Security Agreement - Loislaw.com Inc. and Wolters Kluwer U.S. Corporation

                               SECURITY AGREEMENT


         THIS SECURITY AGREEMENT dated as of December 19, 2000 by and between
LOISLAW.COM, INC., a corporation formed under the laws of State of Delaware (the
"DEBTOR"), and WOLTERS KLUWER U.S. CORPORATION, a Delaware corporation (the
"SECURED PARTY"),


                              W I T N E S S E T H:

         WHEREAS, the Debtor has made a grid promissory demand note dated
December 19, 2000 in favor of the Secured Party in the face amount of Seven
Million Dollars ($7,000,000) (as it may be amended, restated, supplemented or
otherwise modified from time to time, the "NOTE"; capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the Note);
and

         WHEREAS, as a condition precedent to the making of up to an aggregate
of $7,000,000 in loans to the Borrower pursuant to the Note, the Secured Party
has required the Debtor to grant, and the Debtor has agreed to grant, to the
Secured Party a continuing first priority security interest (subject to
Permitted Liens, as defined below) in and to the Collateral (as hereinafter
defined) of the Debtor to secure all of its obligations to the Secured Party
under the Note;

         NOW, THEREFORE, the Debtor, intending to be bound hereby, in
consideration of the premises hereof, in order to induce the Secured Party to
make loans to the Borrower pursuant to the Note and in consideration of any
loans or other financial accommodations heretofore or hereafter made by the
Secured Party in connection therewith to or for the account of the Borrower, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, hereby agrees with, and for the benefit of, the Secured
Party as follows:

         1. GRANT OF SECURITY INTEREST. The Debtor, to secure the Obligations
(as defined herein), pursuant to Article 9 of the Delaware Uniform Commercial
Code (the "CODE"), hereby assigns, pledges and grants to the Secured Party a
continuing first priority security interest in the collateral consisting of all
of the Debtor's right, title and interest in and to all of the following
property and interests in property, whether now owned or existing or hereafter
acquired or arising and regardless of where located and all products, proceeds,
substitutions, additions, accessions and replacements thereof (all of the same
being herein referred to as the "COLLATERAL"):

         (a) All accounts, accounts receivable, contracts, notes, bills,
acceptances, choses in action, chattel paper, instruments, documents and other
forms of obligations at any time owing to the Debtor arising out of goods sold
or leased or for services rendered by the Debtor, including, without limitation,
accounts receivable and contract rights arising under agreements to which the
Debtor is a party, the proceeds thereof and all of the Debtor's rights with
respect to any goods represented thereby, whether or not delivered, goods
returned by customers and all rights as an unpaid vendor or lienor, including
rights of stoppage in transit and 




of recovering possession by proceedings including repletion and reclamation,
together with all customer lists, books and records, ledger and account cards,
computer tapes, software, disks, printouts and records, whether now in existence
or hereafter created, relating thereto (collectively referred to hereinafter as
"ACCOUNTS");

         (b) All general intangibles of the Debtor in which the Debtor now has
or hereafter acquires any rights, including but not limited to causes of action,
corporate or business records, inventions, designs, goodwill, trade names, trade
secrets, trade processes, patents, licenses, permits, franchises, customer
lists, computer programs, all claims under guaranties, tax refund claims, rights
and claims against carriers and shippers, leases, claims under insurance
policies, all rights to indemnification and all other intangible personal
property and intellectual property of every kind and nature (collectively
referred to hereinafter as "INTANGIBLES");

         (c) All rights now or hereafter accruing to the Debtor under contracts,
leases, agreements or other instruments to perform services, to hold and use
land and facilities, and to enforce all rights thereunder;

         (d) All books and records relating to any of the Collateral (including,
without limitation, customer data, credit files, computer programs, printouts,
and other computer materials and records of the Debtor pertaining to any of the
foregoing); and

         (e) All accessions to, substitutions for and all replacements, products
and proceeds of the foregoing, including, without limitation, proceeds of
insurance policies insuring the Collateral.

         2. SECURITY FOR OBLIGATIONS. This Agreement secures the full and prompt
payment and performance of (i) all obligations of the Borrower to pay, as and
when due and payable (by scheduled maturity or otherwise), all amounts from time
to time owing by it in respect of the Note, whether for principal, interest
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of the Borrower), fees or otherwise (collectively, the
"OBLIGATIONS"). The Debtor and the Secured Party agree that they intend the
security interest hereby granted to attach upon the execution of this Agreement.

         3. DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) the Debtor shall remain fully liable under any contracts
and agreements included in the Collateral to perform all of its duties and
obligations thereunder, (ii) the exercise by the Secured Party of any of the
rights hereunder shall not release the Debtor from any of its duties or
obligations under any such Collateral, and (iii) the Secured Party is not
obligated or liable under any such Collateral by reason of this Agreement, nor
is the Secured Party obligated to perform any obligations or duties of the
Debtor thereunder or to take any action hereunder.

         4. FURTHER ASSURANCES. 

            (a) The Debtor agrees that from time to time, at its expense, it 
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or appropriate, or that the
Secured Party may request, in order to create, evidence, perfect or preserve any
security interest granted or purported to be granted hereby or to enable 

                                       2



the Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral, including, without limitation, executing and filing
financing or continuation statements, or amendments thereto, as the Secured
Party may request, without the signature of the Debtor where permitted by law.
The Debtor hereby agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement where permitted by law.

            (b) The Debtor will furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Secured Party may
reasonably request, all in reasonable detail, and will permit the Secured Party,
and/or its designated agents, at any time during the Debtor's usual business
hours, to inspect and/or conduct audits with respect to the Collateral.

      5. REPRESENTATIONS AND WARRANTIES: GENERAL. The Debtor hereby represents
and warrants that (i) the principal place of business and chief executive office
of the Debtor are located at the address identified as such on the signature
page to this Agreement, (ii) except as set forth in SCHEDULE 5(ii) hereof, all
of the Collateral is located at such principal place of business, (iii) the
Debtor has good, indefeasible and merchantable title to the Collateral (or a
valid right to use the Collateral, in the case of Collateral comprised of rights
and interests of the Debtor obtained by lease, license or similar agreement
("Licensed Rights")), and it owns the Collateral free and clear of any lien,
security interest, charge or encumbrance except for: (I) the security interests
in favor of the Secured Party created by this Agreement; (II) non-exclusive
licenses granted by the Debtor to its customers in the ordinary course of
business; (III) rights of lessors or licensors with respect to Licensed Rights;
and (IV) other liens expressly permitted by SCHEDULE 5(iii) hereof (each of the
liens permitted by clauses I, II, III and IV hereof hereinafter collectively
referred to as "PERMITTED LIENS"), (iv) except such as may have been filed in
favor of the Secured Party, no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording office, (v) this Agreement, together with actions heretofore taken or
concurrently undertaken, creates a valid and first perfected priority lien
(subject to Permitted Liens) in the Collateral, securing the payment of the
Obligations, and all filings and other actions necessary to create, evidence,
perfect and preserve such security interest (save for the timely filing of
continuation statements or other statements required by applicable law) have
been, or are being concurrently undertaken with the execution hereof, duly taken
and (vi) the correct corporate name of the Debtor is set forth in the first
paragraph hereof and, except as set forth in SCHEDULE 5(vi), the Debtor has no
other corporate name or fictitious name and has not, during the immediately
preceding five (5) years, been known under or used any other corporate or
fictitious name.

      6.    COVENANTS.

            (a) The Debtor hereby covenants and agrees with the Secured Party
that (i) the Debtor shall preserve and maintain the lien created by this
Agreement and will protect and defend its title to the Collateral so that the
lien so granted shall be and remain a continuing first priority security
interest (subject to Permitted Liens) in the Collateral, (ii) the Debtor will
not create, assume or suffer to exist any other lien in the Collateral except
Permitted Liens, (iii) the Debtor shall maintain books and records pertaining to
the Collateral in such detail, form and scope as the Secured Party may
reasonably require, and (iv) the Debtor shall pay all taxes, 

                                       3



assessments and other charges lawfully levied or assessed upon its properties or
upon any of the Collateral when due. If, in the Secured Party's sole opinion any
lien (other than Permitted Liens) may create an obligation having priority over
the lien granted hereby, the Secured Party may pay such lien and the amount of
such payment shall be charged to the Debtor and be secured by the lien granted
hereby.

            (b) The Debtor shall comply with the following covenants regarding
the Collateral, (i) the Debtor shall keep the Collateral at the places specified
in Section 5(ii); PROVIDED, HOWEVER, that the Debtor may establish any other
location, on written notice delivered to the Secured Party not less than thirty
(30) days prior to establishing any such other location, if the Debtor has
complied with Section 5 hereof, (ii) the Debtor shall cause the Collateral to be
maintained and preserved in good condition, repair and working order, excepting
ordinary wear and tear, and (iii) the Debtor shall not permit any of the
Collateral to become a fixture to any real estate that is not subject to a
mortgage or deed of trust made by the Debtor in favor of the Secured Party. The
Debtor shall, on demand therefor by the Secured Party, deliver to the Secured
Party any and all evidence of ownership of any of the Collateral (including,
without limitation, certificates of title and applications for title).

      7. INSURANCE. The Debtor shall, at its own expense, maintain insurance
with respect to the Collateral in such amounts, against such risks, in such form
and with such insurers, as shall be customary for businesses similar to the
Debtor's business.

      8. TRANSFERS AND OTHER LIENS. The Debtor shall not, without the Secured
Party's prior written consent, (i) sell, assign or otherwise dispose of any of
the Collateral except the sale, assignment or other disposition of assets no
longer used or useful in the conduct of its business and the sale, assignment or
other disposition of assets in the ordinary course of business consistent with
past practice or the grant of non-exclusive licenses to customers in the
ordinary course of business, or (ii) create or suffer to exist any lien upon or
with respect to any of the Collateral, other than Permitted Liens.

      9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Debtor hereby irrevocably
appoints the Secured Party the Debtor's attorney-in-fact, with full authority to
take any action and to execute any instrument that the Secured Party may deem
necessary to carry-out the provisions of this Agreement, including without
limitation to execute and file any UCC financing statements the Secured Party
deems necessary or appropriate.

      10. REMEDIES UPON DEFAULT. If the Debtor shall default on its
obligations under the Note or this Agreement:

          (a) In addition to other rights and remedies provided for herein or
otherwise available to it, the Secured Party may exercise all the rights and
remedies of a secured party under applicable law and may also (i) in the name of
the Secured Party, the Debtor or otherwise, demand, sue for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for, or make any compromise or settlement deemed desirable with respect
to, any of the Collateral, and the Secured Party may modify the terms of payment
or of a release, all without incurring responsibility to, or discharging or
otherwise affecting any liability to the Secured Party of, the Debtor, (ii)
enter upon the premises, or wherever the Collateral is, 

                                       4



and take possession thereof, and maintain such possession on the Debtor's
premises, or demand and receive such possession from any person who has
possession thereof, or remove the Collateral or any part thereof, to such other
places as the Secured Party may desire, all without any obligation, (iii)
require the Debtor to, at its expense, assemble all or part of the Collateral as
directed by the Secured Party and make it available to the Secured Party at a
place to be designated by the Secured Party which is reasonably convenient to
both parties, (iv) without notice (except as specified below) and with or
without taking the possession thereof, sell, lease, assign, grant options to
purchase or otherwise dispose of the Collateral or any part thereof in one or
more parcels at public or private sale, at any location chosen by the Secured
Party, for cash, on credit or for future delivery, and at such price or prices
and upon such other terms as the Secured Party may deem commercially reasonable.
The Debtor agrees that, to the extent notice of sale shall be required by law,
at least five days' notice to the Debtor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Secured Party shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The Secured
Party may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Debtor agrees
that the Secured Party shall have no obligation to preserve rights in the
Collateral against prior parties or to marshal any Collateral for the benefit of
any Person. The Secured Party is hereby granted a license or other right to use,
without charge, the Debtor's intellectual property, as it pertains to the
Collateral, in completing production of, advertising for, sale of, and the
selling of any Collateral, and the Debtor's rights under all licenses and
franchise agreements shall inure to the Secured Party's benefit, and (v) apply,
without notice, any cash or cash items constituting Collateral in the possession
of the Secured Party to payment of any of the Obligations. The Debtor waives, to
the extent permitted by applicable law, all rights of the Debtor to prior notice
and hearing under any other applicable statute or constitution.

            (b) All cash proceeds received by the Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral will, after payment of any amounts payable to the Secured Party
pursuant to Section 12 hereof, be applied against the Obligations in such order
as the Secured Party shall elect, and any balance left thereafter returned to
Debtor.

      11. SETOFF. The Obligations will be paid by the Debtor without regard to
any equities between the Debtor and the Secured Party or any right of setoff or
cross-claim. Any indebtedness owing by the Secured Party to the Debtor may be
set off and applied by the Secured Party against the Obligations at any time or
from time to time either before or after maturity, without demand upon or notice
to the Debtor or any Person.

      12.   INDEMNITY AND EXPENSES.

            (a) The Debtor agrees to indemnify the Secured Party from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting solely from the
Secured Party's gross negligence or willful misconduct.


                                       5



            (b) The Debtor will upon demand pay to the Secured Party the amount
of any and all reasonable expenses (including the reasonable fees and
disbursements of its counsel) which the Secured Party may incur in connection
with (i) the administration of this Agreement, (ii) the custody, use or
operation of, or the sale of, or other realization upon, any of the Collateral,
or (iii) the exercise or enforcement of any of the rights of the Secured Party
hereunder.

      13. SECURITY INTERESTS ABSOLUTE. All rights of the Secured Party, all
Obligations of the Debtor and the liens hereunder, are absolute and
unconditional, irrespective of any lack of validity or enforceability of the
Note, any related document or any other agreement, or any other circumstance
which might otherwise constitute a defense available to, or a discharge of, the
Debtor in respect of the Obligations or this Agreement.

      14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Debtor covenants,
warrants and represents to the Secured Party that all representations and
warranties contained in this Agreement are true and correct at the time of
execution of, and shall survive the execution, delivery and acceptance of, this
Agreement, by the parties hereto and shall continue in effect until no
Obligations remain outstanding.

      15. WAIVER BY SECURED PARTY; AMENDMENTS. The Secured Party's failure, at
any time or times, to require strict performance by the Debtor of any provision
of this Agreement shall not waive, affect or diminish any right of the Secured
Party thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by the Secured Party of an Event of Default shall not
suspend, waive or affect any other Event of Default, whether the same is prior
or subsequent thereto and whether of the same or of a different type. None of
the undertakings, agreements, warranties, covenants and representations of the
Debtor contained in this Agreement and no Event of Default shall be deemed to
have been suspended or waived by the Secured Party, unless such suspension or
waiver is by an instrument in writing signed by an officer of the Secured Party
and directed to the Debtor specifying such suspension or waiver. No amendment,
modification or waiver of any provision of this Agreement will be effective
unless it is in writing and signed by the Secured Party, and then it shall be
effective only in the specific instance and for the specific purpose for which
given.

      16. SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under the
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision 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.

      17. ADDRESSES FOR NOTICES. Any notice or other communication to be
given or made to either party shall be made at the addresses specified on the
signature pages.

      18. CONTINUING SECURITY INTEREST; ASSIGNMENTS. This Agreement shall create
a continuing security interest in the Collateral and shall (i) remain in full
force and effect until no Obligations are outstanding, (ii) be binding upon the
Debtor, its successors, and (iii) inure, together with the rights and remedies
of the Secured Party hereunder, to the benefit of the Secured Party and its
successors, transferees and assigns.

                                       6



      19. GOVERNING LAW; TERMS. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of Delaware,
except to the extent the Uniform Commercial Code of the State of Arkansas
applies, without regard to its principles of conflicts of law.

      20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL.

          (a) THE DEBTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
ILLINOIS STATE OR UNITED STATES FEDERAL COURT SITTING IN COOK COUNTY OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND THE
DEBTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE OR FEDERAL COURT.
THE DEBTOR IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO THE DEBTOR
AT ITS ADDRESS SPECIFIED ON THE SIGNATURE PAGES HERETO. THE DEBTOR AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. THE DEBTOR FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE
AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM
NON CONVENIENS. THE DEBTOR FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT
AGAINST THE SECURED PARTY SHALL BE BROUGHT ONLY IN ILLINOIS STATE OR UNITED
STATES FEDERAL COURT SITTING IN COOK COUNTY. EACH OF THE SECURED PARTY AND THE
DEBTOR WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL.

            (b) Nothing in this Section 20 shall affect the right of the Secured
Party to serve legal process in any other manner permitted by law or affect the
right of the Secured Party to bring any action or proceeding against the Debtor
or its property in the courts of any other jurisdictions.

            (c) To the extent that the Debtor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Debtor
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement.


         [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

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      IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.

                                    LOISLAW.COM, INC.



                                    By:   /s/ Kyle D. Parker   
                                         -------------------------------------
                                         Name:     Kyle D. Parker
                                         Title:    Chairman and Chief
                                                   Executive Officer
                                         Address:  105 North 28th Street
                                                   Van Buren, Arkansas 72956


Accepted and agreed to as of 
the date first above written:

WOLTERS KLUWER U.S. CORPORATION



By:   /s/ Bruce C. Lenz
     -------------------------
     Name:  Bruce C. Lenz
     Title: Secretary
     Address:  c/o Wolters Kluwer United States Inc.
               161 North Clark Street
                 48th Floor
               Chicago, Illinois 60601-3221






                                 SCHEDULE 5(ii)

                             LOCATION OF COLLATERAL



CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS:

105 North 28th Street, Van Buren, Arkansas 72956


OTHER LOCATIONS:

 None





                                 SCHEDULE 5(iii)

                                 PERMITTED LIENS



None







SCHEDULE 5(v)

FICTITIOUS NAMES

Loislaw.com
LOIS
LOIS, Inc.
Law Office Information Systems
Law Office Information Systems, Inc.
Loislawschool.com

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