SECURITY AGREEMENT
Exhibit
10.2
This
SECURITY
AGREEMENT
(this
"Agreement") is executed as of this 1st
day of
February 2008, by Lawriter, LLC, an Ohio limited liability company ("Lawriter"),
in favor of Institute of Legal Publishing, Inc., an Ohio corporation (the
"Secured Party").
W
I T N E S S E T H:
WHEREAS,
pursuant to that certain LLC Interests Purchase Agreement by and among Collexis
Holdings, Inc., a Nevada corporation ("Collexis"), Lawriter, Inc., a
wholly-owned subsidiary of Collexis and Nevada corporation (together with
Collexis, "Buyer"), Lawriter, XXXX.XXX LLC, an Ohio limited liability company
and Secured Party dated February 1, 2008 (the "Purchase Agreement"), Buyer
has
purchased all of the membership interests of Lawriter for and in consideration
of the Purchase Price which includes, in addition to an initial cash payment
and
issuance of Collexis common stock to be made at closing and certain “earnout”
payments, certain periodic cash payments referred to in the Purchase Agreement
as the "Scheduled Payments." Each of the Scheduled Payments shall be secured
by
Lawriter's Accounts Receivable arising from the Consortium Licenses and a first
lien on Lawriter's equipment as set forth in Section 2(b)(i)(B)(2) of the
Purchase Agreement; and
WHEREAS,
as a
condition to and an inducement for the Secured Party to enter into the Purchase
Agreement, Lawriter has agreed to execute this Agreement as security for the
Scheduled Payments.
NOW,
THEREFORE,
as an
inducement to the Secured Party, and in consideration of the Secured Party
extending credit to Collexis and for other valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the undersigned, to secure
the
prompt payment and performance of the Scheduled Payments does hereby agree
as
follows:
ARTICLE
I
SECURITY
INTEREST
Section
1.1 Definitions.
All
terms used herein that are identified in the Ohio Uniform Commercial Code (the
"Code") shall have the same meaning herein unless otherwise indicated. All
capitalized terms used in this Agreement or in the introductory paragraphs
above
not otherwise defined herein or above or in the Code shall have the meaning
attributed to such terms in the Purchase Agreement. All capitalized terms
defined in the introductory paragraphs above are incorporated herein as part
of
this Agreement.
Section
1.2 Security
Interest.
As
security for the prompt satisfaction of the Scheduled Payments, including the
costs and expenses of collection or enforcement thereof, Lawriter hereby grants
the Secured Party, as security for the Scheduled Payments, a continuing first
priority lien and security interest in the following (the "Collateral"): all
of
the Lawriter Equipment and all of Lawriter's Accounts Receivable arising from
the Consortium Licenses. For
purposes
of this Agreement, Lawriter Equipment shall mean that equipment reflected on
Schedule 1, attached hereto and made a part hereof, entitled “Lawriter
Equipment.”
ARTICLE
II
REPRESENTATIONS,
WARRANTIES AND COVENANTS
Section
2.1 Authorization.
The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary action.
Section
2.2 Financing
Statements.
At the
Secured Party's request, Lawriter will join with the Secured Party in executing
one or more financing statements or any other document in form reasonably
satisfactory to the Secured Party. Lawriter authorizes the Secured Party to
prepare and to file financing statements or such other documents deemed
necessary by the Secured Party covering the Collateral signed only by the
Secured Party under such circumstances and in such jurisdictions where
Lawriter's signature is not required. Lawriter will keep accurate and complete
records pertaining to the Collateral or any proceeds thereof.
Section
2.3 Further
Assurances.
Lawriter will do, make, procure, execute and deliver all acts, things, writings
and assurances as the Secured Party may reasonably request at any time and
from
time to time to protect, assure or perfect their interest, rights and remedies
under the Purchase Agreement and applicable law.
Section
2.4 Inspection
of Collateral and Records.
The
Secured Party may, upon reasonable notice, examine and inspect the Collateral
and records and documents related to the Collateral during regular business
hours upon no less than three (3) days prior written notice.
Section
2.5 Assignment
or Sale.
Lawriter, its agents, servants or employees will not mortgage, lease, rent,
sell, assign or offer to sell, assign or otherwise transfer or dispose of the
Collateral, other than the ordinary course of business, either in whole or
in
part, or any interest therein without the prior written consent of the Secured
Party or approval of any applicable bankruptcy court.
Section
2.6 Additional
Representations of Lawriter.
With
respect to all of the Collateral:
(a) Lawriter
is organized under the laws of the State of Ohio and will not change its state
of formation or type of organization without the prior written consent of the
Secured Party which consent shall not be unreasonably withheld or
delayed.
(b) Lawriter
agrees to take such reasonable actions as would be expected from a similarly
situated company granting similar security interests to prevent and protect
against any waste, damage, or destruction of the Collateral, and Lawriter will
safeguard and keep all documents relating to the Collateral.
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(c)
Lawriter
will promptly advise (but in no event greater than ten (10) days) the Secured
Party in writing of any change in Lawriter's name or in its principal place
of
business.
ARTICLE
III
DEFAULT
Section
3.1 Events
of Default.
Lawriter shall be in default under this Agreement upon the happening of any
of
the following events or conditions ("Event of Default"):
(i) Buyer
defaults in the performance or observance of any provision of this Agreement
or
fails to timely make the Scheduled Payments; or
(ii) the
loss,
impairment, sale, assignment, transfer or encumbrance to or of a substantial
part of the Collateral or Lawriter's interest therein shall occur, or any levy,
seizure, injunction or attachment thereon; or
(iii) the
entry
of an order appointing a trustee, receiver, or custodian or the filing by or
against Lawriter of a petition for bankruptcy relief.
Section
3.2 Rights
and Remedies Upon Default.
Upon
occurrence of any of the events of default described in Section 3.1, the Secured
Party shall have the following rights that shall be cumulative with all other
rights and remedies of the Secured Party:
(a) Acceleration.
The
Secured Party shall have the right to and may declare all liabilities secured
hereby to be immediately due and payable without notice to or demand upon
Lawriter or any other person;
(b)
Other
Rights.
The
Secured Party, in addition to any remedies it may exercise under this Agreement
or the Purchase Agreement, or under applicable law, may immediately and without
demand, exercise any and all of the rights of a secured party upon default
under
the Code, all of which shall be cumulative. Such rights shall include, without
limitation:
(i) The
right
to take possession of the Collateral without judicial process and the right
to
enter upon any premises where the Collateral may be located for the purposes
of
taking possession of, securing, removing and/or disposing of the Collateral
without interference from Lawriter and without any liability for rent, storage,
utilities or other sums;
(ii) The
Secured Party shall have the right to notify the person or entity obligated
on
Accounts Receivable to make payments thereon directly to the Secured Party
and
to take control of the cash and noncash proceeds through a lockbox or other
means;
(iii) The
right
to sell, lease, or otherwise dispose of the whole or from time-to-time, any
part
of or all of the Collateral, whether in its then condition or after further
processing or preparation, at public or private sale. Unless the Collateral
is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the
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Secured
Party shall give Lawriter at least five (5) days' prior notice of the time
and
place of any public sale of the Collateral or of the time after which any
private sale or other intended disposition of the Collateral is to be made,
all
of which Lawriter agrees shall be reasonable notice of any such sale or
disposition of the Collateral; and
(c) Upon
request of the Secured Party, Lawriter shall assemble and make the Collateral
available to the Secured Party at a place reasonably convenient to Lawriter
and
the Secured Party.
Section
3.3 Bankruptcy
Court Relief.
Secured
Party agrees that, if applicable, it shall not seek to exercise any of its
rights under Section 3.2 without first seeking relief to do so from the United
States Bankruptcy Court.
Section
3.4 Attorney-in-Fact.
To
effectuate the rights and remedies of the Secured Party upon default, Lawriter
does hereby irrevocably appoint the Secured Party attorney-in-fact for Lawriter,
with full power of substitution, after default of Lawriter, to sign, execute
and
deliver any and all instruments and documents and to do all acts and things
to
the same extent as Lawriter could do, and to sell, assign and transfer any
Collateral to the Secured Party or any other party.
Section
3.5 Proceeds
of Sale; Deficiency.
The
proceeds of any sale or other disposition of the Collateral or any part of
the
Collateral by the Secured Party shall be applied first to the expenses
(including, but not limited to, reasonable attorneys' fees) of retaking,
holding, storing, and processing the Collateral and preparing the Collateral
for
sale, selling and the like and collecting or attempting to collect the Scheduled
Payments secured by this Agreement; then to the satisfaction of the Scheduled
Payments secured hereby; and the balance, if any, to be paid to Lawriter or
to
be paid as otherwise provided by law.
Section
3.6 Cumulative
Rights.
The
enumeration of the foregoing rights is not intended to be exhaustive, and the
exercise of any right shall not preclude the exercise of any other rights,
all
of which shall be cumulative. The Secured Party may permit Lawriter to remedy
any default, but such shall not be a waiver of the default so remedied, and
the
Secured Party's waiver of any default shall not be a waiver of any subsequent
or
prior defaults.
ARTICLE
IV
MISCELLANEOUS
Section
4.1 Waiver;
Severability.
(a) In
addition to any other waivers, as set forth herein in the Note, Lawriter
expressly waives, to the extent allowed by law, all claims and rights to claim
any exemptions allowed or allowable under the Constitution or laws of the United
States, the State of Ohio, or any other jurisdiction.
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(b) In
the
event that any one or more of the terms or provisions of this Agreement shall
be
invalid, illegal or unenforceable in any respect, the validity of the remaining
terms or provisions shall in no way be affected, prejudiced or disturbed
thereby.
Section
4.2 Assignment
of Obligations.
If at
any time or times by sale, assignment, negotiation, pledge or otherwise, the
Secured Party transfers any or all of the Obligations, such transfer shall,
unless otherwise specified in writing, carry with it the Secured Party's rights
and remedies under this Agreement with respect to such Obligations transferred,
and the transferee shall become vested with such rights and remedies whether
or
not they are specifically referred to in the transfer.
Section
4.3 Notices.
All
notices herein authorized or required to be given to Lawriter or the Secured
Party shall be delivered personally or shall be sent by certified mail,
registered mail or overnight express, postage prepaid to the addresses set
forth
below or to such other address as the parties may designate from time to time
in
accordance with this subparagraph:
Buyer
or
Lawriter:
Lawriter,
LLC
Lawriter,
Inc.
0000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attention:
President
With
copy
to:
XxXxxxxx
& Xxxxx, LLP
XX
Xxx
000000
Xxxxxxxx,
Xxxxxxx 00000-0000
Attn:
Xxxxx XxXxxxxx, Esq.
Secured
Party:
Institute
of Legal Publishing, Inc.
000
Xxxx
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
Xxxx 00000
Attn:
Xxxxxx X. Xxxx, III
With
copy
to:
Xxxxxxxx
Xxxx LLP
00
Xxxx
Xxxxxx Xxxxxx
Xxxxxx,
Xxxx 00000
Attn:
Xxxxxx Xxxxxx Xxxxxxxx, Esq.
Section
4.4 Non-Waiver;
Modification.
(a) No
course
of dealing, delay or failure on Secured Party's part in exercising any right,
privilege, option or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, privilege, option or
remedy preclude any further exercise thereof or the exercise of any other right,
privilege, option or remedy. No waiver
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whatsoever
shall be valid unless in writing signed by the Secured Party and then only
to
the extent therein set forth.
(b) No
modification, amendment or waiver of any provision of this Agreement, and no
consent to any departure by Lawriter therefrom, shall be effective unless the
same shall be in writing and signed by the Secured Party and then such waiver
or
modification shall be effective only in the specific instance and for the
purpose for which it is given.
Section
4.5 Captions
and Titles.
The
headings of the sections, paragraphs, and subdivisions of this Agreement are
for
convenience of reference only, are not to be considered a part hereof, and
shall
not limit or otherwise affect any of the terms hereof.
Section
4.6 Successors
and Assigns.
The
provisions of this Agreement shall inure to and bind not only the parties
hereto, but also their respective heirs, executors, administrators, successors
and assigns.
Section
4.7 Applicable
Law.
This
Agreement shall be construed and governed, and its validity determined,
according to the laws of the State of South Carolina.
Section
4.8 Termination
of Security Interest.
The
Secured Party's security interest under this Agreement will not be terminated
until the Secured Party executes a written termination agreement.
Section
4.9 Counterparts.
This
Security Agreement may be executed in any number of counterparts, each of which
so executed shall be deemed an original, but all such counterparts together
constitute but one and the same instrument.
[Signatures
on Following Page]
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IN
WITNESS WHEREOF,
the
undersigned has executed this document on the date first written
above.
LAWRITER,
LLC
By:
/s/
Xxxxxxx X. Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx
Its:
Manager
INSTITUTE
OF LEGAL PUBLISHING, INC.
By:
/s/
Xxxxxx X. Xxxx III
Xxxxxx
Xxxx
Its:
President
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