exv10w7






EXHIBIT 10.7




AMENDED AND RESTATED BORROWER

PARTNERSHIP SECURITY AGREEMENT




     This AMENDED AND RESTATED BORROWER PARTNERSHIP SECURITY AGREEMENT (this “AGREEMENT”) is dated
as of July 1, 2003 and entered into by and between AMERICAN HOMEPATIENT, INC., a Delaware
corporation (“GRANTOR”), and BANK OF MONTREAL, as agent for and representative of (in such capacity
herein called “SECURED PARTY”) the financial institutions (“BANKS”) that hold a promissory note
payable to such Banks as set forth on Exhibit A attached hereto (the “Promissory Note”) and amends
and restates the Borrower Partnership Security Agreement dated as of December 28, 1995 between
Grantor and Bankers Trust Company as the predecessor to the Secured Party (the “Prior Security
Agreement”).



PRELIMINARY STATEMENTS




     A. Grantor, Bankers Trust Company and Banks previously entered into that certain Fifth Amended
and Restated Credit Agreement dated as of May 25, 2001.



     B. Grantor filed a voluntary petition under 11 U.S.C. Sections 101 et seq. on July 30, 2002 in
the United States Bankruptcy Court for the Middle District of Tennessee. On May 27, 2003, the
Bankruptcy Court confirmed Grantor’s Second Amended Joint Plan of Reorganization (herein “Joint
Plan”) in all respects. The Fifth Amended and Restated Credit Agreement is no longer in effect and
as part of the Joint Plan, the Grantor will execute The Promissory Note to the Banks on terms and
in amounts provided in the Joint Plan to evidence Grantor’s indebtedness and obligations to the
Banks.



     B. Grantor is or may become a party to certain partnership agreements in which a majority of
all partnership interests in the partnerships formed pursuant thereto are owned by Grantor and/or
its Subsidiaries (each such partnership agreement, as amended to the date hereof and as it may
hereafter be amended, supplemented or otherwise modified from time to time, a “PARTNERSHIP
AGREEMENT” and collectively, the “PARTNERSHIP AGREEMENTS”), and Grantor is or may become a general
partner of and/or a limited partner in the partnerships formed pursuant thereto (each a “COMPANY”
and collectively, the “COMPANIES”).



     C. Pursuant to the Joint Plan and the Bankruptcy Court’s order issued May 27, 2003, Grantor is
required to amend the Prior Security Agreement as provided herein.



     NOW, THEREFORE, in consideration of the premises set forth herein and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, Grantor hereby
agrees with Secured Party as follows:



     SECTION 1. GRANT OF SECURITY. Grantor hereby pledges and assigns to Secured Party, for Secured
Party’s benefit and the benefit of Banks, and hereby further grants a security interest in, all of
Grantor’s right, title and interest in and to the following (the “COLLATERAL”):



 









 





          (a) all of Grantor’s right, title and interest as a general or limited partner in each
Company, whether now owned or hereafter acquired, including without limitation all of Grantor’s
right, title and interest in, to and under the Partnership Agreement of such Company (including
without limitation Grantor’s right to vote and to manage and administer the business of such
Company), together with all other rights, interests, claims and other property of Grantor in any
manner arising out of or relating to its general and/or limited partnership interest in such
Company, whatever their respective kind or character, whether they are tangible or intangible
property, and wheresoever they may exist or be located, and further including, without limitation,
all of the rights of Grantor as a general and/or limited partner: (i) to (x) receive money due and
to become due (including without limitation dividends, distributions, interest, income from
partnership properties and operations, proceeds of sale of partnership assets and returns of
capital) under or pursuant to such Partnership Agreement, (y) receive payments upon termination of
such Partnership Agreement, and (z) receive any other payments or distributions, whether cash or
noncash, in respect of Grantor’s general and/or limited partnership interest evidenced by such
Partnership Agreement; (ii) in and with respect to claims and causes of action arising out of or
relating to such Company; and (iii) to have access to such Company’s books and records and to other
information concerning or affecting such Company;




          (b) any “certificate of interest” or “certificates of interest” (or other certificates or
instruments however designated or titled) issued by any Company and evidencing Grantor’s interest
as a limited partner in such Company (collectively, the “Certificate” with respect to such Company)
and any interest of Grantor in the entries on the books of such Company or of any financial
intermediary pertaining to Grantor’s interest as a limited partner in such Company;




          (c) all books, records, ledger cards, files, correspondence, computer programs, tapes, disks
and related data processing software that at any time evidence or contain information relating to
any of the Collateral or are otherwise necessary or helpful in the collection thereof or
realization thereupon; and




          (d) all proceeds, products, rents and profits of or from any and all of the foregoing
Collateral and, to the extent not otherwise included, all payments under insurance (whether or not
Secured Party is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing Collateral. For purposes of
this Agreement, the term “proceeds” includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.




     SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the Collateral is collateral
security for, the prompt payment or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including the payment of
amounts that would become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and liabilities of every nature
of Grantor now or hereafter existing under or arising out of or in connection with the Promissory
Note, and all or any portion of such obligations or liabilities that are paid to the extent all or
any part of such payment is avoided or recovered directly or indirectly from Secured Party or any
Bank as a preference, fraudulent transfer or



2









 




otherwise (all such obligations and liabilities being
the “UNDERLYING DEBT”), and all obligations of every nature of Grantor now or hereafter existing under this Agreement (all
such obligations of Grantor, together with the Underlying Debt, being the “SECURED OBLIGATIONS”).




     SECTION 3. NO ASSUMPTION. Notwithstanding any of the foregoing, this Agreement shall not in
any way be deemed to obligate Secured Party, any Bank or any purchaser at a foreclosure sale under
this Agreement to assume any of Grantor’s obligations, duties, expenses or liabilities under any
Partnership Agreement (including without limitation Grantor’s obligations as a general partner for
the debts and obligations of any respective Company and to manage the business and affairs of such
Company) or under any and all other agreements now existing or hereafter drafted or executed
(collectively, the “GRANTOR OBLIGATIONS”) unless Secured Party, such Bank or such purchaser
otherwise expressly agrees to assume any or all of said Grantor Obligations in writing. In the
event of foreclosure by Secured Party on behalf of Banks, Grantor shall remain bound and obligated
to perform the Grantor Obligations and neither Secured Party nor any Bank shall be deemed to have
assumed any of such Grantor Obligations except as provided in the preceding sentence. Without
limiting the generality of the foregoing, neither the grant of the security interest in the
Collateral in favor of Secured Party as provided herein nor the exercise by Secured Party of any of
its rights hereunder nor any action by Secured Party in connection with a foreclosure on the
Collateral shall be deemed to constitute Secured Party or any Bank a general partner of any
Company; provided, however, that in the event Secured Party or any purchaser of Collateral at a
foreclosure sale elects to become a substituted general partner of any Company in place of Grantor,
Secured Party or such purchaser, as the case may be, shall adopt in writing the respective
Partnership Agreement and agree to be bound by the terms and provisions thereof.



     SECTION 4. DELIVERY OF CERTIFICATE; INSTRUCTIONS TO COMPANY REGARDING REGISTRATION OF PLEDGE.
Any certificate shall be delivered to and held by or on behalf of Secured Party pursuant hereto and
shall be in suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance satisfactory to Secured
Party. Upon request by Secured Party, Grantor, at its own expense, shall deliver to each Company an
order, satisfactory in form and substance to Secured Party, requesting that the pledge of Grantor’s
interest as a limited partner in such Company be registered on the books of such Company.



     SECTION 5. REPRESENTATIONS AND WARRANTIES. Grantor represents and warrants as follows:



          (a) Partnership Interests in Companies. Schedule A annexed hereto, as amended from time to
time, correctly sets forth (i) all Partnership Agreements and (ii) the partnership interests of all
partners of each Company. The partnership interests described in Schedule A annexed hereto
constitute 100% of the partnership interests in each Company.




          (b) Partnership Agreement. Each Partnership Agreement, a true and complete copy of which has
been furnished to Secured Party, has been duly authorized, executed and delivered by Grantor and is
in full force and effect and has not been amended or modified except as disclosed in writing to
Secured Party.




3









 








          (c) Ownership of Collateral. Grantor is the legal and beneficial owner of the Collateral free
and clear of any Lien except for the security interest created by this Agreement. No effective
financing statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office except such as may have been filed in favor
of Secured Party relating to this Agreement.




          (d) Consents or Governmental Authorizations. No consent of any other Person (including,
without limitation any other partner of any Company or any creditor of Grantor), and no
authorization, approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the grant by Grantor of the security
interest granted hereby, (ii) the execution, delivery or performance of this Agreement by Grantor,
or (iii) the perfection of or the exercise by Secured Party of its rights and remedies hereunder
(except as may have been taken by or at the direction of Grantor).




          (e) Other Information. All information heretofore, herein or hereafter supplied to Secured
Party by or on behalf of Grantor with respect to the Collateral is accurate and complete in all
material respects.




     SECTION 6. FURTHER ASSURANCES; AMENDMENTS.



          (a) Grantor agrees that from time to time, at the expense of Grantor, Grantor will promptly
execute and deliver all further instruments and documents, and take all further action, that
reasonably may be necessary or desirable, or that the Secured Party may request, in order to
perfect and protect any security interest granted hereby or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Grantor will: (i) at the request of
Secured Party, mark conspicuously each of its records pertaining to the Collateral with a legend,
in form and substance satisfactory to Secured Party, indicating that such Collateral is subject to
the security interest granted hereby, (ii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request. in order to perfect and preserve the security interests
granted or purported to be granted hereby, and (iii) at Secured Party’s request, appear in and
defend any action or proceeding that may affect Grantor’s title to or Secured Party’s security
interest in all or any part of the Collateral.




          (b) Grantor hereby authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the Collateral without the
signature of Grantor. Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all jurisdictions.




          (c) Grantor will furnish to 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 Secured Party may reasonably request, all in reasonable detail.




          (d) Grantor further agrees that it will, upon obtaining any interests required to be pledged
hereunder as provided in Section 7(h), promptly (and in any event within ten



4









 






Business Days) deliver to Secured Party an amendment to this Agreement (a “SECURITY
AMENDMENT”), duly executed by Grantor in respect of the additional Collateral to be pledged
pursuant to this Agreement. Grantor hereby authorizes Secured Party to attach each Security
Amendment to this Agreement and agrees that all additional Collateral listed on any Security
Amendment shall for all purposes hereunder be considered Collateral; provided that the failure of
Grantor to execute a Security Amendment with respect to any additional Collateral shall not impair
the security interest of Secured Party therein or otherwise adversely affect the rights and
remedies of Secured Party hereunder with respect thereto.




     SECTION 7. CERTAIN COVENANTS OF GRANTOR. Grantor shall:



          (a) not without the prior written consent of Secured Party, which consent shall not be
unreasonably withheld, (i) cancel or terminate any Partnership Agreement or consent to or accept
any cancellation or termination thereof, (ii) sell, assign (by operation of law or otherwise) or
otherwise dispose of any part of its general or limited partnership interest in any Company, (iii)
amend, supplement or otherwise modify any Partnership Agreement (if now held, as in effect on the
date hereof or, if hereinafter acquired, as in effect on the date of such acquisition) except
amendments that are immaterial and would not have a material adverse effect on the business,
operations, property, assets, liability (contingent or otherwise), condition (financial or
otherwise), or prospects of the respective Company, (iv) waive any default under or breach of any
Partnership Agreement or waive, fail to enforce, forgive or release any right, interest or
entitlement of any kind, howsoever arising, under or in respect of any Partnership Agreement or
vary or agree to the variation in any respect of any of the provisions of any Partnership Agreement
or of the performance of any other Person under any Partnership Agreement, or (v) petition, request
or take any other legal or administrative action which seeks, or may reasonably be expected, to
rescind, terminate or suspend any Partnership Agreement or to amend or modify any Partnership
Agreement;




          (b) at its expense (i) perform and comply in all material respects with all terms and
provisions of each Partnership Agreement required to be performed or complied with by it, (ii)
maintain each Partnership Agreement in full force and effect, (iii) enforce each Partnership
Agreement in accordance with its terms, and (iv) take all such action to that end as from time to
time may be reasonably requested by Secured Party;




          (c) not create or suffer to exist any lien upon or with respect to any of the Collateral to
secure the indebtedness or other obligations of any person, except for the security interest
created by this Agreement;




          (d) not without the prior written consent of Secured Party, which consent shall not be
unreasonably withheld, (i) vote to permit any Company in which it holds a limited partnership
interest to enter into any transaction of merger or consolidation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution) and (ii) not permit any Company in which
it holds a general partnership interest to enter into any transaction of merger or consolidation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution)




          (e) notify Secured Party of any change in Grantor’s name, identity or corporate structure
within 15 days of such change;




5









 








          (f) give Secured Party 30 days’ prior written notice of any change in Grantor’s chief place of
business, chief executive office or residence or the office where Grantor keeps its records
regarding the Collateral;




          (g) pay promptly when due all taxes, assessments and governmental charges or levies imposed
upon, and all claims against, the Collateral, except to the extent the validity thereof is being
contested in good faith; provided that Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against Grantor or any of the Collateral
as a result of the failure to make such payment;




          (h) pledge hereunder, immediately upon the acquisition thereof,




               (i) any and all additional general and/or limited partnership interests acquired after the
date of this Agreement in, to and under any Partnership Agreement, and



               (ii) any and all general and/or limited partnership interests in partnerships, that become,
after the date of this Agreement, partnerships in which a majority of all partnership interests are
owned by Grantor and/or its Subsidiaries.



     SECTION 8. VOTING RIGHTS; PROFITS, INTEREST AND DIVIDENDS.



          (a) So long as no Event of Default shall have occurred and be continuing (for the purposes of
this Agreement, “Default” or “Event of Default” shall mean Grantor’s failure to pay when due any
amounts owed to any Bank under the Promissory Note):




               (i) Grantor shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Collateral or any part thereof (including without limitation rights of approval
arising under each Partnership Agreement and any and all right to manage and administer the
business of each Company) for any purpose not inconsistent with the terms of this Agreement; and



               (ii) Grantor shall be entitled to receive and retain, and to utilize free and clear of the
lien of this Agreement, any and all payments, including but not limited to profits, dividends and
other distributions, paid in respect of the Collateral; provided, however, that any and all



                    (A) profits, dividends, and other distributions paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise distributed in respect of,
or in exchange for, any Collateral,



                    (B) profits, dividends and other distributions paid or payable in cash in respect of any
Collateral in connection with a partial or total liquidation or dissolution or in connection with a
reduction of capital, and



                    (C) cash paid, payable or otherwise distributed in redemption of or in exchange for any
Collateral,



6









 





               (iii) shall be, and shall forthwith be delivered to Secured Party to hold as, Collateral and
shall, if received by Grantor, be received in trust for the benefit of Secured Party, be segregated
from the other property or funds of Grantor and be forthwith delivered to Secured Party as
Collateral in the same form as so received (with all necessary endorsements); and Secured Party
shall execute and deliver (or cause to be executed and delivered) to Grantor all such proxies and
other instruments as Grantor may from time to time reasonably request for the purpose of enabling
Grantor to exercise the voting and other consensual rights that it is entitled to exercise pursuant
to Section 8(a)(i) and to receive the profits, dividends and other distributions that it is
authorized to receive and retain pursuant to Section 8(a)(ii)



          (b) Upon the occurrence and during the continuation of an Event of Default:




               (i) upon written notice from Secured Party to Grantor, any or all rights of Grantor to
exercise the voting and other consensual rights, and any or all rights to manage and administer the
business and affairs of each Company, that it would otherwise be entitled to exercise pursuant to
Section 8(a)(a)(i) shall cease, and all such rights (or such of those rights as Secured Party may
have elected) shall thereupon become vested in Secured Party who shall thereupon have the sole
right to exercise such voting and other consensual rights;



               (ii) all rights of Grantor to receive any and all payments under or in connection with each
Partnership Agreement, including but not limited to the profits, dividends, and other distributions
which it would otherwise be authorized to receive and retain pursuant to Section 8(a)(a)(ii), shall
cease, and all such rights shall thereupon become vested in Secured Party who shall thereupon have
the sole right to receive and hold such payments as Collateral; and



               (iii) all payments which are received by Grantor contrary to the provisions of Section
8(a)(a)(ii) shall be received in trust for the benefit of Secured Party, shall be segregated from
other funds of Grantor and shall be forthwith paid over to Secured Party as Collateral in the same
form as so received (with any necessary endorsement).



     SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Upon the occurrence and during the
continuation of an Event of Default, Grantor hereby irrevocably appoints Secured Party as Grantor’s
attorney-in-fact, with full authority in the place and stead of Grantor and in the name of Grantor,
Secured Party or otherwise, take any action and to execute any instrument that Secured Party may
deem necessary or advisable to accomplish the purposes of this Agreement, including without
limitation:



          (a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the Collateral;




          (b) to receive, endorse and collect all instruments made payable to Grantor representing any
payment of profits, dividends or any other distribution in respect of any of the Collateral;




7









 








          (c) to file any claims or take any action or institute any proceedings that Secured Party may
deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the
rights of Secured Party with respect to any of the Collateral; and




          (d) to do, at Secured Party’s option and Grantor’s expense, at any time or from time to time,
all acts and things that Secured Party deems reasonably necessary to protect, preserve or realize
upon the Collateral and Secured Party’s security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as Grantor might do.




     SECTION 10. SECURED PARTY MAY PERFORM. If Grantor fails to perform any agreement contained
herein., Secured Party upon ten (10) days prior written notice to Grantor may itself perform, or
cause performance of, such agreement, and the reasonable expenses of Secured Party incurred in
connection therewith shall be payable by Grantor.



     SECTION 11. STANDARD OF CARE. The powers conferred on Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for monies actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property of a similar nature.



     SECTION 12. REMEDIES.



          (a) If any Event of Default shall have occurred and be continuing, Secured Party may exercise
in respect of the Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code as in effect in the State of Tennessee (the “Code’) (whether or not the
Code applies to the affected Collateral), and Secured Party may also in its sole discretion,
without notice except as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange or broker’s board or at any of Secured Party’s
offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such
price or prices and upon such other terms as Secured Party may deem commercially reasonable,
irrespective of the impact of any such sales on the market price of the Collateral. Secured Party
or any Bank may be the purchaser of any or all of the Collateral at any such sale and Secured
Party, as agent for and representative of Banks (but not any Bank or Banks in its or their
respective individual capacities unless Requisite Banks shall otherwise agree in writing), shall be
entitled, for the purpose of bidding and making settlement or payment of the purchase price for all
or any portion of the Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of Grantor, and Grantor hereby waives (to the extent permitted
by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or hereafter enacted.
Grantor agrees that, to the extent notice of sale shall be required by





8









 







law, at least ten days’ notice to Grantor 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. Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of sale having been
given. 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. Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public sale, even if
Secured Party accepts the first offer received and does not offer such Collateral to more than one
offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay
all the Secured Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.




          (b) Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act
of 1933, as from time to time amended (the “SECURITIES ACT”), and applicable state securities laws,
Secured Party may be compelled, with respect to any sale of all or any part of the Collateral
conducted without prior registration or qualification of such Collateral under the Securities Act
and/or such state securities laws, to limit purchasers to those who will agree, among other things,
to acquire the Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Grantor acknowledges that any such private sales may be at prices
and on terms less favorable than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a registration statement under
the Securities Act) and, notwithstanding such circumstances, Grantor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and that Secured Party
shall have no obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the respective Company to register it for a
form of public sale requiring registration under the Securities Act or under applicable state
securities laws, even if such Company would, or should, agree to so register it.




          (c) If Secured Party determines to exercise its right to sell any or all of the Collateral,
upon written request, Grantor shall and shall cause each Company from time to time to furnish to
Secured Party all such information as Secured Party may request in order to determine the number
and nature of the interests included in the Collateral which may be sold by Secured Party in exempt
transactions under the Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.




     SECTION 13. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in this Agreement,
all proceeds received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of Secured Party, be held
by Secured Party as Collateral for, and/or then, or at any other time thereafter, applied in full
or in part by Secured Party against, the Secured Obligations in the following order of priority:




FIRST: To the payment of all reasonable costs and expenses of such
sale, collection or other realization, including reasonable
compensation to Secured Party and its agents and counsel, and all



9









 






other expenses, liabilities and advances made or incurred by Secured
Party in connection therewith, and all advances made by Secured
Party hereunder for the account of Grantor, and to the payment of
all reasonable costs and expenses paid or incurred by Secured Party
in connection with the exercise of any right or remedy hereunder;




SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) in such order as Secured
Party shall elect; and




THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.



     SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This Agreement shall create a
continuing security interest in the Collateral and shall (a) remain in full force and effect until
the payment in full of the Secured Obligations, (b) be binding upon Grantor, its successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and assigns. Any Bank may assign or
otherwise transfer any Loans held by it to any other person, and such other person shall thereupon
become vested with all the benefits in respect thereof granted to Banks herein or otherwise. Upon
the payment in full of all Secured Obligations, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantor. Upon any such termination
Secured Party will, at Secured Party’s expense, execute and deliver to Grantor such documents as
Grantor shall reasonably request to evidence such termination.



     SECTION 15. SECURED PARTY AS AGENT.



          (a) Secured Party has been appointed to act as Secured Party hereunder by Banks. Secured Party
shall be obligated, and shall have the right hereunder, to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral), solely in accordance
with this Agreement.




          (b) Secured Party shall have the right to resign its duties hereunder by giving Grantor and
the Banks fifteen (15) days written. Upon notice of any Secured Party’s resignation, the Banks
shall appoint a successor to the Secured Party who shall be a commercial bank or trust company
reasonably acceptable to Grantor. If no successor is appointed by the Banks and found acceptable to
Grantor by the twentieth (20th) business day after the date of such notice of resignation, the
Secured Party’s resignation shall become effective and the Banks shall thereafter perform all the
duties of the Secured Party hereunder until such time, if any, as the Banks appoint a successor to
the Secured Party as provided above and provided further that Banks’ collective expenses, costs and
fees payable by Grantor while acting as Secured Party hereunder may not materially exceed those of
the initial Secured Party. Upon the acceptance of any



10









 






appointment as Secured Party hereunder, a successor Secured Party shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the retiring or removed
Secured Party under this Agreement, and the retiring or removed Secured Party under this Agreement
shall promptly (i) transfer to such successor Secured Party all sums, securities and other items of
Collateral held hereunder, together with all records and other documents necessary or appropriate
in connection with the performance of the duties of such successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such amendments to
financing statements, and take such other actions, as may be necessary or appropriate in connection
with the assignment to such successor Secured Party of the security interests created hereunder,
whereupon such retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Secured Party’s resignation or
removal hereunder as Secured Party, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.




     SECTION 16. AMENDMENTS. No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Grantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by Secured Party and, in the case of any
such amendment or modification, by Grantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.



     SECTION 17. NOTICES. Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by telefacsimile or United
States mail or courier service and shall be deemed to have been given when delivered in person or
by courier service, upon. receipt of telefacsimile or telex, or three Business Days after
depositing it in the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as set forth under such party’s name on
the signature pages hereof or, as to either party, such other address as shall be designated by
such party in a written notice delivered to the other party hereto.



     SECTION 18. FAILURE OR INDULGENCE NOT WAIVER: REMEDIES CUMULATIVE. No failure or delay on the
part of Secured Party in the exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege preclude any other
or further exercise thereof or of any other power, right or privilege. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.



     SECTION 19. SEVERABILITY. In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.



     SECTION 20. HEADINGS. Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect.



11









 





     SECTION 21. GOVERNING LAW: TERMS. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF TENNESSEE, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO
THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF TENNESSEE. Unless otherwise defined herein, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of Tennessee are used herein as
therein defined.



     SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS AGREEMENT MUST BE BROUGHT IN AN APPROPRIATE
FORUM IN NASHVILLE, DAVIDSON COUNTY, TENNESSEE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Grantor hereby agrees that service of all process in any such proceeding in any such
court may be made by registered or certified mail, return receipt requested, to Grantor at its
address provided below, such service being hereby acknowledged by Grantor to be sufficient for
personal jurisdiction in any action against Grantor in any such court and to be otherwise effective
and binding service in every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law.



     SECTION 23. WAIVER OF JURY TRIAL. GRANTOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Grantor and Secured Party each acknowledge that this waiver is a material
inducement for Grantor and Secured Party to enter into a business relationship, that Grantor and
Secured Party have already relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Grantor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation with legal counsel.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a
trial by the court.



     SECTION 24. COUNTERPARTS. This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so



12









 




executed and delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages are physically
attached to the same document.




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



	 	 	 	 	 
	 	BANK OF MONTREAL, AS SECURED PARTY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 	 
	 	 	 Notice Address:     Attn: Heather Turf
 	 
	 	 	 	

                    115 LaSalle Street, 12W

                    Chicago, Illinois 60603 	 
	 



	 	 	 	 	 
	 	AMERICAN HOMEPATIENT, INC.,

A DELAWARE CORPORATION

 	 
	 	By:  	/s/ Robert L. Fringer
 	 
	 	 	Title:     Vice President & Secretary 	 
	 	 	Notice Address:	 	 
	 	 	               Maryland Farms Office Park

               5200 Maryland Way, Suite 400

               Brentwood,

Tennessee 37027-5018

               Attn: Chief Executive Officer 	 



13









 






	 	 	 	 	 



SCHEDULE A




PARTNERSHIP INTERESTS




	 	 	 	 	 
	 	 	 	 	Borrower’s
	 	 	Other Partners,	 	Ownership
	Partnership	 	Shareholders and Members	 	Interest
	AHP Alliance of Columbia
	 	 	 	100%
	 
	 	 	 	 
	AHP Home Care Alliance of Gainesville
	 	 	 	100%
	 
	 	 	 	 
	AHP Home Care Alliance of Tennessee
	 	 	 	100%
	 
	 	 	 	 
	AHP Home Care Alliance of Virginia
	 	 	 	100%
	 
	 	 	 	 
	AHP Home Medical Equipment Partnership
of Texas
	 	 	 	100%
	 
	 	 	 	 
	AHP Knoxville Partnership
	 	 	 	100%
	 
	 	 	 	 
	AHP, L.P.
	 	 	 	100%
	 
	 	 	 	 
	American HomePatient of Texas, L.P.
	 	 	 	100%
	 
	 	 	 	 
	Colorado Home Medical Equipment
Alliance, LLC
	 	 	 	100%
	 
	Northeast Pennsylvania Alliance, LLC
	 	 	 	100%
	 
	 	 	 	 
	AHP-MHR Home Care, LLP
	 	MHR Home Care, Inc.	 	50%
	 
	 	 	 	 
	AHP Delmarva, LLP
	 	Peninsula Regional Medical Center	 	50%
	 
	 	 	 	 
	American HomePatient of Sanford, LLC
	 	Amisub of North Carolina, Inc. dba	 	50%
	 
	 	Central Carolina Hospital	 	 
	 
	 	 	 	 
	American HomePatient of Unifour, LLC
	 	Frye Regional Medical Center,	 	50%
	 
	 	Grace Hospital and Caldwell	 	 
	 
	 	Memorial Hospital	 	 
	 
	 	 	 	 
	Baptist Ventures AHP Homecare Alliance
	 	Baptist Medical Center	 	50%
	 
	 	 	 	 
	Blue Ridge Home Care
	 	Spruce Pine Community Hospital	 	50%
	 
	 	 	 	 
	Coastal Home Care
	 	Conway Hospital	 	70%
	 
	 	 	 	 
	Health State DME, Ltd.
	 	High Plains Baptist Hospital	 	50%
	 
	 	 	 	 
	HomeLink Home Healthcare Partnership
	 	Home Link Home Health Care	 	50%
	 
	 	Services, Inc.	 	 
	 
	 	 	 	 
	Piedmont Medical Equipment
	 	Piedmont Medical Center/ Tenet	 	50%
	 
	 	Healthcare	 	 
	 
	 	 	 	 
	Pro Med
	 	Union County Health Care Foundation	 	70%
	 
	 	 	 	 
	Shared Care — West Branch, LLC
	 	West Branch Regional Medical Center	 	50%






 









 







	 	 	 	 	 
	 	 	 	 	Borrower’s
	 	 	Other Partners,	 	Ownership
	Partnership	 	Shareholders and Members	 	Interest
	Total Home Care of East Alabama, L.L.C.
	 	East Alabama Medical Center	 	50%






15









 






EXHIBIT A



BANKS




     See attached.



 









 





Allstate-AIMCO CDO Series 2000-A

Allstate Life Insurance Company

Bank of America, N.A.

Bank of Montreal

Barclays Bank PLC

Bear Stearns & Co., Inc.

Deutsche Bank Trust Company Americas f/k/a Bankers Trust Company

Endeavor LLC

Everest Capital Master Fund L.P.

Fernwood Associates L.P.

General Electric Capital Corporation

California Public Employees’ Retirement System (Highland)

Highland Crusader Offshore Partners, L.P. (Highland)

ML CBO IV (Cayman)/Protective (Highland)

PAM Capital Funding, L.P. (Highland)

Pamco Cayman Ltd. (Highland)

HCM/Z Special Opportunities LLC a/ka/ HZ Special Opportunities, LLC (Highbridge Capital)

Long Lane Master Trust IV

Morgan Stanley Prime Income Trust

PPM America Special Investments Funds, L.P.

Fuqua Family Fund, L.P. (Tennenbaum)

Special Value Bond Fund II, LLC (Tennenbaum)

Van Kampen VKM Prime Rate Income Trust

Van Kampen Senior Income Trust





17