Exhibit 10.2
GENERAL BUSINESS SECURITY AGREEMENT
This General Business Security Agreement (this "Security
Agreement") is
made as of this 15th day of July, 2005, by MEDSOLUTIONS, INC., a Texas
corporation, on behalf of itself and its
Subsidiaries
(MedSolutions, Inc.
and
its Subsidiaries are collectively referred to herein as the
"Borrower"),
in
favor of TATE INVESTMENTS, LLC, a Wisconsin limited liability company (the
"Lender").
R E C I T A L S:
WHEREAS, Borrower wishes to secure: (i) the payment of all
indebtedness
evidenced by its One Million Dollars
($1,000,000) 10%
Senior Convertible
Note,
payable to the Lender, and any promissory notes taken in renewal,
exchange or
substitution thereof or therefor, including interest and premium on
all of the
foregoing and all costs of collecting the same, (ii) the performance of
Borrower's obligations and liabilities hereunder, and (iii) all other debts,
obligations and liabilities of Borrower to or in
favor of the Lender,
whether
direct or indirect, absolute or contingent,
liquidated or unliquidated, whether
of the same or a different nature and
whether now existing or hereafter incurred
or arising (all of the obligations
and liabilities described in the preceding
clauses (i) through (ii) being herein
collectively called the "Obligations").
NOW, THEREFORE,
in consideration of
the premises, the
parties hereto
agree as follows:
AGREEMENT
1. Definitions.
The following terms
shall have the meanings set forth
below:
"Accounts" shall
mean all of the Borrower's and its Subsidiaries'
rights to payment for goods (including freight and taxes) sold or leased or
services performed thereby, whether now in existence or arising from time
to
time hereafter, including without limitation, rights evidenced by an
account,
note, contract, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (i) all security pledged, assigned,
hypothecated or granted to or held by the
Borrower or any of its Subsidiaries to
secure the foregoing, (ii) all of the Borrower's and
each Subsidiaries'
right,
title and interest in and to any goods, the sale of which gave rise
thereto,
(iii) all guarantees, endorsements and indemnifications on, or of, any of the
foregoing, (iv) all powers of attorney
for the execution of any evidence of
indebtedness or security or other writing in connection therewith, (v) all
books, records, ledger cards, and invoices
relating thereto, (vi) all evidences
of the filing of financing statements and other statements
and the registration
of other instruments in connection
therewith and amendments thereto, notices to
other creditors or secured parties, and certificates from filing or other
registration officers, (vii) all credit information, reports and memoranda
relating thereto and (viii) all other writings related in any way to the
foregoing.
"Collateral" shall mean:
(a) All Accounts;
(b) The Mortgaged Property;
(c) All additions and accessions to and replacements for any
of the foregoing;
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(d) All of Borrower's right, title and interest in and to
all
goods and other
property, whether or
not delivered,
(i) the sale or
lease of which gives or purports to give rise to any Accounts,
including, but not
limited to, all merchandise returned or rejected by
or repossessed from customers, or (ii) securing any Accounts,
including
all of Borrower's
rights as an unpaid
vendor or lienor, including
stoppage in transit,
replevin and
reclamation
with respect to such
goods and other properties;
(e) All documents,
policies and certificates of insurance
pertaining to any of the foregoing; and
(f) Any and all products and proceeds of the foregoing
Collateral (including,
but not limited to, any claims to any items
referred to in this
definition,
and any claims of
Borrower against
third parties for loss of, damage to, or destruction of, any or all of
the Collateral or for proceeds payable under or unearned
premiums with
respect to policies of insurance) in whatever form, including cash,
negotiable instruments
and other instruments for the payment of money,
chattel paper, security agreements or other documents.
"Deed of Trust" shall mean that certain Deed of Trust from the
Borrower
to the Lender, granting the Lender the security interest in the Mortgaged
Property described herein and therein, a copy of which is attached
hereto as
Exhibit A.
"Event of Default"
shall have the meaning set forth in the Investment
Agreement.
"Investment Agreement"
shall mean that certain Investment Agreement,
dated of even date hereof, by and between Borrower and the
Lender, as it may be
amended from time to time.
"Mortgaged
Property" shall
mean the Borrower's real estate,
improvements, permits and approvals associated with the Company's
treatment/transfer facility in Garland, Texas, which
is more fully described in
the Deed of Trust.
2. Security Interest.
(a) To secure the payment and performance of the Obligations
and for other good and
valuable consideration, receipt of which is
hereby acknowledged, Borrower hereby mortgages, pledges and assigns
all
of the Collateral to the Lender, and grants to the Lender a
continuing
security interest in
all of the Collateral (the "Security Interest").
With respect to only the Mortgaged Property constituting part of the
Collateral, the
Lender's security interest shall be subject and
subordinate only to the first deed of trust lien of First American
Bank
in an amount not to exceed Two Hundred Eight Thousand Dollars
($208,000) plus accrued and unpaid interest thereon, and shall be pari
passu with the second
mortgage liens of The Estate of Vivian Erickson
and Ajit Brar in an aggregate amount not to exceed Seven Hundred
Ninety
Two Thousand
Dollars ($792,000) plus accrued and unpaid interest
thereon.
(b) The Lender's
Security Interest in
the Collateral
under
this Security
Agreement extends to all Collateral of the kind which is
subject to this
Security Agreement
which the Borrower may
acquire at
any time during the continuation of this Security Agreement.
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3. Borrower's
Warranties.
Borrower warrants that while any of the
Obligations remain unpaid:
(a) Except as set forth above, Borrower owns the Collateral
free and clear of all
encumbrances
and security interests (except
Lender's security
interest). No
financing statement is on file (other
than Lender's)
covering the
Collateral or any part
of it. Borrower,
acting alone, may grant a security interest in the Collateral.
(b) Each account constituting Collateral as of this date arose
from the performance
of services by
Borrower or from a bona fide sale
or lease of goods,
which have been delivered or shipped to the account
debtor and for which
the Borrower has genuine invoices, shipping
documents or receipts.
(c) Each account
constituting
Collateral as of this
date is
genuine and
enforceable against
the account debtor
according to its
terms. It and the
transaction
out of which it arose
comply with all
applicable laws and regulations. The amount represented by Borrower
as
owing by each account
debtor is the amount
actually owing and is
not
subject to setoff, credit, allowance or adjustment, except discount
for
prompt payment,
nor has any
account debtor returned the goods or
disputed liability.
(d) As of this date
Borrower has no notice
or knowledge
of
anything which might impair the credit standing of any account
debtor.
4. Delivery; Filing; Refiling.
(a) Borrower
shall, at its sole cost and expense, take or
cause to be taken all actions which the Lender may reasonably request
and which may be
necessary or
desirable in order to assure that the
Lender's Security
Interest in the
Collateral will at all times comply
with the provisions
of this Agreement and to enable the Lender to
exercise or enforce its rights hereunder, including, but not limited
to: (i) delivering to
the Lender the Deed of Trust fully executed and
in full force and effect; (ii) delivering to the Lender,
endorsed or
accompanied by
such instruments of assignment as the Lender may
specify, and stamping
and marking, in such manner as the Lender
may
specify, any and all chattel paper, instruments, letters and
advices of
credit, title
certificates and documents evidencing or forming a part
of the Collateral;
and (iii) executing and delivering
such pledges,
designations,
hypothecations,
notices and assignments, and obtaining
such control agreements in each case in form and substance
satisfactory
to the Lender, relating to the creation, validity, perfection,
maintenance or continuation of the Security Interest in the Collateral
under any applicable laws as the Lender may from time to time
reasonably request.
(b) Borrower
authorizes the Lender to file Uniform Commercial
Code financing
statements describing
the Collateral and amendments to
such financing
statements. Borrower
will cooperate with the Lender in
obtaining control of
Collateral or other security for the Obligations
for which control may
be required to perfect
the Lender's Security
Interest in the Collateral.
(c) Borrower authorizes the Lender to record the Deed of Trust
in the county where the Mortgaged Property is located.
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(d) In the event that any repledge or reassignment, or any
other action,
is, in the Lender's reasonable belief, helpful or
required at any time to protect, preserve or maintain the Security
Interest in the Collateral, Borrower authorizes the Lender to
take any
such action, and at
the Lender's request,
Borrower shall, at its sole
cost and expense,
cause the same to be
done or taken at such time and
in such manner as may be reasonably requested by the Lender.
5. Certain
Covenants as to Collateral. So long as any of the
Obligations are outstanding and unpaid and unless the Lender
shall otherwise
expressly consent in writing:
(a) Borrower will:
(i) at all times be the sole owner of each and every
item of Collateral;
(ii) keep the Collateral free from all liens,
encumbrances and security interests (other than Lender's);
(iii) defend
the Collateral at its own expense
against all claims and legal proceedings by persons other than
Lender;
(iv) at all times keep accurate and complete records
of the Collateral,
and permit the Lender to enter upon the
Borrower's place or
places of business
at any time and
from
time to time during
reasonable business
hours, and without
hindrance or delay, to
inspect the Collateral and to inspect,
audit, check and make
extracts from and
copies of the books,
records, journals,
orders, receipts and
correspondence which
relate to the
Collateral or other
transactions
between the
parties hereto
and the general financial condition of
Borrower;
(v) upon the
request of the Lender, execute and
deliver confirmatory
written assignments of Accounts to the
Lender, but any
failure by
Borrower to execute and deliver
such schedules and other materials or assignments shall not
limit or otherwise
affect the Lender's
Security Interest
or
other rights in and to the Collateral;
(vi) procure and
maintain insurance
against loss,
theft, destruction,
or damage to the
Collateral for the full
insurable value thereof, with such insurers as are
reasonably
acceptable to the Len
