Exhibit 10.46
SECURITY AGREEMENT
This Security
Agreement,
dated effective as of March 15, 2006
(this
"Agreement"), is
entered into by and between MedSolutions, Inc., a Texas
corporation, on behalf
of itself and its Subsidiaries (MedSolutions, Inc. and
its Subsidiaries are referred to herein as the "Pledgor"), and Tate
Investments,
LLC, a Wisconsin limited liability company (the "Secured
Party").
WITNESSETH:
WHEREAS, on even date
herewith, pursuant to
a Loan Agreement
entered
into between the Pledgor and the Secured Party on even date herewith (the
"Loan
Agreement"), the
Pledgor has issued (i) a Convertible Secured Promissory Note
(the "Note") to Secured Party evidencing indebtedness in the
principal amount of
$500,000.00 with
simple interest
thereon and payable in
accordance
with the
terms set forth in the Note;
WHEREAS, the
Pledgor has agreed to secure the payment
of the Note by
the pledge to the
Secured Party of all of the Pledgor's right, title, and
interest in certain of
the assets of Pledgor as set forth on Exhibit A attached
hereto (the "Assets"); and
WHEREAS, the
Pledgor has previously executed a General Business
Security Agreement
dated as of July 15,
2005 in favor of
Secured Party (the
"General Business
Security Agreement")
under the terms of which Pledgor agreed
to secure the payment of all debts, obligations and liabilities of Pledgor to
Secured Party with the
collateral described
in the General
Business Security
Agreement.
NOW, THEREFORE,
in consideration of the foregoing premises and the
mutual covenants and undertakings herein, and for such other good and
valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the
parties to this Agreement hereby agree as follows:
ARTICLE I
---------
PLEDGE
1.01 Pledge of
Collateral. The
Pledgor hereby
grants to the
Secured
Party a continuing
first-lien, security
interest in the Assets, together with
all proceeds thereto and accretions thereon (collectively, the
"Collateral").
1.02 Secured
Obligation.
The security interest granted by this
Agreement shall
secure: (i) the
Pledgor's payment and
performance
under the
Note, together with any and all renewals, extensions, and modifications of the
same, and all costs of collection thereunder, (ii) the performance of
Pledgor's
obligations and liabilities hereunder, and (iii) all other debts,
obligations
and liabilities of
Pledgor to or in favor of Secured Party, whether direct or
indirect, absolute or
contingent, liquidated
or unliquidated,
whether of the
same or of 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 (iii) are collectively referred to as the
"Obligations").
1.03 Termination of Agreement. This Agreement and the security
interest
created hereby shall terminate as of the date on which the
Obligations, and
any
other amounts that the
Pledgor may owe to the Secured Party as a result of this
Agreement, including, but not limited to, Sections 3.03 and 3.06
below, are paid
in full. Upon the
termination of this
Agreement,
the Secured Party
shall, as
soon as practical but in no event later than 30 days, file a termination with
respect to any financing statement(s) that may have been
filed pursuant to this
Agreement.
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ARTICLE II
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REPRESENTATIONS AND COVENANTS OF THE PLEDGOR
2.01 Representations
with Respect to the Collateral. The Pledgor
represents and
warrants that (i) the Pledgor has the legal
capacity to enter
into this Agreement;
(ii) except for any financing statement that may be filed
by the Secured Party
with respect to the
Collateral, no
financing statement
covering the
Collateral, or any
part thereof,
has been filed with
any filing
officer or agency; (iii) no other security agreement covering the
Collateral, or
any part thereof,
has been made and no
security interest,
other than the one
created herein,
has attached to or
been perfected in the
Collateral or in any
part thereof; (iv) no dispute, right of setoff, counterclaim,
or defense exists
with respect to any part of the Collateral; (v) the Collateral is
not subject to
the interest of any third person, and the Pledgor will defend the
Collateral and
its proceeds against the claims and demands of any third person
claiming against
the Pledgor to the extent that such claims are adverse to the Secured
Party's
rights to the Collateral; (vi) the Pledgor has delivered
true and correct asset
descriptions of
the Collateral; and (vii) the Pledgor is owner of the
Collateral.
2.02 Affirmative
Covenants of the Pledgor. The Pledgor covenants and
agrees to each and all of the following: (i) to promptly execute and
deliver to
the Secured Party all such other assignments, certificates, and supplemental
writings, and to do
all other acts or things, as the Secured Party may
reasonably request in
order more fully to evidence and perfect the security
interest created
herein; (ii) to promptly furnish the Secured Party with
any
information or writings that the Secured Party may reasonably
request concerning
the Collateral; (iii)
to promptly notify the Secured Party of any change in any
material fact or
circumstances
warranted or represented by the Pledgor in this
Agreement or in any other writings furnished by the Pledgor to the
Secured Party
in connection with the Collateral; (iv) to promptly notify the
Secured Party of
any claim, action, or proceeding affecting title to the Collateral,
or any part
thereof, or the
security interest herein, and at the request of the
Secured
Party, to appear in and defend, at the Pledgor's sole expense,
any such action
or proceeding; (v) to
promptly pay to the Secured Party the amount of all court
costs and reasonable
attorneys'
fees incurred by the Secured Party in the
enforcement of its rights hereunder; (vi) demand, notice, protest, notice of
intent to accelerate,
notice of acceleration and all demands and notices of any
action taken by the Secured Party under this Security Agreement or
in connection
with the Note, except
as otherwise provided
in this Security
Agreement,
are
hereby waived, and any
indulgence of the Secured Party, substitution for, or
exchange or release of, Collateral, in whole or in part, or addition
or release
of any person liable on the Collateral is hereby assented and consented to by
the Pledgor; (vii) the
Pledgor will not subject the Collateral to any lien or
security interest,
except in favor of the
Secured Party, or assign any part or
all of the Collateral
to any party
other than the Secured Party; (ix) the
Pledgor shall pay prior to delinquency all taxes, charges, liens
and assessments
against the
Collateral, and upon
the Pledgor's
failure to do so, the
Secured
Party, at its option, may pay any of them and (x) 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
Secured Party,
plus other
insurance thereon in the amounts and against
such
risks as the Secured
Party may reasonably
specify, and promptly deliver an
original copy of each policy to the Secured Party, with a standard
lender's loss
payable clause in favor of the Secured Party, as well as a clause
requiring the
insurer to provide the Secured Party at least thirty (30) days' prior
written
notice of the
cancellation,
expiration,
termination or any material change in
the coverage afforded
under any such policy.
Such payment shall become part of
the indebtedness and obligations secured by this Security Agreement
and shall be
paid to the Secured Party by the Pledgor immediately and without
demand, with
interest thereon at the Default Rate (as such term is defined in
the Note).
2.03 Negative
Covenants of the
Pledgor. The Pledgor covenants and
agrees that, without the prior written consent of the Secured
Party, the Pledgor
will not (i) sell,
assign, or transfer any of the Pledgor's rights in the
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<PAGE>
Collateral other
than in the
ordinary course of business with respect to
inventory; or (ii)
create or permit the
Collateral to be or become subject to
any lien, attachment, execution, sequestration, other legal or equitable
process, or any
encumbrance
of any kind or
character senior to the security
interest created herein in favor of the Secured Party.
ARTICLE
III
-----------
DEFAULT AND RIGHTS AND REMEDIES OF THE SECURED PARTY
3.01 Definition of Default. The term "Default," as used
herein, means
the occurrence of any of the following events: (i) the failure of
the Pledgor to
make any payment
(whether at maturity or otherwise) of principal or interest on
the Obligations when due and payable; (ii) the failure of the
Pledgor to perform
any material covenant, agreement, or condition contained herein, or
in the "Loan
Documents" or the
"Transaction
Documents" (as defined in the Loan Agreement);
(iii) the levy against the Collateral, or any part thereof, of any execution,
attachment,
sequestration, or
other writ; (iv) the
appointment of a
receiver
with respect
to the Collateral, or any part thereof; (v) the filing by the
Pledgor, by way of peti
