Exhibit 4.2
ALLONGE TO CONVERTIBLE PROMISSORY
NOTE
This Allonge,
dated as of September 14, 2009 , is attached to and made a
part of that certain Convertible Promissory Note (the
“ Note ”) dated April 14, 2009, in
the original principal amount of ONE MILLION DOLLARS ($1,000,000)
made by ONSTREAM MEDIA CORPORATION to the order of ROCKRIDGE
CAPITAL HOLDINGS, LLC for the purpose of annexing thereto the
following modifications:
(1) The
Principal Amount under the Note has been increased to TWO MILLION
DOLLARS ($200,000,000).
(2) Section
1 of the Note is hereby deleted in its entirety and replaced with
the following:
(a)
Maturity Date; Interest . Company promises to pay
interest at a rate of twelve percent (12%) per annum on the
Principal Amount of this Note, such interest accrued on a monthly
basis based on the then outstanding balance. Monthly
payments against principal and accrued interest shall be due and
payable commencing on May 14, 2009 and continuing on
a monthly basis thereafter through and including August 14,
2013 , except that if not sooner paid, the
Principal Amount together with all accrued interest thereon, shall
be due and payable on September 14, 2013 or such earlier
date as provided in the Purchase Agreement (including by reason of
acceleration upon the occurrence of an Event of Default) (the
“ Maturity Date” ). The monthly
payments to be applied against principal and interest shall
initially be as set forth on Exhibit A attached hereto
calculated on a total of $1,000,000 plus any advances made
on the date of that certain Allonge to this Note dated September
14, 2009.
(b)
Additional Advances . In the event additional
advances are made by Investor to the Company as provided for under
the terms of this Note and the Purchase Agreement (and which at all
times shall not exceed the aggregate principal amount of Two
Million Dollars ($2,000,000) (the “ Maximum Loan
Amount ”), Exhibit A shall be replaced and the
monthly payments to be applied against principal and interest shall
be recalculated as set forth in a revised Exhibit A to take
into the account such additional advances. Each
additional advance shall be in an amount not less than Two Hundred
Thousand Dollars ($200,000) and, to the extent in excess thereof,
in integral multiples of One Hundred Thousand Dollars
($100,000). As an origination fee for each additional
advance, the Investor shall have the option to require the Company
to issue Shares of the Company to Investor, upon not less than
sixty-one (61) days prior written notice to the Company, at the
rate of (i) Two Hundred Thousand (200,000) shares for making the
additional $1,000,000 available to the Company, and (ii) One
Hundred Thousand (100,000) Shares for every Two Hundred Thousand
Dollar ($200,000) advance made by the Investor, on a prorated
basis. In addition, an amount equal to twenty five
percent (25%) of the value of such additional advance shall be
added to the balloon payment described below in Section 1(c)
(collectively, the “ Additional Balloon Payment
Amounts ”). Interest on the Principal Amount
shall be computed on the basis of a 365-day year and actual days
elapsed until all of said Principal Amount has been fully paid,
whether before or after the Maturity Date, by acceleration or
otherwise, and whether or not any judgment is obtained hereon.
Payments shall be made by check or wire transfer to an account
designated by Investor.
(c)
Balloon Payment . In the absence of any optional
conversions in accordance with section 2 below, it is anticipated
that the Company’s final payment on the Maturity Date will
include an approximately Two Hundred and Fifty Thousand Dollars
($250,000) balloon payment against the Principal Amount, subject to
increase based on Additional Balloon Payment Amounts as set forth
in Section 1(b), with a maximum balloon payment of Five Hundred
Thousand Dollars ($500,000). However, in the event of
any optional conversions in accordance with Section 2 below, (i)
the balloon payment will be reduced by the amount of any such
conversion and (ii) the interest portion of the monthly payments
hereunder for the remaining months after any such conversion will
be adjusted to reflect the outstanding principal being immediately
reduced for amount of the conversion.
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