Exhibit
10.4
SECURITY
AGREEMENT
1.
Identification .
This Security Agreement (the
“Agreement”), dated as of March 4, 2009, is entered
into by and between Collexis Holdings, Inc., a Nevada corporation
(“Parent”), Biomed Experts, Inc., a Nevada corporation,
Collexis US, Inc., a Delaware corporation, Collexis, Inc., a
Delaware corporation, Lawriter LLC, an Ohio limited liability
company (each a “Guarantor” and together with Parent
except for Lawriter LLC, each a “Debtor” and
collectively the “Debtors”), and Alpha Capital Anstalt
(the “Lender”).
2.
Recitals .
2.1 At
or about the date hereof, the Lender is making a loan (the
“Loan”) to Parent. Each Guarantor is a
direct or indirect Subsidiary (as defined in Section 6.12) of
Parent. It is beneficial to each Debtor that the Loan is
made. Guarantor has or will deliver a
“Guaranty” of Parent’s obligations to
Lender.
2.2 The
Loan will be evidenced by a promissory note (“Note”)
issued by Parent on or about the date of this Agreement pursuant to
subscription agreement (the “Subscription Agreement”)
to which Parent and Lender are parties. The Note is in
the principal amount of $764,705.88 and was or will be executed by
Parent as “Borrower” or “Debtor” for the
benefit of each Lender as the “Holder” or
“Lender” thereof.
2.3 In
consideration of the Loan made and to be made by Lender to Parent
and for other good and valuable consideration, and as security for
the performance by Parent of its obligations under the Note, by
Guarantor of its obligations under the Guaranty, and as security
for the repayment of the Loan and all other sums due from Debtor to
Lender arising under the Transaction Documents (as defined in the
Subscription Agreement) and any other agreement between or among
them (collectively, the “Obligations”), each Debtor,
for good and valuable consideration, receipt of which is
acknowledged, has agreed to grant to the Lender a security interest
in the Collateral (as such term is hereinafter defined), on the
terms and conditions hereinafter set forth. Obligations
include all future advances and loans by Lender to Debtor that may
be made pursuant to the Subscription Agreement or any other
agreements.
2.4 The
following defined terms which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments, Inventory
and Proceeds. Other capitalized terms employed herein
shall have the meanings attributed to them in the Subscription
Agreement.
3.
Grant of General Security Interest in Collateral
.
3.1 As
security for the Obligations of Debtors, each Debtor hereby grants
the Lender, a security interest in the Collateral.
3.2 “Collateral”
shall mean all of the following property of Debtors:
(A) All
now owned and hereafter acquired right, title and interest of
Debtors in, to and in respect of all Accounts, Goods, real or
personal property, all present and future books and records
relating to the foregoing and all products and Proceeds of the
foregoing, and as set forth below:
(i) All
now owned and hereafter acquired right, title and interest of
Debtors in, to and in respect of all: Accounts, interests in goods
represented by Accounts, returned, reclaimed or repossessed goods
with respect thereto and rights as an unpaid vendor; contract
rights; Chattel Paper; investment property; General Intangibles
(including but not limited to, tax and duty claims and refunds,
registered and unregistered patents, trademarks, service marks,
certificates, copyrights trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or
licensee, choses in action and other claims, and existing and
future leasehold interests and claims in and to equipment, real
estate and fixtures); Documents; Instruments; letters of credit,
bankers’ acceptances or guaranties; cash moneys, deposits;
securities, bank accounts, deposit accounts, credits and other
property now or hereafter owned or held in any capacity by
Debtors, as well as agreements or property securing or relating to
any of the items referred to above;
(ii)
Goods: All now owned and hereafter acquired
right, title and interest of Debtors in, to and in respect of
goods, including, but not limited to:
(a) All
Inventory, wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description, including all
raw materials, work-in-process, finished goods, and materials to be
used or consumed in Debtors’ business; finished goods, timber
cut or to be cut, oil, gas, hydrocarbons, and minerals extracted or
to be extracted, and all names or marks affixed to or to be affixed
thereto for purposes of selling same by the seller, manufacturer,
lessor or licensor thereof and all Inventory which may be returned
to any Debtor by its customers or repossessed by any Debtor and all
of Debtors’ right, title and interest in and to the foregoing
(including all of a Debtor’s rights as a seller of
goods);
(b) All
Equipment and fixtures, wherever located, whether now owned or
hereafter acquired, including, without limitation, all machinery,
furniture and fixtures, and any and all additions, substitutions,
replacements (including spare parts), and accessions thereof and
thereto (including, but not limited to Debtors’ rights to
acquire any of the foregoing, whether by exercise of a purchase
option or otherwise);
(iii)
Property: All now owned and hereafter acquired
right, title and interests of Debtors in, to and in respect of any
other personal property in or upon which a Debtor has or may
hereafter have a security interest, lien or right of
setoff;
(iv)
Books and Records: All present and future books
and records relating to any of the above including, without
limitation, all computer programs, printed output and computer
readable data in the possession or control of the Debtors, any
computer service bureau or other third party; and
(v)
Products and Proceeds: All products and Proceeds
of the foregoing in whatever form and wherever located, including,
without limitation, all insurance proceeds and all claims against
third parties for loss or destruction of or damage to any of the
foregoing.
(B) All
now owned and hereafter acquired right, title and interest of
Debtors in, to and in respect of the following:
(i) the
shares of stock of each Guarantor, which the Debtor represents,
equal 100% of the equity ownership and right to receive equity of
each Guarantor, the certificates representing such shares together
with an executed stock power, and other rights, contractual or
otherwise, in respect thereof and all dividends, distributions,
cash, instruments, investment property and other property from time
to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such shares;
(ii) all
additional shares of stock, partnership interests, member interests
or other equity interests from time to time acquired by Debtor, in
any Subsidiary that is not a Subsidiary of the Debtor on the date
hereof (“Future Subsidiaries”), the certificates
representing such additional shares, and other rights, contractual
or otherwise, in respect thereof and all dividends, distributions,
cash, instruments, investment property and other property from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such additional shares,
interests or equity; and
(iii) all
security entitlements of Debtor in, and all Proceeds of any and all
of the foregoing in each case, whether now owned or hereafter
acquired by Debtor and howsoever its interest therein may arise or
appear (whether by ownership, security interest, lien, claim or
otherwise).
3.3 The
Lender is hereby specifically authorized, after the Maturity Date
(defined in the Note) accelerated or otherwise, and after the
occurrence of an Event of Default (as defined herein) and the
expiration of any applicable cure period, to transfer any
Collateral into the name of the Lender and to take any and all
action deemed advisable to the Lender to remove any transfer
restrictions affecting the Collateral.
4.
Perfection of Security Interest .
4.1 Each
Debtor shall prepare, execute and deliver to the Lender UCC-1
Financing Statements. The Lender is instructed to
prepare and file at each Debtor’s cost and expense, financing
statements in such jurisdictions deemed advisable to Lender,
including but not limited to the States of Nevada and
Delaware.
4.2 Upon
the execution of this Agreement, Parent shall deliver to Lender
stock certificates representing all of the shares of outstanding
capital stock of each Guarantor (the
“Securities”). All such certificates shall
be held by or on behalf of Lender pursuant hereto and shall be
delivered in suitable form for transfer by delivery, and shall be
accompanied by duly executed instruments of transfer or assignment
or undated stock powers executed in blank, all in form and
substance satisfactory to Lender.
4.3 All
other certificates and instruments constituting Collateral from
time to time required to be pledged to Lender pursuant to the terms
hereof (the “Additional Collateral”) shall be delivered
to Lender promptly upon receipt thereof by or on behalf of
Debtors. All such certificates and instruments shall be
held by or on behalf of Lender pursuant hereto and shall be
delivered in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment
or undated stock powers executed in blank, all in form and
substance satisfactory to Lender. If any Collateral
consists of uncertificated securities, unless the immediately
following sentence is applicable thereto, Debtors shall cause
Lender (or its custodian, nominee or other designee) to become the
registered holder thereof, or cause each issuer of such securities
to agree that it will comply with instructions originated by Lender
with respect to such securities without further consent by
Debtors. If any Collateral consists of security
entitlements, Debtors shall transfer such security entitlements to
Lender (or its custodian, nominee or other designee) or cause the
applicable securities intermediary to agree that it will comply
with entitlement orders by Lender without further consent by
Debtors.
4.4 Within
five (5) business days after the receipt by a Debtor of any
Additional Collateral, a Pledge Amendment, duly executed by such
Debtor, in substantially the form of Annex I hereto (a
“Pledge Amendment”), shall be delivered to Lender in
respect of the Additional Collateral to be pledged pursuant to this
Agreement. Each Debtor hereby authorizes Lender to attach each
Pledge Amendment to this Agreement and agrees that all certificates
or instruments listed on any Pledge Amendment delivered to Lender
shall for all purposes hereunder constitute Collateral.
4.5 If
Debtor shall receive, by virtue of Debtor being or having been an
owner of any Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend
or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets,
combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right,
whether as an addition to, substitution for, or in exchange for,
any Collateral, or otherwise, (iii) dividends payable in cash
(except such dividends permitted to be retained by Debtor pursuant
to Section 5.2 hereof) or in securities or other property or
(iv) dividends or other distributions in connection with a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in surplus, Debtor
shall receive such stock certificate, promissory note, instrument,
option, right, payment or distribution in trust for the benefit of
Lender, shall segregate it from Debtor’s other property and
shall deliver it forthwith to Lender, in the exact form received,
with any necessary endorsement and/or appropriate stock powers duly
executed in blank, to be held by Lender as Collateral and as
further collateral security for the Obligations.
5.
Distribution .
5.1 So
long as an Event of Default does not exist, Debtors shall be
entitled to exercise all voting power pertaining to any of the
Collateral, provided such exercise is not contrary to the interests
of the Lender and does not impair the Collateral.
5.2. At
any time an Event of Default exists or has occurred and is
continuing, all rights of Debtors, upon notice given by Lender, to
exercise the voting power and receive payments, which it would
otherwise be entitled to pursuant to Section 5.1, shall cease and
all such rights shall thereupon become vested in Lender, which
shall thereupon have the sole right to exercise such voting power
and receive such payments.
5.3 All
dividends, distributions, interest and other payments which are
received by Debtors contrary to the provisions of Section 5.2 shall
be received in trust for the benefit of Lender as security and
Collateral for payment of the Obligations shall be segregated from
other funds of Debtors, and shall be forthwith paid over to Lender
as Collateral in the exact form received with any necessary
endorsement and/or appropriate stock powers duly executed in blank,
to be held by Lender as Collateral and as further collateral
security for the Obligations.
6.
Further Action By Debtors; Covenants and Warranties
.
6.1 Lender
at all times shall have a perfected security interest in the
Collateral. Each Debtor represents that, other than the
security interests described on Schedule 6.1, it has and
will continue to have full title to the Collateral free from any
liens, leases, encumbrances, judgments or other
claims. The Lender’s security interest in the
Collateral constitutes and will continue to constitute a first,
prior and indefeasible security interest in favor of Lender,
subject only to the security interests described on Schedule
6.1 . Each Debtor will do all acts and things, and
will execute and file all instruments (including, but not limited
to, security agreements, financing statements, continuation
statements, etc.) reasonably requested by Lender to establish,
maintain and continue the perfected security interest of Lender in
the perfected Collateral, and will promptly on demand, pay all
costs and expenses of filing and recording, including the costs of
any searches reasonably deemed necessary by Lender from time to
time to establish and determine the validity and the continuing
priority of the security interest of Lender, and also pay all other
claims and charges that, in the opinion of Lender are reasonably
likely to materially prejudice, imperil or otherwise affect the
Collateral or Lender’s security interests therein.
6.2 Except
in connection with sales of Collateral, in the ordinary course of
business, for fair value and in cash, and except for Collateral
which is substituted by assets of identical or greater value
(subject to the consent of the Lender) or which is inconsequential
in value, each Debtor will not sell, transfer, assign or pledge
those items of Collateral (or allow any such items to be sold,
transferred, assigned or pledged), without the prior written
consent of Lender other than a transfer of the Collateral to a
wholly-owned United States formed and located subsidiary or to
another Debtor on prior notice to Lender, and provided the
Collateral remains subject to the security interest herein
described. Although Proceeds of Collateral are covered
by this Agreement, this shall not be construed to mean that Lender
consents to any sale of the Collateral, except as provided
herein. Sales of Collateral in the ordinary course of
business as described above shall be free of the security interest
of Lender and Lender shall promptly execute such documents
(including without limitation releases and termination statements)
as may be required by Debtors to evidence or effectuate the
same.
6.3 Each
D
