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Exhibit 10.2
SECURITY AGREEMENT
This
SECURITY AGREEMENT (this
"Agreement") is executed as of this 1
st 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, OSBA.COM
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.
(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 at
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