SECURITY AGREEMENT
EXHIBIT
10.2
SECURITY AGREEMENT, dated as
of April 14, 2009, between ONSTREAM MEDIA CORPORATION, a
Florida corporation (the "Company") and ROCKRIDGE CAPITAL HOLDINGS,
LLC, a limited liability company (hereinafter, the "Investor").
WHEREAS,
the Investor and the Company have entered into that certain Note and Stock
Purchase Agreement dated as of even date herewith (as amended and in effect from
time to time, the "Purchase
Agreement"), pursuant to which the Investor, subject to the terms and
conditions contained therein, is to make loans or otherwise to extend credit or
provide financial accommodations to the Company; and
WHEREAS,
it is a condition precedent to the Investor's making any loans or otherwise
extending credit or providing financial accommodations to the Company under the
Purchase Agreement that the Company execute and deliver to the Investor a
security agreement in substantially the form hereof; and
WHEREAS,
the Company wishes to grant a security interest in favor of the Investor as
herein provided;
NOW,
THEREFORE, in consideration of the promises contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. All
capitalized terms used herein without definitions shall have the respective
meanings provided therefor in the Purchase Agreement. The term
"State," as used herein, means the State of Connecticut. All terms
defined in the Uniform Commercial Code of the State and used herein shall have
the same definitions herein as specified therein. However, if a term
is defined in Article 9 of the Uniform Commercial Code of the State differently
than in another Article of the Uniform Commercial Code of the State, the term
has the meaning specified in Article 9. The term "Obligations," as
used herein, means all of the indebtedness, obligations and liabilities of the
Company to the Investor, individually or collectively, whether direct or
indirect, joint or several, absolute or contingent, due or to become due, now
existing or hereafter arising under or in respect of the Purchase Agreement, any
promissory notes or other instruments or agreements executed and delivered
pursuant thereto or in connection therewith or this Agreement, and the term
"Event of Default," as used herein, means as defined in the Purchase
Agreement.
2. Grant of
Security Interest.
The Company hereby grants to the Investor, to secure the payment and
performance in full of all of the Obligations, a security interest in and
pledges and assigns to the Investor the following properties, assets and rights
of the Company, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof (all of the same being
hereinafter called the "Collateral"): all
corporate assets, (provided that with
respect to accounts receivable of the Company, including without limitation all
assets related to Company’s accounts receivable, customer contracts and
insurance policies on such accounts Investor is granted a security interest
junior in priority to (i) Thermo Credit LLC or (ii) any successor of Thermo
Credit LLC or other similar accounts receivable financing (on terms and
conditions similar to Thermo Credit LLC and on terms no more materially onerous
to the Company than those granted to Thermo Credit LLC), personal and fixture
property of every kind and nature, including, goods (including inventory,
equipment, excluding that listed on Schedule 2 and any accessions thereto),
instruments (including promissory notes), documents, chattel paper (whether
tangible or electronic), deposit accounts, letter-of-credit rights (whether or
not the letter of credit is evidenced by a writing), commercial tort claims,
securities and all other investment property, supporting obligations, any other
contract rights or rights to the payment of money, insurance claims and
proceeds, all general intangibles and intellectual property rights (including
all payment intangibles), and all products and proceeds of the
foregoing. Regardless of the foregoing, to the extent that the terms
of the loan with Thermo Credit provide a priority security interest on any of
the above listed items, Investor’s security interest will be junior in priority
to that claim. The Investor acknowledges that the attachment of
its security interest in any commercial tort claim as original collateral is
subject to the Company's compliance with §4.7. The Investor may
retain money or funds received as proceeds from the Collateral as additional
collateral, which shall become part of the "Collateral" under this agreement,
and the Investor shall not be required to apply such proceeds to the secured
obligations or to remit them to the Company.
3. Authorization
to File Financing Statements. The Company hereby irrevocably
authorizes the Investor at any time and from time to time to file in any filing
office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral as described
in paragraph 2 and (b) provide any other information required by part 5 of
Article 9 of the Uniform Commercial Code of the State or such other
jurisdictions for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether the Company is an organization,
the type of organization and any organizational identification number issued to
the Company and, (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of real property to which the Collateral
relates. The Company agrees to furnish any such information to the
Investor promptly upon the Investor's request. The Company also
ratifies its authorization for the Investor to have filed in any Uniform
Commercial Code jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.
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4. Other
Actions. Further to insure
the attachment, perfection and priority of, and the ability of the Investor to
enforce, the Investor's security interest in the Collateral, the Company agrees,
in each case at the Company's expense, at the Investor's option, to take any and
all other actions as the Investor may determine to be necessary or useful for
the attachment, perfection and priority of, and the ability of the Investor to
enforce, the Investor's security interest in any and all of the Collateral,
including, without limitation, (a) executing, delivering and, where appropriate,
filing financing statements and amendments relating thereto under the Uniform
Commercial Code, to the extent, if any, that the Company's signature thereon is
required therefor, (b) causing the Investor's name to be noted as secured party
on any certificate of title for a titled good if such notation is a condition to
attachment, perfection or priority of, or ability of the Investor to enforce,
the Investor's security interest in such Collateral, (c) complying with any
provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Investor to enforce, the Investor's
security interest in such Collateral, (d) obtaining governmental and other third
party waivers, consents and approvals in form and substance satisfactory to the
Investor, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, (e) obtaining waivers from mortgagees and
landlords in form and substance satisfactory to the Investor, (f) taking all
actions under any earlier versions of the Uniform Commercial Code or under any
other law, as reasonably determined by the Investor to be applicable in any
relevant Uniform Commercial Code or other jurisdiction, including any foreign
jurisdiction; and (g) obtaining control agreements, bailee acknowledgements,
non-offset letters and warehouse man waivers in form and substance satisfactory
to the Investor and subject to the rights of Thermo Credit LLC and any successor
thereof.
5. Reserved.
6. Representations
and Warranties Concerning Company's Legal Status. The Company represents
and warrants to the Investor as follows: (a) the Company's exact
legal name is that indicated on the signature page hereof, (b) the Company is an
organization of the type, and is organized in the jurisdiction, set forth on the
Perfection Certificate dated April 14, 2009, substantially in the
form attached hereto as Exhibit 1 (the
“Perfection Certificate), (c) the Perfection Certificate accurately sets forth
the organizational identification number or accurately states that the Company
has none, (d) the Perfection Certificate accurately sets forth the Company's
place of business or, if more than one, its chief executive office, as well as
the Company's mailing address, if different, and (e) all other information set
forth on the Perfection Certificate pertaining to the Company is accurate and
complete.
7. Covenants
Concerning Company's Legal Status. The Company covenants with
the Investor as follows: (a) without providing at least 15 days prior
written notice to the Investor, the Company will not change its name, its
principal place of business or, if more than one, chief executive office, or its
mailing address or organizational identification number if it has one, (b) if
the Company does not have an organizational identification number and later
obtains one, the Company will promptly notify the Investor of such
organizational identification number, and (c) the Company will not change its
type of organization, jurisdiction of organization or other legal
structure.
8. Representations
and Warranties Concerning Collateral Etc. The Company
further represents and warrants to the Investor as follows: (a) the
Company is the owner of or has other rights in or power to transfer the
Collateral, free from any right or claim of any person or any adverse lien,
security interest or other encumbrance, except for the security interest created
by this Agreement, disclosed in the Purchase Agreement and Permitted Liens, (b)
none of the Collateral constitutes, or is the proceeds of, "farm products" as
defined in §9-102(a)(34) of the Uniform Commercial Code of the State, (c) the
Company holds no commercial tort claim except as indicated on the Perfection
Certificate, (d) the Company to its knowledge, currently operates its business
in compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and to its knowledge with all applicable provisions of federal,
state and local statutes and ordinances dealing with the control, shipment,
storage or disposal of hazardous materials or substances, and (e) all other
information set forth on the Perfection Certificate pertaining to the Collateral
is accurate and complete.
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9. Covenants
Concerning Collateral, Etc. The Company
further covenants with the Investor as follows: (a) the Collateral,
to the extent not delivered to the Investor pursuant to §4, will be kept at
those locations listed on the Perfection Certificate and the Company will not
remove the Collateral from such locations, without providing at least 30 days
prior written notice to the Investor, (b) except for the security interest
herein granted and Permitted Liens, the Company shall be the owner of or have
other rights in or power to transfer the Collateral free from any right or claim
of any other person or any lien, security interest or other encumbrance, and the
Company shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Investor, (c)
the Company shall not pledge, mortgage or create, or suffer to exist any right
of any person in or claim by any person to the Collateral, or any security
interest, lien or other encumbrance in the Collateral in favor of any person,
other than the Investor except for Permitted Liens, (d) the Company will keep
the Collateral in good order and repair, with reasonable wear and tear
accepted, and will not use the same in violation of law or any policy
of insurance thereon, (e) the Company will permit the Investor, or its designee,
to inspect the Collateral during regular business hours wherever located, (f)
the Company will pay promptly when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use or
operation of the Collateral or incurred in connection with this Agreement, other
than those being contested in good faith (g) the Company will continue to
operate its business in compliance with all applicable provisions of the federal
Fair Labor Standards Act, as amended, and with all applicable provisions of
federal, state and local statutes and ordinances dealing with the control,
shipment, storage or disposal of hazardous materials or substances other than
those violations that will not have a material adverse effect on the Company,
(h) the Company will not sell or otherwise dispose, or offer to sell or
otherwise dispose, of the Collateral or any interest therein except for (i)
sales and leases of inventory and licenses of general intangibles in the
ordinary course of business and (ii) so long as no Event of Default has occurred
and is continuing, dispositions permitted by the Purchase Agreement and
consistence with past practices, (i) the Company shall not file a correction
statement relating to the Collateral or to any financing statement or fixture
filing filed by the Investor without the Investor’s prior written consent, (j)
if the Company is a corporation, limited liability company, limited partnership
or other registered organization the Company shall, at its expense, furnish to
Investor a certified copy of the Company’s organization documents verifying its
correct legal name or, at Investor’s election, shall permit the Investor to
obtain such certified copy at the Company’s expense; and (k) from time to time,
at Investor’s election, the Investor may obtain a certified copy of the
Company’s organization documents and a search of such Uniform Commercial Code
filing offices as it shall deem appropriate, at the Company’s expense, to verify
the Company’s compliance with the terms of this Agreement.
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10. Insurance.
10.1. Maintenance
of Insurance. The Company will maintain with financially sound
and reputable insurers insurance with respect to its properties and business
against such casualties and contingencies as shall be in accordance with general
practices of businesses engaged in similar activities in similar geographic
areas. Such insurance shall be in such minimum amounts that the
Company will not be deemed a co-insurer under applicable insurance laws,
regulations and policies and otherwise shall be in such amounts, contain such
terms, be in such forms and be for such periods as may be reasonably
satisfactory to the Investor. In addition, all such insurance shall
be payable to the Investor as loss payee under a "standard" or "New York" loss
payee clause. Without limiting the foregoing, the Company will (i)
keep all of its physical property insured with casualty or physical hazard
insurance on an "all risks" basis, (ii) maintain all such workers' compensation
or similar insurance as may be required by law and (iii) maintain, in amounts
and with deductibles equal to those generally maintained by businesses engaged
in similar activities in similar geographic areas, general public liability
insurance against claims of bodily injury, death or property damage occurring,
on, in or about the properties of the Company; business interruption
insurance.
10.2. Continuation
of Insurance. The Company shall provide Investor with at least
30 days prior written notice prior to the Company’s cancellation of any
insurance policy and shall provide Investor with any notices of cancellation
delivered by the insurance providers within 5 days of receipt of such
notice. In the event of failure by the Company to provide and
maintain insurance as herein provided, the Investor may, at its option, provide
such insurance and charge the amount thereof to the Company. The
Company shall furnish the Investor with certificates of insurance and policies
evidencing compliance with the foregoing insurance provision. Such
insurance maintained by the Company shall include, without limitation, insurance
coverage on Collateral in the possession of the Investor or its agent or
contractor.
11. Collateral
Protection Expenses: Preservation of Collateral.
11.1. Expenses
Incurred by Investor. In the Investor's discretion after 5
days prior notice to the Company, if the Company fails to do so, the Investor
may discharge taxes not paid and not being contested in good faith and other
encumbrances at any time levied or placed on any of the Collateral, make repairs
thereto, maintain any of the Collateral, and pay any necessary filing fees or
insurance premiums. The Company agrees to reimburse the Investor on
demand for all expenditures so made. The Investor shall have no
obligation to the Company to make any such expenditures, nor shall the making
thereof be construed as a waiver or cure of any Default or Event of
Default.
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11.2. Investor's
Obligations and Duties. Anything herein to the contrary
notwithstanding, the Company shall remain obligated and liable under each
contract or agreement comprised in the Collateral to be observed or performed by
the Company thereunder subject to the business judgment of the Company’s
officers and directors acting in good faith. The Investor shall not
have any obligation or liability under any such contract or agreement by reason
of or arising out of this Agreement or the receipt by the Investor of any
payment relating to any of the Collateral, nor shall the Investor be obligated
in any manner to perform any of the obligations of the Company under or pursuant
to any such contract or agreement, to make inquiry as to the nature or
sufficiency of any payment received by the Investor in respect of the Collateral
or as to the sufficiency of any performance by any party under any such contract
or agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Investor or to which the Investor may be entitled at any time or
times. The Investor's sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession, under
§9-207 of the Uniform Commercial Code of the State or otherwise, shall be to
deal with such Collateral in the same manner as the Investor deals with similar
property for its own account.
12. Securities
and Deposits. The Investor may at any time following the
occurrence and during the continuance of an Event of Default, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. The Investor may following the
occurrence and during the continuance of an Event of Default demand, xxx for,
collect, or make any settlement or compromise which it deems desirable with
respect to the Collateral. Regardless of the adequacy of Collateral
or any other security for the Obligations, any deposits or other sums at any
time credited by or due from the Investor to the Company may at any time be
applied to or set off against any of the Obligations then due and
owing.
13. Notification
to Account Debtors and Other Persons Obligated on
Collateral. If an Event of Default shall have occurred and be
continuing, the Company shall, at the request and option of the Investor and
subject to the rights of Thermo Credit LLC, notify account debtors and other
persons obligated on any of the Collateral of the security interest of the
Investor in any account, chattel paper, general intangible, instrument or other
Collateral and that payment thereof is to be made directly to the Investor or to
any financial institution designated by the Investor as the Investor's agent
therefor, and the Investor may itself, if an Event of Default shall have
occurred and be continuing, without notice to or demand upon the Company, so
notify account debtors and other persons obligated on
Collateral. After the making of such a request or the giving of any
such notification, the Company shall hold any proceeds of collection of
accounts, chattel paper, general intangibles, instruments and other Collateral
received by the Company as trustee for the Investor without commingling the same
with other funds of the Company and shall turn the same over to the Investor in
the identical form received, together with any necessary endorsements or
assignments. The Investor shall apply the proceeds of collection of
accounts, chattel paper, general intangibles, instruments and other Collateral
received by the Investor to the Obligations, such proceeds to be immediately
credited after final payment in cash or other immediately available funds of the
items giving rise to them.
14. Power of
Attorney.
14.1. Appointment
and Powers of Investor. The Company hereby irrevocably
constitutes and appoints the Investor and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Company or in the
Investor's own name, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or useful to accomplish the
purposes of this Agreement and, without limiting the generality of the
foregoing, hereby gives said attorneys the power and right, on behalf of the
Company, without notice to or assent by the Company, to do the
following:
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(a) upon
the occurrence and during the continuance of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise dispose
of or deal with any of the Collateral in such manner as is consistent with the
Uniform Commercial Code of the State and as fully and completely as though the
Investor were the absolute owner thereof for all purposes, and to do, at the
Company's expense, at any time, or from time to time, all acts and things which
the Investor deems necessary or useful to protect, preserve or realize upon the
Collateral and the Investor's security interest therein, in order to effect the
intent of this Agreement, all no less fully and effectively as the Company might
do, including, without limitation, (i) the filing and prosecuting of
registration and transfer applications with the appropriate federal, state or
local agencies or authorities with respect to trademarks, copyrights and
patentable inventions and processes, (ii) upon written notice to the Company,
the exercise of voting rights with respect to voting securities, which rights
may be exercised, if the Investor so elects, with a view to causing the
liquidation of assets of the issuer of any such securities and (iii) the
execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral;
and
(b) to
the extent that the Company's authorization given in §3 is not sufficient, to
file such financing statements with respect hereto, with or without the
Company's signature, or a photocopy of this Agreement in substitution for a
financing statement, as the Investor may deem appropriate and to execute in the
Company's name such financing statements and amendments thereto and continuation
statements which may require the Company's signature.
(c) In
the event that any other security interest or lien attaches to the Collateral,
other than the security interest to the Investor, the Company hereby grants to
Investor a power of attorney to, in the name of the Company, request and to
enforce any right of the Company to obtain accountings and information from such
other secured party or lienor relating to the obligations secured and collateral
securing such security interest or lien, which power, being coupled with an
interest, shall not be revocable by the Company. The Company agrees
to pay or reimburse Investor upon demand for any charges resulting from such
requests for information.
14.2. Ratification
by Company. To the extent permitted by law, the Company hereby
ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof absent bad faith, willful misconduct or gross negligence. This
power of attorney is a power coupled with an interest and is
irrevocable.
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14.3. No Duty
on Investor. The powers conferred on the Investor hereunder
are solely to protect its interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. The Investor shall be
accountable only for the amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Company for any act or failure
to act, except for the Investor's own gross negligence or willful
misconduct.
15. Rights
and Remedies. If an Event of Default shall have occurred and
be continuing, the Investor, without any other notice to or demand upon the
Company, shall have in any jurisdiction in which enforcement hereof is sought,
in addition to all other rights and remedies, the rights and remedies of a
secured party under the Uniform Commercial Code of the State and of such
jurisdiction and any additional rights and remedies as may be provided to a
secured party in any jurisdiction in which Collateral is located, including,
without limitation, the right to take possession of the Collateral, and for that
purpose the Investor may, so far as the Company can give authority therefor,
enter upon any premises on which the Collateral may be situated and remove the
same therefrom. The Investor may in its discretion require the
Company to assemble all or any part of the Collateral at such location or
locations within the jurisdiction(s) of the Company's principal office(s) or at
such other locations as the Investor may reasonably designate. Unless
the Collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, the Investor shall give to the
Company at least five (5) Business Days prior written notice of the time and
place of any public sale of Collateral or of the time after which any private
sale or any other intended disposition is to be made. The Company
hereby acknowledges that five (5) Business Days prior written notice of such
sale or sales shall be reasonable notice. In addition, the Company
waives any and all rights that it may have to a judicial hearing in advance of
the enforcement of any of the Investor’s rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.
16. Standards
for Exercising Rights and Remedies. To the extent that
applicable law imposes duties on the Investor to exercise remedies in a
commercially reasonable manner, the Company acknowledges and agrees that it is
not commercially unreasonable for the Investor (a) to fail to incur expenses
reasonably deemed significant by the Investor to prepare Collateral for
disposition or otherwise to fail to complete raw material or work in process
into finished goods or other finished products for disposition, (b) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (c) to fail to exercise collection remedies against account
debtors or other persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral, (d) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Company, for expressions of interest in acquiring all or
any portion of the Collateral, (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the collateral is of
a specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Investor against risks of loss, collection or
disposition of Collateral or to provide to the Investor a guaranteed return from
the collection or disposition of Collateral, or (l) to the extent deemed
appropriate by the Investor, to obtain the services of brokers, investment
bankers, consultants and other professionals to assist the Investor in the
collection or disposition of any of the Collateral. The Company
acknowledges that the purpose of this §16 is to provide non-exhaustive
indications of what actions or omissions by the Investor would fulfill the
Investor's duties under the Uniform Commercial Code of the State or any other
relevant jurisdiction in the Investor's exercise of remedies against the
Collateral and that other actions or omissions by the Investor shall not be
deemed to fail to fulfill such duties solely on account of not being indicated
in this §16. Without limitation upon the foregoing, nothing contained
in this §16 shall be construed to grant any rights to the Company or to impose
any duties on the Investor that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this §16.
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17. No Waiver
by Investor, etc. The Investor shall not be deemed to have
waived any of its rights and remedies in respect of the Obligations or the
Collateral unless such waiver shall be in writing and signed by the
Investor. No delay or omission on the part of the Investor in
exercising any right or remedy shall operate as a waiver of such right or remedy
or any other right or remedy. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right or remedy on any future
occasion. All rights and remedies of the Investor with respect to the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Investor deems expedient.
18. Suretyship
Waivers by Company. The Company waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With
respect to both the Obligations and the Collateral, the Company assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Investor may deem advisable. The Investor
shall have no duty as to the collection or protection of the Collateral or any
income therefrom, the preservation of rights against prior parties, or the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in §11.2. The Company further waives any and all other
suretyship defenses.
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19. Marshalling. The
Investor shall not be required to marshal any present or future collateral
security (including but not limited to the Collateral) for, or other assurances
of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of its
rights and remedies hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that
it lawfully may, the Company hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of the Investor's rights and remedies under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Company hereby irrevocably waives the benefits
of all such laws.
20. Proceeds
of Dispositions; Expenses. The Company shall pay to the
Investor on demand amounts equal to any and all expenses, including, without
limitation, attorneys' fees and disbursements, incurred or paid by the Investor
in protecting, preserving or enforcing the Investor's rights and remedies under
or in respect of any of the Obligations or any of the
Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale or other disposition of Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as the Investor may determine or in such order or
preference as is provided in the Purchase Agreement, proper allowance and
provision being made for any Obligations not then due. Upon the final
payment and satisfaction in full of all of the Obligations and after making any
payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform
Commercial Code of the State, any excess shall be returned to the
Company. In the absence of final payment and satisfaction in full of
all of the Obligations, the Company shall remain liable for any
deficiency.
21. Overdue
Amounts. Until paid, all amounts due and payable by the
Company hereunder including under Section 11.1 shall be a debt secured by the
Collateral and shall bear, whether before or after judgment, interest if an
event of default exists and is continuing at the default rate of interest set
forth in the Purchase Agreement.
22. Governing
Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE. The Company agrees that any
action or claim arising out of any dispute in connection with this Agreement,
any rights or obligations hereunder or the performance or enforcement of such
rights or obligations may be brought in the courts of the State or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Company by
mail at the address specified in the Purchase Agreement. The Company
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court.
23. Waiver of
Jury Trial. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR
ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited
by law, the Company waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Company (i) certifies that neither the Investor
nor any representative, agent or attorney of the Investor has represented,
expressly or otherwise, that the Investor would not, in the event of litigation,
seek to enforce the foregoing waivers or other waivers contained in this
Agreement and (ii) acknowledges that, in entering into the Purchase Agreement
and the other Financing Documents to which the Investor is a party, the Investor
is relying upon, among other things, the waivers and certifications contained in
this §23.
10
24. Prejudgment
Remedy Waiver.
THE COMPANY HEREBY (I) ACKNOWLEDGES THAT THIS AGREEMENT IS PART OF A
COMMERCIAL TRANSACTION AND (II) TO THE EXTENT PERMITTED BY ANY STATE OR FEDERAL
LAW (INCLUDING, BUT NOT LIMITED TO CHAPTER 903a OF THE CONNECTICUT GENERAL
STATUTES), WAIVES ANY RIGHT IT MAY HAVE TO PRIOR NOTICE OF AND A HEARING ON THE
RIGHT OF THE INVESTOR, ITS SUCCESSORS OR ASSIGNS TO ANY REMEDY OR COMBINATION OF
REMEDIES THAT ENABLES THE INVESTOR, ITS SUCCESSORS OR ASSIGNS, BY WAY OF
ATTACHMENT, FOREIGN ATTACHMENT, GARNISHMENT OR REPLEVIN TO DEPRIVE THE COMPANY
OF ITS PROPERTY AT ANY TIME PRIOR TO FINAL JUDGMENT IN ANY LITIGATION INSTITUTED
IN CONNECTION WITH THIS AGREEMENT AND ANY TRANSACTIONS SECURED HEREBY, AND
FURTHER WAIVES ALL RIGHTS TO REQUEST THAT THE INVESTOR POST A BOND, WITH OR
WITHOUT SURETY, TO PROTECT THE COMPANY AGAINST DAMAGES THAT MAY BE CAUSED BY ANY
SUCH REMEDY OR REMEDIES.
25. Electronic
Self-Help Authorization: Upon and after an
Event of Default, the Investor shall have, in addition to all other rights and
remedies contained in this Agreement, (which the Company, and, by becoming bound
by the Obligations or this Agreement, all other Obligors, guarantors and any new
debtors accept and agree upon), the right to locate, disable or to take
possession of the Collateral by electronic, digital, magnetic or wireless
optical electromagnetic or similar means after giving any notices required under
applicable law.
26. Miscellaneous. The
headings of each section of this Agreement are for convenience only and shall
not define or limit the provisions thereof. This Agreement and all
rights and obligations hereunder shall be binding upon the Company and its
successors and assigns, and shall inure to the benefit of the Investor and its
successors and assigns. If any term of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Company acknowledges receipt of a copy of this
Agreement.
[Signature
page follows]
11
IN
WITNESS WHEREOF, intending to be legally bound, the Company has caused this
Agreement to be duly executed as of the date first above written.
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ONSTREAM
MEDIA CORPORATION
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By:
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/s/ Xxxxx X. Xxxxxx
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Name:
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Xxxxx
X. Xxxxxx
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Title:
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President
and Chief Executive Officer
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Accepted:
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ROCKRIDGE
CAPITAL HOLDINGS, LLC
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By:
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/s/ Xxxxx Xxxxxxxx
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Name:
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Xxxxx Xxxxxxxx
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Title:
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Managing Director
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