SECURITY AGREEMENT
Exhibit
10.2
This
SECURITY AGREEMENT (this “Agreement”) is made and entered into this April ___,
2008, between the investors set forth on Schedule A attached hereto (the
"Secured Parties"), and Onstream Media Corporation, a Florida corporation (the
"Debtor").
WITNESSETH
Pursuant
to the terms of that certain Term Sheet ("Term Sheet") the Debtor has issued
to
the Secured Parties promissory notes in the total principal amount of up to
ONE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000) (the "Notes"). In order
to
secure the obligations of the Debtor under the Notes the Debtor has agreed
to
grant the Secured Parties an undivided security interest in certain assets
of
Debtor.
In
consideration of the mutual covenants contained herein and other good and
valuable consideration, the parties hereto agree as follows:
1. Grant
of Security Interest.
In
consideration of and as an inducement to the Secured Parties to invest in the
Notes, Debtor hereby grants the Secured Parties an undivided security interest
(the “Security Interest”) in (i) the equipment and software described on the
attached Schedule B, and any proceeds and products therefrom, and (ii) in the
event the foregoing is insufficient to satisfy the payment of the Obligations,
then the Secured Parties shall have a further undivided security interest in
all
other assets of the Debtor and any proceeds and products therefrom, excluding
those assets related to the Debtor's accounts receivable,
customer
contracts, insurance policies on such accounts (the "Collateral").
2. The
Obligations.
The
Security Interest herein granted shall secure full payment and performance
of
Debtor’s obligations under the Notes (collectively, the
“Obligations”).
3. Covenants
of Debtor.
So long
as the Obligations remain unpaid, Debtor will perform and observe each of their
covenants to the Secured Parties as set forth herein, and (a) will defend the
Collateral against the claims and demands of all other parties; (b) will notify
the Secured Parties promptly in writing of any change in its address; (b)
without the written consent of Secured Parties holding a majority of the then
outstanding principal amount of the Notes ("Majority of SP's") will not permit
anything to be done that may impair the value of such Collateral or the security
intended to be afforded by this Agreement outside normal wear and tear; (c)
will
keep and maintain the Collateral in good order and repair at all times, normal
wear and tear excepted; and (d) in connection herewith will do such other things
as the Majority of SP's may reasonably request to protect the Collateral and
the
Secured Parties' security interest.
4. Events
of Default.
Debtor
shall be in default (each, an “Event of Default”) under this Agreement upon the
happening of any one or more of the following events, circumstances or
conditions, and the subsequent receipt by Debtor of written notice of default
from the Majority of SP's: (a) an Event of Default shall occur as specified
in
the Note; or (b) failure by Debtor to materially comply with or perform any
provision of this Agreement. However,
Debtor shall have a grace period of five (5) business days after receipt of
written notice describing the alleged breach in which to cure any such alleged
breach and an Event of Default shall not be deemed to have occurred until and
unless the item is uncured as of the expiration of the five (5) business day
cure period.
5. Remedies.
Upon
the happening of any Event of Default, the Secured Parties’ rights with respect
to the Collateral shall be those of a secured party under the Uniform Commercial
Code of the State of Florida, as now in effect or hereinafter amended (the
“Florida Uniform Commercial Code”). The Secured Parties shall also have any
additional rights granted herein. All Secured Parties shall be treated the
same
by the Debtor in the event of an Event of Default, and all such rights of
Secured Parties set forth in this Section 5 shall be administered by the
Majority of SP's. Notwithstanding the foregoing, in the event the Secured
Parties take action hereunder against the Collateral in satisfaction of the
Obligations, the Secured Parties shall first proceed against only the Collateral
described in Section 1(i) hereof, and if, and only if, the proceeds therefrom
are insufficient to satisfy the Obligations, the Secured Parties may take action
against the Collateral described in Section 1(ii) hereof.
6. Miscellaneous.
(a) The
terms
“Secured Parties," and “Debtor” as used in this Agreement include the heirs,
personal representatives, and successors or assigns of those parties, as
applicable.
(b) This
Agreement is a continuing agreement which shall remain in force and effect
until
all of the Obligations and any extensions or renewals together with all interest
thereon shall be paid in full.
(c) This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which taken together shall constitute one
agreement.
(d) Whenever
possible, each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of
this
Agreement shall be prohibited by or invalid under applicable law, such
provisions shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(e) Notices
required under this Agreement shall be deemed to have been adequately given
if
delivered by registered mail or sent by electronic transmission with evidence
of
sending and receipt at the addresses set forth below or such other address
as
such party may from time to time designate in writing.
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The
Debtor:
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0000
XX 00 Xxxxxx,
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Xxxxxxx
Xxxxx, Xxxxxxx 00000
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Attn:
Xxxxxx X. Xxxxxxxxx, CFO
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The
Secured Parties:
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As
set forth on Schedule A
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(f) No
failure to exercise and no delay in exercising any right, power or privilege
granted under this Agreement shall operate as a waiver of such right, power
or
privilege. No single or partial exercise of any right, power or privilege
granted under this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and
remedies provided in this Agreement are cumulative and are not exclusive of
any
rights or remedies provided by law.
(g) This
Agreement shall be governed by and construed in accordance with the procedural
and substantive laws of Florida without regard for its conflicts-of-laws rules.
Any action to enforce or interpret this agreement shall be brought in the
appropriate court in Broward County, Florida.
(h) This
Agreement and the Notes express the entire understanding of the parties and
supersede all prior and contemporaneous agreements and undertakings of the
parties with respect to the subject matter of this Agreement.
(i) This
Agreement and the rights hereunder shall not be assignable without the prior
written consent of the parties hereto. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable
by
the parties hereto and their respective successors and assigns.
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IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Security
Agreement as of the date first written above.
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Onstream
Media Corporation
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By:
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__________________________
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Name:
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Xxxxxx
X. Xxxxxxxxx
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Title:
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CFO
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