UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
 
 
 
 
FORM 8-K
 
 
 
 
 
 
 
CURRENT REPORT
 
 
 
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (date of earliest event reported): May 1, 2020
 
 
 
Qumu Corporation 
(Exact name of Registrant as Specified in its Charter)
 
 
Minnesota
 
(State Or Other Jurisdiction Of Incorporation)
 
 
 
000-20728
 
41-1577970
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
510 1st Avenue North, Suite 305
 
 
Minneapolis, MN
 
55403
(Address Of Principal Executive Offices)
 
(Zip Code)
 
 
 
 
(612) 638-9100
 
Registrant’s Telephone Number, Including Area Code
 
 
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading
Symbol
 
Name of each exchange on which registered
Common stock, par value $0.01
 
QUMU
 
The NASDAQ Stock Market LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
o
Written communications pursuant to Rule 425 under the Securities Act
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934. o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
 
 
 
 




Items under Sections 2 through 9 are not applicable and therefore omitted.

ITEM 1.01
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

ITEM 1.02
TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

ITEM 2.03
CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

On May 1, 2020, the Company and ESW Holdings, Inc. (“ESW”) canceled that certain Amended and Restated Warrant No. 2R dated January 12, 2018 to purchase 925,000 shares of the Company’s common stock (the “Warrant”) and simultaneously entered into that certain Secured Promissory Note for face amount of $1,832,888.27 and maximum amount of $1,982,888.27, reflecting the deferred payment of the purchase price in respect of the Warrant, and that certain Security Agreement providing for a future security interest in certain assets of the Company that will not attach unless and until the occurrence of the Triggering Event specified therein. The obligations under the note do not accrue interest, may be repaid at any time without penalty and, to the extent not earlier repaid will be due in full on April 1, 2021.

The foregoing descriptions of the secured promissory note and the security agreement do not purport to be complete and are qualified in their entirety by reference to the secured promissory note and security agreement, which is filed herewith as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated by reference herein.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
QUMU CORPORATION
 
 
 
 
By:
/s/ David G. Ristow
 
 
David G. Ristow
 
 
Chief Financial Officer
 
 
 
Date: May 7, 2020
 
 



EXHIBIT 10.1

SECURED PROMISSORY NOTE

$1,832,888.27    May 1, 2020
    

FOR VALUE RECEIVED, QUMU CORPORATION (referred to herein as “Debtor”), hereby promises to pay to the order of ESW HOLDINGS, INC., or its successors or assigns (“Holder”) at 401 Congress Avenue, Suite 2650, Austin, Texas 78701, or such other address as Holder may designate or permit in writing, the principal sum of One Million Eight Hundred Thirty-Two Thousand Eight Hundred Eighty-Eight and 27/100 Dollars ($1,832,888.27) in the manner provided in this Secured Promissory Note (this “Note”). This Note is issued as consideration for Debtor’s purchase from Holder of that certain Amended and Restated Warrant No. 2R dated January 12, 2018 to purchase 925,000 shares of Common Stock issued by Debtor to Holder (the “Warrant”) as provided in Section 3.
1.    Principal. Debtor shall pay Holder the entire outstanding principal balance, together with all other amounts owing hereunder, in full on April 1, 2021 (the “Maturity Date”) if not paid earlier as required or permitted hereby. In the event this Note remains outstanding after the Maturity Date, Debtor shall pay Holder the entire outstanding principal balance, together with all other amounts owing hereunder, plus the Fundamental Transaction Amount (as defined below).
2.    Prepayment. Debtor may prepay this Note in whole or in part at any time without penalty or premium; provided, however that any partial prepayment of this Note must be in an amount equal to $250,000 or a higher integral multiple of $50,000 (or, if less, the entire principal amount then outstanding).
3.    Cancellation of Warrant. Holder acknowledges and agrees that this Note is being issued in full and complete satisfaction of Debtor’s obligations under the Warrant, and upon Holder’s acceptance of this Note, the Warrant and Debtor’s obligations under the Warrant shall automatically be terminated and irrevocably cancelled in full and rendered null and void, and all past, current, or future obligations of Debtor or Holder under the Warrant shall be extinguished, including, for the avoidance of doubt, the right of Holder to receive the Warrant Consideration (as defined in the Warrant). Upon the issuance of this Note, Holder will return the original Warrant for cancellation by Debtor.
4.    Security. This Note shall be secured as provided in that certain Security Agreement dated as of the date hereof made by Debtor in favor Holder and that certain Deposit Account Control Agreement dated as of the date hereof among Debtor, Holder and Wells Fargo Bank, N.A. (collectively, the “Security Documents”).
5.    Fundamental Transaction. If, at any time prior to the Maturity Date (i) Debtor effects any merger or consolidation of Debtor with or into another Person, (ii) Debtor effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange offer (whether by Debtor or another Person) is completed pursuant to which holders of at least 50% of the Common Stock (excluding any shares held by the Person(s) making such tender or exchange offer) tender or exchange their shares for other securities, cash or property, (iv) Debtor


effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property or (v) there is a Change of Control, as defined below (in any such case, a “Fundamental Transaction”), then upon the consummation of such Fundamental Transaction, Debtor shall pay to Holder all amounts then outstanding under this Note, plus an amount (such amount, the “Fundamental Transaction Amount”) equal to One Hundred Fifty Thousand Dollars ($150,000). For the avoidance of doubt, if (x) no payments have been made on this Note prior to the consummation of a Fundamental Transaction or (y) any amount of this Note remains outstanding after the Maturity Date, Holder shall be entitled to an aggregate amount of One Million Nine Hundred Eighty-Two Thousand Eight Hundred Eighty-Eight and 27/100 Dollars ($1,982,888.27). Debtor shall provide notice to Holder in writing at least five (5) days prior to the consummation of a Fundamental Transaction.
For purposes of this Note, the following terms shall have the meanings set forth below:
(a)
“Change of Control” means the occurrence of any of the following in one or a series of related transactions: (i) an acquisition after the date of this Note by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) under the Exchange Act) of more than fifty percent (50%) of the voting rights or equity interests in Debtor; (ii) a replacement of more than fifty percent (50%) of the members of Debtor’s board of directors that is not approved by those individuals who are members of the board of directors on the date of this Note; (iii) a merger or consolidation of Debtor or a sale of all or substantially all of the assets of Debtor in one or a series of related transactions, unless following such transaction or series of transactions, the holders of Debtor’s securities prior to the first such transaction continue to hold at least fifty percent (50%) of the voting rights and equity interests in the surviving entity or acquirer of such assets, as applicable; (iv) a recapitalization, reorganization or other transaction involving Debtor that constitutes or could result in a transfer of more than fifty percent (50%) of the voting rights or equity interests in Debtor; or (v) consummation of a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act with respect to Debtor.
(b)
“Common Stock” means the common stock, $0.01 par value per share of Debtor.
(c)
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.
(d)
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
6.    Events of Default. Any of the following acts, conditions, events or occurrences shall constitute a default hereunder (“Default”):
6.1    Failure to Pay. If Debtor fails to pay as and when due any principal or other amount owed under this Note.

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6.2    Bankruptcy or Insolvency. If Debtor is or becomes insolvent, or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or applies for or consents to appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property; such receiver, trustee or similar officer is appointed without the application or consent of Debtor and such appointment shall continue undischarged for a period of 30 days; or Debtor shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against Debtor and shall remain undismissed for a period of 30 days; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of Debtor and such judgment, writ, or similar process shall not be released, vacated or fully bonded within 30 days after its issue or levy.
6.3    Other Defaults. If Debtor fails to comply with or perform any other term, obligation, covenant or condition contained in this Note or any of the Security Documents, or if any of the Security Documents is of no further force or effect, or if Debtor otherwise fails to provide Holder with a lien against the collateral described the Security Documents.
7.    Remedies.
7.1    Remedies. In the event of any Default, or at any time thereafter until such Default is cured or waived to the written satisfaction of Holder, Holder may (i) by notice in writing to Debtor declare the entire principal amount of this Note to be immediately due and payable without presentment, demand, protest, notice of protest or other notice of dishonor of any kind, all of which are waived by Debtor, and/or (ii) exercise any or all of its remedies as a secured party under any of the Security Documents or under applicable law; provided, that upon the occurrence of a Default under Section 6.2, the entire unpaid principal amount of this Note then outstanding and all interest accrued and unpaid thereon will be immediately due and payable without presentment, demand, protest or notice of any kind. Debtor agrees to pay on demand all reasonable costs and expenses, including attorney fees, incurred by Holder in connection with the collection of this Note or enforcement of the Security Documents.
7.2    No Waiver; Remedies Cumulative. No failure or delay on the part of Holder in exercising any right, power or remedy under this Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under this Note. The remedies herein are cumulative and not exclusive of any remedies provided by law.
7.3    Default Interest.    Upon the occurrence and during the continuance of an event of any Default, the unpaid principal balance shall bear interest thereafter at a rate of twelve percent (12%) per annum until such Default is cured, calculated on the basis of a 360-day year based on the actual number of days elapsed.
8.    General.

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8.1    Governing Law and Jurisdiction. This Note will be construed and enforced in accordance with the substantive laws of the State of New York, with any dispute or action relating to this Note venued or heard in the State and Federal courts sitting in the City of New York, Borough of Manhattan.
8.2    Waiver. No waiver, forbearance, failure or delay by Holder in exercising, or the exercise or beginning of exercise by Holder of, any right, power or remedy, simultaneously or later, shall not preclude the further, simultaneous or later exercise thereof, and every right, power or remedy of Holder shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed by Holder.
8.3    Notices. All notices or other communications provided for hereunder shall be in writing and mailed (registered or certified, return receipt requested), delivered by a recognized overnight courier or hand delivered to the receiving party at its address listed above in the case of Holder or on the signature line below in the case of Debtor, or such other address as shall be designated such party in written notice to the other party complying as to deliver with the terms of this Section 8.3.
8.4    Jury Trial Waiver. DEBTOR AND HOLDER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE OTHER PARTY HERETO.
8.5    Waivers and Agreements by Debtor. Debtor:
(a)    waives diligence, presentment, demand for payment, notice of dishonor, notice of non-payment, protest, notice of protest, and any and all other demands in connection with the delivery, acceptance, performance, default or enforcement of this Note;
(b)    agrees that Holder will have the right, without notice, to grant any extension of time for payment of any indebtedness evidenced by this Note or any other indulgence or forbearance whatsoever;
(c)    agrees that no failure on the part of Holder to exercise any power, right or privilege hereunder, or to insist upon the prompt compliance with the terms of this Note, will constitute a waiver of that power, right or privilege; and
(d)    agrees that the acceptance at any time by Holder of any past due amounts will not be deemed to be a waiver of the requirements to make prompt payment when due of any other amounts then or thereafter due and payable.
8.6    Payoff Letter. In connection with the payment by the Debtor of the entire outstanding principal balance, together with all other amounts owing hereunder, Holder shall execute and deliver to Debtor a customary payoff letter, which letter will set forth (a) the total amount

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required to be paid to satisfy in full and discharge the obligations of this Note (the “Payoff Amount”), (b) the Holder’s obligation to release any liens or other security interests under the Security Documents, at Debtor’s expense, after Holder shall have received the Payoff Amount, and (c) wire transfer instructions for paying the Payoff Amount. If this Note is satisfied and terminated prior to the Maturity Date absent the occurrence of a Fundamental Transaction, Debtor and Holder shall execute an agreement concurrently with such satisfaction and termination whereby Debtor agrees to pay Holder an amount equal to the Fundamental Transaction Amount upon the occurrence of a Fundamental Transaction prior to the Maturity Date.
*****

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IN WITNESS WHEREOF, this Secured Promissory Note has been duly executed by Debtor as of the day and year first above written.


QUMU CORPORATION



By:                          
Name:                         
Title:                          

Address for Notices:

QUMU CORPORATION
510 1st Avenue North, Suite 305
Minneapolis, MN 55403
Attention: Chief Executive Officer

Accepted and agreed as of the day and year first above written.

ESW HOLDINGS, INC.

By:                          
Name:                         
Title:                          





EXHIBIT 10.2

SECURITY AGREEMENT
This Security Agreement (this “Security Agreement” or “Agreement”) is entered into as of May 1, 2020 by and between QUMU CORPORATION, a Minnesota corporation (“Debtor”) and ESW HOLDINGS, INC. (“Secured Party”) pursuant to the Secured Promissory Note dated as of the date hereof between Debtor and Secured Party (as amended, restated, supplemented or otherwise modified from time to time, the “Note”). Capitalized terms used herein without definition have the meanings provided in the Note.

Whereas, the execution and delivery of this Security Agreement is a condition the financial accommodations provided to Debtor under the Note;

Now, therefore, Debtor agrees with Secured Party as follows:

1.    Definitions. All terms defined in the Uniform Commercial Code of the State of New York (the “UCC”) and used herein, unless defined herein or in the Note, shall have the same definitions herein as specified in the UCC.

2.    Security Interest. Debtor hereby grants Secured Party, effective upon the occurrence of the Trigger Event (as defined below), a security interest in the following properties, assets and rights of Debtor, whether now owned or hereafter acquired: all cash deposited by or on behalf of Debtor deposited in those certain deposit accounts with Wells Fargo, National Association and identified as Account No. 4946319456 and 4125676627 (collectively, the “Deposit Accounts”), together with all proceeds thereof, any contract rights, accounts or rights to the payment of money including accounts receivable, and all interest, products, proceeds and replacements of any of the foregoing (all of the foregoing being hereinafter called the “Collateral”). For purposes of this Agreement, the term “Trigger Event” shall mean the earliest to occur of: (a) the consummation of the transactions contemplated by that certain Agreement and Plan of Merger and Reorganization by and among Synacor, Inc., Quantum Merger Sub I, Inc. and Debtor dated February 11, 2020 (the “Merger Agreement”), (b) the termination of the Merger Agreement, (c) the taking of any action in preparation for a potential bankruptcy, including without limitation board resolutions, hiring of bankruptcy counsel, the formation of a special committee or any similar action; provided that Debtor shall provide immediate notice of such action to Secured Party, (d) the institution (by petition, application, answer, consent or otherwise) of any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to Debtor under the laws or any jurisdiction and (e) April 1, 2021. The parties hereto agree and acknowledge that the no security interest shall attach pursuant to this Security Agreement unless and until the occurrence of the Trigger Event.

3.    Obligations Secured. The security interest provided in this Security Agreement shall secure all of the following obligations (collectively, the “Obligations”): (i) all obligations under the Note, and all extensions, renewals or modifications thereof, (ii) all obligations under the Security Documents now or hereafter entered into by Debtor, in each case as the same may be amended, supplemented, restated or otherwise modified from time to time.



4.    Authorization to File Financing Statements. Debtor hereby irrevocably authorizes Secured Party (and its counsel and agents) at any time following the Trigger Event and from time to time to file thereafter in any UCC jurisdiction any initial financing statements and other filing or recording documents or instruments, and any amendments, continuations or terminations thereto that (a) indicate the Collateral (i) as all cash and accounts receivable of Debtor, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by Article 9 of the UCC. Debtor agrees to reasonably cooperate with Secured Party following the Trigger Event to furnish any information to Secured Party promptly upon request in order to enable Secured Party to perfect, or better perfect or evidence the perfection of, its security interest in the Collateral.

5.    Ownership. Debtor represents and warrants that Debtor owns, and to the extent that the Collateral is to be acquired after the date hereof will own, the Collateral free from encumbrance. Debtor will use commercially reasonable efforts to defend the right, title and interest of Secured Party in and to the Collateral against all claims and demands of all persons at any time claiming the Collateral or any interest in the Collateral.

6.    Representations, Warranties and Covenants Concerning Collateral. Debtor represents and warrants that no Financing Statement or other public notice or record of any lien covering the Collateral is on file in any public office. Debtor warrants that (a) its exact legal name is as stated on the first page of this Security Agreement, (b) Debtor is an organization of the type and organized in the jurisdiction set forth on the first page of this Security Agreement, and (c) Debtor’s place(s) of business, its chief executive office, its mailing address and the locations where all of its books and records related to the Collateral is regularly kept, is 510 1st Avenue North, Suite 305, Minneapolis, MN 55403. Debtor agrees that, upon the occurrence of the Trigger Event, it will promptly execute a control agreement with respect to the Deposit Accounts in a form reasonably satisfactory to Secured Party. Debtor agrees that it will not change its name, any place of business, any location of its collateral, its mailing address or its chief executive office without giving at least 10 days prior written notice to Secured Party. The Collateral is and will remain personal property. Debtor will not change its type of organization, jurisdiction of organization or other legal structure without the prior written consent of Secured Party. Debtor will pay the cost of filing Financing Statements and Continuation Statements in all appropriate public offices and will deliver any subordinations or waivers of other liens deemed by Secured Party to be necessary. Debtor hereby appoints Secured Party as its attorney-in-fact to do all acts and things which Secured Party may deem necessary to perfect and to continue perfected the security interest created hereby and to protect and to preserve the Collateral.

7.    Other Actions as to any and all Collateral. Debtor agrees to take any other action reasonably requested by Secured Party to ensure the attachment, perfection and priority of, and the ability of Secured Party to enforce, Secured Party’s security interest in any and all of the Collateral.

8.    Use. Until a Default has occurred and is continuing, Debtor may use the Collateral in any lawful manner not inconsistent with this Security Agreement.


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9.    Costs. If Debtor fails to perform any of its duties hereunder, Secured Party may, but shall not be required to, do so on Debtor’s behalf. Upon the occurrence and during the continuance of a Default, Debtor will pay the costs, including the reasonable actual attorneys’ fees, of Secured Party incurred in enforcing this Security Agreement. Any amounts expended by Secured Party in performing Debtor’s duties or enforcing this Security Agreement shall be payable by Debtor to Secured Party on demand and shall bear interest at the rate applicable from time to time to the Note.

10.    Default. Debtor will be in default under this Security Agreement and under the Obligations upon the happening of any of the following events (each a “Default”):

(a)    Debtor’s failure to perform when due any of the Obligations required to be performed by Debtor;

(b)    The occurrence of any Default as defined in the Note; or

(c)    Any representation or warranty made by Debtor herein shall prove to be incorrect in any material respect.

11.    Remedies. Upon the occurrence and during the continuance of any Default, Secured Party may at any time thereafter declare any or all monetary Obligations due and payable and all other Obligations immediately performable without notice to Debtor of the exercise of such option, and shall have the rights and remedies of a secured party under the UCC or other applicable laws. Thereafter, Secured Party may take possession of the Collateral with or without judicial process. Secured Party may require Debtor to assemble the Collateral and make it available to Secured Party at a place to be designated by Secured Party which is reasonably convenient to Secured Party. Secured Party will give Debtor reasonable notice of the time and place of any public sale or of the time after which any private sale or any other intended disposition of the Collateral is to be made. The requirements of reasonable notice shall be met if the notice is mailed, postage prepaid, to Debtor at least 10 days before the time of the sale or disposition.

12.    Secured Party Appointed Attorney-in-Fact. Debtor hereby irrevocably constitutes and appoints Secured Party as its attorney-in-fact for Debtor with respect to the Collateral with the right to, either personally or through an agent, during the continuance of a Default, take any of the following actions: (i) collect and receive all payments made thereon, (ii) notify the parties obligated on any of the Collateral to make payment to Secured Party of any amounts due or to become due thereunder, (iii) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or renew for any period (whether or not longer than the original period) any liabilities of any nature of any person with respect thereto, (iv) sell in one or more sales after ten days’ notice of the time and place of any public sale (which notice Debtor agrees is commercially reasonable) the whole or any part of the Collateral, (v) exercise all other rights, powers, privileges and remedies to which a holder of the Collateral would be entitled, (vi) otherwise act with respect to the Collateral as though Secured Party was the outright owner thereof, (vii) exercise any other rights or remedies lender may have under the UCC or other applicable law, (viii) take any action and to execute any instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Security Agreement. The appointment of Secured

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Party as attorney-in-fact is coupled with an interest and shall be valid and irrevocable until (x) the Obligations have been indefeasibly paid in full in accordance with the provisions of the Note or any other Security Document, as applicable, and (y) Debtor has no further obligations under the Note, the other Security Documents or any other documents entered into or delivered in connection therewith. If at any time payment, in whole or in part, of any of the obligations is rescinded or must otherwise be restored or returned by Secured Party for any reason, including as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, such obligations shall be automatically reinstated all as though such payment had not been made. In the event payment of all or any part of the obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by Secured Party in defending and enforcing such reinstatement shall be deemed to be included as a part of the Obligations.

13.    No Waivers. No waiver by Secured Party of any default shall operate or be construed as a waiver of any other Default or of the same Default on a future occasion. The taking of this Security Agreement will not waive or impair any other security Secured Party may have or hereafter acquire for the Obligations, nor will the taking of any additional security waive or impair the rights granted in this Security Agreement. Secured Party may resort to any security it may have in any order it deems proper, and may apply any payments made on any part of the Obligations to any part of the Obligations, despite any directions of Debtor to the contrary.

14.    Information. Debtor will upon no less than 48 hours’ written notice during normal business hours allow Secured Party and its agents, employees, attorneys or accountants to examine, inspect and make extracts from Debtor’s books and other records, and to verify under reasonable procedures directly with account debtors or by other methods accounts which are Collateral. Debtor will furnish to Secured Party upon request all documents evidencing any Collateral and any guarantees, security or other information relating thereto. Debtor agrees to reimburse Secured Party for the reasonable and documented fees and charges incurred in connection with any such inspection.

15.    Governing Law; Binding Effect. This Security Agreement shall be governed by the laws of the State of New York and shall inure to the benefit of, and bind, Debtor and his, her or its heirs, personal representatives, successors and assigns. No provision of this Security Agreement shall be amended, modified or waived other than by a written instrument that refers to this Security Agreement and is signed on behalf of Secured Party and Debtor. This Security Agreement may be executed in counterparts.

16.    Termination. This Security Agreement shall terminate upon the satisfaction and payment of all obligations owed to Secured Party by Debtor under the Note, but shall automatically be reinstated in the event any such payment is or is ordered to be returned by Secured Party. Promptly following termination of this Security Agreement, Secured Party shall deliver written evidence of such termination to Debtor, including any evidence necessary to terminate any liens granted hereunder.

17.    Consent to Jurisdiction. AT THE OPTION OF SECURED PARTY, THIS SECURITY AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE

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COURT SITTING IN CITY OF NEW YORK, BOROUGH OF MANHATTAN; AND EACH PARTY HERETO CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT ANY PARTY COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS SECURITY AGREEMENT, SECURED PARTY AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE‑DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

18.    Waiver of Trial by Jury. EACH PARTY TO THIS SECURITY AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

[The remainder of this page is intentionally blank.]

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In Witness Whereof, the parties have executed this Security Agreement as of the date first written above.

Secured Party:                    Debtor:

ESW HOLDINGS, INC.                QUMU CORPORATION



______________________________        __________________________________
By: __________________________            By: ___________________________
Its: __________________________            Its: _____________________________