Exhibit 10.10


 


WAIVER AND CONSENT


 


THIS WAIVER AND CONSENT (this “Waiver
and Consent”), dated December
       , 2002 but effective for all purposes
as of September 27, 2002, is executed by KINETIC CONCEPTS, INC., a Texas
corporation (the “Company”),
JAMES R. LEININGER (“Pledgor”),
each of the SHAREHOLDERS of the Company under that certain Agreement Among
Shareholders (the “Shareholders’ Agreement”),
dated November 5, 1997, by and among the Company and the Shareholders of the
Company named therein (such shareholders, other than Pledgor, referred to
herein as the “Shareholders”),
JPMORGAN CHASE BANK, a New York
banking corporation (“Chase”),
in its capacity as administrative agent for the Lenders (as defined herein) (in
such capacity, together with its successors in such capacity, “Administrative Agent”), and Chase and
BANK ONE, NA, in their capacity as lenders (together with their respective
successors and assigns, individually a “Lender”
and collectively the “Lenders”)
and as issuing lenders.  (Capitalized terms
not defined herein shall have the same meanings set forth in the Shareholders’
Agreement).


 


RECITALS


 


WHEREAS, Pledgor is a party to that certain Amended and Restated Credit
Agreement (the “Credit Agreement”),
dated as of September 27, 2002, among Pledgor, Administrative Agent and the
Lenders; and


 


WHEREAS, the Lenders have agreed to make certain extensions of credit
to Pledgor and certain affiliates of Pledgor pursuant to the terms of the
Credit Agreement, conditioned on the indebtedness and obligations of Pledgor
and such affiliates under the Credit Agreement and the other loan documents (as
defined in the Credit Agreement) (such indebtedness and obligations as
referenced and defined in the Credit Agreement being also referred to herein as
the “Obligations”) being
secured by, among other collateral, such of Pledgor’s shares as constitute
19.947% of the outstanding Common Stock of the Company (the “Shares”), pursuant to that certain
Security and Pledge Agreement (the “Security
and Pledge Agreement”) to be entered into by and between
Pledgor, and Administrative Agent, for the benefit of Lenders; and


 


WHEREAS, the agreements of the Lenders under the Credit Agreement are
further conditioned on the execution and delivery of this Consent and Waiver by
the Company and the Shareholders evidencing certain agreements of the Company
and the Shareholders with respect to the rights of the Administrative Agent and
the Lenders under the Security and Pledge Agreement; and


 


WHEREAS, the Company and the Shareholders have agreed to enter into
this Consent and Waiver conditioned upon the agreements of the Administrative
Agent and the Lenders set forth herein.


 


NOW THEREFORE, for valuable consideration hereby acknowledged, the
Company, Pledgor, each of the Shareholders, the Administrative Agent and the
Lenders, hereby agree as follows:


 

















 


1.  Waiver and Consent.


 


(a)                                  Notwithstanding
the provisions of Section 2.01 and Section 2.02 of the Shareholders’ Agreement,
each of the Company and the Shareholders hereby consent (i) to the pledge of
the Shares by Pledgor to Administrative Agent for the benefit of the Lenders
under the Security and Pledge Agreement and, subject to the provisions set
forth herein, any exercise of the rights or remedies with respect to a
disposition of the Shares pursuant to the Security and Pledge Agreement, and
(ii) subject to the provisions set forth herein, to any subsequent Transfer by
Administrative Agent or any Holder (as defined herein) to any Person who agrees
to be bound by the Shareholders’ Agreement;


 


(b)                                 Should
the Administrative Agent elect to accept in full or partial satisfaction of any
indebtedness secured under the Security and Pledge Agreement any or all of the
Shares pursuant to Section 9.620 of the Texas Business and Commerce Code, in
connection with the exercise of its rights and remedies under the Security and
Pledge Agreement, each of the Company and the Shareholders hereby consent to
such acceptance by the Administrative Agent and, except as otherwise expressly
set forth herein, waive any rights to a proposal under Section 9.621 of the
Texas Business and Commerce Code; and


 


(c)                                  Subject
to the provisions set forth herein, each of the Company and the Shareholders
hereby waive any and all rights provided under Section 2.03 of the Shareholders’
Agreement, including but not limited to all tag-along and Participation Offer
rights, in connection with the Pledge, resulting from any Foreclosure
Disposition (as hereinafter defined), and, in the event that the Administrative
Agent on behalf of the Lenders, or any of the Lenders individually, or any of
their respective affiliates acquires the Shares pursuant to a Foreclosure
Disposition, any subsequent Transfer by the Administrative Agent or such Lender
or affiliate made to any Person, provided however, in the case of any such
subsequent transfer by the Administrative Agent, any Lender or any such
affiliate, such rights are waived only to the extent of those Shares are
transferred for consideration equal to or less than $50,000,000, in the
aggregate.  Pledgor, the Shareholders
and the Company agree that the Participation Offer rights shall be suspended in
connection with any sale, transfer or conveyance made by each of the
Shareholders, but only to the extent that the aggregate consideration for the
shares transferred by any such Shareholder are equal to or less than
$50,000,000.  Upon the later of (i) the
termination of the Security and Pledge Agreement or (ii) a subsequent Transfer
of the Shares by Administrative Agent or any Holder to any Person in connection
with a disposition of the Shares, all of the rights, duties and obligations of
the Pledgor, the Shareholders and any transferee who agrees to be bound by the
Shareholders’ Agreement with respect to the Participation Offer rights under
Section 2.03 shall be fully reinstated.


 


2.  Notice of Default.  Pledgor
covenants and agrees to promptly deliver to the Shareholders and the Company
upon receipt thereof, and in any event within three (3) business days of the
receipt thereof, any Default Notice (as such term is defined in the Security
and Pledge Agreement) under the Security and Pledge Agreement and any
subsequent communication, written or oral, regarding such default and any
proposed sale or transfer of the Shares, including without limitation, a Foreclosure
Disposition.


 


3.  Notice of Foreclosure
Disposition; Public Sale.  In the event that the Lenders elect to direct the Administrative Agent to
conduct a sale of any of the Shares, or any portion thereof, in


 

















 


connection with the exercise any of its remedies under the Security and
Pledge Agreement (a “Foreclosure
Disposition”), then, in the
case of a Foreclosure Disposition which is to be a public sale:


 


(a)                                  Each
of the Company and the Shareholders shall receive written notice from the
Administrative Agent of the time and place of such Foreclosure Disposition and
the Note Purchase Price as of such date not less than ten (10) business days
prior to the date of such Foreclosure Disposition, such notice to be given in
accordance with the provisions of Section 15 hereof (the “Foreclosure Sale Notice”), and such
Foreclosure Disposition shall not occur prior to the expiration of the
Pre-Foreclosure Option Period (as defined in Section 4 below).  If the Company and/or any of the
Shareholders agree to purchase any or all of the Shares in the Foreclosure
Disposition, then the closing of such purchases shall take place on the
forty-fifth (45th) day of such agreement, unless the Administrative
Agent and all such purchasers agree to a different closing date.


 


(b)                                 The
Foreclosure Disposition shall be conditioned upon the right of the Company and
the Shareholders to approve the public sale purchaser within a period of ten
(10) business days following the date of their receipt of Foreclosure Notice
(as hereinafter defined), and shall not be deemed to be consummated until the
obtainment (or deemed obtainment) of the approvals contemplated by Section
3(c) below; provided, however, that in the event that the Administrative
Agent on behalf of the Lenders that are Lenders as of the date hereof, or any
assignee which is a nationally or state chartered bank, federal savings bank,
quasi-governmental lending agency or similar banking or lending institution, or
any of such Lenders individually, or any of their respective affiliates shall
be the public sale purchaser at a Foreclosure Disposition, then such sale shall
be deemed approved by the Company and the Shareholders and no further approval
as provided in this Section 3 shall be required.


 


(c)                                  The
Administrative Agent shall deliver to the Company and each of the Shareholders
written notice of the occurrence of such conditional Foreclosure Disposition
and the name of the public sale purchaser (the “Foreclosure
Notice”).  Within ten
(10) business days following receipt of the Foreclosure Notice, the Company and
each of the Shareholders shall deliver to the Administrative Agent, in writing,
either (i) its approval of the public sale purchaser as set forth in the
Foreclosure Notice, or (ii) its election to purchase the Obligations from the
Lenders pursuant to the provisions of Section 6 below.  The failure of the Company or any of the
Shareholders to deliver its written approval of the public sale purchaser or
election to purchase the Obligations prior to the expiration of such ten (10)
business day period shall be deemed to constitute the approval of the public
sale purchaser as set forth in the Foreclosure Notice and, unless one of the
Company or any of the Shareholders shall deny its approval of the public sale
purchaser, the Administrative Agent shall have the right to consummate the
Foreclosure Disposition, provided that as a condition precedent to such
transfer, such public sale purchaser becomes a party to and agrees to be bound
by all terms and conditions of the Shareholders’ Agreement.


 


4.  Pre-Foreclosure Purchase Option.  Prior to any
Foreclosure Disposition, the Administrative Agent and each of the Lenders
agrees that the Company and the Shareholders shall have the exclusive option to
purchase (i) the Obligations (the “Pre-Foreclosure
Note Option”) at the price
and upon the terms and conditions set forth in Section 6 hereof or (ii)
the Shares (the “Pre-Foreclosure
Purchase Option”) at price
(the “Pre-Foreclosure Purchase
Price”) equal to the


 

















 


Appraised Value (as defined in the Security and Pledge Agreement) of
such Shares (the “Pre-Foreclosure
Shares”).


 


(a)                                  To
exercise the Pre-Foreclosure Note Option or Pre-Foreclosure Purchase Option,
the Company and/or Shareholders (a “Pre-Foreclosure Exercising
Party”) shall deliver to the Administrative Agent written notice
(the “Pre-Foreclosure Purchase Notice”)
of its intention to exercise the Pre-Foreclosure Note Option or Pre-Foreclosure
Purchase Option not later than ten (10) business days following the delivery of
the Foreclosure Sale Notice (the “Pre-Foreclosure Purchase
Option Exercise Period”).


 


(b)                                 If
the Company and/or Shareholders do not exercise the Pre-Foreclosure Note
Option, but the Company and/or any of the Shareholders have elected to exercise
the Pre-Foreclosure Purchase Option prior to the expiration of the
Pre-Foreclosure Note Option Exercise Period, then the closing of the
Pre-Foreclosure Purchase Option shall occur on or before the forty-fifth (45th)
day after the Pre-Foreclosure Purchase Notice is delivered.  To the extent that more than one of the
Company and/or the Shareholders desire to exercise such option to acquire the
Pre-Foreclosure Shares, then such option shall be an option exercisable first
by the Company and then to the extent not fully exercised by the Company,
jointly by the Shareholders with respect to the remaining Pre-Foreclosure
Shares to the extent of their respective pro rata interests (as defined below);
provided, however, in no event shall the option to acquire the Pre-Foreclosure
Shares be exercisable with respect to less than the number of Shares that have
an aggregate Pre-Foreclosure Purchase Price equal to the Note Purchase Price
or, if the Pre-Foreclosure Purchase Price for all of the Pre-Foreclosure Shares
is less than or equal to the Note Purchase Price, all of the Pre-Foreclosure
Shares.  For purposes of this Section
4(b), the term “pro rata interest” shall mean the ratio of the number of
shares of Common Stock held by a Pre-Foreclosure Exercising Party (other than
the Company) to the number of shares of Common Stock held by all
Pre-Foreclosure Exercising Parties (other than the Company).  At such closing, the Administrative Agent
shall deliver any and all certificates, instruments and/or other documents
representing the Pre-Foreclosure Shares, free and clear of the security
interests of the Lenders, in the form reasonably requested by the
Pre-Foreclosure Exercising Party, but without recourse or warranty, express or
implied, and the Pre-Foreclosure Exercising Party shall deliver a bank or certified
check (or wire transfer) to the Administrative Agent, in an amount equal to the
Pre-Foreclosure Purchase Price.


 


(c)                                  Pledgor
acknowledges and agrees that a transfer of the Pre-Foreclosure Shares pursuant
this Section 4 shall constitute a commercially reasonable sale under the
applicable provisions of the Uniform Commercial Code as in effect in the State
of Texas (the “UCC”) and a
proper disposition of the collateral pursuant to the security interest granted
to the Administrative Agent for the benefit of the Lenders under the Security
and Pledge Agreement, and Pledgor shall have no right to contest the amount of
the consideration or credit given with respect to the Lender Acquired Shares in
accordance with this Section 4.


 


(d)                                 Notwithstanding
anything in this Section 4 or otherwise in this Waiver and Consent to
the contrary, nothing herein shall preclude the Administrative Agent and/or the
Lenders, or any of them, from taking steps permitted by applicable laws
preliminary to the conduct of a public or private sale or other disposition in
accordance with the rights and remedies of the Lenders under the Security and
Pledge Agreement and/or the UCC or otherwise under the Loan Documents.


 

















 


5.  Private Sale Offers and Rights of
First Refusal.  If the Company and/or Shareholders do not
exercise the Pre-Foreclosure Note Option or Pre-Foreclosure Purchase Option
prior to the expiration of the Pre-Foreclosure Purchase Option Exercise Period,
then, in the event of a proposed Foreclosure Disposition which is to be a
private sale pursuant to an offer for the purchase and sale of the Shares, or
any portion thereof, which the Lenders desire to accept (a “Proposed Private Sale Offer”), then the Administrative Agent shall deliver to
the Company and the Shareholders written notice of the Proposed Private Sale
Offer in accordance with the provisions of Section 5(a) below (the “Private Sale Notice”), and the Company and the Shareholders shall
have the right to purchase the Shares which are the subject of the Proposed Private
Sale Offer (the “Private
Sale Offered Shares”) on the
same terms and conditions as the Proposed Private Sale Offer in accordance with
and subject to the provisions of Section 5(b) below.


 


(a)                                  The
Administrative Agent shall deliver to the Company and to each of the
Shareholders a Private Sale Notice prior to its acceptance of any Proposed
Private Sale Offer, in the manner and at the addresses set forth in Section
15 hereof.  The Private Sale Notice
shall disclose the terms of the Proposed Private Sale Offer, including the
number of Private Sale Offered Shares, the aggregate purchase price for the
Private Sale Offered Shares, the name of the proposed transferee, the method of
payment, the closing date of such proposed transfer, and all other material terms
and conditions of the Proposed Private Sale Offer and the Note Purchase Price
as of such date.


 


(b)                                 On
receipt of the Private Sale Notice, the Company and each of the Shareholders
(and their respective nominees) shall have the right and option to acquire the
Private Sale Offered Shares, on the same terms and conditions as set forth in
the Proposed Private Sale Offer, except that (i) the closing date shall be the
date which is forty-five (45) days following the expiration of the Private Sale
Offer Notice Period (as defined below), (ii) if the Proposed Private Sale Offer
specifies consideration other than cash, the consideration shall be the cash
equivalent of the consideration specified in the Proposed Private Sale Offer,
and (iii) to the extent that more than one of the Company and/or the
Shareholders desire to exercise such option to acquire the Private Sale Offered
Shares, then such option shall be an option exercisable first by the Company
and then to the extent not fully exercised by the Company, jointly by the
Shareholders with respect to the remaining Private Sale Offered Shares to the
extent of their respective pro rata interests (as defined below); provided,
however, in no event shall the option to acquire the Private Sale Offered
Shares be exercisable with respect to less than the entirety of the Private
Sale Offered Shares.  If either the
Company and/or any Shareholder elects to exercise its option to acquire the
Private Sale Offered Shares (a “Private Sale Exercising
Party”), such Private Sale Exercising Party shall give notice to
the Administrative Agent within ten (10) business days of its receipt of such
Private Sale Offer Notice (the “Private Sale Offer Notice
Period”).  For purposes
of this Waiver and Consent, the term “pro rata interest” shall mean the ratio
of the number of shares of Common Stock held by a Private Sale Exercising Party
(other than the Company) to the number of shares of Common Stock held by all
Private Sale Exercising Parties (other than the Company).  For purposes of this Section 5.5(b), the
term “cash equivalent” shall mean (i) the value ascribed to the consideration
by mutual agreement of the Administrative Agent and the Private Sale Exercising
Parties within five (5) business days of the expiration of the Private Sale Offer
Notice Period or (ii) if no such agreement is reached within five (5) business
days of the expiration of the Private Sale Offer Notice Period, the value
ascribed to such consideration by a nationally-recognized investment bank or
appraisal firm engaged by the tenth (10th) business day after the
expiration of the Private Sale Offer Notice Period by the Private Sale
Exercising Parties and reasonably acceptable to the Administrative Agent (the


 

















 


fees and
expenses of which shall be borne by Pledgor), which firm shall use a valuation
methodology supplied by the Private Sale Exercising Parties and reasonably
acceptable to the Administrative Agent, and which firm shall be directed to
provide its valuation within thirty (30) days of its engagement.


 


(c)                                  At
the closing of any sale of the Private Sale Offered Shares to a Private Sale
Exercising Party pursuant to the provisions of this Section 5, the
Administrative Agent shall deliver any and all certificates, instruments and/or
other documents representing the Private Sale Offered Shares, free and clear of
the security interests of the Lenders, in the form reasonably requested by the
Private Sale Exercising Party but without recourse or warranty, express or
implied, and the Private Sale Exercising Party shall deliver a bank or
certified check (or wire transfer) to the Administrative Agent in an amount
equal to the aggregate purchase price set forth in the Proposed Private Sale
Offer.


 


(d)                                 If
none of the Company and any of the Shareholders elects to exercise the option
to acquire the Private Sale Offered Shares pursuant to this Section 5,
then, prior to the expiration of the Private Sale Offer Notice Period, each of
the Company and each Shareholder shall deliver to the Administrative Agent, in
writing, either (i) its consent to the Transfer pursuant to the Proposed
Private Sale Offer, or (ii) its election to purchase the Obligations from the
Lenders pursuant to the provisions of Section 6 below.  The failure of the Company or any
Shareholder to deliver its written consent or election to purchase the
Obligations prior to the expiration of the Private Sale Offer Notice Period
shall be deemed to constitute the consent of such party to the Transfer of the
Private Sale Offered Shares pursuant to the terms of the Proposed Private Sale
Offer, and, if (x) there shall be no Private Sale Exercising Party pursuant to
the provisions of this Section 5 (or if any such Private Sale Exercising
Party shall fail to consummate the acquisition of the Private Sale Offered
Shares as set forth herein) and (y) and neither the Company nor any of the
Shareholders elects to purchase the Obligations from the Lenders pursuant to
the provisions of Section 6 below, then the Administrative Agent shall
have the right to transfer the Private Sale Offered Shares to the proposed
transferee on the same terms and conditions set forth in the Private Sale Offer
Notice, provided that as a condition precedent to such transfer, such proposed
transferee becomes a party to and agrees to be bound by all terms and conditions
of the Shareholders’ Agreement and such condition shall not be waived or
modified.


 


(e)                                  Notwithstanding
anything in this Section 5 or otherwise in this Waiver and Consent to
the contrary, nothing herein shall preclude the Administrative Agent and/or the
Lenders, or any of them, from taking steps permitted by applicable laws
preliminary to the conduct of a private sale or other disposition in accordance
with the rights and remedies of the Lenders under the Security and Pledge
Agreement and/or the UCC or otherwise under the Loan Documents.


 


(f)                                    Pledgor
acknowledges and agrees that a transfer of the Shares pursuant this Section
5 shall constitute a commercially reasonable sale under the UCC and a
proper disposition of the collateral pursuant to the security interest granted
to the Administrative Agent for the benefit of the Lenders under the Security
and Pledge Agreement, and Pledgor shall have no right to contest the amount of
the consideration or credit given with respect to the Lender Acquired Shares in
accordance with this Section 5.


 

















 


6.  Note Purchase Obligation.  If any of the
Company or the Shareholders elect to purchase the Obligations from the Lenders
(whether one or more, the “Note
Purchasing Party”), (a)
pursuant to Section 4(a) or (b) in lieu of (i) granting its approval or
deemed approval of public sale purchaser disclosed in a Foreclosure Notice,
(ii) granting its consent or deemed consent to a Transfer pursuant to a
Proposed Private Sale Offer, or (iii) becoming a Private Sale Exercising Party
pursuant to the provisions of Section 5 above, as applicable, Lenders
agree to sell and transfer to the Note Purchasing Party, and the Note
Purchasing Party agrees to purchase and assume the Leininger Term Notes,
Designated Affiliate Term Notes and L/C Obligations (as each is defined in the
Credit Agreement) (the Leininger Term Notes, Designated Affiliate Term Notes
and L/C Obligations are collectively, the “Term Notes”),
including all of the rights, interests and obligations of the Lenders under
those of the Loan Documents (as such term is defined under the Credit
Agreement) more particularly described on Annex B attached hereto (the “Assigned Loan Documents”), for a purchase price equal to the amount then
due under the Term Notes (the “Note
Purchase Price”), including
all accrued but unpaid interest, and all reasonable out-of-pocket fees and
expenses incurred by the Lenders in connection with the enforcement of the Loan
Documents as set forth in the Foreclosure Sale Notice or Private Sale Notice,
as applicable.


 


(a)                                  The
sale and assignment of the Assigned Loan Documents to the Shareholders shall
occur on or before forty-five (45) days after the expiration of the
Pre-Foreclosure Purchase Option Exercise Period or Private Sale Offer Notice
Period, as applicable.  To the extent
that more than one of the Company and/or the Shareholders elect to acquire the
Assigned Loan Documents in accordance with Section 6(a), then such
option shall be an option exercisable first by the Company and then to the
extent not fully exercised by the Company, shall be exercised jointly by the
remaining Note Purchasing Parties to the extent of their respective pro rata
interests (as defined below) unless otherwise agreed to by the Note Purchasing
Parties; provided, however, in no event shall the option to acquire the Term
Notes be exercisable with respect to less than the entirety of the Term
Notes.  For purposes of this Section
6(b), the term “pro rata interest” shall mean the ratio of the number of
shares of Common Stock held by a Note Purchasing Party (other than the Company)
to the number of shares of Common Stock held by all Note Purchasing Parties
(other than the Company).  At such
closing, the Administrative Agent and the Lenders shall deliver an instrument
of assignment which is reasonably acceptable to the Lenders and the Note
Purchasing Party (subject to the provisions of Section 6(b) below),
endorse the Term Notes to the Note Purchasing Party (or its designee), without
recourse or warranty (subject to the provisions of Section 6(b) below),
and deliver to the Note Purchasing Party the originals of the Term Notes and
the other Assigned Loan Documents, the certificates evidencing the Shares, the
stock powers held by the Administrative Agent with respect thereto, and such
other instruments of conveyance or assignment as shall be reasonably necessary
to transfer to the Note Purchasing Party the Obligations and the rights and
interests of the Lenders under the Assigned Loan Documents free and clear of
liens and encumbrances (subject to the provisions of Section 6(b)
below), and the Shareholders shall deliver a bank or certified check (or wire
transfer) to the Administrative Agent, in an amount equal to the Note Purchase
Price, together with such other acknowledgements of receipt and assumption of
the obligations of the Administrative Agents and the Lenders under the Assigned
Loan Documents, including but not limited to the obligations to fund the
outstanding Letters of Credit (as defined in the Credit Agreement), if any, up
to the face amount of such L/C Obligations set forth on Annex B, subject
to the terms and conditions thereof.


 

















 


(b)                                 Lenders’
assignment of the Term Notes and the other Assigned Loan Documents will be
without recourse, warranty or representation, express or implied, except that
each of the Lenders will represent and warrant to the Note Purchasing Party (i)
the amount of the unpaid principal balance and accrued interest due and owing
in respect of the Term Notes as of the date of the assignment, (ii) the amounts
to be funded under any of the outstanding Letters of Credit, and (iii) that
such Lender has not sold, assigned or pledged its interest in the Loan
Documents in whole or in part to any person or entity that is not a party to
such assignment.


 


(c)                                  The
Company and the Shareholders acknowledge and agree that, upon the conveyance to
the Note Purchasing Party of the Assigned Loan Documents, the maturity date of
the Term Notes shall be automatically be reinstated and extended to the date
which is one (1) year from the date of the conveyance of the Assigned Loan
Documents.  Pledgor acknowledges and
agrees that, upon the conveyance to the Note Purchasing Party of the Assigned
Loan Documents, the Obligations shall continued to be secured by all of the
collateral (or any portion thereof, at the option of the Note Purchasing Party)
securing the Obligations under the Loan Documents enforceable as of the date of
the Foreclosure Notice.  The Note
Purchasing Party agrees to act reasonably and to cooperate with the Lenders in
consummating the sale and assignment of the Lenders’ interest in the Term
Notes.


 


(d)                                 The
Administrative Agent and the Lenders agree that the Obligations under the Loan
Documents shall not be increased without the consent of the Company and the
Shareholders which shall not be unreasonably withheld.


 


(e)                                  The
rights granted to the Company and the Shareholders under this Section 6
shall not require any notice to or consent of any of the Company or the
Shareholders with respect to any of the Loan Documents or the exercise of any
of the rights or remedies of the Lenders thereunder except as specifically set
forth in this Agreement with respect to the exercise of the remedies of the
Lenders under the Security and Pledge Agreement (in the event of the election
of the Lenders to exercise such rights and remedies), it being understood and
agreed by the Company and the Shareholders that the Loan Documents, and any and
all of the terms or provisions thereof, may be exercised, waived, modified,
amended, supplemented, released, renewed or extended by the Lenders in the sole
and absolute discretion.


 


7.  Company and Shareholder Purchase Option. 


 


(a)                                  If
the Company and/or the Shareholders do not exercise the Pre-Foreclosure Note
Option or Pre-Foreclosure Purchase Option prior to the expiration of the
Pre-Foreclosure Purchase Option Exercise Period, then, if the Administrative
Agent on behalf of the Lenders, or any of the Lenders individually, or any of
their respective affiliates (such acquiror referred to herein as the “Holder”), shall acquire all or any
portion of the Shares in connection with the exercise of the rights and
remedies of the Lenders under the Security and Pledge Agreement, whether
pursuant to a Foreclosure Disposition or otherwise (the “Lender
Acquired Shares”), the Administrative Agent shall give written
notice thereof promptly following such acquisition of the Shares, and each of
the Lenders that the Company and Shareholders shall have the exclusive option
to purchase all of the Lender Acquired Shares (the “Purchase
Option”), exercisable during the period set forth in Section
7(b), at a purchase price equal to the amount of the consideration paid or
credit given with respect to the Lender Acquired Shares plus two percent
(2%) of such amount (the “Exercise Price”).  Each of


 

















 


the
Administrative Agent and the Lenders agrees to cause any affiliate thereof who
becomes a Holder to acknowledge that its acquisition of the Shares is subject
to the provisions of this Waiver and Consent.


 


(b)                                 To exercise the
Pre-Foreclosure Purchase Option, the Company and/or Shareholders (a “Purchase Option Exercising Party”)
shall deliver to the Holder of the Lender Acquired Shares written notice (the “Purchase Option Notice”) of its
intention to exercise the Purchase Option not later than ten (10) business days
following the delivery of the notice specified in Section 7(a) (the “Purchase Option Exercise Period”),
and the closing of the Purchase Option shall occur on or before the forty-fifth
(45th) day after the Purchase Option Notice is delivered.  To the extent that more than one of the
Company and/or the Shareholders desire to exercise such option to acquire the
Lender Acquired Shares, then such option shall be an option exercisable first
by the Company and then to the extent not fully exercised by the Company,
jointly by the Shareholders with respect to the remaining Lender Acquired
Shares to the extent of their respective pro rata interests (as defined below);
provided, however, in no event shall the option to acquire the Lender Acquired
Shares be exercisable with respect to less than the entirety of the Lender
Acquired Shares.  For purposes of this Section
7(b), the term “pro rata interest” shall mean the ratio of the number of
shares of Common Stock held by a Purchase Option Exercising Party (other than
the Company) to the number of shares of Common Stock held by all Purchase
Option Exercising Parties (other than the Company).  At such closing, the Holder of the Lender Acquired Shares shall
deliver any and all certificates, instruments and/or other documents
representing the Lender Acquired Shares free and clear of the security
interests of the Lenders, in a form reasonably requested by the Purchase Option
Exercising Party, but without recourse or warranty, express or implied, and the
Purchase Option Exercising Party shall deliver a bank or certified check (or
wire transfer) to the Holder of the Lender Acquired Shares, in an amount equal
to the Exercise Price for the Lender Acquired Shares.


 


(c)                                  Pledgor acknowledges
and agrees that it shall have no right to contest the validity or propriety of
any transfer of the Shares which may be made by the Holder pursuant to this Section
7, or the amount of the consideration or credit given with respect to the
Lender Acquired Shares.


 


(d)                                 At
the expiration of the Purchase Option Exercise Period, the Purchase Option and
all rights and obligations associated therewith and described herein shall
automatically and with no further action expire and terminate.


 


(e)                                  Notwithstanding
anything in this Section 7 or otherwise in this Waiver and Consent to
the contrary, nothing herein shall preclude the Administrative Agent and/or the
Lenders, or any of them, from marketing the Lender Acquired Shares, in
compliance with applicable laws, at any time to any third party.


 


8.  Proposed Purchase Offers and
Rights of First Refusal.  If all or any portion of the Shares shall be acquired by a Holder in
connection with the exercise of the rights and remedies of the Lenders under
the Security and Pledge Agreement, whether pursuant to a Foreclosure
Disposition or otherwise, and neither the Company nor any Shareholder does not
exercise the Purchase Option prior to the expiration of the Purchase Option
Exercise Period, then, if the Holder of the Shares obtains an offer for the
sale and purchase of the Shares which the Holder desires to accept from any
third party pursuant to a bona fide offer or private placement (a “Proposed


 

















 


Purchase Offer”), the Administrative Agent shall deliver to the Company and the
Shareholders written notice of the Proposed Purchase Offer in accordance with
the provisions of Section 8(a) below (the “Offer Notice”) and
the Company and the Shareholders shall have the right to purchase the Lender
Acquired Shares which are the subject of the Proposed Purchase Offer (the “Offered Shares”) on the same terms and conditions as the
Proposed Purchase Offer in accordance with and subject to the provisions of Section
8(b) below.


 


(a)                                  The
Holder shall deliver to the Company and to each of the Shareholders prior to
its acceptance of any Proposed Purchase Offer, in the manner and at the
addresses set forth in Section 15 hereof, the Offer Notice.  The Offer Notice shall disclose the terms of
the Proposed Purchase Offer, including the number of Offered Shares, the aggregate
purchase price for the Offered Shares, the name of the proposed transferee, the
method of payment, the closing date of such proposed transfer, and all other
material terms and conditions of the Proposed Purchase Offer.


 


(b)                                 On
receipt of the Offer Notice, the Company and each of the Shareholders shall
have the right and option to acquire the Offered Shares, on the same terms and
conditions as set forth in the Offer Notice, except that (i) the closing date
shall be the date which is forty-five (45) days following the expiration of the
Right of First Refusal Notice Period (as defined below), (ii) if the Proposed
Purchase Offer specifies consideration other than cash, the consideration shall
be the cash equivalent of the consideration specified in the Proposed Purchase
Offer, and (iii) to the extent that more than one of the Company and/or the
Shareholders desire to exercise such option to acquire the Offered Shares, then
such option shall be an option exercisable first by the Company and then to the
extent not fully exercisable by the Company, jointly by the Shareholders with
respect to the remaining Offered Shares to the extent of their respective pro
rata interests; provided, however, in no event shall the option to acquire the
Offered Shares be exercisable with respect to less than the entirety of the
Offered Shares.  If either the Company
and/or any Shareholder elects to exercise its option to acquire the Offered
Shares pursuant to this Section 8 (an “Exercising
Party”), such Exercising Party shall give notice to the Holder
of the Lender Acquired Shares within ten (10) business days of its receipt of
such Offer Notice (the “Right of First Refusal
Notice Period”).  For
purposes of this Section 8.5(b), the term “cash equivalent” shall mean (i) the
value ascribed to the consideration by mutual agreement of the Administrative
Agent and the Exercising Parties within five (5) business days of the
expiration of the Right of First Refusal Notice Period or (ii) if no such
agreement is reached within five (5) business days of the expiration of the
Right of First Refusal Notice Period, the value ascribed to such consideration
by a nationally-recognized investment bank or appraisal firm engaged by the
tenth (10th) business day after the expiration of the Right of First
Refusal Notice Period by the Exercising Parties and reasonably acceptable to
the Administrative Agent (the fees and expenses of which shall be borne by
Pledgor), which firm shall use a valuation methodology supplied by the
Exercising Parties and reasonably acceptable to the Administrative Agent, and
which firm shall be directed to provide its valuation within thirty (30) days
of its engagement.


 


(c)                                  If
any of the Company or any of the Shareholders do not elect to exercise its
option to acquire the Offered Shares pursuant to this Section 8 (a “Non-Exercising Party”), then, prior
to the expiration of the Right of First Refusal Notice Period, such
Non-Exercising Party shall deliver to the Administrative Agent, in writing, its
consent or denial of consent to the acceptance by the Holder of the Proposed
Purchase Offer and a Transfer pursuant to the Proposed Purchase Offer
(conditioned upon the failure of any of the Company or any Shareholder to
become an Exercising


 

















 


Party pursuant
to the provisions of this Section 8), which consent shall not be
unreasonably withheld.  The failure of a
Non-Exercising Party to deliver its written consent or denial of consent prior
to the expiration of the Right of First Refusal Notice Period shall be deemed
to constitute the consent of such Non-Exercising Party to the Transfer of the
Offered Shares pursuant to the terms of the Offer Notice.  Notwithstanding the giving of any consent to
the acceptance and Transfer, it shall be provided that as a condition precedent
to such Transfer that such proposed transferee becomes a party to and agrees to
be bound by all terms and conditions of the Shareholders’ Agreement and such
condition shall not be waived or modified.


 


(d)                                 At
the closing of any sale of the Offered Shares to an Exercising Party pursuant
to the provisions of this Section 8, the Holder of the Offered Shares
shall deliver any and all certificates, instruments and/or other documents
representing the Offered Shares free and clear of the security interest of the
Lenders and in a form reasonably requested by the Company and/or Shareholders
acquiring the Offered Shares, but without recourse or warranty, express or
implied, and the Company and/or Shareholders shall deliver a bank or certified
check (or wire transfer) to the Holder of the Offered Shares in an amount equal
to the aggregate purchase price set forth in the Offer Notice.


 


9.  Right of Inspection and Audit.  The Company hereby
covenants and agrees to permit the Administrative Agent or any of its agents or
representatives, including but not limited to any accountants, investment
bankers, attorneys and other financial, business or legal consultants, to visit
and inspect the financial records and statements, inventory or properties of
the Company, to discuss the affairs, finances, and accounts of the Company and
to otherwise assist Administrative Agent in conducting an appraisal of the
Shares and a valuation of the equity of the Company, during normal business
hours, at any reasonable time and from time to time (“Appraisal and Marketing
Investigations”).  It shall be a condition to the Company’s
obligation to provide any information that the Administrative Agent and any
other party or entity receiving such information shall enter into a
confidentiality agreement in the form of Annex A hereto.  Such inspection right shall commence upon
receipt of a bona fide Default Notice under Section 2 and continue
during any Event of Default (as defined in the Security and Pledge Agreement)
and shall terminate upon the earliest to occur of (i) consummation of an
initial public offering of the Company’s equity securities, (ii) acceptance of
any or all of the Shares by the Administrative Agent in full or partial
satisfaction of any indebtedness secured under the Security and Pledge
Agreement, (iii) consummation of a Foreclosure Disposition, and (iv)
consummation of a private placement or other disposition of any or all of the
Shares.  The Administrative Agent agrees
that the scope of the Appraisal and Marketing Investigations shall be limited
to only that information deemed by the Company to be reasonably necessary to
appraise the Shares and value the equity of the Company.  The Administrative Agent agrees that any
such information received from the Company shall be kept confidential and shall
not be disclosed to any other party or entity, except for the Lenders,
affiliated entities of the Administrative Agent and/or the Lenders deemed
reasonably acceptable by the Company, and their respective agents,
representatives and successors.  The
Administrative Agent shall use the same degree of care as the Administrative
Agent takes to preserve and safeguard its own proprietary information.  Any costs, fees and expenses incurred by the
Administrative Agent and/or or the Lenders in connection with any inspection or
Appraisal and Marketing Investigations shall be the sole obligation of Pledgor.


 

















 


10.  Other Shareholder Rights
Agreements.


 


(a)                                  Upon
acceptance by the Administrative Agent, for the benefit of the Lenders, of any
or all of the Shares in full or partial satisfaction of the Obligations, or
upon a Transfer of the Shares by the Administrative Agent to any Person in
connection with Administrative Agent’s exercise of any of the rights or
remedies under the Security and Pledge Agreement or otherwise, the
Administrative Agent, any other Holder or any other such transferee shall agree
in writing to become a party to the Shareholders’ Agreement and to be bound by
all of its terms and provisions; provided, however, neither the Administrative
Agent, any other Holder nor any other transferee of the Shares shall be
entitled to the rights, duties, and obligations set forth in Section 3 or
Section 4 of the Shareholders’ Agreement with respect to any acquired Shares
(other than the obligation to vote their shares in accordance with Section 3.01
for directors of the Company which votes shall not be made cumulatively).


 


(b)                                 Notwithstanding
a Transfer of the Shares to the Administrative Agent, the Lenders or any other
third party, Pledgor shall continue to be bound to all of the terms and
conditions of the Shareholders’ Agreement; provided, however, the rights set
forth in Section 3.01, Section 4 and Section 5.01 of the Shareholders’
Agreement shall automatically terminate solely with respect to Pledgor or any
transferee of Pledgor or any subsequent transferee in the event that Pledgor
shall hold title to less than fifty percent (50%) of the shares of Common Stock
of the Company held as of November 5, 1997.


 


(c)                                  Except to the extent
set forth herein, the Shareholders’ Agreement shall remain in full force and
effect and the Shares shall at all times remain subject to all of terms and
provisions of the Shareholders’ Agreement.


 


11.  Release of Shares upon Exercise of Drag-Along Rights.  In the event of a Required Sale, the Seller shall
deliver a copy of any Required Sale Notice to the Administrative Agent.  From and after receipt of such Required Sale
Notice and for so long as the Shares shall remain subject to the Security
Agreement and Pledge, the Administrative Agent and the Lenders shall cooperate
in good faith with the Seller in connection with consummating the Required Sale
(including, without limitation, releasing the Shares to be sold from the
Security and Pledge Agreement and the Credit Agreement upon the payment to it
of the consideration payable to Pledgor incident to the consummation of the
Required Sale to the extent of, in the case of cash consideration, the amount
of the Obligations, the giving of consents and the voting of any Common Stock
held by the Administrative Agent to approve such Required Sale).  On the Required Sale Date, the
Administrative Agent shall deliver, free and clear of the security interests of
the Lenders, a certificate or certificates and/or other instrument or
instruments for all Shares, duly endorsed and in proper form for transfer, to
the Third Party in the manner and at the address indicated in the Required Sale
Notice but conditioned upon the delivery to the Administrative Agent of the
consideration payable to Pledgor incident to the consummation of the Required
Sale to the extent of, in the case of cash consideration, the amount of the
Obligations.


 


12.  No Termination or Amendment of Shareholders’ Agreement.  The Company, Pledgor and each of the Shareholders
hereby covenant and agree not to vote in favor of, or cause, the termination of
the Shareholders’ Agreement, or vote in favor of, or cause, any modification,
extension, renewal, amendment, replacement or alteration of any of the terms of
the Shareholders’


 

















 


Agreement without the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld.


 


13.  Pledgor Covenant.  Pledgor
covenants and agrees that upon any sale or transfer of the Shares by the
Administrative Agent or any Holder to the Company or any Shareholders in
accordance with this Agreement, Pledgor shall deliver to such purchaser at
closing a certificate signed by the Pledgor attesting that good title is being
passed to the Shares free and clear of all encumbrances.  Notwithstanding the foregoing, the delivery
of such certificate shall not be a condition precedent to consummating any such
transaction


 


14.  Restrictive Legend.  Pledgor
acknowledges and agrees that each certificate representing the Shares shall
bear a legend as follows until the later of (i) the termination of the Security
and Pledge Agreement or (ii) a subsequent Transfer of the Shares by
Administrative Agent or any Holder to any Person in connection with a
disposition of the Shares:


 


“THE
SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A WAIVER AND
CONSENT, DATED DECEMBER      , 2002 BUT EFFECTIVE FOR
ALL PURPOSES AS OF SEPTEMBER 27, 2002, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY, AND SAID SHARES MAY NOT BE SOLD OR TRANSFERRED
EXCEPT IN STRICT ACCORDANCE WITH THE TERMS OF THAT AGREEMENT.  A COPY OF SAID AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE TO THE SHAREHOLDER UPON RECEIPT BY THE COMPANY AT ITS PRINCIPAL
PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST FROM THE HOLDER REQUESTING
SUCH A COPY.”


 


15.  Notices.  All
notices given with respect to this Waiver and Consent shall be in writing and
shall be deemed to have been properly given or served for all purposes (i) if
sent by a nationally recognized overnight carrier for next business day
delivery, on the first business day following deposit of such notice with such
carrier unless such carrier confirms such notice was not delivered, then on the
day such carrier actually delivers such notice, or (ii) if personally
delivered, on the actual date of delivery, or (iii) if sent by certified U.S.
Mail, return receipt requested postage prepaid, on the fifth business day
following the date of mailing, or (iv) if sent by facsimile, then on the actual
date of delivery (as evidenced by a facsimile confirmation) provided that a
copy of the facsimile and confirmation is also sent by regular U.S. Mail,
addressed as follows:


 


 


	
  If to Pledgor:

  	
   

  	
  8122 Datapoint Drive, Suite 1000

  
	
   

  	
   

  	
  San Antonio, Texas  78229

  
	
   

  	
   

  	
  Facsimile:  (210) 614-5841

  
	
   

  	
   

  	
  Attention:  Thomas W. Lyles,
  Jr., President

  



 

















 


	
  If to Administrative Agent:

  	
   

  	
  JPMorgan Chase Bank

  
	
   

  	
   

  	
  1020 N.E. Loop 410

  
	
   

  	
   

  	
  San Antonio, Texas  78265-7531

  
	
   

  	
   

  	
  Facsimile:  (210) 829-6126

  
	
   

  	
   

  	
  Attention:  David P. McGee,
  President

  
	
   

  	
   

  	
   

  
	
  with copy to:

  	
   

  	
  Jackson Walker L.L.P.

  
	
   

  	
   

  	
  112 E. Pecan Street, Suite 2100

  
	
   

  	
   

  	
  San Antonio, Texas  78205

  
	
   

  	
   

  	
  Facsimile: (210) 978-7790

  
	
   

  	
   

  	
  Attention:  Eileen E. Sommer,
  Esq.

  
	
   

  	
   

  	
   

  
	
  If to the Company:

  	
   

  	
  Kinetic Concepts, Inc.

  
	
   

  	
   

  	
  8023 Vantage

  
	
   

  	
   

  	
  San Antonio, Texas  78203

  
	
   

  	
   

  	
  Facsimile:

  	
  (210) 255-6993

  
	
   

  	
   

  	
  Attention:

  	
  Dennis Noll, Vice President

  
	
   

  	
   

  	
   

  	
  General Counsel

  
	
   

  	
   

  	
   

  
	
  If to the Shareholders:

  	
   

  	
  Richard C. Blum & Associates, L.P.

  
	
   

  	
   

  	
  909 Montgomery Street, Suite
  400

  
	
   

  	
   

  	
  San Francisco, CA  94133

  
	
   

  	
   

  	
  Facsimile:

  	
  (415) 434-3130

  
	
   

  	
   

  	
  Attention:

  	
  Murray Indick, Esq.

  
	
   

  	
   

  	
   

  	
  Partner and General Counsel

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  Fremont Partners, L.P.

  
	
   

  	
   

  	
  199 Fremont Street, Suite 2300

  
	
   

  	
   

  	
  San Francisco, CA  94105

  
	
   

  	
   

  	
  Facsimile:  (415) 284-8191

  
	
   

  	
   

  	
  Attention:  Kevin Baker, Esq.

  
	
   

  	
   

  	
   

  
	
  with copy to:

  	
   

  	
  Skadden, Arps, Slate, Meagler & Flom LLP

  
	
   

  	
   

  	
  525 University Avenue, Suite 1100

  
	
   

  	
   

  	
  Palo Alto, CA  94403

  
	
   

  	
   

  	
  Facsimile: (650) 470-4570

  
	
   

  	
   

  	
  Attention:  Kenton J. King,
  Esq.

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  Richard Welch

  
	
   

  	
   

  	
  8122 Datapoint Drive, Suite 1000

  
	
   

  	
   

  	
  San Antonio, Texas  78229

  
	
   

  	
   

  	
  Facsimile:  (210) 614-5841

  
	
   

  	
   

  	
  Attention:  Thomas W. Lyles,
  Jr., Esq.

  



 

















 


	
  and

  	
   

  	
  Robert Welch

  
	
   

  	
   

  	
  8122 Datapoint Drive, Suite 1000

  
	
   

  	
   

  	
  San Antonio, Texas  78229

  
	
   

  	
   

  	
  Facsimile:  (210) 614-5841

  
	
   

  	
   

  	
  Attention:  Thomas W. Lyles,
  Jr., Esq.

  



 


16.  Further Assurances.  Each
party hereto agrees to perform any further acts and to execute and deliver any
further documents which may be reasonably necessary to carry out the provisions
of this Waiver and Consent.


 


17.  Subsequently Acquired Shares.  For
purposes of this Consent and Waiver, the term “Shares” shall not include any
Common Stock of the Company acquired prior to the Effective Date hereof or
acquired by the Administrative Agent or any of the Lenders, in each case, that
do not constitute the Shares described in the Security and Pledge Agreement.


 


18.  Titles and Captions.  All section titles
or captions in this Waiver and Consent are for convenience only, shall not be
deemed part of this Waiver and Consent and in no way define, limit, extend or
describe the scope or intent of any provisions hereof.


 


19.  Assignment.  This
Waiver and Consent shall be binding upon and inure to the benefit of the
successors and assigns of the respective parties.  Neither this Waiver and Consent nor any right, duty or obligation
created hereby or in any shall be assignable by any party hereto other than a
Lender or a Holder.


 


20.  Choice of Law.  This
Waiver and Consent shall be construed, interpreted and governed in accordance
with the laws of the State of Texas applicable to agreements fully executed,
delivered and performed there.


 


21.  Construction.  This
Waiver and Consent shall be interpreted and construed in accordance with its
fair meaning and not for or against any party to this Waiver and Consent.


 


22.  Severability.  In the
event that any of the provisions, or portions thereof, of this Waiver and
Consent are held to be unenforceable or invalid by any court of competent
jurisdiction, the validity and enforceability of the remaining provisions, or
portions thereof, shall not be affected thereby.


 


23.  Amendment.  No
amendment or modification of this Waiver and Consent shall in any event be
effective against any party hereto unless the same shall be agreed or consented
to in writing by such party.


 


24.  Counterparts.  This
Waiver and Consent may be executed in multiple counterparts, each of which
shall be deemed an original but all of which together will constitute one and
the same instrument and facsimile signatures shall be given the same effect as
original signatures.


 


[Remainder of Page Intentionally Left Blank]


 

















 


IN WITNESS WHEREOF, the parties hereto have each executed the Waiver
and Consent to be effective as of the date first above written.


 


 


	
   

  	
  COMPANY:

  
	
   

  
	
   

  	
  KINETIC CONCEPTS, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
  JAMES R. LEININGER:

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  James R. Leininger, M.D.

  
	
   

  
	
   

  
	
   

  	
  SHAREHOLDERS:

  
	
   

  
	
   

  	
  FREMONT PARTNERS, L.P.

  
	
   

  
	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  
	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  Managing Member

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
  Its:

  	
  Managers

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
												



 

















 


	
   

  	
  RICHARD C. BLUM & ASSOCIATES, L.P.

  
	
   

  
	
   

  	
  By:

  	
  Richard C. Blum & Associates, Inc.

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  THE COMMON FUND FOR

  NON-PROFIT ORGANIZATIONS

  
	
   

  
	
   

  	
  By:

  	
  Richard C. Blum & Associates, L.P.

  	
   

  
	
   

  	
  Its:

  	
  Attorney-In-Fact

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  STINSON CAPITAL PARTNERS II, L.P.

  
	
   

  
	
   

  	
  By

  	
  Richard C. Blum & Associates, L.P.

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  RCBA-KCI CAPITAL PARTNERS, L.P.

  
	
   

  
	
   

  	
  By

  	
  Richard C. Blum & Associates, L.P.

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
															



 


17

















 


	
   

  	
  FREMONT PARTNERS SIDE-BY-SIDE, L.P.

  
	
   

  
	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  
	
   

  	
  By:

  	
  Fremont Investors, Inc.

  	
   

  
	
   

  	
  Its:

  	
  Manager

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
  FREMONT-KCI INVESTMENT COMPANY, L.L.C.

  
	
   

  
	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  Member-Manager

  	
   

  
	
   

  
	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  Managing Member

  	
   

  
	
   

  
	
   

  	
  By:

  	
  Fremont Investors, Inc.

  
	
   

  	
  Its:

  	
  Managers

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  FREMONT PURCHASER II, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
														



 

















 


	
   

  	
  FREMONT ACQUISITION COMPANY II, L.L.C.

  	 

	
   

  	 

	
   

  	
  By:

  	
  Fremont Partners, L.P.

  	
   

  	 

	
   

  	
  Its:

  	
  Member

  	
   

  	 

	
   

  	 

	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  	
   

  	 

	
   

  	
  Its:

  	
  General Partner

  	
   

  	 

	
   

  	 

	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  	
   

  	 

	
   

  	
  Its:

  	
  Managing Member

  	
   

  	 

	
   

  	 

	
   

  	
  By:

  	
  Fremont Investors, Inc.

  	
   

  	 

	
   

  	
  Its:

  	
  Manager

  	
   

  	 

	
   

  	 

	
   

  	
  By:

  	
   

  	 

	
   

  	
  Name:

  	
   

  	 

	
   

  	
  Title:

  	
   

  	 

	
   

  	 

	
   

  	 

	
   

  	
  FREMONT ACQUISITION COMPANY IIA, L.L.C.

  	 

	
   

  	 

	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  Non-Member Manager

  	
   

  
	
   

  	 

	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  	
   

  	 

	
   

  	
  Its:

  	
  Managing Member

  	
   

  	 

	
   

  	 

	
   

  	
  By:

  	
  Fremont Investors, Inc.

  	
   

  	 

	
   

  	
  Its:

  	
  Manager

  	
   

  	 

	
   

  	 

	
   

  	
  By:

  	
   

  	 

	
   

  	
  Name:

  	
   

  	 

	
   

  	
  Title:

  	
   

  	 

																								



 

















 


	
   

  	
  FREMONT OFFSHORE PARTNERS, L.P.

  
	
   

  
	
   

  	
  By:

  	
  FP Advisors, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  General Partner

  	
   

  
	
   

  
	
   

  	
  By:

  	
  Fremont Group, L.L.C.

  	
   

  
	
   

  	
  Its:

  	
  Managing Member

  	
   

  
	
   

  
	
   

  	
  By:

  	
  Fremont Investors, Inc.

  	
   

  
	
   

  	
  Its:

  	
  Manager

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  
	
   

  
	
   

  	
  RICHARD WELCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Richard Welch

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROBERT WELCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Robert Welch

  
	
   

  
	
   

  
	
  AGREED AND ACCEPTED:

  
	
   

  
	
  ADMINISTRATIVE AGENT:

  
	
   

  
	
  JPMORGAN CHASE BANK,

  
	
  a New York banking corporation

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  David P. McGee

  
	
   

  	
  President

  
												



 

















 


	
  LENDERS:

  
	
   

  
	
  JPMORGAN CHASE BANK,

  
	
  a New York banking corporation

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  David P. McGee

  
	
   

  	
  President

  
	
   

  
	
   

  
	
  BANK ONE, NA

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					



 

















 


ANNEX A


FORM OF CONFIDENTIALITY AGREEMENT


 

















 


ANNEX B


LOAN DOCUMENTS


 


 


1.                                       Credit
Agreement.


 


2.                                       Term
Note dated September 27, 2002, in the original principal amount of $16,608,175,
executed by Pledgor and payable to the order of Chase.


 


3.                                       Term
Note dated September 27, 2002, in the original principal amount of 11,641,825,
executed by Pledgor and payable to the order of Bank One.


 


4.                                       Continuing
and Unlimited Guaranty, dated effective as of September 27, 2002, executed by
Pledgor in favor of the Administrative Agent for the benefit of the Lenders
with respect to Guaranteed Extensions of Credit issued for the account of The
Core Group, Inc.


 


5.                                       Continuing
and Unlimited Guaranty, dated effective as of September 27, 2002, executed by
Pledgor in favor of the Administrative Agent for the benefit of the Lenders
with respect to Guaranteed Extensions of Credit issued for the account of
LynMed Capital, Inc.


 


6.                                       Continuing
and Unlimited Guaranty, dated effective as of September 27, 2002, executed by
Pledgor in favor of the Administrative Agent for the benefit of the Lenders
with respect to Existing Letters of Credit issued for the account of the
Designated Affiliate Borrowers named therein.


 


7.                                       Security
and Pledge Agreement, dated effective as of September 27, 2002 executed by
Pledgor in favor of the Administrative Agent for the benefit of the Lenders.


 


8.                                       Covenant
Ranch Cash Collateral Agreement, dated effective as of September 27, 2002,
executed by Leininger in favor of the Administrative Agent for the benefit of
the Lenders.


 


9.                                       Renewal
and Extension Deed of Trust, Absolute Assignment of Rents, Security Agreement
and Financing Statement, dated effective as of September 27, 2002, executed by
Leininger to David L. Mendez, Trustee, covering certain tracts of land in
Kendall County and Gillespie County, Texas.


 


10.                                 Deed
of Trust, Absolute Assignment of Rents, Security Agreement and Financing
Statement, dated effective as of September 27, 2002, executed by Leininger to
David L. Mendez, Trustee, covering certain tracts of land in Comal County,
Texas.


 


11.                                 Deed
of Trust, Absolute Assignment of Rents, Security Agreement and Financing
Statement, dated effective as of September 27, 2002, executed by Leininger and
his wife, Cecilia Leininger, to David L. Mendez, Trustee, covering certain
tracts of land in Comal County, Texas.


 

















 


12.                                 Deed
of Trust, Absolute Assignment of Rents, Security Agreement and Financing
Statement, dated effective as of September 27, 2002, executed by Willow
Springs, Ltd. to David L. Mendez, Trustee, covering certain tracts of land in
Bandera County, Texas.


 


13.                                 Deed
of Trust, Absolute Assignment of Rents, Security Agreement and Financing
Statement, dated effective as of September 27, 2002, executed by Covenant Ranch
I, L.C. to David L. Mendez, Trustee, covering certain tracts of land in Webb
County, Texas.


 


14.                                 Term
Note dated September 27, 2002, in the original principal amount of $4,703,200,
executed by The Core Group, Inc. and payable to the order of Chase.


 


15.                                 Term
Note dated September 27, 2002, in the original principal amount of $3,296,800,
executed by The Core Group, Inc. and payable to the order of Bank One.


 


16.                                 Term
Note dated September 27, 2002, in the original principal amount of $2,939,500,
executed by LynMed Capital, Inc. and payable to the order of Chase.


 


17.                                 Term
Note dated September 27, 2002, in the original principal amount of $2,060,500,
executed by LynMed Capital, Inc. and payable to the order of Bank One.


 


18.                                 Letter
of Credit Application dated December 20, 2001, executed by American Gem
Seafoods, Inc., MCMI Food Company and Harry Lees in favor of Chase, as Issuing Lender,
with respect to Letter of Credit No. D-220597, in the face amount of
$4,000,000, issued to RLI Insurance Company for the account of American Gem
Seafoods, Inc., MCMI Food Company and Harry Lees.


 


19.                                 Letter
of Credit Application, executed by MCMI Food Company in favor of Chase, as
Issuing Lender, with respect to Letter of Credit No. D-211160, in the face
amount of $150,000, issued to Zurich American Insurance Company for the account
of MCMI Food Company.


 


20.                                 Letter
of Credit Application dated August 6, 1999, executed by ATX Technologies,
Inc.  in favor of Chase, as Issuing
Lender, with respect to Letter of Credit No. D-291414, in the face amount of
$3,000,000, issued to Freeport #2, L.P. for the account of ATX Technologies,
Inc.


 


21.                                 Letter
of Credit Application dated April 5, 2000, executed by Covenant Classic
Schools, LLC in favor of Chase, as Issuer, with respect to Letter of Credit No.
D-299684, in the face amount of $117,242, issued to Del Norte Center Limited
Partnership for the account of Covenant Classic Schools, LLC.


 


22.                                 Letter
of Credit Application dated August, 2001, executed by James R. Leininger in
favor of Bank One, as Issuing Lender, with respect to Letter of Credit No.
STR18411, in the face amount of $575,000, issued to General Electric Capital
Corporation for the account of James R. Leininger.