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
      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:

            	
              Onstream
                Media Corp.

            
	
            	
              1291
                SW 29 Avenue,

            
	
            	
              Pompano
                Beach, Florida 33069

            
	
            	
              Attn:
                Robert E. Tomlinson, CFO

            
	 	 
	
              The
                Secured Parties:

            	
              As
                set forth on Schedule A

            


    

    


    (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.

     

    
      	
              Onstream
                Media Corporation

            
	 	 
	 	 
	
              By:

            	
              __________________________

            
	
              Name:

            	
              Robert
                E. Tomlinson

            
	
              Title:

            	
              CFO

            


    

    


    
      
         

      

      
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