Document:

Exhibit 4.1

 

THIS NOTE AND THE SECURITIES ISSUABLE UPON
THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

 

GROM SOCIAL ENTERPRISES, INC.

 

8%CONVERTIBLE PROMISSORY NOTE

 

 

	$278,000.00	Issue Date: August 29, 2021

 

FOR VALUE RECEIVED, GROM SOCIAL
ENTERPRISES, Inc., a Florida corporation (the “Company”), promises to pay to CURIOSITY INK MEDIA LLC, a Delaware limited
liability company (“Curiosity Ink” or the “Holder”), in lawful money of the United States of America
the principal sum of $278,000.00, or such lesser amount as shall equal the outstanding principal amount hereof, together with interest
from the date of this 8% Convertible Promissory Note (this “Note”) on the unpaid principal balance at a rate equal
to 8% per annum computed on the basis of the actual number of days elapsed and a year of 365 days. All unpaid principal, together with
any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on February 20, 2023 (the “Maturity
Date”) or such earlier date as this Note is permitted to be repaid as provided hereunder.

 

This Note has been issued
to the Holder under that certain Membership Interest Purchase Agreement, dated July 29, 2021 (the “Purchase Agreement”)
by and among the Company, Curiosity Ink and the holders of Curiosity Ink’s membership interests, including the Holder. This Note
is the “Contributed Convertible Note” under (and as defined in) the Purchase Agreement. Capitalized terms used and not defined
herein have the respective meanings ascribed to such terms in the Purchase Agreement.

 

The following is a statement
of the rights of Holder and the conditions to which this Note is subject, and to which Holder (and his direct and indirect transferees,
permitted or otherwise), by the acceptance of this Note, agrees:

 

		1.	Payments.

 

(a)        Principal
and Interest. Interest shall accrue on the outstanding principal amount of this Note at an annual rate of eight percent (8%) (“Interest
Rate”). The Company shall pay (or cause to be paid) monthly installments of principal and interest to the Holder, commencing
with September 20, 2021 and on each Payment Day thereafter to (and including) the Maturity Date, of $17,241.01, such monthly payment having
been calculated based on the “straight line amortization” of the original principal amount of this Note, the Interest Rate
hereunder and the Maturity Date, if not otherwise converted into shares of Common Stock pursuant to Section 2 hereof. In this Note,
the term “Payment Day” means the 19th day of each month that follows the issue date specified hereinabove (“Issue
Date”) and ending on (and including) the Maturity Date; provided that if any such date is not a Trading Day (as hereinafter
defined), then in lieu thereof the Payment Date shall be the next succeeding Business Day. In the case of any Payment Date which is not
a Trading Day, the extension of the due date thereof shall not be considered for purposes of determining the amount of interest due on
such date or otherwise under this Note.

 

 

 

    	 	1	 

     

    

 

(b)       Voluntary
Prepayment. Notwithstanding anything to the contrary contained in this Note, the Company shall have the right, exercisable at any
time or from time to time, and whether or not a Payment Date hereunder, to prepay all or any portion of the outstanding principal balance
of this Note without premium or penalty; provided that any such payment be accompanied by the payment of all accrued and outstanding
interest (at the Interest Rate) on the principal amount then being prepaid. In the event of any such prepayment, the Company shall promptly:
(i) recalculate the monthly Payment Date payments due under this Note (based on the “straight line amortization” of the remaining
principal amount of this Note, the Interest Rate and the Maturity Date) and (ii) advise the Holder in writing of such revised monthly
payment amount.

 

(c)       Method
of Payment. The Company shall make (or cause to be made) all payments of principal and interest under this Note by wire transfer of
immediately available funds to the bank account specified by the Holder on Annex B hereto (or to such other bank account specified
by the Holder in writing to the Company from time to time).

 

(d)       Subordination.
This Note and the obligations of the Company hereunder are subordinate to the Company’s Senior Indebtedness (as hereinafter defined),
presently existing or hereafter created, as and to the extent provided in any relevant Subordination Agreement, and is subject to the
terms and provisions thereof. In the event that the Company, Curiosity Ink or any of their respective subsidiaries determine to incur
any Senior Indebtedness after the Issue Date and the holder(s) of such Senior Indebtedness require or request that the Holder execute
and deliver, or otherwise agree to be bound by, one or more Subordination Agreements, the Holder shall promptly do so and, thereupon,
the rights of the Holder under this Note shall be subordinate and junior to the rights of the holder(s) of such Senior Indebtedness as
and to the extent provided therein. In this Note, the term: (i) “Senior Indebtedness” means any senior (i.e.,
non-subordinated/non-junior indebtedness) of the Company (including by way of guarantee) for money borrowed from any bank, financial institution
or other lender as financing for the business, operations and/or working capital needs of the Company, Curiosity Ink or any their respective
subsidiaries, including any direct or indirect refinancing(s), refunding(s), renewal(s), replacement(s) and/or extension(s) thereof; and
(ii) “Subordination Agreement” means any one or more subordination, inter-creditor, forbearance, standstill and/or
related agreement(s) in good faith required or requested from time to time by the holder(s) of Senior Indebtedness as a condition to the
origination, funding, maintenance, refinancing, refunding, renewal, replacement and/or extension of such Senior Indebtedness.

 

		2.	Conversion.

 

(a)       Conversion.
The conversion price on any Conversion Date shall be equal to 110% of the closing price of the Common Stock as of the Trading Day immediately
preceding the Closing Date (as defined in the Purchase Agreement), or $3.28 per share (and subject to adjustment as described herein,
the “Conversion Price”). The number of Conversion Shares issuable upon a conversion hereunder shall be determined by
the quotient obtained by dividing (x) the aggregate amount of principal of and interest under this Note is being converted by (y) the
Conversion Price.

 

(b)       Voluntary
Conversion.

 

(i)       At
any time until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at
the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 2(j) hereof).
The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex
A (each, a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted and
the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified
in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original
Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the
Company unless the entire principal amount of this Note, plus all accrued and unpaid interest thereon, has been or is being so converted,
in which case the Holder shall surrender this Note contemporaneously with such conversion. All conversions of the whole or any part of
the principal balance of this Note shall automatically include the conversion of all accrued and unpaid interest on such principal balance.
Upon conversion of less than the entire outstanding principal balance of this Note at any time, the Company shall promptly: (i) recalculate
the monthly Payment Date payments due under this Note (based on the “straight line amortization” of the remaining principal
amount of this Note, the Interest Rate and the Maturity Date) and (ii) advise the Holder in writing of such revised monthly payment amount..
The Holder (and any direct or indirect transferee thereof) by acceptance of this Note, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note
may be less than the amount stated on the face hereof.

 

 

 

    	 	2	 

     

    

 

(ii)       Mechanics
of Conversion. Not later than four (4) Trading Days after each Conversion Date (the “Share Delivery Date”), the
Company shall deliver, or cause to be delivered, to the Holder the Conversion Shares which, on or after the six-month anniversary of the
date of this Note shall be free of restrictive legends and trading restrictions, represent the number of Conversion Shares being acquired
upon the conversion of this Note.

 

(c)       Failure
to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed
by the Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before
its receipt of such Conversion Shares, to rescind such Conversion, in which event the Company shall promptly return to the Holder the
original physical Note (if delivered or surrendered to the Company) and the Holder shall promptly return to the Company the Conversion
Shares (if issued to such Holder pursuant to the rescinded Conversion Notice).

 

(d)       Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of
this Note in accordance with the terms hereof are absolute and unconditional.

 

(e)       Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note and payment of interest on this Note,
each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder,
not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments provided for
hereinbelow) upon the conversion of the then outstanding principal amount of and interest under this Note. The Company covenants that
all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

(f)       Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction
of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall, at its election, either pay
a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up
to the next whole share.

 

(g)       Transfer
Taxes and Expenses. The issuance of Conversion Shares on conversion of this Note shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares; provided
that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and
delivery of any such Conversion Shares upon conversion in a name other than that of the Holder of this Note so converted and the Company
shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof
shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been
paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository
Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of
the Conversion Shares.

 

(h)       Stock
Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions payable in shares of Common Stock on shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon conversion of the Notes), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into
a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock
of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 2(h) shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

 

 

 

    	 	3	 

     

    

 

(i)         Notices
of Record Date. If:

 

(i)       Any
taking by the Company of a record of the holders of any class of securities of Company for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to receive any other right; or

 

(ii)       Any
capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of
all or substantially all of the assets of the Company to any other Person or any consolidation or merger involving the Company; or

 

(iii)       Any
voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then the Company shall deliver to Holder at least
ten (10) days prior to the earliest date specified therein, a notice specifying: (A) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right and the amount and character of such dividend, distribution or right; and (B) the
date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected
to become effective and the record date for determining stockholders entitled to vote thereon.

 

(j)       Conversion
Limitations. The Company shall not affect any conversion of this Note, and the Holder shall not have the right to convert any portion
of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together
with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates)
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of
Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Note beneficially owned by
the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(j), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder (the “Exchange Act”). To the extent that the limitation contained in this Section 2(j) applies,
the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates)
and of which principal amount of this Note is convertible shall be in reasonable determination of the Company. The “Beneficial
Ownership Limitation” for purposes of this Note shall be 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The limitations
contained in this Section 2(j) shall apply to a successor holder of this Note.

 

3.        Events
of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note:

 

(a)       Failure
to Pay. The Company fails to make any monthly payment due on any Payment Date, and/or fails to satisfy and pay in full on the Maturity
Date all amounts (principal, interest and other) due and payable under this Note; and such payment shall not have been made within thirty
(30) days of the Company’s receipt of written notice by the Holder of such failure to pay; or

 

(b)       Breaches
of Covenants. The Company shall fail to observe or perform any other covenant, obligation, condition or agreement contained
in this Note (other than those specified in Section 4(a) hereof) and such failure shall continue for thirty (30)
days after the Company’s receipt of written notice by the Holders to the Company of such failure; or

 

 

 

 

    	 	4	 

     

    

 

(c)       Voluntary
Bankruptcy or Insolvency Proceedings. The Company shall: (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its property, (ii) admit in writing its inability to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its or any of its creditors, (iv) be dissolved or liquidated,
(v) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of
or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) take any
action for the purpose of effecting any of the foregoing; or

 

(d)       Involuntary
Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company,
or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to the Company or any of its subsidiaries, if any, or the debts thereof under any bankruptcy, insolvency
or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed
or discharged within forty-five (45) days of commencement.

 

4.       
Rights of Holder upon Default. Upon the occurrence of any Event of Default (other than an Event of Default described in Section
4(c) or Section 4(d)) hereof and at any time thereafter during the continuance of such Event of Default, Holder may,
by written notice to the Company, declare all outstanding obligations payable by the Company hereunder to be immediately due and payable,
without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived. Upon the occurrence of
any Event of Default described in Section 4(c) and Section 4(d) hereof, immediately and without notice, all principal
and accrued and unpaid interest hereunder shall automatically become immediately due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived. In addition to the foregoing remedies, upon the occurrence
and during the continuance of any Event of Default, Holder may exercise any other right power or remedy permitted to it by law, either
by suit in equity or by action at law, or both.

 

5.        Certain
Definitions. As used in this Note, the following capitalized terms have the following meanings:

 

“Common Stock”
means the Common Stock of the Company, par value $0.001 per share.

 

“Conversion Shares”
means the shares of Common Stock issuable upon conversion of this Note.

 

“Trading Day”
means any business day on which the Common Stock is traded or quoted (in Nasdaq’s over-the-counter (OTC) “Capital Markets”
market or system, or otherwise).

 

6.       Miscellaneous.

 

		(a)	Successors and Assigns; Transfers.

 

(i)       Subject
to the restrictions on transfer described in this Section 6(a), the rights and obligations of the Company and Holder shall be binding
upon and benefit the successors, assigns, heirs, administrators and permitted transferees of the Company and Holder.

 

(ii)       With
respect to any offer, sale or other disposition of this Note or securities into which such Note may be converted, Holder shall give advance
written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of Holder’s
counsel or other evidence reasonably satisfactory to the Company, to the effect that such offer, sale or other distribution may be effected
without registration or qualification (under any federal or state law then in effect). Upon receiving such written notice and reasonably
satisfactory opinion or other evidence if so requested, the Company, as promptly as practicable, shall notify Holder that Holder may sell
or otherwise dispose of this Note or such securities, all in accordance with the terms of the notice delivered to the Company. If a determination
has been made pursuant to this Section 6(a)(ii) that the opinion of counsel for Holder, or other evidence, is not reasonably satisfactory
to the Company, the Company shall so notify Holder promptly after such determination has been made. Each Note thus transferred and each
certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order
to ensure compliance with the Securities Act, unless in the opinion of counsel for the Company such legend is not required in order to
ensure compliance with the Securities Act. The Company may issue stop transfer instructions to its transfer agent in connection with such
restrictions. Subject to the foregoing, transfers of this Note shall be registered upon registration books maintained for such purpose
by or on behalf of the Company. Prior to presentation of this Note for registration of transfer, the Company shall treat the registered
holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for
all other purposes whatsoever, whether or not this Note shall be overdue and the Company shall not be affected by notice to the contrary.

 

 

 

 

    	 	5	 

     

    

 

(b)       Waiver
and Amendment. Any provision of this Note may be amended, waived or modified only upon the written consent of the Company and
the Holder.

 

(c)       Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be given to the Company or Holder (as the case may be) in the manner provided in the Purchase
Agreement.

 

(d)       Payment.
Except for Conversion Shares, all payments under this Note shall be made in United States dollars.

 

(e)       No
Usury. In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then
that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal
and applied against the principal of this Note.

 

(f)       Headings.
The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect
any of the provisions hereof.

 

(g)       Governing
Law. This Note shall be construed, interpreted and the rights and obligations of the Holder and Company hereunder determined
in accordance with the laws of the State of Delaware (without reference to any choice of law rules that would require the application
of the laws of any other jurisdiction). Section 9.11 of the Purchase Agreement (Submission to Jurisdiction; Waivers; Consent to
Service of Process) is hereby incorporated by reference in this Note with respect to any legal action or proceeding between the
Company and Holder with respect to this Note.

 

[Remainder of page intentionally left blank]

 

 

 

 

    	 	6	 

     

    

 

IN WITNESS WHEREOF, the Company has caused this
8% Convertible Promissory Note to be signed in its name by its duly authorized officer as of the Issue Date set forth above.

 

 

	 	Grom Social Enterprises, Inc.
	 	 
	 	 
	 	By: /s/ Darren Marks                           
	 	Name: Darren Marks
	 	Title: CEO

 

 

 

 

 

    	 	7	 

     

    

 

 

ANNEX A

 

Notice of Conversion

 

THE UNDERSIGNED HEREBY elects
to convert the principal amount specified hereinbelow outstanding under the 8% Convertible Promissory Note of Grom Social Enterprises,
Inc., a Florida corporation (the “Company”), held by the undersigned (the “Note”), or if less is outstanding,
then such lesser amount, including all accrued and unpaid interest on such principal amount being converted, into shares of Common Stock
of the Company according to the terms and conditions of said Note, as of the date written below. Capitalized terms used and defined in
this Notice of Conversions have the respective meanings ascribed to such terms in the Note.

 

If the entire balance or entire
remaining balance of this Note is being converted pursuant hereto, Holder is surrendering herewith to the Company for cancellation the
original physical Note instrument payable to the Holder.

 

If shares of Common Stock
are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee
will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By the delivery of this Notice
of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts
specified under Section 2(j) of the Note, as determined in accordance with Section 13(d) of the Exchange Act.

 

The undersigned agrees to
comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.

 

Date: ____________________________

 

	 	Principal Amount of Note to be Converted: $____________
	 	(plus all accrued and unpaid interest thereon) 
	 	Remaining Principal Balance of Note (if any):
$ ___________
	 	 
	 	 
	 	 
	 	 
	 	 
	 	Signature: ____________________________________________
	 	Name:                                                                                          
	 	 
	 	Address for Delivery of Common Stock Certificates:                                     
	 	 
	 	_______________________________________________________
	 	_______________________________________________________
	 	_______________________________________________________
	 	OR
	 	DWAC Instructions:______________________________________
	 	Broker No: __________________________________________
	 	 
	 	 

 

 

 

 

 

    	 	8	 

     

    

 

 

ANNEX B

 

 

Holder’s Wire Instructions

 

 

 

Name of Bank: ___________________________________

 

ABA No. _______________________________________

 

Account No. ____________________________________

 

F/B/O (Account holder): ___________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	9Exhibit 10.2

 

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

 

This Amended and Restated
Limited Liability Company Agreement (this “Agreement”) is entered into as of August 19, 2021 (the “Effective
Date”) by and among: (A) Curiosity Ink Media LLC, a Delaware limited liability company (the “Company”), (B)(1)
Grom Social Enterprises, Inc., a Florida corporation (“Grom”), (2) Brent Watts, an individual (“Watts”),
(3) Russell Hicks, an individual (”Hicks”), (4) John Van Slooten, Trustee of the Van Slooten Family Revocable Living Trust
dated 4/6/90 (“Van Slooten Trust”), (5) Gregory A. Peterson, Trustee, of the Gregory A. Peterson Revocable Living Trust
dated April 9, 2001 (“Peterson Trust”), (6) Ryan Watts, an individual (“RWatts”); (7) Robert Nelsen,
an individual (“Nelsen”); (8) Lauren Selig, an individual (“Selig”); (9) Jared Wolfson, an individual
(“Wolfson”); and (10) Matthew Cubberly, an individual (“Cubberly”), as Members, and (C) those persons
listed on the Managers Schedule, as Managers.

 

RECITALS

 

A.       The
Company was formed under the laws of the State of Delaware by the filing of a Certificate of Formation with the Secretary of State of
the State of Delaware on January 5, 2017 (the “Certificate of Formation”).

 

B.       Prior
to the Effective Date, the parties hereto (other than Grom) were party to that certain Limited Liability Company Agreement with respect
to the Company dated as of January 5, 2017, executed by the Company, Hicks, Watts and Bridger Capital Partners LLC (“Bridger”),
the predecessor-in-interest to the Van Slooten Trust and Peterson Trust, as (i) amended by that certain First Amendment thereof dated
January 1, 2019 (“First Amendment”) among the Company, Hicks, Watts, Bridger and the Van Slooten Trust and Peterson
Trust and (ii) as supplemented by those certain (x) Grant and Joinder Agreements, each dated as of July 28, 2021 executed by Selig, Wolfson
and Cubberly (respectively) on the one hand, and the Company on the other, and (x) Conversion Notice and Agreements, each dated as of
July 28, 2021 executed by Nelsen and RWatts (respectively) on the one hand, and the Company, on the other (as so amended and supplemented,
the “Original LLC Agreement”). By such First Amendment, Bridger ceased to be a member of the Company and the Van Slooten
Trust and Peterson Trust became members of the Company; and by such three (3) Grant and Joinder Agreements and two (2) Conversion Notice
and Agreements, RWatts, Nelsen, Selig, Wolfson and Cubberly became members of the Company with respect to membership interests previously
(and respectively) granted to them by the Company.

 

C.       Under
the terms of that certain Membership Interest Purchase Agreement, dated July 29, 2021 (the “Purchase Agreement”), among
Grom, as “Purchaser”, Hicks, Watts, Van Slooten Trust, Peterson Trust, RWatts, Nelsen, Selig, Wolfson and Cubberly, as “Sellers”,
and the Company (among other things), each Member party hereto sold a portion of their respective Membership Interests in the Company
to Grom for the consideration set forth in the Purchase Agreement effective on and as of the Effective Date. It is a condition to the
closing of such transaction under the Purchase Agreement that the parties hereto execute and deliver this Agreement to supersede and replace
the Original LLC Agreement.

 

D.       The
Company and Members therefore now wish to enter into this Agreement for such purpose and to set forth the terms and conditions governing
the operation and management of the Company from and after the Effective Date.

 

 

 

    	 	1	 

     

    

 

ARTICLE I DEFINITIONS; INTERPRETATION

 

1.1       Definitions.
Appendix 1 hereof sets forth the definitions of certain terms relating to the maintenance of capital accounts and accounting rules. In
addition, the following terms used in this Agreement shall have the following meanings:

 

“Act”
means the Delaware Limited Liability Company Act, Del. Code Ann. title 6, §§ 18-101, et seq., as amended from time
to time.

 

“Affiliate”
means any Person directly or indirectly controlling, controlled by, or under common control with another Person. “Control,”
“controlled” and “controlling” mean the power to direct or cause the direction of the management and policies
of a Person and shall be deemed to exist if any Person directly or indirectly owns, controls, or holds the power to vote fifty percent
(50%) or more of the voting securities of such other Person.

 

“Applicable Law”
means all applicable provisions of (a) constitutions, treaties, statutes, laws (including the common law), rules, regulations, decrees,
ordinances, codes, proclamations, declarations or orders of any Governmental Authority; (b) any consents or approvals of any Governmental
Authority; and (c) any orders, decisions, advisory or interpretative opinions, injunctions, judgments, awards, decrees of, or agreements
with, any Governmental Authority.

 

“Board of
Managers” means the board of managers of the Company comprised delegated the power and authority such that the business
and affairs of the Company shall be managed by the Board of Managers.

 

“Business Day”
means a day other than a Saturday, Sunday or other day on which commercial banks in California or Florida are authorized or required to
close.

 

“Capital Contribution”
means any contribution to the capital of the Company whenever made.

 

“Certificate
of Formation” has the meaning set forth in the recitals.

 

“Code” means
the Internal Revenue Code of 1986, as amended from time to time. All references herein to sections of the Code shall include any corresponding
provision or provisions of succeeding law.

 

“Company”
has the meaning set forth in the preamble.

 

“Confidential
Information” has the meaning set forth in Section 12.3(a).

 

“Covered
Person” has the meaning set forth in Section 8.1(a).

 

“Defaulting
Member” has the meaning set forth in Section 9.3(a)(iii).

 

“Drag-along
Member” has the meaning set forth in Section 10.4(a).

 

“Drag-along
Notice” has the meaning set forth in Section 10.4(a).

 

“Drag-along
Sale” has the meaning set forth in Section 10.4(a).

 

 

 

    	 	2	 

     

    

 

“Dragging
Member” has the meaning set forth in Section 10.4(a).

 

“Electronic Transmission”
means any form of communication not directly involving the physical transmission of paper that creates a record that may be retained,
retrieved and reviewed by a recipient thereof and that may be directly reproduced in paper form by such a recipient through an automated
process.

 

“Fair Market Value”
of any asset as of any date means the purchase price that a willing buyer having all relevant knowledge would pay a willing seller for
such asset in an arm’s length transaction, as determined in good faith by the Board of Managers based on such factors as the Board
of Managers, in the exercise of the Board of Managers’ reasonable business judgment, consider relevant.

 

“Family
Member” has the meaning set forth in 11.2(f).

 

“Fiscal Year”
means the calendar year, unless the Company is required to have a taxable year other than the calendar year, in which case Fiscal Year
shall be the period that conforms to its taxable year.

 

“Governmental Authority”
means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government
or political subdivision, or any self-regulated organization or other non- governmental regulatory authority or quasi-governmental authority
(to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court
or tribunal of competent jurisdiction.

 

“Hicks”
has the meaning set forth in the preamble.

 

“Independent Third
Party” means, with respect to any Member, any Person who is not an Affiliate of such Member.

 

“Interest Holder”
means a Person who owns a Membership Interest in the Company but who is not a Member including, except as otherwise expressly provided
herein, a Member who becomes a Withdrawn Member.

 

“Lien” means
any mortgage, pledge, security interest, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever.

 

“Liquidator”
has the meaning set forth in Section 11.3(a).

 

“Manager”
means each person appointed to serve as a Manager in accordance with Section 7.2, who shall initially be the Managers set forth
on the Managers Schedule, each of whom shall sit on the Board of Managers. In the event, at any time, that there is only one Manager,
any reference to Managers or the Board of Managers shall be deemed to be a reference to the sole Manager, where appropriate.

 

“Managers Schedule”
means the schedule of Managers set forth on Exhibit B.

 

“Member”
means (a) Grom, Watts, Hicks, the Van Slooten Trust and the Peterson Trust, in each case unless and until such Person ceases to be a Member
in accordance with the terms of this Agreement; and (b) each Person who is hereafter admitted as a Member in accordance with the terms
of this Agreement and the Act, in each case so long as such Person is shown on the Company’s books and records as the owner of Membership
Interests. The Members shall constitute “members” (as that term is defined in the Act) of the Company.

 

 

 

    	 	3	 

     

    

 

“Member
Assessment” has the meaning set forth in Section 9.3(a)(iii).

 

“Membership Interest”
means an interest in the Company owned by a Member, including such Member’s right (a) to its distributive share of Profits, Losses
and other items of income, gain, loss and deduction of the Company; (b) to its distributive share of the assets of the Company; (c) to
vote on, consent to or otherwise participate in any decision of the Members as provided in this Agreement; and (d) to any and all other
benefits to which such Member may be entitled as provided in this Agreement or the Act. The Membership Interest of each Member shall be
expressed as a percentage interest and shall be as set forth on the Members Schedule.

 

“Members Schedule”
means the schedule of Members set forth on Exhibit A.

 

“Net Available Cash”
means, with respect to any period, the Company’s free cash flow reduced by (i) the portion thereof used to pay or establish reasonable
reserves (as determined by the Board of Managers in its sole discretion) for working capital, contingencies and savings for future growth
and (ii) without duplication, expenses of and for the Company’s business that are paid or reimbursed by Purchaser or a different
subsidiary thereof (including salary, bonuses and benefits paid under the Employment Agreements (as defined in the Purchase Agreement)
and to other employees of the Company). “Net Available Cash” shall not be reduced by depreciation, amortization, cost recovery
deductions, or similar allowances.

 

“Offered
Interests” has the meaning set forth in 11.3(a).

 

“Offering
Member” has the meaning set forth in 11.3(a).

 

“Offering
Member Notice” has the meaning set forth in 11.3(b).

 

“Officers”
has the meaning set forth in Section 7.4.

 

“Permitted Transfer”
means a Transfer of Membership Interests carried out pursuant to Section 10.2.

 

“Permitted
Transferee” means a recipient of a Permitted Transfer.

 

“Person”
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization,
trust, association or other entity.

 

“Proposed
Transferee” has the meaning set forth in Section 10.5(a).

 

“Quarterly Estimated
Tax Amount” of a Member for any calendar quarter of a Fiscal Year means the excess, if any of (a) the product of (i) a quarter
(1/4) in the case of the first calendar quarter of the Fiscal Year, half (1/2) in the case of the second calendar quarter of the Fiscal
Year, three-quarters (3/4) in the case of the third calendar quarter of the Fiscal Year, and one (1) in the case of the fourth calendar
quarter of the Fiscal Year and (ii) the Member’s Estimated Tax Amount for such Fiscal Year over (b) all distributions previously
made during such Fiscal Year to such Member.

 

“Regulations”
means the final or temporary regulations issued by the United States Department of Treasury pursuant to its authority under the Code,
and any successor regulations.

 

“Related Party Agreement”
means any agreement, arrangement or understanding between the Company and any Member or Manager or any Affiliate of a Member or Manager
(excluding Grom and its Subsidiaries), as such agreement may be amended, modified, supplemented or restated in accordance with the terms
of this Agreement.

 

 

 

 

    	 	4	 

     

    

 

“Representative”
means, with respect to any Person, any and all directors, officers, managers, employees, consultants, financial advisors, counsel, accountants
and other agents of such Person.

 

“ROFR Notice
Period” has the meaning set forth in 11.3(c)(i).

 

“ROFR Offer
Notice” has the meaning set forth in 11.3(c)(i).

 

“Sale Notice”
has the meaning set forth in Section 10.5(c).

 

“Securities Act”
means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall
be in effect at the time.

 

“Selling
Member” has the meaning set forth in Section 10.5(a).

 

“Subsidiary”
means, with respect to any Person, any other Person of which a majority of the outstanding shares or other equity interests having the
power to vote for directors or comparable managers are owned, directly or indirectly, by the first Person.

 

“Tag-along
Member” has the meaning set forth in Section 10.5(a).

 

“Tag-along
Notice” has the meaning set forth in Section 10.5(d)(ii).

 

“Tag-along
Period” has the meaning set forth in Section 10.5(d)(ii).

 

“Tag-along
Portion” has the meaning set forth in Section 10.5(d)(i).

 

“Tag-along
Sale” has the meaning set forth in Section 10.5(a).

 

“Tax Advance”
has the meaning set forth in Section 5.2(a).

 

“Tax Loan”
has the meaning set forth in Section 9.3(a)(iii).

 

“Taxing
Authority” has the meaning set forth in Section 5.3(b).

 

“Tax Matters
Partner” means the Person so designated in Section 9.3(a)(i).

 

“Transfer”
means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, by operation of law or otherwise, or to enter into any contract, option or other arrangement or understanding with respect
to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any Membership Interests owned by a Person
or any interest (including a beneficial interest) in any Membership Interests owned by a Person. “Transfer” when used
as a noun shall have a correlative meaning. “Transferor” and “Transferee” mean a Person who makes
or receives a Transfer, respectively.

 

“Triggering Event”
means, with respect to any Member: (i) the occurrence of a Withdrawal Event with respect to such Member and/or (ii) the completion of
a Permitted Transfer under Section 10.2(b) or 10.2(f); provided, however, that any such occurrence or completion
after the delivery of a (x) Drag-along Notice under Section 10.4 as to which such Member is or will be a Drag-along Member or (y)
Tag-along Notice under Section 10.5 as to which such Member is or will be a Tag-along Member shall not deemed a “Triggering
Event” hereunder if and so long as such Member complies with such Member’s obligations under such Section 10.4 with
respect to the relevant Drag-along Sale or Section 10.5 with respect to the relevant Tag-along Sale, as applicable.

 

 

 

 

    	 	5	 

     

    

 

“Watts”
has the meaning set forth in the preamble.

 

“Withdrawal Event”
means, with respect to any Member, the occurrence of any of the following events: (1) The Member voluntarily withdraws from the Company;
(2) The Member does any of the following: (a) Makes an assignment for the benefit of creditors; (b) Files a voluntary petition in bankruptcy;
(c) Is adjudicated as bankrupt or insolvent; (d) Files a petition or answer seeking for himself any reorganization, arrangement, composition,
readjustment, liquidation or similar relief under any statute, law or rule; (e) Files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against him in a bankruptcy, insolvency, reorganization or similar proceeding;
(f) Seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Member or of all or any substantial
part of his property; (3) If the Member is a natural person: (a) His or her death; (b) The entry of an order or judgment by a court of
competent jurisdiction adjudicating him incompetent to manage his person or his estate; (4) If the Member is acting as a Member by virtue
of being a trustee of a trust, the termination of the trust but not merely the substitution of a new trustee; (5) If the Member is a general
or limited partnership, the dissolution and commencement of winding up of the partnership; (6) If the Member is a corporation, the filing
of a certificate of dissolution or its equivalent for the corporation or revocation of its charter; (7) If the Member is an estate, the
distribution by the fiduciary of the estate’s entire interest in the limited liability company; (8) If the Member is another foreign
or domestic limited liability company, the filing of articles of dissolution or termination or their equivalent for the foreign or domestic
limited liability company.

 

“Withdrawn
Member” means a Member following the occurrence of a Withdrawal Event with respect to such Member.

 

“Withholding
Advances” has the meaning set forth in Section 5.3(b).

 

1.2       Interpretation.
For purposes of this Agreement: (a) the words “include,” “includes” and “including” shall be deemed
to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein”,
“hereof”, “hereby”, “hereto” and “hereunder” refer to this Agreement as a whole. The definitions
given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Unless the context otherwise
requires, references herein: (i) to Articles, Sections, Exhibits and Appendices mean the Articles and Sections of, and Exhibits and Appendices
attached to, this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as
amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (iii) to a statute means such
statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement
shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument
or causing any instrument to be drafted. The Exhibits and Appendices referred to herein shall be construed with, and as an integral part
of, this Agreement to the same extent as if they were set forth verbatim herein.

 

ARTICLE II

FORMATION OF THE LIMITED LIABILITY COMPANY

 

2.1       General.
The Company was formed pursuant to the Act and (originally) the terms of the Original LLC Agreement, effective upon the filing of the
Certificate of Formation for the Company with the Delaware Secretary of State. By this Agreement, the parties hereby agree that, from
and after the Effective Date, the Original LLC Agreement is (a) terminated in its entirety and (b) amended and restated in its entirety
by this Agreement, and (c) superseded and replaced in its entirety by this Agreement. The Members shall execute and acknowledge any and
all certificates and instruments and do all filing, recording, and other acts as may be necessary or appropriate to comply with the requirements
of the Act relating to the formation, operation, and maintenance of the Company in accordance with the terms of this Agreement. This Agreement
shall constitute the “limited liability company agreement” (as that term is used in the Act) of the Company. The rights, powers,
duties, obligations and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the
rights, powers, duties, obligations and liabilities of any Member are different by reason of any provision of this Agreement than they
would be under the Act in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.

 

 

 

 

    	 	6	 

     

    

 

2.2       Name.
The name of the Company is “Curiosity Ink Media LLC” or such other name or names as may be designated by the Board of Managers;
provided that the name shall always contain the words “Limited Liability Company” or the abbreviation “L.L.C.”
or the designation “LLC”. The Board of Managers shall give prompt notice to each of the Members of any change to the name
of the Company.

 

2.3        Purposes
and Powers. The purposes of the Company are (a) to acquire, own, produce and provide access to animated and/or other feature films,
television series and physical books for children, non-adults and families, including by creating original content revitalizing pre-existing
intellectual properties, and (b) to engage in any lawful act or activity for which limited liability companies may be formed under the
Act and to engage in any and all activities necessary or incidental thereto. The Company shall have all the powers necessary or convenient
to carry out the purposes for which it is formed, including the powers granted by the Act.

 

2.4        Principal
Office. The principal office of the Company is located at 478 Ellis St., Pasadena, CA 91105, or such other place as may from time
to time be determined by the Board of Managers. The Board of Managers shall give prompt notice of any such change to each of the Members.

 

2.5        Registered
Office; Registered Agent. The registered office of the Company shall be the office of the initial registered agent named in the Certificate
of Formation or such other office (which need not be a place of business of the Company) as the Board of Managers may designate from time
to time in the manner provided by the Act and Applicable Law. The registered agent for service of process on the Company in the State
of Delaware shall be the initial registered agent named in the Certificate of Formation or such other Person or Persons as the Board of
Managers may designate from time to time in the manner provided by the Act and Applicable Law.

 

2.6        Term.
The term of the Company commenced on the date the Certificate of Formation was filed with the Secretary of State of the State of Delaware
and shall continue in existence perpetually until the Company is dissolved in accordance with the provisions of this Agreement.

 

2.7        Company
Classification. The Members intend that the Company always be operated in a manner consistent with its treatment as a “partnership”
for federal and state income tax purposes. The Members also intend that the Company not be operated or treated as a “partnership”
for purposes of Section 303 of the Federal Bankruptcy Code. No Manager or Member shall take any action inconsistent with the express intent
of the parties hereto. The Company is not a “partnership” for purposes of the Delaware Revised Uniform Partnership Act or
the Delaware Uniform Limited Partnership Act and the Members are not partners for the purpose of such acts.

 

ARTICLE III

CAPITAL CONTRIBUTIONS

 

3.1        Capital
Contributions; Membership Interests. On or prior to the Effective Time each Member made a Capital Contribution. Each Member’s
ownership of Membership Interests is in the amount set forth opposite such Member’s name and address on the Members Schedule. The
Board of Managers shall maintain and update the Members Schedule upon the issuance or Transfer of any Membership Interests to any new
or existing Member in accordance with this Agreement.

 

3.2        Additional
Capital Contributions. No Member shall be required to make any further or additional Capital Contributions to the Company. Any future
Capital Contributions made by any Member shall only be made with the consent of the Board of Managers, or, in connection with an issuance
of Membership Interests, each made in compliance with Section 7.3. To the extent that a Member makes an additional Capital Contribution
to the Company, the Board of Managers shall revise the Members Schedule to reflect an increase in the Membership Interest of the contributing
Member that fairly and equitably reflects the value of its additional Capital Contribution in relation to the aggregate amount of all
Capital Contributions made by the Members.

 

 

 

 

    	 	7	 

     

    

 

3.3        Borrowing.
As determined by the Board of Managers, the Company may (a) borrow from any Person, including, without limitation, from banks, lending
institutions, other third parties, any Manager or Member or any Affiliate of a Member or Manager and (b) pledge Company property or any
income therefrom to secure or provide for the repayment of any such loans.

 

3.4        Use
of Capital Contributions. All Capital Contributions shall be expended only in furtherance of the business purpose of the Company as
set forth in Section 2.3.

 

3.5        No
Unauthorized Withdrawals of Capital Contributions. No Member or Interest Holder shall have the right to withdraw or to be repaid any
of such Member or Interest Holder’s Capital Contributions, except as specifically provided in this Agreement.

 

3.6        Return
of Capital. Except as otherwise provided in this Agreement, no Member or Interest Holder shall be entitled to the return of the Member
or the Interest Holder’s Capital Contributions to the Company. No shall have any personal liability for the repayment of the Capital
Contributions made by any Member or Interest Holder, it being agreed that any return of Capital Contributions or Profits shall be made
solely from the assets of the Company.

 

3.7        Third
Party Rights. Nothing contained in this Agreement is intended or will be deemed to benefit any creditor of the Company, nor will any
creditor of the Company be entitled to require any Manager to solicit or demand Capital Contributions from any Member.

 

ARTICLE IV

MEMBERS

 

4.1        Admission
of New Members.

 

(a)        New
Members may be admitted from time to time (i) in connection with the issuance of Membership Interests by the Company, subject to compliance
with the provisions of Section 7.3 and Section 10.1, and (ii) in connection with a Transfer of Membership Interests, subject
to compliance with the provisions of ARTICLE X, and in either case, following compliance with the provisions of Section 4.1(b).

 

(b)        In
order for any Person not already a Member of the Company to be admitted as a Member, whether pursuant to an issuance or Transfer of Membership
Interests, such Person shall have executed and delivered to the Company a written joinder agreement to this Agreement, in a form reasonably
acceptable to the Board of Managers. Upon the satisfaction of any applicable conditions imposed by the Board of Managers in its reasonable
discretion, including, to the extent applicable, the receipt by the Company of payment for the issuance of Membership Interests, such
Person shall be admitted as a Member and deemed listed as such on the books and records of the Company.

 

4.2        No
Personal Liability. Except as otherwise provided in the Act, by Applicable Law or expressly in this Agreement, no Member shall be
obligated personally for any debt, obligation or liability of the Company or other Members, whether arising in contract, tort or otherwise,
solely by reason of being a Member.

 

4.3        No
Withdrawal. So long as a Member continues to hold any Membership Interests, such Member shall not have the ability to withdraw or
resign as a Member prior to the dissolution and winding up of the Company and any such withdrawal or resignation or attempted withdrawal
or resignation by a Member prior to the dissolution or winding up of the Company shall be null and void. As soon as any Person who is
a Member ceases to hold any Membership Interests, such Person shall no longer be a Member. A Member shall not cease to be a Member as
a result of the bankruptcy of such Member or as a result of any other events specified in § 18-304 of the Act.

 

 

 

 

    	 	8	 

     

    

 

4.4        Death.
The death of any Member shall not cause the dissolution of the Company. In such event, the Company and its business shall be continued
by the remaining Member or Members and Membership Interests owned by the deceased Member shall automatically be Transferred to such Member’s
heirs, subject, however, to Section 10.6.

 

4.5        Meetings
of Members.

 

(a)        Meetings
of the Members may be called by (i) the Board of Managers or

(ii) by a Member or group of Members holding a
majority of the Membership Interests.

 

(b)        Written
notice stating the place, date and time of the meeting and, in the case of a meeting of the Members not regularly scheduled, describing
the purposes for which the meeting is called, shall be delivered not fewer than ten (10) days and not more than thirty (30) days before
the date of the meeting to each Member, by or at the direction of the Board of Managers or the Member(s) calling the meeting, as the case
may be. The Members may hold meetings at the Company’s principal office or at such other place as the Board of Managers or the Member(s)
calling the meeting may designate in the notice for such meeting.

 

(c)        Any
Member may participate in a meeting of the Members by means of conference telephone or other communications equipment by means of which
all Persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in
person at such meeting.

 

(d)        On
any matter that is to be voted on by Members, a Member may vote in person or by proxy, and such proxy may be granted in writing, by means
of Electronic Transmission or as otherwise permitted by Applicable Law. Every proxy shall be revocable in the discretion of the Member
executing it unless otherwise provided in such proxy; provided that such right to revocation shall not invalidate or otherwise affect
actions taken under such proxy prior to such revocation.

 

(e)        The
business to be conducted at such meeting need not be limited to the purpose described in the notice and can include business to be conducted
by Members; provided that the appropriate Members shall have been notified of the meeting in accordance with Section 4.5(b).
Attendance of a Member at any meeting shall constitute a waiver of notice of such meeting, except where a Member attends a meeting for
the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

 

4.6        Quorum;
Voting. A quorum of any meeting of the Members shall require the presence of the Members holding a majority of the outstanding Membership
Interests permitted to vote on the matters to be voted upon at such meeting. Subject to Section 4.7, no action at any meeting may
be taken by the Members unless the appropriate quorum is present. Subject to Section 4.7, no action may be taken by the Members
at any meeting at which a quorum is present without the affirmative vote of Members holding a majority of the outstanding Membership Interests
permitted to vote on such matters.

 

4.7        Action
without a Meeting. Notwithstanding the provisions of Section 4.6, any matter that is to be voted on, consented to or approved
by Members may be taken without a meeting, without prior notice and without a vote if consented to, in writing or by Electronic Transmission,
by a Member or Members holding not less than that percentage of Membership Interests as would be required to authorize or take the action
at a duly called and convened meeting at which all Members entitled to vote on the action were present and voted. A record shall be maintained
by the Board of Managers of each such action taken by written consent of a Member or Members.

 

4.8        Power
of Members. The Members shall have the power to exercise any and all rights or powers granted to Members pursuant to the express terms
of this Agreement and the Act. Except as otherwise specifically provided by this Agreement or required by the Act, no Member, in its capacity
as a Member, shall have the power to act for or on behalf of, or to bind, the Company.

 

 

 

 

    	 	9	 

     

    

 

4.9        No
Interest in Company Property. No real or personal property of the Company shall be deemed to be owned by any Member individually,
but shall be owned by, and title shall be vested solely in, the Company. Without limiting the foregoing, each Member hereby irrevocably
waives during the term of the Company any right that such Member may have to maintain any action for partition with respect to the property
of the Company.

 

4.10        Certification
of Membership Interests. Membership Interests will not be certificated.

 

4.11        Other
Activities; Business Opportunities. Nothing contained in this Agreement shall prevent any Member or any of its Affiliates from engaging
in any other activities or businesses, regardless of whether those activities or businesses are similar to or competitive with the business
activities of the Company. None of the Members or any of their Affiliates shall be obligated to account to the Company or to the other
Member for any profits or income earned or derived from other such activities or businesses. None of the Members or any of their Affiliates
shall be obligated to inform the Company or the other Member of any business opportunity of any type or description. The foregoing shall
not be deemed to limit any rights or obligations of the parties hereto (or their respective Affiliates) under any (a) Seller Transaction
Document (as defined in the Purchase Agreement) and/or (b) any other agreement or instrument entered into after the Effective Time binding
upon such party or parties.

 

ARTICLE V

PAYMENTS AND DISTRIBUTIONS

 

5.1        General.
Except as provided in Section 5.2 (in connection with a Tax Advance) or Section 11.3 (in connection with the liquidation
of the Company), distributions of Net Available Cash shall be made in such amounts and at such times as the Board of Managers may determine,
but in no event less than annually, to the Members pro rata in accordance with their Membership Interests.

 

5.2        Tax
Advances.

 

(a)        Subject
to any restrictions in the Company’s then applicable debt- financing arrangements, and subject to the determination by the Board
of Managers to retain Net Available Cash necessary to satisfy the Company’s obligations, the Company shall distribute fifty five
percent (55%) of its taxable income (which such rate may be adjusted from time to time as tax laws change) to the Members at least five
(5) Business Days before each date prescribed by the Code for a calendar-year entity to pay quarterly installments of estimated tax. The
Company shall use commercially reasonable efforts to distribute such cash to each Member in proportion to and to the extent of such Member’s
Quarterly Estimated Tax Amount for the applicable calendar quarter (each such distribution, a “Tax Advance”).

 

(b)        Any
distributions made pursuant to this Section 5.2 shall be treated for purposes of this Agreement as advances on distributions pursuant
to Section 5.1 and shall reduce, dollar-for-dollar, the amount otherwise distributable to such Member pursuant to Section 5.1.

 

5.3        Tax
Withholding; Withholding Advances.

 

(a)       Tax
Withholding. Each Member agrees to furnish the Company with a properly completed and executed IRS Form W-9 (or any substitute therefor)
in order to assist the Company in determining the extent of, and in fulfilling, any withholding obligations it may have with respect to
such Member.

 

(b)       
Withholding Advances. The Company is hereby authorized at all times to make payments (“Withholding Advances”)
with respect to each Member in amounts required to discharge any obligation of the Company (as determined by the Tax Matters Partner based
on the advice of legal or tax counsel to the Company) to withhold or make payments to any federal, state, local or foreign taxing authority
(a “Taxing Authority”) with respect to any distribution or allocation by the Company of income or gain to such Member
and to withhold the same from distributions to such Member. Any funds withheld from a distribution by reason of this 5.3(b) shall
nonetheless be deemed distributed to the Member in question for all purposes under this Agreement. If the Company makes any Withholding
Advance in respect of a Member hereunder that is not immediately withheld from actual distributions to the Member, then the Member shall
promptly reimburse the Company for the amount of such payment, plus interest at a rate equal to the prime rate published in the Wall Street
Journal on the date of payment 2% per annum, compounded annually, on such amount from the date of such payment until such amount is repaid
(or deducted from a distribution) by the Member (any such payment shall not constitute a Capital Contribution). Each Member’s reimbursement
obligation under this Section 5.3(b) shall continue after such Member Transfers its Membership Interests.

 

 

 

    	 	10	 

     

    

 

(c)        Indemnification.
Each Member hereby agrees to indemnify and hold harmless the Company and the other Members from and against any liability with respect
to taxes, interest or penalties that may be asserted by reason of the Company’s failure to deduct and withhold tax on amounts distributable
or allocable to such Member. The provisions of this Section 5.3(c) and the obligations of a Member pursuant to Section 5.3(b)
shall survive the termination, dissolution, liquidation and winding up of the Company and the withdrawal of such Member from the Company
or Transfer of its Membership Interests. The Company may pursue and enforce all rights and remedies it may have against each Member under
this Section 5.3, including bringing a lawsuit to collect repayment with interest of any Withholding Advances.

 

(d)        Over-withholding.
Neither the Company nor any Manager shall be liable for any excess taxes withheld in respect of any distribution or allocation of income
or gain to a Member. In the event of an over-withholding, a Member’s sole recourse shall be to apply for a refund from the appropriate
Taxing Authority.

 

5.4        Distributions
in Kind.

 

(a)       Subject
to Section 7.3, the Board of Managers is hereby authorized, as the Board of Managers may reasonably determine, to make distributions
to the Members in the form of securities or other property held by the Company; provided that Tax Advances shall only be made in
cash. In any non-cash distribution, the securities or property so distributed will be distributed among the Members in the same proportion
and priority as cash equal to the Fair Market Value of such securities or property would be distributed among the Members pursuant to
Section 5.1.

 

(b)        Any
distribution of securities shall be subject to such conditions and restrictions as the Board of Managers determines are required or advisable
to ensure compliance with Applicable Law. In furtherance of the foregoing, the Board of Managers may require that the Members execute
and deliver such documents as the Board of Managers may deem necessary or appropriate to ensure compliance with all federal and state
securities laws that apply to such distribution and any further Transfer of the distributed securities, and may appropriately legend the
certificates that represent such securities to reflect any restriction on Transfer with respect to such laws.

 

5.5        State
Law Limitation on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not
make any distribution to Members if such distribution would violate § 18-607 of the Act or other Applicable Law.

 

5.6        Inclusion
of Interest Holder. Except as otherwise provided herein, the term “Member” for purposes of this ARTICLE V shall
include an Interest Holder.

 

ARTICLE VI

ALLOCATION OF PROFITS AND LOSSES

 

6.1        Profit
and Loss Allocations.

 

(a)       
The rules set forth below in this Section 6.1 shall apply for the purpose of determining each Member’s allocable share of
the items of income, gain, loss and expense of the Company comprising Profits or Losses of the Company for each taxable year, determining
special allocations of other items of income, gain, loss and expense, and adjusting the balance of each Member’s Capital Account
to reflect the aforementioned general and special allocations. For each taxable year, the special allocations in Appendix 1 shall
be made immediately prior to the general allocations of Section 6.1.

 

(b)        For
each Fiscal Year of the Company, after adjusting each Member’s Capital Account for all Capital Contributions and distributions during
such Fiscal Year and all special allocations pursuant to Appendix 1 with respect to such Fiscal Year, all Profits and Losses (other
than Profits and Losses specially allocated pursuant to Appendix 1) shall be allocated to the Member’s Capital Accounts in
a manner such that, as of the end of such Fiscal Year, the Capital Account of each Member (which may be either a positive or negative
balance) shall be equal to (a) the amount which would be distributed to such Member, determined as if the Company were to sell all of
its assets for the Gross Asset Value thereof and distribute the proceeds thereof pursuant to Section 11.3, minus (b) the sum of
(i) such Member’s share of Company Minimum Gain (as determined according to Treasury Regulation Section 1.704-2(d) and (g)(3)) and
Interest Holder Nonrecourse Debt Minimum Gain (as determined according to Treasury Regulation Section 1.704-2(i)) and (ii) the amount,
if any, which such Member is obligated to contribute to the capital of the Company as of the last day of such Fiscal Year.

 

 

 

 

    	 	11	 

     

    

 

(c)        Notwithstanding
anything to the contrary in this Section 6.1, the amount of items of Company expense and loss allocated pursuant to this Section
6.1 to any Member shall not exceed the maximum amount of such items that can be so allocated without causing such Member to have an
Adjusted Capital Account Deficit at the end of any taxable year. All such items in excess of the limitation set forth in this Section
6.1(c) shall be allocated first to Members who would not have an Adjusted Capital Account Deficit, pro rata in proportion to their
Capital Account balances as adjusted in accordance with subdivisions (i) and (ii) of the definition of Adjusted Capital Account Deficit.

 

6.2        Tax
Allocations.

 

(a)       Except
as otherwise provided in Section 6.2(b) hereof, for income tax purposes, all items of income, gain, loss, deduction and credit
of the Company for any tax period shall be allocated among the Members in accordance with the allocation of Profits and Losses prescribed
in this ARTICLE VI and Appendix 1 hereto.

 

(b)       In
accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss and deduction with respect to any property contributed
to the capital of the Company shall, solely for tax purposes, be allocated among Members so as to take account of any variation between
the adjusted basis of such property to the Company for federal income tax purposes and its initial Gross Asset Value. In the event the
Gross Asset Value of any Company asset is adjusted pursuant to Section A1 of Appendix 1 hereto, subsequent allocations of
income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset
for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the Regulations thereunder;
provided, however, that unless otherwise determined by the Board of Managers, the Company shall not adopt the Traditional Method
with Curative Allocations as defined under Regulation Section 1.704-3(c) or the Remedial Allocation Method as defined under Regulation
Section 1.704-3(d) that would require any Member to report any item of income or gain for Section 704(c) purposes that differs in amount
or timing from the taxable income that the Company allocates to such Member under Section 704(b). Allocations pursuant to this Section
6.2 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing,
any Member’s Capital Account or share of Profits, Losses or other items or distributions pursuant to any provision of this Agreement.

 

(c)        The
Members are aware of the income tax consequences of the allocations made by this ARTICLE VI and Appendix 1 hereto and hereby
agree to be bound by the provisions of this ARTICLE VI and Appendix 1 hereto in reporting their distributive shares of the
Company’s taxable income and loss for income tax purposes.

 

6.3        Transferor
- Transferee Allocations. Income, gain, loss, deduction or credit attributable to any Membership Interests which has been transferred
shall be allocated between the transferor and the transferee under any method allowed under Section 706 of the Code and the Regulations
thereunder as agreed by the transferor and the transferee.

 

6.4        Inclusion
of Interest Holder. Except as otherwise provided herein, the term “Member” for purposes of this ARTICLE VI shall
include an Interest Holder.

 

 

 

 

    	 	12	 

     

    

 

ARTICLE VII

MANAGEMENT

 

7.1 Management of the
Company. The business and affairs of the Company shall be managed, operated and controlled exclusively by or under the direction of
the Board of Managers. Any determination by or consent and decision of the Board of Managers shall be made by the affirmative vote of
a majority of the Managers on the Board of Managers. If the Managers on the Board of Managers remain at a deadlock with respect to any
matter for a period of thirty (30) days, the Board of Managers shall submit such disputed matter to a vote of all of the Members, whereupon
such matter shall be decided by the affirmative vote of those Members holding a majority of the Membership Interests. Subject to the provisions
of Section 7.3, the Board of Managers shall have, and is hereby granted, full and complete power, authority and discretion for,
on behalf of and in the name of the Company, to take such actions as the Board of Managers may deem necessary or advisable to carry out
any and all of the objectives and purposes of the Company. The Board of Managers may delegate, authorize or otherwise instruct any Manager
or Officer to perform on behalf of the Company and/or the Board of Managers any duties or responsibilities of the Board of Managers. Without
limiting the foregoing, the Members hereby specifically authorize the Board of Managers to, subject to any additional approvals required
by any other express provisions contained in this Agreement, including Section 7.3, or Applicable Law:

 

(a)        supervise
the business of the Company and to make those general decisions regarding the affairs of the Company;

 

(b)        preside
at all Company meetings;

 

(c)        open
accounts in the name of the Company with banks and other financial institutions and designate, replace and remove from time to time all
signatories on such bank accounts;

 

(d)        incur
and pay all bills, invoices and expenses by and on behalf of the

 

(e)        comply
with, or cause to be complied with, all provisions of the Act governing the administration of a limited liability company, including but
not limited to, filing with the applicable state authorities any required and necessary initial and/or amended state filings;

 

(f)        execute
on behalf of the Company all agreements, contracts, instruments and documents including, without limitation, checks, drafts, notes and
other negotiable instruments, documents providing for the acquisition of the Company’s assets, assignments, bills of sale, and any
other instruments or documents in connection with the business of the Company, consistent, in each instance, with the terms of this Agreement;

 

(g)        employ
accountants, legal counsel, consultants, independent contractors and other Persons to perform services for the Company and to compensate
them from Company funds;

 

(h)        purchase
policies of comprehensive general liability insurance and to purchase such other insurance coverage as the Board of Managers shall determine
to be necessary or desirable to insure the Members or to protect the Company’s assets;

 

(i)        keep
all books of account and other records required by the Company, including vouchers, statements, receipted bills and invoices and all other
records, covering all collections, disbursements and other data in connection with the Company;

 

(j)       prepare
and modify and/or replace, from time to time, an annual operating budget for the Company which includes costs for the operation of the
business and other operating expenses of the Company for such twelve (12) month period;

 

 

 

 

    	 	13	 

     

    

 

(k)        cause
the Company to take any action with respect to, for, or on behalf of any Subsidiary of the Company, if such action would be permitted
to be taken by the Company directly;

 

(l)        determine
Net Available Cash and cause the Company to make a distribution whether such distribution is required pursuant to the terms hereof or
discretionary;

 

(m)        determine
or modify the compensation of any Person;

 

(n)        issue
additional Membership Interests;

 

(o)        prior
to the actual termination of the Company, sell, assign, transfer, or otherwise dispose of all or substantially all of the Company’s
assets;

 

(p)        cause
the Company to incur, modify or refinance any debt, including pledging, hypothecating or otherwise encumbering any of the Company’s
assets;

 

(q)        compromise
and settle claims against the Company;

 

(r)        confess
or cause a confession of a judgment against the Company;

 

(s)        file
or cause the filing of a voluntary petition, or consent to the involuntary filing of a petition, in bankruptcy or seek the reorganization
or the appointment of a receiver on behalf of the Company;

 

(t)        enter
into or cause the Company to enter any joint venture investment with any other Person; or

 

(u)        do
or perform any act set forth herein or on behalf of the Company as the Board of Managers determines necessary or appropriate in connection
with the Company’s business.

 

7.2        Appointment
and Replacement of Manager. The number of Persons serving on the Board of Managers shall be five (5). Each of Watts and Hicks, for
as long as they shall be Members of the Company, shall appoint, in each such Person’s sole and absolute discretion, one (1) Manager.
Grom, for as long as it (or any of its Affiliates) shall be a Member of the Company shall appoint, in its sole and absolute discretion,
three (3) Managers. The identities of the current Managers are set forth on the Managers Schedule, and the Board of Managers shall amend
the Managers Schedule from time to time to reflect any change to the information contained therein. If at any time a Manager shall resign
as Manager, die or become adjudicated insane or incompetent, or in the case of a Manager that is not an individual, become subject to
a bankruptcy proceeding, dissolution or liquidation, then such Manager shall immediately thereupon cease to be a Manager of the Company.
A Manager may only resign by delivering a written notice to all of the Members. Any such resignation shall be effective upon receipt thereof
unless it is specified to be effective at some other time or upon the occurrence of some other event. The acceptance of a resignation
by any Member shall not be necessary to make it effective. A Manager may only be removed from the office of Manager by the Member that
appointed such Manager, which appointing Member may remove such appointed Manager at any time without or without cause by providing written
notice to such Manager. If at any time a Manager is removed as Manager or ceases to be a Manager of the Company for any reason, the Member
that appointed such Manager may appoint a new Manager. If a Manager who is also a Member ceases to serve as a Manager for any reason (including
due to resignation or removal), such cessation shall not in and of itself constitute a withdrawal or expulsion of such Manager as a Member
of the Company or otherwise affect such Manager’s rights as a Member.

 

 

 

 

    	 	14	 

     

    

 

7.3        Actions
Requiring Approval of Members. The Board of Managers shall not have authority to do or cause to be done any of the following acts
for or on behalf of the Company and shall not, without first obtaining the prior written consent of Members holding at least 85% of the
then outstanding Membership Interests:

 

(a)        amend,
modify or waive the Certificate of Formation or this Agreement; provided that the Board of Managers may, without the consent of
the Members, amend the Members Schedule and the Managers Schedule to update or correct any of the information provided therein;

 

(b)        enter
into, amend in any material respect, waive or terminate any Related Party Agreement or series of Related Party Agreements;

 

(c)       convert
the Company into a different form of entity;

 

(d)       make
a non-pro rata distribution or return of capital to any Member;

 

(e)       authorize
or take any action described in Section 7.1(n), 7.1(o) or 7.1(s) above; or

 

(f)       making
any material change to the nature of the Company’s business.

 

7.4        Officers.
The Board of Managers may appoint individuals as officers of the Company (the “Officers”) as the Board of Managers
deems necessary or desirable to carry on the business of the Company and the Board of Managers may delegate to such Officers such power
and authority as the Board of Managers deems advisable. No Officer need be a Member of the Company. Any individual may hold two or more
offices of the Company. Each Officer shall hold office until such Officer’s successor is designated by the Board of Managers or
until such Officer’s earlier death, resignation or removal. Any Officer may resign at any time upon written notice to the Board
of Managers. Any Officer may be removed by the Board of Managers with or without cause at any time by delivery of written notice to such
Officer. A vacancy in any office occurring because of death, resignation, removal or otherwise, may, but need not, be filled by the Board
of Managers.

 

7.5        Business
Plan and Budget. Not less than annually, the Board of Managers shall prepare a business plan and monthly and annual operating budgets
for the Company in detail for the upcoming Fiscal Year, including capital and operating expense budgets, cash flow projections, covenant
compliance calculations of all outstanding and projected indebtedness, and profit and loss projections, all itemized in reasonable detail.
The Board of Managers shall amend the business plan and budgets when material changes occur and otherwise as they determine appropriate
or necessary. The Board of Managers shall provide a copy of the business plan and budgets and each amendment thereto or modification thereof
to each Member.

 

7.6        Other
Activities of Board of Managers; Business Opportunities. Each Manager shall devote so much time and attention to the business of the
Company as such Manager deems appropriate in such Manager’s sole discretion. Nothing contained in this Agreement shall prevent any
Manager from engaging in any other activities or businesses, provided that such activities or businesses are not similar to, or competitive
with, the Company. No Manager shall be obligated to account to the Company and to the Members for any profits or income earned or derived
from such other permitted activities or businesses. The foregoing shall not be deemed to limit any rights or obligations of any Manager
(or the Affiliates thereof) under any (a) Seller Transaction Document and/or (b) any other agreement or instrument entered into after
the Effective Time binding upon by such Manager.

 

 

 

 

    	 	15	 

     

    

 

7.7        Compensation
and Reimbursement of the Board of Managers; No Employment.

 

(a)        No
Manager shall be compensated for such Manager’s services as Manager, but the Company shall reimburse each Manager for all ordinary,
necessary and direct expenses incurred by such Manager in performance of such Manager’s duties as Manager. All reimbursements for
expenses shall be reasonable in amount. Nothing contained in this Section 7.6 shall be construed to preclude any Manager from serving
the Company in any other capacity and receiving reasonable compensation for such services.

 

(b)        This
Agreement does not, and is not intended to, confer upon any Manager any rights with respect to continued employment by the Company, and
nothing herein should be construed to have created any employment agreement with any Manager.

 

7.8       No
Personal Liability. Except as otherwise provided in the Act, by Applicable Law or expressly in this Agreement, no Manager shall be
obligated personally for any debt, obligation or liability of the Company, whether arising in contract, tort or otherwise, solely by reason
of being a Manager.

 

7.9       Action without
a Meeting. Notwithstanding any other provision of this ARTICLE VII, any matter that is to be voted on, consented to or approved
by the Board of Managers may be taken without a meeting, without prior notice and without a vote if consented to, in writing or by Electronic
Transmission, by all of the Managers. A record shall be maintained by the Board of Managers of each such action taken by written consent
of the Board of Managers.

 

ARTICLE VIII

EXCULPATION AND INDEMNIFICATION

 

8.1        Exculpation
of Covered Persons.

 

(a)        Covered
Persons. As used herein, the term “Covered Person” shall mean (i) each Member; (ii) each officer, director, manager,
equity holder, Affiliate, employee, agent or Representative of each Member, and each of their Affiliates; and (iii) each Manager, Officer,
employee, agent or Representative of the Company.

 

(b)        Standard
of Care. No Covered Person shall be liable to the Company or any other Covered Person for any loss, damage or claim incurred by reason
of any action taken or omitted to be taken by such Covered Person in good faith reliance on the provisions of this Agreement, so long
as such action or omission does not constitute fraud or willful misconduct by such Covered Person.

 

(c)        Good
Faith Reliance. A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information,
opinions, reports or statements (including financial statements and information, opinions, reports or statements as to the value or amount
of the assets, liabilities, Profits or Losses of the Company or any facts pertinent to the existence and amount of assets from which distributions
might properly be paid) of the following Persons or groups (other than to the extent prepared by such Covered Person): (i) the Board of
Managers; (ii) one or more Officers or employees of the Company; (iii) any attorney, independent accountant, appraiser or other expert
or professional employed or engaged by or on behalf of the Company; or (iv) any other Person selected in good faith by or on behalf of
the Company, in each case as to matters that such relying Person reasonably believes to be within such other Person’s professional
or expert competence. The preceding sentence shall in no way limit any Person’s right to rely on information to the extent provided
in § 18-406 of the Act.

 

8.2       Liabilities
and Duties of Covered Persons.

 

(a)        Duties.
Each Manager shall perform his managerial duties in good faith and in a manner he believes to be in, and not opposed to, the best interests
of the Company and the Members, with such fiduciary duties to the Company and the Members that are customarily vested in a director of
a Delaware corporation in the absence of specific delegation or limitation of duties.

 

(b)        Standard
of Care. In performing his duties, each Manager shall be entitled to rely on information, opinions, reports or statements, including
financial statements and other financial data, of any attorney, independent accountant or other Person as to matters which such Manager
believes in good faith, after due inquiry, to be within such Person’s professional or expert competence.

 

 

 

 

    	 	16	 

     

    

 

8.3        Indemnification.

 

(a)        Indemnification.
To the fullest extent permitted by the Act, as the same now exists or may hereafter be amended, substituted or replaced (but, in the case
of any such amendment, substitution or replacement, only to the extent that such amendment, substitution or replacement permits the Company
to provide broader indemnification rights than the Act permitted the Company to provide prior to such amendment, substitution or replacement),
the Company shall indemnify, hold harmless, defend, pay and reimburse any Covered Person against any and all losses, claims, damages,
judgments, fines or liabilities, including reasonable legal fees or other expenses incurred in investigating or defending against such
losses, claims, damages, judgments, fines or liabilities, and any amounts expended in settlement of any claims (collectively, “Liabilities”)
to which such Covered Person may become subject by reason of:

 

(i)       any
act or omission or alleged act or omission performed or omitted to be performed on behalf of the Company, any Member or any direct or
indirect Subsidiary of the foregoing in connection with the business of the Company; or

 

(ii)        such
Covered Person being or acting in connection with the business of the Company as an equity holder, Affiliate, manager, director, officer,
employee or agent of the Company, any Member, or any of their respective Affiliates, or that such Covered Person is or was serving at
the request of the Company as a member, manager, director, officer, employee or agent of any Person including the Company;

 

provided that (x) such Covered Person acted
in good faith and in a manner believed by such Covered Person to be in, or not opposed to, the best interests of the Company and, with
respect to any criminal proceeding, had no reasonable cause to believe such Covered Person’s conduct was unlawful, and (y) such
Covered Person’s conduct did not constitute fraud or willful misconduct. In connection with the foregoing, the termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the Covered Person did not act in good faith or, with respect to any criminal proceeding, had
reasonable cause to believe that such Covered Person’s conduct was unlawful, or that the Covered Person’s conduct constituted
fraud or willful misconduct.

 

(b)        Control
of Defense. Upon a Covered Person’s discovery of any claim, lawsuit or other proceeding relating to any Liabilities for which
such Covered Person may be indemnified pursuant to this Section 8.3, the Covered Person shall give prompt written notice to the
Company of such claim, lawsuit or proceeding, provided that the failure of the Covered Person to provide such notice shall not
relieve the Company of any indemnification obligation under this Section 8.3, unless the Company shall have been materially prejudiced
thereby. Subject to the approval of the disinterested Members, the Company shall be entitled to participate in or assume the defense of
any such claim, lawsuit or proceeding at its own expense. After notice from the Company to the Covered Person of its election to assume
the defense of any such claim, lawsuit or proceeding, the Company shall not be liable to the Covered Person under this Agreement or otherwise
for any legal or other expenses subsequently incurred by the Covered Person in connection with investigating, preparing to defend or defending
any such claim, lawsuit or other proceeding. If the Company does not elect (or fails to elect) to assume the defense of any such claim,
lawsuit or proceeding, the Covered Person shall have the right to assume the defense of such claim, lawsuit or proceeding as it deems
appropriate, but it shall not settle any such claim, lawsuit or proceeding without the consent of the Company (which consent shall not
be unreasonably withheld, conditioned or delayed).

 

(c)        Reimbursement.
The Company shall promptly reimburse (and/or advance to the extent reasonably required) each Covered Person for reasonable legal or other
expenses (as incurred) of such Covered Person in connection with investigating, preparing to defend or defending any claim, lawsuit or
other proceeding relating to any Liabilities for which such Covered Person may be indemnified pursuant to this Section 8.3; provided
that if it is finally judicially determined that such Covered Person is not entitled to the indemnification provided by this Section
8.3, then such Covered Person shall promptly reimburse the Company for any reimbursed or advanced expenses.

 

 

 

 

    	 	17	 

     

    

 

(d)        Entitlement
to Indemnity. The indemnification provided by this Section 8.3 shall not be deemed exclusive of any other rights to indemnification
to which those seeking indemnification may be entitled under any agreement or otherwise. The provisions of this Section 8.3 shall
continue to afford protection to each Covered Person regardless of whether such Covered Person remains in the position or capacity pursuant
to which such Covered Person became entitled to indemnification under this Section 8.3 and shall inure to the benefit of the executors,
administrators, legatees and distributees of such Covered Person.

 

(e)        Insurance.
To the extent available on commercially reasonable terms, the Company may purchase, at its expense, insurance to cover Liabilities covered
by the foregoing indemnification provisions and to otherwise cover Liabilities for any breach or alleged breach by any Covered Person
of such Covered Person’s duties in such amount and with such deductibles as the Board of Managers may determine; provided
that the failure to obtain such insurance shall not affect the right to indemnification of any Covered Person under the indemnification
provisions contained herein, including the right to be reimbursed or advanced expenses or otherwise indemnified for Liabilities hereunder.
If any Covered Person recovers any amounts in respect of any Liabilities from any insurance coverage, then such Covered Person shall,
to the extent that such recovery is duplicative, reimburse the Company for any amounts previously paid to such Covered Person by the Company
in respect of such Liabilities.

 

(f)        Funding
of Indemnification Obligation. Notwithstanding anything contained herein to the contrary, any indemnity by the Company relating to
the matters covered in this Section 8.3 shall be provided out of and to the extent of Company assets only, and no Member (unless
such Member otherwise agrees in writing) shall have personal liability on account thereof or shall be required to make additional Capital
Contributions to help satisfy such indemnity by the Company.

 

(g)        Savings
Clause. If this Section 8.3 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction,
then the Company shall nevertheless indemnify and hold harmless each Covered Person pursuant to this Section 8.3 to the fullest
extent permitted by any applicable portion of this Section 8.3 that shall not have been invalidated and to the fullest extent permitted
by Applicable Law.

 

(h)        Amendment.
The provisions of this Section 8.3 shall be a contract between the Company, on the one hand, and each Covered Person who served
in such capacity at any time while this Section 8.3 is in effect, on the other hand, pursuant to which the Company and each such
Covered Person intend to be legally bound. No amendment, modification or repeal of this Section 8.3 that adversely affects the
rights of a Covered Person to indemnification for Liabilities incurred or relating to a state of facts existing prior to such amendment,
modification or repeal shall apply in such a way as to eliminate or reduce such Covered Person’s entitlement to indemnification
for such Liabilities without the Covered Person’s prior written consent.

 

ARTICLE IX

ACCOUNTING; TAX MATTERS

 

9.1       Financial
Statements. As soon as available, and in any event within one hundred twenty (120) days after the end of each Fiscal Year, the Company
shall furnish to each Member consolidated balance sheets of the Company as at the end of each such Fiscal Year and consolidated statements
of income, cash flows and Members’ equity for such Fiscal Year, in each case setting forth in comparative form the figures for the
previous Fiscal Year, accompanied by the certification of such Officer, if any, as is responsible for the financial affairs of the Company
or by the Board of Managers, certifying to the effect that, except as set forth therein, such financial statements fairly present in all
material respects the financial condition of the Company as of the dates thereof and the results of their operations and changes in their
cash flows and Members’ equity for the periods covered thereby.

 

9.2        Inspection
Rights. Upon reasonable notice from a Member, the Company shall afford each Member and its Representatives access during normal business
hours to (a) the Company’s properties, offices, plants and other facilities; (b) the corporate, financial and similar records, reports
and documents of the Company, including, without limitation, all books and records, minutes of proceedings, internal management documents,
reports of operations, reports of adverse developments, copies of any management letters and communications with Members or the Board
of Managers, and to permit each Member and its Representatives to examine such documents and make copies thereof; and (c) any officers,
senior employees and public accountants of the Company, and to afford each Member and its Representatives the opportunity to discuss and
advise on the affairs, finances and accounts of the Company with such officers, senior employees and public accountants (and the Company
hereby authorizes said accountants to discuss with such Member and its Representatives such affairs, finances and accounts).

 

 

 

 

    	 	18	 

     

    

 

9.3        Income
Tax Status. It is the intent of this Company and the Members that this Company shall be treated as a partnership for U.S., federal,
state and local income tax purposes. Neither the Company nor any Member shall make an election for the Company to be classified as other
than a partnership pursuant to Regulations Section 301.7701-3.

 

(a)        Tax
Matters Member; Membership Representative.

 

(i)       Grom
is hereby designated as the “Tax Matters Partner” (i.e., the Tax Matters Partner under Section 6231 of the Code and
the “Partnership Representative” under Code Section 6223 with respect to Company years beginning after December 31, 2017).

 

(ii)        The
Tax Matters Partner shall represent the Company in any disputes, controversies or proceedings with any taxing jurisdictions. The Company
shall reimburse the out-of-pocket expenses (including attorneys’ and other outside professional fees) incurred by the Tax Matters
Partner in such capacity.

 

(iii)        The
Members agree to cooperate in good faith to timely provide information requested by the Tax Matters Partner as needed to comply with the
Post-2017 Partnership Audit Procedures. The Members acknowledge and agree that the Tax Matters Partner shall have the power to cause the
Company to elect out of the partnership-level audit procedures to the extent allowed under Section 6221(b) of the Code or to elect out
of partnership-level tax assessments under Section 6226 of the Code. Further, to the extent requested to do so by the Tax Matters Partner,
the Members shall timely file amended returns and pay tax liabilities (including interest and penalties) under Section 6225(c)(2) of the
Code. The Members agree to cooperate in good faith, including by timely providing information requested by the Tax Matters Partner and
making elections and filing amended returns requested by the Tax Matters Partner to give effect to the preceding sentence. Subject to
the foregoing, to the extent required to do so under the Post 2017 Partnership Audit Procedures, the Company shall make any payments of
assessed amounts under Section 6221 of the Post-2017 Partnership Audit Procedures and shall allocate any such assessment among the current
or former Members of the Company for the “reviewed year” to which the assessment relates in a manner that reflects the current
or former Members’ respective interests in the Company for that reviewed year based on such Member’s share of such assessment
as would have occurred if the Company had amended the tax returns for such reviewed year and such Member incurred the assessment directly
(using the tax rates applicable to the Company under Section 6225(b) of the Code). To the extent the Company is assessed amounts under
Section 6221(a) of the Post-2017 Partnership Audit Procedures, the current or former Member(s) to which such assessment relates shall
pay to the Company such Member’s share of the assessed amounts including such Member’s share of any additional accrued penalties
and interest assessed against the Company relating to such Member’s share of the assessment (together, the “Member Assessment”),
upon at least thirty (30) days’ written notice from the Tax Matters Partner requesting the payment and such payment shall not be
treated as a Capital Contribution. If a Member does not timely pay to the Company the full amount of such Member’s Member Assessment
(the “Defaulting Member”), then the shortfall shall be treated as a loan (the “Tax Loan”) by the
Company to the Defaulting Member, with the following results:

 

(A)        the
unpaid balance of the Tax Loan shall bear interest at the rate of ten percent (10%) per annum, compounded annually, from the day that
the Tax Loan is deemed made until the date that the Tax Loan, together with all accrued interest, is repaid to the Company;

 

(B)        all
amounts otherwise distributable by the Company to the Defaulting Member shall be withheld and credited to the Company against repayment
of the Tax Loan, with any such withholding and credit first being applied to accrued and unpaid interest until fully paid, and then to
outstanding principal until all outstanding principal is paid in full; and

 

(C)        in
addition to the other rights and remedies granted to it under this Agreement, the Company may take any action available at law or in equity,
at the cost and expense of the Defaulting Member, to obtain payment from the Defaulting Member of the unpaid balance of the Tax Loan and
all accrued and unpaid interest thereon.

 

 

 

 

    	 	19	 

     

    

 

(b)        Survival.
The provisions contained in this Section 9.3 shall survive the dissolution of the Company and the withdrawal of any Member or the
Transfer of any Member’s Membership Interest in the Company.

 

9.4        Non-Confidential
Tax Shelter. Any obligations of confidentiality contained in or applicable to this Agreement shall not apply to the federal tax structure
or federal tax treatment of the Company or the transactions contemplated herein. Each Members and its employees, Representatives, and
agents may disclose to any and all persons, without limitation of any kind, such federal tax structure and treatment and such transactions.
The Membership Interests shall not be treated as having been issued under conditions of confidentiality for purposes of Regulations Section
1.6011-4(b)(3) or any successor provision. Each Member agrees that it has no proprietary or exclusive rights to the federal tax structure
of the Company, the transactions contemplated herein, or federal tax matters or ideas related to such transactions.

 

9.5        Tax
Returns and Tax Deficiencies. Each Member agrees that such Member shall not treat any Company item inconsistently on such Member’s
federal, state, foreign or other income tax return with the treatment of the item on the Company’s return. Any deficiency for taxes
imposed on any Member (including penalties, additions to tax or interest imposed with respect to such taxes and taxes imposed pursuant
to Code Section 6226 as amended) will be paid by such Member and if required to be paid (and actually paid) by the Company, will be recoverable
from such Member as provided in Section 5.3(b).

 

9.6        Tax
Returns. At the expense of the Company, the Board of Managers (or any Officer that the Board of Managers may designate) shall endeavor
to cause the preparation and timely filing (including extensions) of all tax returns required to be filed by the Company pursuant to the
Code as well as all other required tax returns in each jurisdiction in which the Company owns property or does business. As soon as reasonably
possible after the end of each Fiscal Year, the Board of Managers or designated Officer will cause to be delivered to each Person who
was a Member at any time during such Fiscal Year, IRS Schedule K-1 to Form 1065 and such other information with respect to the Company
as may be necessary for the preparation of such Person’s federal, state and local income tax returns for such Fiscal Year.

 

9.7        Company
Funds. All funds of the Company shall be deposited in its name, or in such name as may be designated by the Board of Managers, in
such checking, savings or other accounts, or held in its name in the form of such other investments as shall be designated by the Board
of Managers. The funds of the Company shall not be commingled with the funds of any other Person. All withdrawals of such deposits or
liquidations of such investments by the Company shall be made exclusively upon the signature or signatures of a Manager and/or such Officer
or Officers as the Board of Managers may designate.

 

ARTICLE X

TRANSFERABILITY

 

10.1       General Restrictions
on Transfer.

 

(a)        Except
as permitted pursuant to Section 10.2 or in accordance with the provisions set forth in Sections 10.3, 10.4, 10.5, 10.6
or Section 10.7, no Member may Transfer all or any portion of its Membership Interest in the Company. No Transfer of Membership
Interests to a Person not already a Member of the Company shall be deemed completed until the prospective Transferee is admitted as a
Member of the Company in accordance with Section 4.1(b).

 

(b)        Notwithstanding
any other provision of this Agreement (including Sections 10.2, 10.6 and 10.7), each Member agrees that it will not Transfer
all or any portion of its Membership Interest in the Company, and the Company agrees that it shall not issue any Membership Interests,
in each case without the prior written consent of Members holding at least 85% of the then outstanding Membership Interests:

 

 

 

 

    	 	20	 

     

    

 

(i)        except
as permitted under the Securities Act and other Applicable Law, including without limitation applicable federal or state securities or
blue sky laws, and then, with respect to a Transfer of Membership Interests and if requested by the Board of Managers, only upon delivery
to the Company of an opinion of counsel in form and substance satisfactory to the Company to the effect that such Transfer may be effected
without registration under the Securities Act;

 

(ii)        if
such Transfer or issuance would cause the Company to be considered a “publicly traded partnership” under Section 7704(b) of
the Code within the meaning of Regulations Section 1.7704-1(h)(1)(ii), including the look-through rule in Regulations Section 1.7704-1(h)(3);

 

(iii)        if
such Transfer or issuance would affect the Company’s existence or qualification as a limited liability company under the Act;

 

(iv)        if
such Transfer or issuance would cause the Company to lose its status as a partnership for federal income tax purposes;

 

(v)        if
such Transfer or issuance would cause a termination of the

Company for federal income tax purposes;

 

(vi)        if
such Transfer or issuance would cause the Company to be required to register as an investment company under the Investment Company Act
of 1940, as amended; or

 

(vii)        if
such Transfer or issuance would cause the assets of the Company to be deemed “Plan Assets” as defined under the Employee Retirement
Income Security Act of 1974 or its accompanying regulations or result in any “prohibited transaction” thereunder involving
the Company.

 

(c)       Any
Transfer or attempted Transfer of any Membership Interest in violation of this Agreement shall be null and void, no such Transfer shall
be recorded on the Company’s books and the purported Transferee in any such Transfer shall not be treated (and the purported Transferor
shall continue be treated) as the owner of such Membership Interest for all purposes of this Agreement.

 

(d)        For
the avoidance of doubt, any Transfer of a Membership Interest permitted by this Agreement shall be deemed a sale, transfer, assignment
or other disposal of such Membership Interest in its entirety as intended by the parties to such Transfer, and shall not be deemed a sale,
transfer, assignment or other disposal of any less than all of the rights and benefits described in the definition of the term “Membership
Interest,” unless otherwise explicitly agreed to by the parties to such Transfer.

 

10.2        Permitted
Transfers. The provisions of Sections 10.1(b), 10.3, 10.4 and 10.5. shall not apply to any Transfer by any Member
of all or any portion of its Membership Interest to any of the following:

 

(a)       in
the case of Grom, any Affiliate of such Member; or

 

(b)        subject
to Section 10.6, such Member’s spouse, parent, siblings, descendants (including adoptive relationships and stepchildren)
and the spouses of each such natural persons (collectively, “Family Members”);

 

(c)       a
trust under which (x) the distribution of Membership Interests may be made only to such Member and/or any Family Member of such Member
and (y) such Trust is exclusively controlled by such Member or such Member’s Family Members;

 

 

 

 

    	 	21	 

     

    

 

(d)        a
charitable remainder trust, the income from which will be paid to such Member during such Member’s life and exclusively controlled
by such Member;

 

(e)        a
corporation, partnership or limited liability company, the equity holders of which are only such Member and/or Family Members of such
Member; or

 

(f)        subject
to Section 10.6, by will or by the laws of intestate succession, to such Member’s executors, administrators, testamentary
trustees, legatees or beneficiaries.

 

10.3        Right
of First Refusal.

 

(a)        Right
of First Refusal. Subject to the terms and conditions specified in this Section 10.3, Grom shall have a right of first refusal
if any other Member (the “Offering Member”), receives a bona fide written offer from an Independent Third Party
that the Offering Member desires to accept to Transfer all or any portion of the Membership Interest owned by the Offering Member (the
“Offered Interests”); provided that such right of first refusal shall not apply with respect to any Transfer that is
(i) permitted by Section 10.2, 10.6 or 10.7, (ii) proposed to be made by a Dragging Member or required to be made by a Drag-along
Member pursuant to Section 10.4, or (iii) made by a Tag-along Member upon the exercise of its tag-along right pursuant to Section
10.5 after Grom has declined to exercise their rights under this Section 10.3 with respect to all of the Offered Interests).
Each time the Offering Member receives such an offer for all or any portion of its Membership Interest in the Company and Grom is granted
a right of first refusal with respect thereto pursuant to this Section 10.3(a), the Offering Member shall first make an offering
of the Offered Interests to Grom in accordance with the following provisions of this Section 10.3 prior to Transferring such Offered
Interests to the Independent Third Party.

 

(b)        Offer
Notice.

 

(i)       The
Offering Member shall, within five (5) Business Days of receipt of the offer from the Independent Third Party, give written notice (the
“Offering Member Notice”) to Grom stating that it has received a bona fide offer from an Independent Third Party
and specifying: (A) the amount of Offered Interests to be Transferred by the Offering Member; (B) the name of the Person who has offered
to purchase such Offered Interests; (C) the purchase price and the other material terms and conditions of the Transfer, including a description
of any non-cash consideration in sufficient detail to permit the valuation thereof; and (D) the proposed date, time and location of the
closing of the Transfer.

 

(ii)        The
Offering Member Notice shall constitute the Offering Member’s offer to Transfer the Offered Interests to Grom, which offer shall
be irrevocable until the end of the ROFR Notice Period.

 

(iii)        By
delivering the Offering Member Notice, the Offering Member represents and warrants to Grom that: (A) the Offering Member has full right,
title and interest in and to the Offered Interests; (B) the Offering Member has all the necessary power and authority and has taken all
necessary action to sell such Offered Interests as contemplated by this Section 10.3 and (C) the Offered Interests are free and
clear of any and all Liens other than those arising as a result of or under the terms of this Agreement.

 

 

 

 

    	 	22	 

     

    

 

(c)        Exercise
of the Rights of First Refusal.

 

(i)        Upon
delivery of the Offering Member Notice, Grom shall have ten (10) Business Days (the “ROFR Notice Period”) to collectively
elect to purchase all (but not less than all) of the Offered Interests by delivering written notice (a “ROFR Offer Notice”)
to the Offering Member, signed by Grom and stating that Grom offers to purchase such Offered Interests on the terms specified in the Offering
Member Notice. Each ROFR Offer Notice shall be binding upon delivery and irrevocable by Grom delivering such ROFR Offer Notice.

 

(ii)        If
Grom does not deliver a ROFR Offer Notice during the ROFR Notice Period that evidences the election to purchase all (but not less than
all) of the Offered Interests, Grom shall be deemed to have waived all of its rights to purchase the Offered Interests under this Section
10.3, and, provided the Offering Member has also complied with the provisions of Section 10.5, to the extent applicable, the
Offering Member may, during the sixty (60)-day period immediately following the expiration of the ROFR Notice Period (which period may
be extended for a reasonable time to the extent reasonably necessary to obtain any required approvals or consents from any Governmental
Authority and/or to accommodate any additional time granted to a Selling Member under Section 10.5), Transfer all of the Offered
Interests to the Independent Third Party on terms and conditions no more favorable to the Independent Third Party than those set forth
in the Offering Member Notice. If the Offering Member does not Transfer the Offered Interests within such period, the rights provided
hereunder shall be deemed to be revived and the Offered Interests shall not be Transferred to the Independent Third Party unless the Offering
Member sends a new Offering Member Notice in accordance with, and otherwise complies with, this Section 10.3.

 

(d)        Consummation
of ROFR Sale. If Grom delivers a ROFR Offer Notice evidencing the election to purchase all (but not less than all) of the Offered
Interests, then the Offering Member shall be required to sell the Offered Interests to Grom in accordance with the terms of the Offering
Member Notice. Any such sale contemplated by this Section 10.3(d) shall take place within twenty (20) Business Days of the date
of delivery of the Offering Member Notice, or at such other time as may be agreed to by the Offering Member and Grom. At the closing of
any such sale and purchase, the Offering Member shall deliver to Grom a certificate or certificates representing the Offered Interests
to be sold (if any), accompanied by evidence of Transfer and all necessary transfer taxes paid and stamps affixed, if necessary, against
receipt of the purchase price therefor from Grom by certified or official bank check of by wire transfer of immediately available funds.

 

(e)       Grom
shall have the right to assign its rights under this Section 10.3, with respect to all or any particular Offered Interests, to the Company
if approved by the Board of Managers in its discretion.

 

10.4       Drag-along
Rights.

 

(a)        Participation.
If one or more Members (together with their respective Permitted Transferees) holding no less than 51% of the then outstanding Membership
Interests (such Member or Members, the “Dragging Member”), proposes to Transfer, in one transaction or a series of
related transactions, all of the Membership Interests owned by the Dragging Member (a “Drag-along Sale”), the Dragging
Member shall have the right, after delivering the Drag-along Notice in accordance with Section 10.4(c) and subject to compliance
with Section 10.4(d), to require that each other Member (each, a “Drag-along Member”) participate in such sale
in the manner set forth in Section 10.4(b).

 

(b)        Sale
of Membership Interests. Subject to compliance with Section 10.4(d), each Drag-along Member shall sell in the Drag-along Sale
all of the Membership Interests held by such Drag-along Member.

 

 

 

 

    	 	23	 

     

    

 

(c)        Sale
Notice. The Dragging Member shall exercise its rights pursuant to this Section 10.4 by delivering a written notice (the “Drag-along
Notice”) to the Company and each Drag-along Member no more than ten (10) Business Days after the execution and delivery by all
of the parties thereto of the definitive agreement entered into with respect to the Drag- along Sale and, in any event, no later than
twenty (20) Business Days prior to the closing date of such Drag-along Sale. The Drag-along Notice shall make reference to the Dragging
Members’ rights and obligations hereunder and shall describe in reasonable detail:

 

(i)       The
name of the person or entity to whom such Membership Interests are proposed to be sold;

 

(ii)       The
proposed date, time and location of the closing of the sale;

 

(iii)        The
proposed amount of consideration for the Drag-along Sale and the other material terms and conditions of the Drag-along Sale, including
a description of any non-cash consideration in sufficient detail to permit the valuation thereof; and

 

(iv)        A
copy of any form of agreement proposed to be executed in connection therewith.

 

(d)        Conditions
of Sale. The obligations of the Drag-along Members in respect of a Drag-along Sale under this Section 10.4 are subject to the
satisfaction of the following conditions:

 

(i)        The
consideration to be received by each Drag-along Member shall be the same form and amount of consideration to be received by the Dragging
Member per percentage interest and the terms and conditions of such sale shall, except as otherwise provided in Section 10.4(d)(ii),
be the same as those upon which the Dragging Member sells its Membership Interests;

 

(ii)        If
the Dragging Member or any Drag-along Member is given an option as to the form and amount of consideration to be received, the same option
shall be given to all Drag-along Members; and

 

(iii)        Each
Drag-along Member shall execute the applicable purchase agreement, if applicable, and make or provide the same representations, warranties,
covenants, indemnities and agreements as the Dragging Member makes or provides in connection with the Drag-along Sale (except that in
the case of representations, warranties, covenants, indemnities and agreements pertaining specifically to the Dragging Member, the Drag-along
Member shall make the comparable representations, warranties, covenants, indemnities and agreements pertaining specifically to itself);
provided that all representations, warranties, covenants and indemnities shall be made by the Dragging Member and each Drag- along
Member severally and not jointly and any indemnification obligation shall be pro rata based on the consideration received by the Dragging
Member and each Drag-along Member (other than any indemnification obligation pertaining specifically to the Dragging Member or a Drag-along
Member, which obligation shall be the sole obligation of such Dragging Member or Drag-along Member), in each case in an amount not to
exceed the aggregate proceeds received by the Dragging Member and each such Drag-along Member in connection with the Drag-along Sale.

 

(e)        Cooperation.
Each Drag-along Member shall take all actions as may be reasonably necessary to consummate the Drag-along Sale, including, without limitation,
entering into agreements and delivering certificates and instruments, in each case, consistent with the agreements being entered into
and the certificates being delivered by the Dragging Member, but subject to Section 10.4(d)(iii).

 

(f)        Expenses.
The fees and expenses of the Dragging Member incurred in connection with a Drag-along Sale and for the benefit of all Drag-along Members
(it being understood that costs incurred by or on behalf of a Dragging Member for its sole benefit will not be considered to be for the
benefit of all Drag-along Members), to the extent not paid or reimbursed by the Company or the Independent Third Party, shall be shared
by the Dragging Member and all the Drag-along Members on a pro rata basis, based on the consideration received by each such Member; provided
that no Drag-along Member shall be obligated to make any out-of-pocket expenditure prior to the consummation of the Drag-along Sale.

 

 

 

 

    	 	24	 

     

    

 

(g)        Consummation
of Sale. The Dragging Member shall have sixty (60) days following the date of the Drag-along Notice in which to consummate the Drag-along
Sale, on the terms set forth in the Drag-along Notice (which sixty (60)-day period may be extended for a reasonable time to the extent
reasonably necessary to obtain required approvals or consents from any Governmental Authority). If at the end of such period the Dragging
Member has not completed the Drag-along Sale, the Dragging Member may not then exercise its rights under this Section 10.4 without
again fully complying with the provisions of this Section 10.4.

 

10.5        Tag-along
Rights.

 

(a)        Participation.
Subject to the terms and conditions specified in Sections 10.1, 10.2 and 10.3, if one or more Members acting together
(together with their Permitted Transferees) holding no less than 50% of the then outstanding Membership Interests (collectively, the “Selling
Member”) proposes to Transfer at least 50% of the Membership Interests owned by the Selling Member to an Independent Third Party
(a “Proposed Transferee”), each other Member (each, a “Tag-along Member”) shall be permitted to
participate in such sale (a “Tag-along Sale”) on the terms and conditions set forth in this Section 10.5.

 

(b)        Application
of Transfer Restrictions. The provisions of this Section 10.5 shall only apply to Transfers in or to which (i) which Grom has
not exercised their rights under Section 10.3 to purchase the Offered Interests; (ii) the Dragging Member has elected to not exercise
its drag-along right under Section 10.4; or (iii) Section 10.2, 10.6 or 10.7 applies.

 

(c)        Sale
Notice. Prior to the consummation of any Transfer of Membership Interests qualifying under Section 10.5(b), and after satisfying
its obligations pursuant to Section 10.3, the Selling Member shall deliver to the Company and each other Member a written notice
(a “Sale Notice”) of the proposed Tag-along Sale as soon as practicable following the expiration of the ROFR Notice
Period, and in no event later than five (5) Business Days/days thereafter. The Sale Notice shall make reference to the Tag-along Members’
rights hereunder and shall describe in reasonable detail:

 

(i)        The
aggregate percentage of Membership Interests the Proposed Transferee has offered to purchase;

 

(ii)       The
identity of the Proposed Transferee;

 

(iii)        The
proposed date, time and location of the closing of the Tag-along Sale;

 

(iv)        The
purchase price and other material terms and conditions of the Transfer, including a description of any non-cash consideration in sufficient
detail to permit the valuation thereof; and

 

(v)        A
copy of any form of agreement proposed to be executed in connection therewith.

 

(d)        Exercise
of Tag-along Right.

 

(i)        The
Selling Member and each Tag-along Member timely electing to participate in the Tag-along Sale pursuant to Section 10.5(d)(ii) shall
have the right to Transfer in the Tag-along Sale the amount of Membership Interests, equal to the product of (x) the total percentage
of Membership Interests that the Proposed Transferee proposes to buy as stated in the Sale Notice and (y) a fraction (A) the numerator
of which is equal to the percentage of Membership Interests then held by the applicable Member, and (B) the denominator of which is equal
to the total percentage of Membership Interests then held by the Selling Member and all of the Tag-along Members timely electing to participate
in the Tag- along Sale pursuant to Section 10.5(d)(ii) (such amount, the “Tag-along Portion”).

 

 

 

 

    	 	25	 

     

    

 

(ii)        Each
Tag-along Member shall exercise its right to participate in a Tag-along Sale by delivering to the Selling Member a written notice (a “Tag-along
Notice”) stating its election to do so and specifying the amount of Membership Interests (up to its Tag- along Portion) to be
Transferred by it no later than ten (10) Business Days after receipt of the Sale Notice (the “Tag-along Period”).

 

(iii)        The
offer of each Tag-along Member set forth in a Tag-along Notice shall be irrevocable, and, to the extent such offer is accepted, such Tag-along
Member shall be bound and obligated to consummate the Transfer on the terms and conditions set forth in this Section 10.5.

 

(e)        Waiver.
Each Tag-along Member who does not deliver a Tag-along Notice in compliance with Section 10.5(d)(ii) shall be deemed to have waived
all of such Tag-along Member’s rights to participate in the Tag-along Sale, and the Selling Member shall (subject to the rights
of any other participating Tag-along Member) thereafter be free to sell to the Proposed Transferee the Membership Interests identified
in the Sale Notice at a price that is no greater than the price set forth in the Sale Notice and on other terms and conditions which are
not in the aggregate materially more favorable to the Selling Member than those set forth in the Sale Notice, without any further obligation
to the non-accepting Tag-along Members.

 

(f)        Conditions
of Sale.

 

(i)        Each
Member participating in the Tag-along Sale shall receive the same consideration after deduction of such Member’s proportionate share
of the related expenses in accordance with Section 10.5(h).

 

(ii)        Each
Tag-along Member shall make or provide the same representations, warranties, covenants, indemnities and agreements as the Selling Member
makes or provides in connection with the Tag-along Sale (except that in the case of representations, warranties, covenants, indemnities
and agreements pertaining specifically to the Selling Member, the Tag-along Member shall make the comparable representations, warranties,
covenants, indemnities and agreements pertaining specifically to itself); provided, that all representations, warranties, covenants
and indemnities shall be made by the Selling Member and each Tag-along Member severally and not jointly and any indemnification obligation
shall be pro rata based on the consideration received by the Selling Member and each Tag-along Member (other than any indemnification
obligation pertaining specifically to the Selling Member or a Tag-along Member, which obligation shall be the sole obligation of such
Selling or Tag-along Member), in each case in an amount not to exceed the aggregate proceeds received by the Selling Member and each such
Tag-along Member in connection with the Tag-along Sale.

 

(g)       
Cooperation. Each Tag-along Member shall take all actions as may be reasonably necessary to consummate the Tag-along Sale, including,
without limitation, entering into agreements and delivering certificates and instruments, in each case, consistent with the agreements
being entered into and the certificates being delivered by the Selling Member, but subject Section 10.5(f)(ii).

 

(h)        Expenses.
The fees and expenses of the Selling Member incurred in connection with a Tag-along Sale and for the benefit of all Tag-along Members
(it being understood that costs incurred by or on behalf of a Selling Member for its sole benefit will not be considered to be for the
benefit of all Tag-along Members), to the extent not paid or reimbursed by the Company or the Proposed Transferee, shall be shared by
the Selling Member and all the participating Tag-along Members on a pro rata basis, based on the consideration received by each such Member;
provided, that no Tag-along Member shall be obligated to make any out-of-pocket expenditure prior to the consummation of the Tag-along
Sale.

 

(i)       Consummation
of Sale. The Selling Member shall have sixty (60) days following the expiration of the Tag-along Period in which to consummate the
Tag-along Sale, on terms not more favorable to the Selling Member than those set forth in the Tag-along Notice (which such sixty (60)-day
period may be extended for a reasonable time to the extent reasonably necessary to obtain required approvals or consents from any Governmental
Authority). If at the end of such period the Selling Member has not completed the Tag-along Sale, the Selling Member may not then effect
a Transfer that is subject to this Section 10.5 without again fully complying with the provisions of this Section 10.5.

 

 

 

 

    	 	26	 

     

    

 

(j)       Transfers
in Violation of the Tag-along Right. If the Selling Member sells or otherwise Transfers to the Proposed Transferee any of its Membership
Interests in breach of this Section 10.5, then each Tag-along Member shall have the right to sell to the Selling Member, and the
Selling Member undertakes to purchase from each Tag-along Member, the amount of Membership Interests that such Tag-along Member would
have had the right to sell to the Proposed Transferee pursuant to this Section 10.5, for a price and upon the terms and conditions
on which the Proposed Transferee bought such Membership Interests from the Selling Member, but without indemnity being granted by any
Tag-along Member to the Selling Member; provided, that nothing contained in this Section 10.5(j) shall preclude any Member
from seeking alternative remedies against such Selling Member as a result of its breach of this Section 10.5. The Selling Member
shall also reimburse each Tag-along Member for any and all reasonable and documented out-of-pocket fees and expenses, including reasonable
legal fees and expenses, incurred pursuant to the exercise or the attempted exercise of the Tag-along Member’s rights under this
Section 10.5(j).

 

10.6        Triggering
Events; Purchase Option.

 

(a)        After
the occurrence or the completion of a Triggering Event with respect to any Member: (1) the successor in interest to or other Transferee
(the “Relevant Holder”) of such Member will automatically and thereupon become an Interest Holder (and not a Member),
and (2) Grom shall have the option (the “Purchase Option”), exercisable within one year of the thereafter (the “Purchase
Option Exercise Period”), to purchase, acquire and/or redeem the all (and not less than all) of the Membership Interests of
the former Member at the Option Value. The “Option Value” of such Membership Interests shall be the fair market value
thereof most recently determined by the Board of Managers in their good faith discretion.

 

(b)       If
Grom wished to exercise the Purchase Option with respect to any Triggering Event, it shall, within the Purchase Option Exercise Period,
give written notice (the “Purchase Option Notice”) to the Relevant Holder stating that it wishes to exercise its Purchase
Option hereunder and specifying: (A) the Option Value; and (B) the proposed date, time and location of the closing of the Transfer.

 

(c)        If
Grom delivers a Purchase Option Notice evidencing the election to purchase all (but not less than all) of the Membership Interests of
the Relevant Holder, then the Relevant Holder shall be required to sell its Membership Interests to Grom in accordance with the terms
of the Purchase Option Notice. Any such sale contemplated by this Section 10.6(c) shall take place within twenty (20) Business
Days of the date of delivery of the Purchase Option Notice, or at such other time as may be agreed to by Grom and the Relevant Holder.
At the closing of any such sale and purchase, the Relevant Holder shall deliver to Grom a certificate or certificates representing the
Membership Interests to be sold (if any), accompanied by evidence of Transfer and all necessary transfer taxes paid and stamps affixed,
if necessary, against receipt of the purchase price therefor from Grom by certified or official bank check of by wire transfer of immediately
available funds.

 

(d)       Grom
shall have the right to assign its Purchase Option hereunder, with respect to all or any particular Triggering Event, to the Company if
approved by the Board of Managers in its discretion.

 

10.7        Wolfson
Claw-Up. If on any of the first four (4) anniversary dates of the Effective Date Wolfson is employed by Grom (and/or its subsidiary)
and has maintained his employment with Grom (and/or its subsidiary), under his Employment Agreement or otherwise, on a continuous basis
since the Effective Time, then: effective automatically and without further action on the part of the parties hereto, each Member (other
than Grom), being the Sellers under the Purchase Agreement, shall be deemed to have Transferred a portion of his or her Membership Interests
in an amount equal to the product of (i) two and one-half percent (2.5%) and (ii) such Member’s Pro Rata Portion (as defined
in the Purchase Agreement. By way of example, pursuant to the foregoing if Wolfson is so employed on each such four (4) anniversary dates
(and the outstanding Membership Interests do not Transfer or change from the Effective Time): (1) Wolfson would receive automatic Transfers
hereunder of Membership Interests from Sellers (pro rata) amounting to 10% of the outstanding Membership Interests in the Company, and
(2) the aggregate Membership Interests owned by such Members (“Sellers”) will be 9.6%.[1]
The parties hereby irrevocably consent to such Transfers in accordance with the foregoing. The Managers shall promptly amend the Members
Schedule in order to record such Transfers, if any.

 

10.8        Inclusion
of Interest Holder. Except for Section 10.6 and/or as otherwise provided herein, the term “Member” for purposes of this
ARTICLE X shall include an Interest Holder.

 

 

[1]
Post sale Wolfson has 0.4% out of the 20%. If he gets 10% more, that leaves 9.6%.

 

    	 	27	 

     

    

  

ARTICLE XI

DISSOLUTION AND TERMINATION

 

11.1        Dissolution.
The Company shall be dissolved and its affairs wound up only upon the occurrence of any of the following events:

 

(a)        An
election to dissolve the Company made by holders of at least eighty -five percent (85%) of the outstanding Membership Interests;

 

(b)        The
sale, exchange, involuntary conversion, or other disposition or Transfer of all or substantially all the assets of the Company;

 

(c)        Any
event specified in § 18-801(4) of the Act;

 

(d)        The
entry of a decree of judicial dissolution under § 18-802 of the Act; or

\

(e)        Any
other event that would require the dissolution of the Company pursuant to Applicable Law.

 

11.2        Effectiveness
of Dissolution. Dissolution of the Company shall be effective on the day on which the first to occur of the events described in Section
11.1 occurs, but the Company shall not terminate until the winding up of the Company has been completed, the assets of the Company
have been distributed as provided in Section 11.3 and the Certificate of Formation shall have been cancelled as provided in Section
11.1.

 

11.3        Liquidation.
If the Company is dissolved pursuant to Section 11.1, the Company shall be liquidated and its business and affairs wound up in
accordance with the Act and the following provisions:

 

(a)       Liquidator.
The Board of Managers, or another Person selected by the Board of Managers, shall act as liquidator to wind up the Company (the “Liquidator”).
The Liquidator shall have full power and authority to sell, assign, and encumber any or all of the Company’s assets and to wind
up and liquidate the affairs of the Company in an orderly and business-like manner.

 

(b)        Accounting.
As promptly as possible after dissolution and again after final liquidation, the Liquidator shall cause a proper accounting to be made
by a recognized firm of certified public accountants of the Company’s assets, liabilities and operations through the last day of
the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable.

 

(c)        Liquidation,
Winding Up and Distribution of Assets. The Liquidator shall liquidate the assets of the Company and distribute the proceeds of such
liquidation in the following order of priority, unless otherwise required by mandatory provisions of Applicable Law:

 

(i)        First,
to the payment of all of the Company’s debts and liabilities to its creditors (including Members, if applicable) and the expenses
of liquidation (including sales commissions incident to any sales of assets of the Company);

 

(ii)        Second,
to the establishment of and additions to reserves that are determined by the Board of Managers to be reasonably necessary for any contingent
unforeseen liabilities or obligations of the Company; and

 

(iii)        Third,
to the Members in accordance with Section 5.1.

 

 

 

 

    	 	28	 

     

    

 

(d)        Discretion
of Liquidator. Notwithstanding the provisions of Section 11.3(c) that require the liquidation of the assets of the Company,
but subject to the order of priorities set forth in Section 11.3(c), if upon dissolution of the Company the Liquidator reasonably
determines that an immediate sale of part or all of the Company’s assets would be impractical or could cause undue loss to the Members,
the Liquidator may defer the liquidation of any assets except those necessary to satisfy Company liabilities and reserves, and may, upon
unanimous consent of the Members, distribute to the Members, in lieu of cash, as tenants in common and in accordance with the provisions
of Section 11.3(c), undivided interests in such Company assets as the Liquidator deems not suitable for liquidation. Any such distribution
in kind shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable
and equitable and to any agreements governing the operating of such properties at such time. For purposes of any such distribution, any
property to be distributed will be valued at its Fair Market Value.

 

11.4        Deficit
Capital Accounts. No Member shall have any obligation to contribute or advance any funds or other property to the Company by reason
of any negative or deficit balance in such Member’s Capital Account during or upon completion of winding up or at any other time
except to the extent that a deficit balance is directly attributable to a distribution of cash or other property in violation of this
Agreement.

 

11.5        Cancellation
of Certificate. Upon completion of the distribution of the assets of the Company as provided in Section 11.3(c), the Company
shall be terminated and the Liquidator shall cause the cancellation of the Certificate of Formation in the State of Delaware and of all
qualifications and registrations of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware
and shall take such other actions as may be necessary to terminate the Company.

 

11.6        Survival
of Rights, Duties and Obligations. Dissolution, liquidation, winding up or termination of the Company for any reason shall not release
any party from any Liabilities that at the time of such dissolution, liquidation, winding up or termination already had accrued to any
other party or thereafter may accrue in respect of any act or omission prior to such dissolution, liquidation, winding up or termination.
For the avoidance of doubt, none of the foregoing shall replace, diminish or otherwise adversely affect any Covered Person’s right
to indemnification pursuant to Section 8.3.

 

11.7        Recourse
for Claims. Each Member shall look solely to the assets of the Company for all distributions with respect to the Company, such Member’s
Capital Account, and such Member’s share of Profits, Losses and other items of income, gain, loss and deduction, and shall have
no recourse therefor (upon dissolution or otherwise) against the Liquidator or any other Member.

 

11.8        In-Kind
Distributions. A Member shall have no right to demand and receive any distribution from the Company in any form other than cash. However,
a Member may be compelled to accept a distribution of an asset in kind if the Company is unable to dispose of all of its assets for cash.

 

11.9        Inclusion
of Interest Holder. Except as otherwise provided herein, the term “Member” for purposes of this ARTICLE XI shall
include an Interest Holder.

 

 

 

 

    	 	29	 

     

    

 

ARTICLE XII

MISCELLANEOUS PROVISIONS

 

12.1        Expenses.
Except as otherwise expressly provided herein, all costs and expenses, including fees and disbursements of counsel, financial advisors
and accountants, incurred in connection with the preparation and execution of this Agreement, or any amendment or waiver hereof, and the
transactions contemplated hereby shall be paid by the party incurring such costs and expenses.

 

12.2        Further
Assurances. In connection with this Agreement and the transactions contemplated hereby, the Company and each Member hereby agrees,
at the request of the Company or any other Member, to execute and deliver such additional documents, instruments, conveyances and assurances
and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated
hereby.

 

12.3        Confidentiality.

 

(a)        Each
Member acknowledges that during the term of this Agreement, it will have access to and become acquainted with trade secrets, proprietary
information and confidential information belonging to the Company and its Affiliates that are not generally known to the public, including,
but not limited to, information concerning business plans, financial statements and other information provided pursuant to this Agreement,
operating practices and methods, strategic plans, marketing plans, contracts, or other business documents that the Company treats as confidential,
in any format whatsoever (including oral, written, electronic or any other form or medium) (collectively, “Confidential Information”).
In addition, each Member acknowledges that: (i) the Company has invested, and continues to invest, substantial time, expense and specialized
knowledge in developing its Confidential Information; (ii) the Confidential Information provides the Company with a competitive advantage
over others in the marketplace; and (iii) the Company would be irreparably harmed if the Confidential Information were disclosed to competitors
or made available to the public. Without limiting the applicability of any other agreement to which any Member is subject, no Member shall,
directly or indirectly, disclose or use (other than solely for the purposes of such Member monitoring and analyzing its investment in
the Company), including, without limitation, use for personal, commercial or proprietary advantage or profit, either during its association
with the Company or thereafter, any Confidential Information of which such Member is or becomes aware. Each Member in possession of Confidential
Information shall take all appropriate steps to safeguard such information and to protect it against disclosure, misuse, espionage, loss
and theft.

 

(b)        Nothing
contained in Section 12.3(a) shall prevent any Member from disclosing Confidential Information: (i) upon the order of any court
or administrative agency; (ii) upon the request or demand of any regulatory agency or authority having jurisdiction over such Member;
(iii) to the extent compelled by legal process or required or requested pursuant to subpoena, interrogatories or other discovery requests;
(iv) to the extent necessary in connection with the exercise of any remedy hereunder; (v) to the other Members; (vi) to such Member’s
Representatives who, in the reasonable judgment of such Member, need to know such Confidential Information and agree to be bound by the
provisions of this Section 12.3 as if a Member; or (vii) to any potential Permitted Transferee in connection with a proposed Transfer
of Membership Interests from such Member, as long as such potential Permitted Transferee agrees to be bound by the provisions of this
Section 12.3 as if a Member; provided, that in the case of clause (i), (ii) or (iii), such Member shall notify the Company
and other Members of the proposed disclosure as far in advance of such disclosure as practicable (but in no event make any such disclosure
before notifying the Company and other Members) and use reasonable efforts to ensure that any Confidential Information so disclosed is
accorded confidential treatment satisfactory to the Company, when and if available.

 

(c)        The
restrictions of Section 12.3(a) shall not apply to Confidential Information that: (i) is or becomes generally available to the
public other than as a result of a disclosure by a Member in violation of this Agreement; (ii) is or has been independently developed
or conceived by such Member without use of Confidential Information; or (iii) becomes available to such Member or any of its Representatives
on a non-confidential basis from a source other than the Company, the other Member or any of their respective Representatives, provided,
that such source is not known by the receiving Member to be bound by a confidentiality agreement regarding the Company.

 

 

 

 

    	 	30	 

     

    

 

(d)        The
obligations of each Member under this Section 12.3 shall survive for so long as such Member remains a Member, and for one (1) year
following the earlier of (i) termination, dissolution, liquidation and winding up of the Company, (ii) the withdrawal of such Member from
the Company, and (iii) such Member’s Transfer of its Membership Interests.

 

12.4        Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to
have been given: (a) when received if delivered in Person or by courier; (b) on the date of receipt of delivery confirmation if sent by
facsimile; (c) on the date sent by e-mail, if sent during the normal business hours of the recipient, or on the next Business Day if sent
after the normal business hours of the recipient; (d) on the day following the date given to a nationally recognized overnight delivery
service; or (e) three (3) days after being deposited in the U.S. mail, certified or registered mail, postage prepaid, return receipt requested.
Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 12.4):

 

If to the Board of Managers or the Company:

 

Grom Social Enterprises,
Inc.

2060 NW Boca Raton
Blvd., #6

Boca Raton, Florida
33431

Attn: Darren Marks

Email: darren@gromsocial.com

 

With copy (which shall not
constitute notice) to:

 

Crone Law Group,
PC

500 Fifth Avenue,
Suite 938

New York, New York
10110

Attn: Mark E. Crone,
Esq.

Email: mcrone@cronelawgroup.com

 

If to a Member, to such Member’s address
as set forth on the Members Schedule.

 

12.5        Headings.
The headings in this Agreement are inserted for convenience of reference only and are in no way intended to describe, interpret, define,
or limit the scope, extent or intent of this Agreement or any provision of this Agreement.

 

12.6        Severability.
If any term or provision of this Agreement is held to be invalid, illegal or unenforceable under Applicable Law in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable
such term or provision in any other jurisdiction. Except as provided in Section 8.3(g), upon such determination that any term or
other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the greatest extent possible.

 

12.7        Entire
Agreement. This Agreement, together with the Certificate of Formation and all related Exhibits, Appendices and other attachments,
constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein,
and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect
to such subject matter.

 

 

 

 

    	 	31	 

     

    

 

12.8        Successors
and Assigns. Subject to the restrictions on Transfers set forth herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.

 

12.9        No
Third-party Beneficiaries. Except as provided in ARTICLE VIII, which shall be for the benefit of and enforceable by Covered
Persons as described therein, this Agreement is for the sole benefit of the parties hereto (and their respective heirs, executors, administrators,
successors and assigns) and nothing herein, express or implied, is intended to or shall confer upon any other Person, including any creditor
of the Company, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

12.10        Amendment.
No provision of this Agreement may be amended or modified except by an instrument in writing executed by the Company and all of the Members.
Any such written amendment or modification will be binding upon the Company and each Member. Notwithstanding the foregoing, amendments
to the Members Schedule and Managers Schedule may be made, without the consent of any Member, by the Board of Managers at any time and
from time to time to correct any information contained therein.

 

12.11        Waiver.
No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party
so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly
identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No
failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed
as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or privilege. For the avoidance of doubt, nothing contained
in this Section 12.11 shall diminish any of the explicit and implicit waivers described in this Agreement, including in Section
4.5(e), Section 10.3(c)(ii), Section 10.5(e) and Section 12.4.

 

12.12        Governing
Law. All issues and questions concerning the application, construction, validity, interpretation and enforcement of this Agreement
shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice
or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdiction other than those of the State of Delaware.

 

12.13        Submission
to Jurisdiction. The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions contemplated hereby, whether in contract, tort or otherwise,
may be brought in the state and federal courts located in the City of Wilmington in the State of Delaware and the courts to which an appeal
therefrom may be taken so long as one of such courts shall have subject-matter jurisdiction over such suit, action or proceeding, and
that any case of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of Delaware.
Each of the parties hereby irrevocably consents to the non-exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it
may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action
or proceeding that is brought in any such court has been brought in an inconvenient form.

 

12.14        Waiver
of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy that may arise under this Agreement is likely
to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have
to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

 

 

 

    	 	32	 

     

    

 

12.15        Equitable
Remedies. Each party hereto acknowledges that a breach or threatened breach by such party of any of its obligations under this Agreement
would give rise to irreparable harm to the other parties, for which monetary damages would not be an adequate remedy, and hereby agrees
that in the event of a breach or a threatened breach by such party of any such obligations, each of the other parties hereto shall, in
addition to any and all other rights and remedies that may be available to them in respect of such breach, be entitled to equitable relief,
including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of
competent jurisdiction(without any requirement to post bond).

 

12.16        Attorneys’
Fees. In the event that any party hereto institutes any legal suit, action or proceeding, including arbitration, against another party
in respect of a matter arising out of or relating to this Agreement, the prevailing party in the suit, action or proceeding shall be entitled
to receive, in addition to all other damages to which it may be entitled, the costs incurred by such party in conducting the suit, action
or proceeding, including reasonable attorneys’ fees and expenses and court costs.

 

12.17        Remedies
Cumulative. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other
rights and remedies available at law or in equity or otherwise, except to the extent expressly provided in this Agreement to the contrary.

 

12.18        Authority
to Adopt Agreement. By execution hereof, each Member represents and covenants as follows:

 

(a)        The
Member has full legal right, power, and authority to deliver this

Agreement and to perform the Member’s obligations
hereunder;

 

(b)        This
Agreement constitutes the legal, valid, and binding obligation of the Member enforceable in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy and other laws of general application relating to creditors’ rights or general principles of
equity;

 

(c)        This
Agreement does not violate, conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default or an
event of default under any other agreement of which the Member is a party; and

 

(d)        The
Member’s investment in its Membership Interest is made for the Member’s own account for investment purposes only and not with
a view to the resale or distribution of such Membership Interest.

 

12.19        Preparation
of Document/Independent Counsel. After negotiations between the Members, this Agreement was prepared by The Crone Law Group P.C. (“CLG”),
as legal counsel to Grom. CLG has not acted as legal counsel to the Company or any other Member or any Manager. Each Member acknowledges
that each of them has had the opportunity to review this Agreement with its own legal counsel.

 

12.20        Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to
be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of Electronic Transmission
shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

 

[Remainder of Page Intentionally Blank; Signature Page
Follows]

 

 

 

    	 	33	 

     

    

 

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the date first above written.

 

 

	COMPANY:	MEMBER/GROM:
	 	 
	CURIOSITY INK MEDIA LLC	GROM SOCIAL ENTERPRISES, INC.
	 	 
	By: /s/ Brent Watts                                    	By: /s/ Darren Marks                            
	Name: Brent Watts	Name: Darren Marks
	Title: CEO	Title: CEO
	 	 
	MEMBERS:	 
	 	 
	/s/ Russell Hicks                                            	/s/ Brent Watts                                        
	RUSSELL HICKS	BRENT WATTS
	 	 
	/s/ John Van Slooten                                   	/s/ Gregory A. Peterson                         
	JOHN VAN SLOOTEN, TRUSTEE	GREGORY A. PETERSON, TRUSTEE
	 	 
	/s/ Ryan Watts                                            	/s/ Robert Nelsen                                    
	RYAN WATTS	ROBERT NELSEN
	 	 
	/s/ Lauren Selig                                           	/s/ Jared Wolfson                                    
	LAUREN SELIG	JARED WOLFSON
	 	 
	/s/ Matthew Cubberly                               	 
	MATTHEW CUBBERLY	 
	 	 
	BOARD OF MANAGERS:	 
	 	 
	/s/ Russell Hicks                                      	/s/ Brent Watts                                     
	RUSSELL HICKS	BRENT WATTS
	 	 
	/s/ Melvin Leiner                                     	/s/ Darren Marks                                
	MELVIN LEINER	DARREN MARKS
	 	 
	/s/ Jason Williams                                  	 
	JASON WILLIAMS	 

 

 

 

 

 

    	 	34	 

     

    

 

APPENDIX 1

 

SPECIAL TAX AND ACCOUNTING PROVISIONS

 

 

A1. Accounting
Definitions. The following terms, which are used predominantly
in this Appendix 1, shall have the meanings set forth below for all purposes under this Agreement.

 

“Adjusted
Capital Account Balance” means, with respect to any Member, the balance of such Member’s Capital Account as of the end
of the relevant Fiscal Year, after giving effect to the following adjustments:

 

(a)       Credit
to such Capital Account any amounts which such Member is obligated to restore pursuant to this Agreement or as determined pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c), or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

 

(b)       Debit
to such Capital Account the items described in clauses (4), (5) and (6) of Section 1.704-1(b)(2)(ii)(d) of the Regulations.

 

The foregoing definition of Adjusted
Capital Account Balance is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall
be interpreted consistently therewith.

 

“Capital
Account” means, with respect to any Member or other owner of a Membership Interest in the Company, the Capital Account maintained
for such Person in accordance with the following provisions:

 

(a)        To
each such Person’s Capital Account, there shall be credited the amount of money and the initial Gross Asset Value of such Person’s
Capital Contributions as determined by the Board of Managers, such Person’s distributive share of Profits and any items in the nature
of income or gain that are specially allocated pursuant to Sections A2 and A3 hereof, and the amount of any Company liabilities
assumed by such Person;

 

(b)        To
each such Person’s Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Company property distributed
to such Person pursuant to any provision of this Agreement as determined by the Board of Managers, such Person’s distributive share
of Losses, and any items in the nature of expenses or losses that are specially allocated pursuant to Sections A2 and A3
hereof, and the amount of any liabilities of such Person assumed by the Company;

 

(c)        In
the event any Membership Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred Membership Interest;

 

 

 

 

    	 	35	 

     

    

 

(d)        Section
752(c) of the Code shall be applied in determining the amount of any liabilities taken into account for purposes of this definition of
“Capital Account”;

 

(e)        The
foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply
with Sections 1.704-1(b) and 1.704-2 of the Regulations and shall be interpreted and applied in a manner consistent with such Regulations.
The Board of Managers may modify the manner of computing the Capital Accounts or any debits or credits thereto (including debits or credits
relating to liabilities that are secured by contributed or distributed property or that are assumed by the Company or any Member) in order
to comply with such Regulations, provided that any such modification is not likely to have a material effect on the amounts distributable
to any Member pursuant to Section 11.3 upon the dissolution of the Company. Without limiting the generality of the preceding sentence,
the Board of Managers shall make any adjustments that are necessary or appropriate to maintain equality between the aggregate sum of the
Capital Accounts and the amount of capital reflected on the balance sheet of the Company, as determined for book purposes in accordance
with Section 1.704-1(b)(2)(iv)(g) of the Regulations. The Board of Managers shall also make any appropriate modifications if unanticipated
events (for example, the availability of investment tax credits) might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).

 

“Company Minimum Gain”
has the same meaning as the term “partnership minimum gain” under Regulations Section 1.704-2(d) of the Regulations.

 

“Depreciation” means,
for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount that bears the same ratio to
such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that if such depreciation, amortization or other cost recovery
deductions with respect to any such asset for federal income tax purposes is zero for any Fiscal Year, Depreciation shall be determined
with reference to the asset’s Gross Asset Value at the beginning of such year using any reasonable method selected by the Board
of Managers.

 

“Gross Asset Value”
means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

 

(a)        The
initial Gross Asset Value for any asset (other than money) contributed by a Member to the Company shall be as determined by the Board
of Managers and the contributing Member;

 

(b)        The
Gross Asset Value of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by the Board
of Managers, as of the following times: (i) the acquisition of additional Membership Interest in the Company by any new or existing Member
in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis
amount of cash or property as consideration for Membership Interest in the Company, if (in any such event) such adjustment is necessary
or appropriate, in the reasonable judgment of the Board of Managers, to reflect the relative economic interests of the Members in the
Company; (iii) the liquidation of the Company for federal income tax purposes pursuant to Regulations Section 1.704-1(b)(2)(ii)(g);
or (iv) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or
for the benefit of the Company by an existing Member acting in a Member capacity, or by a new Member acting in a Member capacity or in
anticipation of being a Member;

 

 

 

 

    	 	36	 

     

    

 

(c)        The
Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal its gross fair market value on the date of
distribution;

 

(d)        The
Gross Asset Value of the Company’s assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account
in determining Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and Section A2(g) hereof; provided,
however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that an adjustment pursuant to subsection
(b) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant
to this subsection (d); and

 

(e)        If
the Gross Asset Value of an asset has been determined or adjusted pursuant to subsection (a), (b) or (d) above, such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account from time to time with respect to such asset for purposes of computing
Profits and Losses.

 

Upon the occurrence of any event specified
in Regulations Section 1.704-1(b)(2)(iv)(f), the Board of Managers may cause the Capital Accounts of the Members to be adjusted to reflect
the Gross Asset Value of the Company’s assets at such time in accordance with such Regulation if the Board of Managers determines,
in its reasonable discretion, that the Gross Asset Value of the Company’s assets has materially appreciated or depreciated in such
an amount so as to render such adjustment necessary to preserve the economic arrangement of the Members.

 

“Member
Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” under Section 1.704-2(b)(4) of the
Regulations.

 

“Member
Nonrecourse Debt Minimum Gain” has the same meaning as the term “partner nonrecourse debt minimum gain” under Section
1.704-2(i)(2) of the Regulations and shall be determined in accordance with Section 1.704-2(i)(3) of the Regulations.

 

“Member
Nonrecourse Deductions” has the same meaning as the term “partner nonrecourse deductions” under Regulations Section
1.704-2(i)(1). The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for each Fiscal Year of the Company
equals the excess (if any) of the net increase (if any) in the amount of Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt during such Fiscal Year over the aggregate amount of any distributions during such Fiscal Year to the Member that bears
the economic risk of loss for such Member Nonrecourse Debt to the extent that such distributions are from the proceeds of such Member
Nonrecourse Debt which are allocable to an increase in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(2) of the Regulations.

 

“Nonrecourse
Debt” or “Nonrecourse Liability” has the same meaning as the term “nonrecourse liability” under
Section 1.704-2(b)(3) of the Regulations.

 

“Nonrecourse
Deductions” has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for
a Company Fiscal Year equals the excess (if any) of the net increase (if any) in the amount of Company Minimum Gain during that Fiscal
Year over the aggregate amount of any distributions during that Fiscal Year of proceeds of a Nonrecourse Debt that are allocable to an
increase in Company Minimum Gain, determined according to the provisions of Section 1.704-2(c) of the Regulations.

 

 

 

 

    	 	37	 

     

    

 

“Profits”
or “Losses” means, for each Fiscal Year or other period, the taxable income or taxable loss of the Company as determined
under Code Section 703(a) (including in such taxable income or taxable loss all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code) with the following adjustments:

 

(a)        All
items of gain or loss resulting from the sale of any company property shall be determined upon the basis of the Gross Asset Value of such
property rather than the adjusted tax basis thereof;

 

(b)        Any
income of the Company that is exempt from federal income tax shall be added to such taxable income or loss;

 

(c)        Any
expenditures of the Company that are described in Code Section 705(a)(2)(B), or treated as such pursuant to Regulations Section 1.704-1(b)(2)(iv)(i),
and that are not otherwise taken into account in the computation of taxable income or loss of the Company, shall be included in the determination
of Profits or Losses;

 

(d)        If
the Gross Asset Value of any Company asset is adjusted pursuant to subsection (b) or (c) of the definition of “Gross Asset Value”
set forth in this Appendix 1, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset
for purposes of computing Profits or Losses unless such gain or loss is specially allocated pursuant to Section A2 hereof;

 

(e)        In
lieu of the depreciation, amortization, and other cost recovery deductions taken into account in determining such taxable income or loss,
there shall be deducted Depreciation, computed in accordance with the definition of such term in this Appendix 1, and

 

(f)        Notwithstanding
any of the foregoing provisions, any items that are specially allocated pursuant to Section A2 or A3 hereof or pursuant
to Section 704(c) of the Code shall not be taken into account in computing Profits or Losses.

 

A2. Special
Allocations. The allocation of Profits and Losses for each Fiscal

Year shall be subject to the following
special allocations in the order set forth below:

 

(a)        Company
Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain for any Fiscal Year, each Member shall be specially allocated
items of income and gain for such year (and, if necessary, for subsequent years) in an amount equal to such Member’s share of the
net decrease in Company Minimum Gain during such year, determined in accordance with Regulations Section 1.704-2(g)(2). Allocations pursuant
to the preceding sentence shall be made among the Members in proportion to the respective amounts required to be allocated to each of
them pursuant to such Regulation. The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f)(6).
Any special allocation of items of Company income and gain pursuant to this Section A2(a) shall be made before any other
allocation of items under this Appendix 1. This Section A2(a) is intended to comply with the “minimum gain chargeback”
requirement in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

 

(b)        Member
Nonrecourse Debt Minimum Gain Chargeback. If there is a net decrease during a Fiscal Year in the Member Nonrecourse Debt Minimum Gain
attributable to a Member Nonrecourse Debt, then each Member with a share of the Member Nonrecourse Debt Minimum Gain attributable to such
debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of income and gain for such
year (and, if necessary, subsequent years) an amount equal to such Member’s share of the net decrease in the Member Nonrecourse
Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the preceding sentence shall be made among the Members in proportion to the respective amounts to be allocated to each of
them pursuant to such Regulation. Any special allocation of items of income and gain pursuant to this Section A2(b) for
a Fiscal Year shall be made before any other allocation of Company items under this Appendix 1, except only for special allocations required
under Section A2(a) hereof. The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(i)(4).
This Section A2(b) is intended to comply with the provisions of Regulations Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.

 

 

 

 

    	 	38	 

     

    

 

(c)        Qualified
Income Offset. If any Member receives any adjustments, allocations, or distributions described in clauses (4), (5) or (6) of Regulations
Section 1.704-1(b)(2)(ii)(d), items of income and gain shall be specially allocated to each such Member in an amount and manner
sufficient to eliminate as quickly as possible, to the extent required by such Regulation, any deficit in such Member’s Adjusted
Capital Account Balance, such balance to be determined after all other allocations provided for under this Appendix 1 have been tentatively
made as if this Section A2(c) were not in this Agreement.

 

(d)        Gross
Income Allocation. In the event any Member has a deficit Capital Account at the end of any Fiscal Year which is in excess of the sum
of (i) the amount (if any) such Member is obligated to restore pursuant to any provision of this Agreement, and (ii) the amount such Member
is deemed to be obligated to restore pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations,
each such Member shall be specially allocated items of income and gain in the amount of such excess as quickly as possible, provided that
an allocation pursuant to this Section A2(d) shall be made only if and to the extent that such Member would have a deficit
Capital Account in excess of such sum after all other allocations provided for in this Appendix 1 have been made as if Section A2(c)
hereof and this Section A2(d) were not in the Agreement.

 

(e)        Nonrecourse
Deductions. Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated to the Members in accordance with
their Membership Interests.

 

(f)        Member
Nonrecourse Deductions. Member Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated, in accordance
with Regulations Section 1.704-2(i)(1), to the Member or Members who bear the economic risk of loss for the Member Nonrecourse Debt to
which such deductions are attributable.

 

(g)        Code
Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset under Code Section 734(b) or 743(b)
is required to be taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), the amount
of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their Capital Accounts are required to be adjusted pursuant to such section of the Regulations.

 

(h)        Syndication
Expenses. Any syndication expenses which must be deducted from each Member’s Capital Account in accordance with Regulation section
1.704-

1(b)(2)(iv)(i)(2) in the year paid
shall be allocated pro rata to the Members based on their Membership Interest. If Members are admitted to the Company on different dates,
all syndication expenses shall be divided among the Members from time to time so that, to the extent possible, the cumulative syndication
expenses allocated pursuant to this Section A.2(h) with respect to each one percent (1%) of Membership Interest is the same
amount. In the event the Board of Managers shall determine that such result is not likely to be achieved through future allocations of
syndication expenses, the Board of Managers may allocate a portion of Profits or Losses so as to achieve the same effect on the Capital
Accounts of the Members, notwithstanding any other provision of this Agreement.

 

A3. Curative
Allocations. The allocations set forth in subsections (a) through
(h) of Section A2 hereof (“Regulatory Allocations”) are intended to comply with certain requirements
of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding any other provisions of this Appendix 1 (other than the Regulatory Allocations
and the next two (2) following sentences), the Regulatory Allocations shall be taken into account in allocating other Profits, Losses
and items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of
other Profits, Losses and other items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been
allocated to each such Member if the Regulatory Allocations had not occurred. For purposes of applying the preceding sentence, Regulatory
Allocations of Nonrecourse Deductions and Member Nonrecourse Deductions shall be offset by subsequent allocations of items of income and
gain pursuant to this Section A3 only if (and to the extent) that: (a) the Board of Managers reasonably determines that
such Regulatory Allocations are not likely to be offset by subsequent allocations under Section A2(a) or Section A2(b)
hereof, and (b) there has been a net decrease in Company Minimum Gain (in the case of allocations to offset prior Nonrecourse Deductions)
or a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt (in the case of allocations to offset
prior Member Nonrecourse Deductions). The Board of Managers shall apply the provisions of this Section A3, and shall divide
the allocations hereunder among the Members, in such manner as will minimize the economic distortions upon the distributions to the Members
that might otherwise result from the Regulatory Allocations.

 

 

 

 

    	 	39	 

     

    

 

A4. General
Allocation Rules.

 

(a)        For
purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall
be determined on a daily, monthly or other basis, as determined by the Board of Managers using any method permissible under Code Section
706 and the Regulations thereunder.

 

(b)        For
purposes of determining the Members’ proportionate shares of the “excess nonrecourse liabilities” of the Company within
the meaning of Regulations Section 1.752-3(a)(3), their respective interests in Member profits shall be in the same proportions as their
Membership Interests.

 

A5. Recharacterization
of Fees or Distributions. In the event that a guaranteed payment
to a Member is ultimately recharacterized (as the result of an audit of the Company’s return or otherwise) as a distribution for
federal income tax purposes, and if such recharacterization has the effect of disallowing a deduction or reducing the adjusted basis of
any asset of the Company, then an amount of Company gross income equal to such disallowance or reduction shall be allocated to the recipient
of such payment. In the event that a distribution to a Member is ultimately recharacterized (as the result of an audit of the Company’s
return or otherwise) as a guaranteed payment for federal income tax purposes, and if any such recharacterization gives rise to a deduction,
such deduction shall be allocated to the recipient of the distribution.

 

A6. Recapture
of Deductions and Credits. If any “recapture” of deductions
or credits previously claimed by the Company is required under the Code upon the sale or other taxable disposition of any Company Property,
those recaptured deductions or credits shall, to the extent possible, be allocated to Members, pro rata in the same manner that the deductions
and credits giving rise to the recapture items were allocated using the “first-in, first-out” method of accounting; provided,
however, that this Section A6 shall only affect the characterization of income allocated among the Members for tax purposes.

 

 

 

 

 

 

 

 

 

    	 	40	 

     

    

 

Exhibit A

MEMBERS SCHEDULE

	
     

     

    Members
	
    Membership Interests

    (Effective Time)
	
     

     

    Addresses for Notices

	
     

    Grom Social Enterprises, Inc.

     
	
     

    80.000%
	 
	
     

    Russell Hicks

     
	
     

    7.814%
	 
	
     

    Brent Watts

     
	
     

    7.814%%
	 
	
    John Van Slooten, Trustee of the Van Slooten Family Revocable Living
    Trust dated 4/6/90

     
	
     

    0.868%
	 
	
    Gregory A. Peterson, Trustee of the Gregory A. Peterson Revocable Living
    Trust dated April 9, 2001

     
	
     

    0.868%

     

     

     

     

     

     

     

     

     
	 
	
     

    Ryan Watts

     
	
     

    0.168%
	 
	
     

     

    Robert Nelsen

     
	
     

     

    1.068%
	 
	
     

    Lauren Selig

     
	
     

    0.600%
	 
	
     

    Jared Wolfson

     
	
     

    0.400%
	 
	
     

    Matthew Cubberly

     
	
     

    0.400%
	 

 

 

 

 

 

 

 

    	 	41	 

     

    

 

Exhibit B

MANAGERS SCHEDULE

 

	Manager Name	
    Appointing Member

     

	
     

    Brent Watts

     
	
     

    Brent Watts

	
     

    Russell Hicks

     
	
     

    Russell Hicks

	
     

    Melvin Leiner

     
	
     

    Grom Social Enterprises, Inc.

	
     

    Darren Marks

     
	
     

    Grom Social Enterprises, Inc.

	
     

    Jason Williams

     
	
     

    Grom Social Enterprises, Inc.

 

 

 

 

 

 

 

    	 	42

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00332-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00332-of-00352.parquet"}]]