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Exhibit No. 10-8
EXHIBIT D
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is made and
entered into as of the 31st day of December, 1998, by and between INTEGRATED
HEALTH OPTIONS, LLC, a Michigan limited liability company ("Guarantor"), and
MHM EXTENDED CARE SERVICES, INC., a Delaware corporation ("Seller").
RECITALS
A. Guarantor's affiliate, BHG of Pennsylvania, LLC, a
Pennsylvania limited liability company ("Buyer") has entered into an Asset
Acquisition Agreement with Seller dated December22, 1998 (the "Asset
Acquisition Agreement") pursuant to which Buyer is acquiring certain assets
from Seller. Any capitalized terms used in this Security Agreement and not
otherwise defined have the meanings ascribed to them in the Asset Acquisition
Agreement.
B. To induce Seller to enter into and consummate the transactions
contemplated by the Asset Acquisition Agreement, Guarantor and two affiliates
of Guarantor have agreed to enter into the Guaranty Agreement and Guarantor has
agreed to collateralize the performance of the Buyer's Obligations, as defined
in SECTION 3 of the Guaranty Agreement, pursuant to this Security Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Creation of Security Interest.
(a) Guarantor hereby grants to Seller a valid, binding
and enforceable security interest in and to Guarantor's rights,
including all proceeds with respect thereto, under the two contracts
attached as EXHIBIT A, to this Security Agreement (the "Collateral"):
(b) Guarantor hereby grants and assigns to Seller a
continuing security interest in and to the Collateral for the purpose of
securing performance of the Guaranty Agreement. Guarantor hereby agrees
that it shall not, without the prior written consent of Seller, enter
into any agreement, incur any debt, take any action or fail to take any
action which will result in the creation of a security interest in the
Collateral which is senior to the security interest granted to Seller
hereunder.
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2. Covenants of Guarantor. Guarantor hereby covenants that:
(a) Guarantor will not permit any default on the part of
Guarantor to occur under the contracts constituting the Collateral; and
(b) Guarantor shall furnish promptly to Seller such
information concerning the Collateral as Seller from time to time may
reasonably request.
3. Perfection of Security Interest. Guarantor agrees, at the
request of Seller:
(a) To execute from time to time one or more financing
statements pursuant to the Uniform Commercial Code of the State of
Illinois (the "UCC"), in a form satisfactory to Seller, to perfect
Seller's security interest in and to the Collateral to the extent that
such security interest may be perfected by such a filing under the UCC;
(b) To execute and deliver such further documents and
instruments as may be required, in addition to, or in lieu of, filings
under the UCC, to perfect Seller's interest in the Collateral; and
(c) To do such further acts and things as Seller may at any
time, and from time to time, reasonably request in writing to effect the
purpose of this Security Agreement.
4. Preservation of Collateral by the Seller. Should Guarantor fail
or refuse to perform or take any other action which Guarantor is obligated
hereunder to take or do at the time or in the manner herein provided, then
Seller, at Seller's reasonable discretion, and upon reasonable prior notice to
Guarantor but without releasing Guarantor from any obligation may take or do
the same in such manner and to such extent as Seller may deem necessary to
protect Seller's security interest in, and/or the value of, the Collateral.
5. Default and Remedies.
(a) The failure of Guarantor to perform or observe any
material terms or conditions of this Security Agreement and the
continuation of such failure for a period of 10 days after notice
thereof, shall constitute an "Event of Default" hereunder. Upon the
occurrence of an Event of Default, Seller may at any time, at its
election, with notice as provided herein, and to the extent permitted by
this Agreement:
(i) Make such payments and do such acts as Seller
may deem necessary to protect Seller's security interest in the
Collateral, including but not limited to, performing any
obligations of Guarantor under the contracts constituting the
Collateral, and, in exercising any such powers or authority, pay
all expenses incurred in connection therewith;
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(ii) Notify the other party to any contract constituting
the Collateral to make any payment due thereunder directly to Seller
and/or require Guarantor to deliver any such payments to Seller, or an
agent or representative designated by Seller; and
(iii) Exercise any remedies available to Seller under the
UCC available under any other applicable law.
(b) Seller shall have the right to enforce one or more remedies
hereunder, successively or concurrently, and such action shall not
operate to estop or prevent Seller from pursuing any further remedy
which it may have pursuant to the terms of this Security Agreement or
the Guaranty Agreement.
6. Termination of Security Interest. This Agreement shall terminate
upon performance in full of Buyer's Obligations and termination of the Guaranty
Agreement.
7. Notices. All notices, demands and other communications
given hereunder shall be given as provided in the Asset Acquisition Agreement.
8. Waiver. Seller's failure to require strict performance by
Guarantor of any provision of this Security Agreement shall not waive, affect
or diminish any right of Seller thereafter to demand strict compliance and
performance therewith. Any waiver of an Event of Default hereunder shall not
suspend, waive or affect any other Event of Default hereunder.
9. Governing Law. This Security Agreement shall be governed by the
internal laws of the State of Delaware (without regard to the principles
thereof respecting the conflict of laws), which laws shall, without limitation,
govern the enforceability, validity and interpretation of this Security
Agreement.
10. Severability. Whenever possible, each provision of this Security
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of the
Security Agreement.
11. Assignment. This Security Agreement may not be assigned without
the prior written consent of the other party hereto.
12. Successor and Assigns. All agreements, covenants, conditions and
provisions of this Agreement shall inure to the benefit of Seller and Seller's
successors and assigns and shall be binding upon Guarantor and Guarantor's
successors and assigns.
13. Headings and Terminology. The headings in this Security
Agreement are inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or
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any provision hereof. As used in this Security Agreement, the singular shall
include the plural, and the plural shall include the singular, as the context
requires.
14. Amendment. This Security Agreement can be modified or
rescinded only by writing expressly referring to this Security Agreement and
signed by the parties.
15. Multiple Counterparts. This Security Agreement may be executed
in two counterparts, which taken together shall constitute one and same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed as of the date first above written.
GUARANTOR:
INTEGRATED HEALTH OPTIONS, LLC
By:
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Its: Manager
Printed Name: Xxxxx X. Xxxxxxxxx
SELLER:
MHM EXTENDED CARE SERVICES, INC.
By: /s/ XXXXXX X. XXXXXXX
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Printed Name: Xxxxxx X. Xxxxxxx
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Its: Executive Vice President
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