Exhibit 10.2
SECURITY AGREEMENT
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
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