Exhibit 10.4


 


SECURITY AND
CONTROL AGREEMENT


 


Kinetic
Concepts, Inc., a Texas corporation (the “Pledgor”), U.S. BANK NATIONAL
ASSOCIATION as trustee for the registered holders from time to time (the “Holders”)
of the Notes (as defined herein) issued by the Pledgor under the Indenture
referred to below (in such capacity, the “Trustee”), and as securities
intermediary hereunder for the benefit of the Holders of the Notes (in such
capacity, the “Securities Intermediary”), hereby enter into this
SECURITY AND CONTROL AGREEMENT (this “Security Agreement”), as of and on
August 11, 2003.


 


All
references herein to the “UCC” are to the Uniform Commercial Code in effect
from time to time in the State of New York. 
Capitalized terms not otherwise defined herein have the meaning given
them in the Indenture referred to below.


 


RECITALS


 


A.            Pledgor
is issuing on the date hereof $205,000,000 aggregate principal amount of 7 3/8%
Senior Subordinated Notes due 2013 (together with any notes that may from time
to time be issued in substitution therefor, the “Notes”).  The Notes will be issued pursuant to an
indenture, dated as of the date hereof, by and among the Pledgor, the
guarantors signatory thereto and the Trustee (as amended, restated,
supplemented or otherwise modified from time to time, the “Indenture”).


 


B.            The
Pledgor has agreed that, on the date hereof, $199,875,000 constituting all of
the net proceeds from the sale of the Notes (the “Secured Proceeds”)
will be paid directly to the Securities Intermediary, to be applied in
accordance with the express terms of this Security Agreement.


 


C.            The
Securities Intermediary shall use the Secured Proceeds to purchase U.S.
Government Obligations (as defined in the Indenture), as more fully described
in 3(f) below (the “Pledged Securities”), and shall deposit the Pledged
Securities and all remaining cash of the Secured Proceeds, if any, in, or
credit the Pledged Securities and all remaining cash of the Secured Proceeds,
if any, to, an account (the “Securities Account”) maintained by the
Trustee with the Securities Intermediary for the benefit of the Holders of the
Notes, as such account is further described in the next recital.


 


D.            The
Trustee has opened an account with the Securities Intermediary, at the
Securities Intermediary’s office at 60 Livingston Avenue, St. Paul, Minnesota
55107.  This account bears Account No.
33586701, is in the name of “U.S. Bank National Association,” and will serve as
the Securities Account.  The Securities
Account is the “Secured Proceeds Account” referred to in the Indenture.


 


E.             It
is a condition precedent to the issuance of the Notes that the Pledgor (i)
grant to the Trustee, for the Trustee’s benefit and the ratable benefit of the
Holders of the Notes a first-priority lien on and security interest in the
Pledged Securities (including all remaining Secured Proceeds, if any, after the
purchase of the U.S. Government Obligations and all proceeds from such
securities) and related collateral to secure the Pledgor’s payment of its
Obligations (as


 

















 


defined below), and (ii)
execute and deliver this Security Agreement to create and perfect that
first-priority lien and security interest.


 


NOW,
THEREFORE, in view of the foregoing and in consideration of the mutual promises
herein and the benefits to be received therefrom, the Pledgor, the Trustee, and
the Securities Intermediary hereby adopt each of the foregoing recitals and
further agree as follows:


 


SECTION
1.         Grant of Security Interest.  The Pledgor hereby grants to the Trustee,
for its benefit and for the ratable benefit of the Holders of the Notes, a
continuing first-priority lien on and security interest in all of the Pledgor’s
right, title and interest in, to and under the following in each case whether
now owned or hereafter acquired by the Pledgor, wherever located and whether
now or hereafter existing or arising, whether investment property, general
intangibles, other rights, interests, claims, or otherwise (collectively, the
“Pledged Collateral”): (a) the Securities Account, all “Financial Assets” (as
defined in UCC § 8-102(a)(9)) held therein (including the Pledged Securities)
and all dividends, interest, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Financial Assets, and all “Security Entitlements” (as
defined in UCC Section 8102(a)(17)) with respect thereto, (b) any successor or
other account into which Financial Assets held in the Securities Account may be
transferred or held at any time and all Security Entitlements with respect
thereto, (c) all proceeds of any and all of the foregoing (including proceeds,
collateral and supporting obligations that constitute property of the types
described in the foregoing clauses (a) and (b) and this clause (c)) and to the
extent not otherwise included, cash.


 


SECTION
2.         Security for Obligations.  This Security Agreement and the security
interest granted hereby secure (i) the Pledgor’s prompt and complete payment of
all amounts due, whether at maturity, upon acceleration or mandatory
prepayment, or otherwise, under the Notes and (ii) the Pledgor’s timely and
full payment of all its other obligations under the Notes (including, without
limitation, its obligation to make an offer to redeem the Notes pursuant to Section
4.23 of the Indenture), the Indenture, the Registration Rights Agreement
and this Security Agreement (collectively, the “Obligations”).


 


SECTION
3.         Delivery of Pledged
Securities: Maintenance of Securities Account; Governing Law


 


(a)           Upon the Securities
Intermediary’s acquisition of Pledged Securities or any other Pledged
Collateral, the Securities Intermediary shall promptly make appropriate book
entries indicating that the Trustee is the sole “Entitlement Holder” (as
defined in UCC § 8-102(a)(7)) with respect thereto.  Subject to the other terms and conditions of this Security
Agreement, all funds or other property held by the Trustee under this Security
Agreement shall be held in the Securities Account and be subject to the
Trustee’s exclusive dominion and control (including “control” as defined
in UCC § 8-106), for the benefit of the Trustee and for the ratable benefit of
the Holders of the Notes, and segregated from all other funds or other property
otherwise held by the Trustee.


 


(b)           The Securities
Intermediary shall cause all securities or other property underlying any
Financial Assets credited to the Securities Account, including all Pledged


 


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Securities, to
be registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank, or credited to another securities account
maintained in the name of the Securities Intermediary.  In no case will any Financial Asset credited
to the Securities Account be registered in the name of, payable to the order
of, or specially endorsed to the Pledgor, unless it has been specially endorsed
to the Securities Intermediary or in blank.


 


(c)           The Securities
Intermediary shall not disburse or dispose of any Pledged Collateral except in
accordance with the terms hereof.


 


(d)           Concurrently with
the execution and delivery of this Security Agreement, the Trustee and the
Securities Intermediary are delivering to the Pledgor and to Morgan Stanley
& Co. Incorporated, as representative of the several placement agents for
the Notes, a certificate, in the form of Exhibit A hereto, duly executed
by an officer of each of the Trustee and the Securities Intermediary,
confirming that (i) the Trustee has established and will maintain the Securities
Account with the Securities Intermediary, and (ii) the Securities Intermediary
has received the Secured Proceeds, has used the Secured Proceeds to acquire
Pledged Securities or a Securities Entitlement thereto, and has credited the
same to the Securities Account, in accordance with this Security Agreement.


 


(e)           Concurrently with
the execution and delivery of this Security Agreement, the Pledgor shall duly
file the proper financing statements in the office of the Secretary of State of
Texas, covering the Pledged Collateral described in this Security Agreement.


 


(f)            Pledged Securities
purchased from the Secured Proceeds shall consist solely of short-term U.S.
Government Obligations with a maturity date not later than November 26, 2003 or
Money Market Funds investing in such obligations.  As used herein “Money Market Funds” means money market funds
having a rating in the highest investment category granted thereby by a
recognized credit rating agency at the time of acquisition, including any fund
for which the Trustee or an Affiliate of the Trustee serves as an investment
advisor, administrator, shareholder servicing agent, custodian or subcustodian,
notwithstanding that (A) the Trustee or an Affiliate of the Trustee charges and
collects fees and expenses from such funds for services rendered (provided that
such charges, fees and expenses are on terms consistent with terms negotiated
at arm’s length) and (B) the Trustee charges and collects fees and expenses for
services rendered, pursuant to this Agreement;


 


(g)           This Security
Agreement and the Securities Account shall be governed by the laws of the State
of New York.


 


SECTION
4.         Entitlement Orders;
Subordination of Lien, Waiver of Set-Off, etc.


 


(a)           The Trustee shall be
the sole Entitlement Holder of, and have the sole power to originate “Entitlement
Orders” (as defined in UCC § 8102(a)(8)) with respect to, the Pledged
Collateral.  The Securities Intermediary
shall comply with Entitlement


 


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Orders issued
by the Trustee with respect to the Pledged Collateral, without further consent
of the Pledgor or any other Person.


 


(b)           Notwithstanding
anything to the contrary herein, if at any time the Securities Intermediary
shall receive conflicting orders from the Trustee and the Pledgor, the
Securities Intermediary shall follow the orders of the Trustee and not the
Pledgor.


 


(c)           The Securities
Intermediary hereby agrees that any security interest in any of the Pledged
Collateral that it has or may in the future acquire shall be subordinate to the
Trustee’s security interest created hereby. 
The Financial Assets held in the Securities Account will not be subject
to deduction, set-off, banker’s lien, or any other right in favor of any Person
other than the Trustee (except that the Securities Intermediary may set off or
deduct all amounts due to it as customary fees for the routine operation and
maintenance of the Securities Account and for the customary fees owed to the
Trustee).


 


(d)           In the event of any
conflict between this Security Agreement and any other agreement to which the
parties hereunder are parties thereto, the terms of this Security Agreement
shall prevail.


 


(e)           The Securities
Intermediary hereby confirms and agrees that:


 


(i)            It has not entered
into any agreement (other than this Security Agreement and the Indenture) with
the Pledgor with respect to the Securities Account;


 


(ii)           It has not granted,
and until the termination of this Security Agreement will not grant, control
(including without limitation, “control” as defined in UCC § 8-106 over
or with respect to any Pledged Collateral to any Person other than the Trustee
(for the benefit of Holders of the Notes). 
It has not entered into, and until the termination of this Security
Agreement will not enter into, any agreement with any Person in which it agrees
to comply with Entitlement Orders, relating to the Pledged Collateral, from any
Person other than the Trustee or which purports to limit or condition its
obligation under this Section 4 to comply with the Trustee’s Entitlement
Orders.


 


(iii)          It has not entered
into, and until the termination of this Security Agreement will not enter into,
any agreement purporting to limit or condition its obligation to comply with
the Trustee’s Entitlement Orders as provided in this Section 4.


 


SECTION
5.         Adverse Claims.  The Securities Intermediary does not know of
any claim to, or interest in, any Pledged Collateral other than those of the
Trustee (for the benefit of Holders of the Notes) and the Pledgor.  If any Person asserts or attempts to enforce
any Lien or adverse claim (including by means of writ, garnishment, judgment,
warrant of attachment, execution or similar process) against any Pledged
Collateral, the Securities Intermediary will promptly notify the Trustee and
the Pledgor thereof.


 


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SECTION
6.         Disbursement; Redemption


 


SECTION
6.1       Disbursement.


 


If the Pledgor delivers
to the Trustee a written request substantially in the form of Exhibit B
hereto (a “Redemption Disbursement Request”) containing the
certifications described therein, together with the other material described
therein, then as soon as practicable after receipt thereof the Trustee shall
instruct the Securities Intermediary to liquidate the assets in the Securities
Account and deliver the net liquidation proceeds (after deducting any
applicable Securities Intermediary and Trustee fees and charges) as directed in
the Redemption Disbursement Request, on the disbursement date set forth
therein, which disbursement date must be (x) no more than twenty and no less
than two Business Days after the Trustee’s receipt of the Redemption
Disbursement Request, and (y) no later than 5:00 p.m. New York time on November
7, 2003.


 


SECTION
6.2       Entitlement Orders;
Redemption.


 


(a)           If at any time the
Securities Intermediary shall receive any order from the Trustee directing
transfer or redemption of any financial asset relating to the Securities
Account, the Securities Intermediary shall comply with such entitlement order
without further consent by the Pledgor or any other person.  If the Pledgor is otherwise entitled to
issue Entitlement Orders (as defined in UCC § 8-102(a)(8)) and such orders
conflict with any Entitlement Order issued by the Trustee, the Securities
Intermediary shall follow the orders issued by the Trustee.


 


(b)           If the Trustee does
not receive a Redemption Disbursement Request by 5:00 p.m. New York time on
November 7, 2003 (such event constituting an “Event of Failure”), the
Trustee shall:


 


(i)            as soon as practicable
instruct the Securities Intermediary to liquidate the assets in the Securities
Account and deliver the net liquidation proceeds (after deducting any
applicable Securities Intermediary and Trustee fees and charges) to the account
of the Trustee; and


 


(ii)           apply the net
liquidation proceeds, received in accordance with the foregoing clause (i), to
make an offer to redeem the outstanding Notes (the “Special Redemption Offer”),
for a price equal to 100% of their principal amount, plus accrued and unpaid interest
thereon through the redemption date, if any, all in accordance with Section
4.23 of the Indenture.  The Special
Redemption Offer must occur no later than five Business Days after the Event of
Failure.


 


SECTION
6.3       General Provisions.


 


(a)           Nothing in this
Security Agreement shall afford the Pledgor any right to issue Entitlement
Orders with respect to any Pledged Collateral.


 


(b)           Nothing in this Section
6 shall limit the Trustee’s rights and powers under this Security
Agreement.


 


SECTION
7.         Representations and
Warranties.  The
Pledgor hereby represents and warrants that, as of the date hereof:


 


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(a)           The Pledgor’s
execution and delivery of, and its performance of its obligations under, this
Security Agreement will not (i) contravene any provision of applicable law or
statute, the Pledgor’s organizational documents, any material agreement or
other material instrument binding upon the Pledgor or any of its affiliates, or
any judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Pledgor or any of its affiliates, or (ii) result in the
creation or imposition of any Lien on any of the Pledgor’s assets, except for
the security interest granted to the Trustee herein.  No consent, approval, authorization or order of, qualification
with, or other action by any governmental or regulatory body or agency or any
third party is required for (i) the Pledgor’s execution, delivery or
performance of this Security Agreement, or (ii) the Pledgor’s grant of, or the
perfection and maintenance of, the security interest created hereby (including
its first-priority nature), assuming the Securities Intermediary’s compliance
with its obligations hereunder. 
Notwithstanding the foregoing, a breach of any of the representations
and warranties in this Section 7(a) will not constitute a default under this
Security Agreement unless that breach causes a material adverse effect on (i)
the validity or enforceability of this Security Agreement or any other material
agreement executed in connection with the transactions contemplated herein or
in the Indenture, or (ii) the Pledgor’s ability to perform its material
obligations under the Notes and the Indenture.


 


(b)           The Pledgor has duly
and validly authorized, executed, and delivered this Security Agreement.  Assuming the Trustee’s and Security
Intermediary’s due authorization, execution and delivery of this Security
Agreement and its enforceability against the Trustee and the Securities
Intermediary in accordance with its terms, this Security Agreement constitutes
the Pledgor’s valid and binding agreement, enforceable against the Pledgor in
accordance with its terms, except as (i) may be limited by bankruptcy,
insolvency, fraudulent transfer, preference, reorganization, moratorium, or
similar laws now or hereafter in effect relating to or affecting
creditors’rights or remedies generally, (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability and
the discretion of the court considering the matter, (iii) the exculpation
provisions and rights to indemnification hereunder may be limited by federal
and state securities laws and public policy considerations, and (iv) applicable
law may limit the enforceability of the waiver of rights and defenses in and
other provisions of Sections 13(b), 16.10, and 16.15
hereof.


 


(c)           The Pledgor is the
legal and beneficial owner of the Pledged Securities and other Pledged
Collateral.  The Pledgor owns the
Pledged Securities and other Pledged Collateral free and clear of any Lien or
claim of any person or entity (except for the security interest granted to the
Trustee herein).  No financing statement
or other instrument similar in effect covering the Pledgor’s interest in the
Pledged Securities is on file in any public office, other than any financing
statement filed under this Security Agreement.


 


(d)           Upon the Trustee’s
acquisition of a Security Entitlement in the Pledged Collateral in accordance
herewith, and the Securities Intermediary’s performance of its obligations
hereunder, the security interest granted to the Trustee herein will constitute
a first-priority security interest in the Pledged Collateral (subject to the
limitations in UCC


 


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§ 9-315 with
respect to proceeds), enforceable as such against all creditors of the Pledgor
and against any Person purporting to purchase any of the Pledged Collateral
from the Pledgor, except insofar as enforcement may be affected by general equitable
principles (whether in a proceeding in equity or at law).


 


(e)           There are no legal
or governmental proceedings pending or, to the best of the Pledgor’s knowledge,
threatened to which the Pledgor or any of its affiliates is a party or relating
to any property of the Pledgor or any affiliate that would materially adversely
affect the Pledgor’s power or ability to perform its obligations under this
Security Agreement, the Notes, or the Indenture.


 


(f)            No law or
governmental regulation (including, without limitation, Regulations T, U and X
of the Board of Governors of the Federal Reserve System) applicable to the
Pledgor prohibits the grant of the security interest to the Trustee hereunder.


 


(g)           The Pledgor is a
corporation whose jurisdiction of organization is Texas.  The Pledgor will not change its form or
jurisdiction of organization without giving at least 30 days’ prior written
notice to the Trustee.


 


(h)           No Event of Default
(as defined below) exists.


 


SECTION
8.         Pledgor’s Covenants.  In addition to its other agreements herein,
the Pledgor covenants and agrees with the Trustee and the Holders of the Notes
that from and after the date hereof until the Termination Date:


 


(a)           It will, promptly
upon request by the Trustee, execute and deliver or cause to be executed and
delivered, or use its commercially reasonable efforts to procure, all
assignments, instruments and other documents, in form and substance reasonably
satisfactory to the Trustee, and take any other action that is necessary or
desirable to perfect, further evidence the perfection of, continue the
perfection of, or protect the first priority of, the Trustee’s security
interest in the Pledged Collateral, to protect the Pledged Collateral against
rights, claims, or interests asserted therein by third persons (other than any
right, claim, or interest created by the Trustee on behalf of the Holders of
the Notes), to enable the Trustee to enforce its rights and remedies hereunder,
and to effect the purposes of this Security Agreement.  The Pledgor will promptly pay all reasonable
costs incurred in connection with any of the foregoing;


 


(b)           It will not (and
will not purport to) (i) sell or otherwise dispose of, or grant any option or
warrant with respect to, its beneficial interest in, any of the Pledged
Collateral or its interest therein, or (ii) create or permit to exist any Lien
or other adverse interest in or with respect to any of the Pledged Collateral
(other than the security interest granted herein);


 


(c)           It will not (i)
enter into any agreement or understanding that, directly or indirectly,
restricts or inhibits or purports to restrict or inhibit the Trustee’s rights
or remedies hereunder, including, without limitation, the Trustee’s right to
dispose of the Pledged Collateral as provided herein, or (ii) fail to pay or
discharge any tax, assessment or


 


7

















 


levy of any
nature with respect to its beneficial interest in the Pledged Collateral later
than five days before the date of any proposed sale under any judgment, writ or
warrant of attachment with respect to its beneficial interest; and


 


(d)           It will at all times
remain the sole beneficial owner of the Pledged Collateral (subject to the
security interest granted to the Trustee herein).


 


SECTION
9.         Securities Intermediary’s
Representations, Warranties and Covenants.  The Securities Intermediary represents and
warrants that it is, as of the date hereof, and it agrees that for so long as
it maintains the Securities Account and acts as securities intermediary under
this Security Agreement it shall be, a “Securities Intermediary” (as defined in
the UCC and in 31 C.F.R. § 357.2).  In
furtherance of the foregoing, and in addition to its other representations,
warranties, and agreements herein, the Securities Intermediary hereby:


 


(a)           represents and
warrants that it is a financial institution that, in the ordinary course of its
business, maintains securities accounts for others and is acting in that
capacity with respect to the Securities Account;


 


(b)           covenants that, as
Securities Intermediary hereunder and with respect to the Securities Account,
it shall not take any action inconsistent with, and represents and warrants
that it is not and so long as this Security Agreement remains in effect will
not become party to any agreement whose terms are materially inconsistent with,
and would prevent the Trustee and the Pledgor from substantial enjoyment of the
benefits contemplated by, this Security Agreement;


 


(c)           agrees to treat any
item of property credited to the Securities Account as a Financial Asset;


 


(d)           agrees, so long as
it serves as Securities Intermediary under this Security Agreement, to maintain
the Securities Account as a securities account and maintain appropriate books
and records in respect thereof in accordance with its usual procedures and
subject to the terms of this Security Agreement;


 


(e)           agrees, with the
other parties to this Security Agreement, that its jurisdiction, for purposes
of UCC §§ 9-301, 9-305 and 8-110(e) and 31 C.F.R. 357.11(b) as it pertains to
this Security Agreement, the Securities Account and all Security Entitlements
relating thereto, shall be the State of New York; and


 


(f)            agrees that it will
maintain the Securities Account, at its office at the address set forth in the
Recitals hereof, segregated from all other accounts, and will not change the
name on the account or its account number without the Trustee’s prior written
consent.


 


SECTION
10.       Power of Attorney.  Upon the occurrence and continuation of an
Event of Default, in addition to all of the powers granted to the Trustee under
the Indenture, the Pledgor hereby appoints and constitutes the Trustee as the
Pledgor’s attorney-in-fact, with full authority in its place and its name to
take, from time to time in the Trustee’s discretion, any action and to execute
any instrument that the Trustee may deem necessary or advisable to


 


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accomplish the purposes of this Security Agreement.  The Trustee’s authority under this Section
10 shall include, without limitation, the authority to endorse and
negotiate any checks or instruments representing proceeds of Pledged Collateral
in the name of the Pledgor, execute and give receipt for any certificate of
ownership or any document constituting Pledged Collateral, transfer title to
any item of Pledged Collateral, sign the Pledgor’s name on all financing
statements (to the extent permitted by applicable law) or any other document
deemed necessary or appropriate by the Trustee to preserve, protect or perfect
the security interest in the Pledged Collateral and to file the same, prepare,
file and sign the Pledgor’s name on any notice of Lien, and to take any other
actions arising from or incident to the powers granted to the Trustee in this
Security Agreement.  This power of
attorney is coupled with an interest and is irrevocable.  Notwithstanding anything to the contrary
herein, the Trustee has no duty or obligation to exercise any of the powers in
this Section 10.  The Pledgor
hereby authorizes the Trustee to file one or more financing or continuation
statements, and amendments thereto, including, without limitation, one or more
financing statements indicating that such statements cover all assets or all
personal property (or words of similar effect) of such Pledgor, in each case
without the signature of the Pledgor, and regardless of whether any particular
asset described in such financing statement falls within the scope of the UCC
or the granting clause of this Agreement.


 


SECTION
11.       No Assumption of Duties;
Reasonable Care. 
The Trustee and the Securities Intermediary undertake to perform only
those duties that are expressly and specifically set forth herein.  This Security Agreement does not, and may
not be interpreted to, impose any implied duties or obligations on either of
them, including, without limitation, any obligation to monitor the Pledgor’s
performance of its obligations hereunder. 
The Pledgor acknowledges that the Trustee and Securities Intermediary
have not participated in the selection of financial assets to be deposited in
or credited to the Securities Account. 
Except as provided by applicable law or by the Indenture, the Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral if the Trustee accords the Pledged
Collateral treatment substantially similar to that which the Trustee accords
similar property held by the Trustee for similar accounts, it being understood
that the Trustee shall not have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities or
other matters relative to any Pledged Collateral, whether or not the Trustee
has or is deemed to have knowledge of such matters, (ii) monitoring the
Pledgor’s compliance with its covenants herein, or (iii) any loss on any
investment (including without limitation any loss resulting from the sale of a
Financial Asset held in or credited to the Securities Account before its
maturity).


 


SECTION
12.       Indemnity.


 


(a)           The Pledgor hereby
indemnifies, holds harmless, and agrees to defend the Trustee, the Securities
Intermediary, and each of their respective directors, officers, employees,
attorneys, and agents (each, an “Indemnified  Person”) from and
against any and all claims, actions, obligations, liabilities and expenses,
including reasonable defense costs, reasonable investigative fees and costs and
reasonable legal fees and expenses and damages, arising from the performance by
the Trustee and the Securities Intermediary of their respective obligations
under this Security Agreement.  The
Pledgor shall, upon demand by any Indemnified Person, promptly pay or reimburse
that Indemnified Person for all such expenses, costs, fees and damages.  Notwithstanding the foregoing, the Pledgor
(i) shall not be obligated to indemnify any Indemnified Person from any claim,


 


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action,
obligation, liability or expense against or incurred by that Indemnified Person
that is judicially determined (the determination having become final) to be
directly attributable to the gross negligence or willful misconduct of that
Indemnified Person, and (ii) shall, upon that final judicial determination, be
entitled to recover from that Indemnified Person all amounts therefore paid
hereunder, provided that before any such judicial determination becomes final,
the Pledgor must promptly pay all amounts demanded by any Indemnified Person.


 


(b)           In addition, and
without limiting the provisions of the foregoing Section 12(a), if the
Trustee is required to take any action hereunder to enforce its rights with
respect to the Pledged Collateral, the Trustee’s rights and duties shall be as
set forth in Article VII of the Indenture, and the Trustee shall be entitled to
the benefit of the indemnity and compensation provisions and all other
protections and exculpatory provisions therein.


 


SECTION
13.       Remedies Upon Event of
Default.  As used
herein, “Event of Default” means (i) any Event of Default as that term is
defined in the Indenture, and (ii) any breach by the Pledgor of its
representations, warranties, covenants, or agreements herein.  If any Event of Default occurs before the
Termination Date and is continuing:


 


(a)           The Trustee (for the
benefit of the Holders of the Notes) shall have, in addition to all other
rights given by law, by this Security Agreement, or by the Indenture, all of
the rights and remedies with respect to the Pledged Collateral of a secured
party under the UCC.  In addition, with
respect to any Pledged Collateral that shall then be in or shall thereafter
come into the possession or custody or under the control of the Trustee, the
Trustee may, upon the written direction of a majority in aggregate principal
amount of the Holders of the Notes, sell or cause the same to be sold at any
broker’s board or at public or private sale, in one or more sales or lots, for
cash or on credit or for future delivery, without assumption of any credit
risk.  The purchaser of any Pledged Collateral
so sold shall thereafter hold the same absolutely, free from any claim,
encumbrance or right of any kind whatsoever of, or created by or through, the
Pledgor.  The Trustee shall give the
Pledgor such notice of the time and place of any public sale of the Pledged
Collateral as is feasible and reasonable under the circumstances, except no
notice of sale shall be required if the Trustee determines, in its reasonable
judgment, that (i) an immediate sale is necessary because the Pledged
Collateral threatens to decline speedily in value or (ii) the Pledged
Collateral is or becomes of a type regularly sold on a recognized market.  To the extent permitted by applicable law,
the Pledgor agrees that any sale of the Pledged Collateral conducted in
conformity with reasonable commercial practices of banks, insurance companies,
commercial finance companies, or other financial institutions disposing of
property similar to the Pledged Collateral shall be deemed to be commercially
reasonable.  Subject to the other provisions
of this Section 13(a), notice mailed to the Pledgor as provided in Section
16.1 hereof at least 10 days before the time of the sale or disposition
shall constitute reasonable notice.  The
Trustee or any Holder of Notes may, in its own name or in the name of a
designee or nominee, buy any of the Pledged Collateral at any public sale and,
if permitted by applicable law, at any private sale.  All expenses (including court costs and reasonable attorneys’
fees, expenses and disbursements) of, or incident to, the enforcement of any of
the provisions


 


10

















 


hereof shall
be recoverable from the proceeds of the sale or other disposition of the
Pledged Collateral.


 


(b)           The Pledgor shall
use its reasonable best efforts to do or cause to be done all other acts as may
be necessary to make a sale of all or a portion of the Pledged Collateral under
this Section 13 valid and binding and in compliance with any applicable
requirements of law.  The Pledgor agrees
that a breach of any of its covenants in this Section 13 will cause
irreparable injury to the Trustee and the Holders of the Notes, that the
Trustee and the Holders of the Notes would have no adequate remedy at law in
respect of that breach and, as a consequence, that each of its covenants in
this Section 13 shall be specifically enforceable against the
Pledgor.  The Pledgor hereby waives and
agrees not to assert any defenses against an action for specific performance of
these covenants except for a defense that no Event of Default has occurred.


 


(c)           The Trustee may,
without notice to the Pledgor except as required by law and at any time or from
time to time, charge, setoff and otherwise apply all or any part of the
Obligations against the Securities Account or any part thereof.


 


SECTION
14.       Expenses.  Except as provided in any fee agreement to
the contrary, the Pledgor shall, promptly upon demand, pay to each of the
Trustee and the Securities Intermediary any and all reasonable expenses,
including, without limitation, the reasonable fees, expenses and disbursements
of counsel, experts and agents, that either the Trustee or the Securities
Intermediary may incur in connection with (a) the review, negotiation and
administration of this Security Agreement, (b) the maintenance and
administration of the Securities Account and the custody, preservation, or sale
of, collection from, or other realization upon, any of the Pledged Collateral,
(c) the exercise or enforcement of any of the rights of the Trustee and the
Holders of the Notes hereunder, (d) the Pledgor’s failure to perform or observe
any of the provisions hereof, or (e) any claim covered by Section 12
hereof.


 


SECTION
15.       Security Interest Absolute.  All rights of the Trustee and the Holders of
the Notes and the security interest granted to the Trustee hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional under
all circumstances, including but not limited to:


 


(a)           any lack of validity
or enforceability of the Indenture or any other agreement or instrument
relating thereto;


 


(b)           any change in the
time, manner or place of payment or performance of, or in any other term of,
any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Indenture;


 


(c)           any taking,
exchange, surrender, release or non-perfection of any other collateral or any
taking, release, amendment, or waiver of any provision of any guaranty for all
or any of the Obligations;


 


(d)           any change,
restructuring or termination of the corporate structure or existence of the
Pledgor or any of its affiliates; or


 


11

















 


(e)           to the extent
permitted by applicable law, any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Pledgor in respect of
the Obligations or of this Security Agreement.


 


SECTION
16.       Miscellaneous Provisions.


 


SECTION
16.1     Notices.  Any notice or communication given hereunder
shall be sufficiently given if in writing and delivered in person or mailed by
first class mail, commercial courier service or telecopier communication,
addressed as follows:


 


if
to the Pledgor:


 


Kinetic Concepts,
Inc.

8023 Vantage Drive,

San Antonio, Texas 78230

Attn:  General Counsel

Fax: (210) 255-6204


 


with
a copy to:


 


Thomas Ivey

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Ave, 11th Floor

Palo Alto, CA 94301

Fax: (650)-470-4646


 


if
to the Trustee:


 


U.S. Bank National
Association

60 Livingston Ave.

St. Paul, Minnesota 55107-2292

Attn: Corporate Trust Services


 


if
to the Securities Intermediary:


 


U.S. Bank National
Association

60 Livingston Ave.

St. Paul, Minnesota 55107-2292

Attn: Corporate Trust Services


 


SECTION
16.2     Severability.  The provisions of this Security Agreement
are severable.  If a court in any
jurisdiction holds that a clause or provision is invalid, illegal or
unenforceable, in whole or in part, then that holding shall affect the validity
or enforceability of that clause or provision in that jurisdiction only,
without effect in any other jurisdiction or with respect to any other clause or
provision hereof.


 


12

















 


SECTION
16.3     Headings.  The headings in this Security Agreement are
included for convenience of reference only, are not to be considered a part
hereof, and do not modify or restrict any of the terms or provisions hereof.


 


SECTION
16.4     Counterpart Originals.  This Security Agreement may be signed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement.  A photocopy or other reproduction of this
Security Agreement or any financing statement covering the Pledged Collateral
or any part thereof shall be sufficient as a financing statement where
permitted by law.


 


SECTION
16.5     Benefits of Security Agreement.  Nothing in this Security Agreement, express
or implied, shall give to any person, other than the parties hereto, their
successors hereunder, all Indemnified Persons, and (subject to the provisions
of the Indenture) the Holders of the Notes, any legal or equitable right,
remedy or claim.  Other than the Persons
identified in the preceding sentence, there are and shall be no third-party
beneficiaries of this Security Agreement. 
No Holder of Notes shall have any independent rights hereunder, other
than those rights granted to individual Holders of the Notes under the
Indenture.


 


SECTION
16.6     Amendments, Waivers and
Consents.  Any
amendment or waiver of any provision of this Security Agreement and any consent
to any departure by the Pledgor from any provision of this Security Agreement
shall be effective only if made or duly given in compliance with all of the
terms and provisions of the Indenture. 
Neither the Trustee nor any Holder of Notes shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof.  A failure to exercise, a delay in exercising, or a waiver of any
right, power or privilege hereunder by the Trustee or any Holder of Notes shall
not preclude any subsequent exercise thereof or the exercise of any other
right, power or privilege.  The rights
and remedies provided herein are cumulative, may be exercised singly or concurrently,
and are not exclusive of any rights or remedies provided by law.


 


SECTION
16.7     Interpretation of Agreement.  Acceptance of or acquiescence in a course of
performance rendered under this Security Agreement shall not be relevant to
determine the meaning of this Security Agreement, even if the accepting or
acquiescing party had knowledge of the nature of the performance and an
opportunity to object thereto.


 


SECTION
16.8     Continuing Security Interest:
Termination.


 


(a)           This Security
Agreement shall create a continuing security interest in and to the Pledged
Collateral, shall be binding upon the Pledgor, its transferees, successors and
assigns, shall inure, together with the rights and remedies of the Trustee
hereunder, to the benefit of the Trustee, the Securities Intermediary, the
Holders of the Notes and their respective successors, transferees and assigns,
and shall remain in full force and effect until the Termination Date.  On or as soon as practicable after the
Termination Date, the Trustee shall, at the Pledgor’s expense, take any
reasonable action necessary to release the security interest created hereby,
including the execution and delivery of any termination statements prepared and
delivered to it by the Pledgor.  Any
redelivery of the Pledged Collateral hereunder to the Pledgor shall be without
warranty by or recourse to the Trustee in its


 


13

















 


capacity as
such, except as to the absence of any Liens on the Pledged Collateral created
by or arising through the Trustee, and shall be at the reasonable expense of
the Pledgor.


 


(b)           This Security
Agreement will terminate on the date on which all assets in the Securities
Account have been liquidated and applied in accordance with any applicable
provision of Section 6 hereof (the “Termination Date”).


 


(c)           Notwithstanding the
foregoing, the Pledgor’s obligations under Sections 12 and 14 shall survive
this Security Agreement’s termination.


 


SECTION
16.9     Survival of Representations
and Covenants. 
All representations, warranties and covenants of the Pledgor herein
shall survive execution and delivery of this Security Agreement, and shall
terminate only on the Termination Date.


 


SECTION
16.10  Waivers.  The Pledgor waives presentment and demand
for payment of any of the Obligations, protest and notice of dishonor or
default with respect to any of the Obligations, and all other notices to which
the Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.


 


SECTION
16.11  Authority of the Trustee and
Securities Intermediary.


 


(a)           Each of the Trustee
and Securities Intermediary may exercise all rights and powers granted
hereunder, together with any powers reasonably incident hereto.  The Trustee and the Securities Intermediary
may perform any of their respective duties hereunder or in connection with the
Pledged Collateral by or through agents or employees and shall be entitled to
retain counsel and to rely conclusively upon the advice of counsel concerning
their rights, powers and duties hereunder. 
The Trustee and the Securities Intermediary shall not be responsible for
the validity, effectiveness or sufficiency hereof or of any document or
security furnished in accordance herewith and shall be entitled to
indemnification hereunder from any claims related thereto.  The Trustee, the Securities Intermediary,
and their respective directors, officers, employees, attorneys and agents may
conclusively rely on any communication, instrument or document reasonably
believed by them to be genuine and correct and to have been signed or sent by
the proper person or persons.


 


(b)           The Pledgor
acknowledges that, as between the Pledgor and the Trustee, with respect to any
action or inaction by the Trustee in connection with the performance of its
duties hereunder, the Trustee shall be conclusively presumed to be acting as
agent for the Holders of the Notes with full and valid authority so to act or
refrain from acting, and the Pledgor may not make any inquiry respecting that
authority.


 


(c)           No provision of this
Security Agreement shall require either the Trustee or the Securities
Intermediary to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties or the exercise of any of its rights
and powers hereunder.  If,
notwithstanding the foregoing, the Trustee determines to advance funds, the
Trustee shall be entitled to reimbursement thereof from the Pledgor within ten
days of demand therefor, together with interest at the maximum rate permitted
by law.


 


14

















 


SECTION
16.12  Removal or Resignation of the
Securities Intermediary. 
The Securities Intermediary may resign by notice to, or be removed by
notice from, the Trustee at any time, except that in either case the Securities
Intermediary’s duties hereunder shall not terminate until the Trustee has
appointed a successor Securities Intermediary, who has accepted the appointment
(by delivery of an agreement substantially in the form hereof), and until all assets
held by the retiring Securities Intermediary have been transferred to the
successor Securities Intermediary in accordance with the Trustee’s instruction.


 


SECTION
16.13  [Intentionally deleted]


 


SECTION
16.14  Final Expression.  This Security Agreement, together with the
Indenture and any other agreement executed in connection herewith, is intended
by the parties as a final expression of this Security Agreement and is intended
as a complete and exclusive statement of the terms and conditions thereof, subject
to any amendment duly made in accordance herewith.


 


SECTION
16.15  CHOICE OF LAW; SUBMISSION TO
JURISDICTION: WAIVER OF JURY TRIAL; WAIVER OF DAMAGES.


 


(a)           THIS SECURITY
AGREEMENT, THE SECURITIES ACCOUNT, AND THE SECURITIES ENTITLEMENTS RELATED
THERETO SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK INCLUDING,
WITHOUT LMTATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAW AND RULES 327.  ANY DISPUTE ARISING FROM, RELATED TO, OR IN
CONNECTION WITH ANY OF THE FOREGOING, OR THE RELATIONSHIP AMONG OR THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HERETO, SHALL LIKEWISE BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.  REGARDLESS OF
ANY PROVISION OF ANY OTHER AGREEMENT, FOR PURPOSES OF THE UCC, NEW YORK SHALL
BE DEEMED TO BE THE SECURITIES INTERMEDIARY’S JURISDICTION.


 


(b)           THE PLEDGOR AGREES
THAT THE TRUSTEE MAY, IN ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF
OF ANY HOLDER OF NOTES, PROCEED AGAINST THE PLEDGOR OR THE PLEDGED COLLATERAL
IN ANY COURT HAVING PERSONAL OR IN REM JURISDICTION OVER THE PLEDGOR OR THE
PLEDGED COLLATERAL, AS THE CASE MAY BE, TO ENABLE THE TRUSTEE TO ASSERT A CLAIM
OR EXERCISE ITS RIGHTS AND REMEDIES UNDER THIS SECURITY AGREEMENT.  THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY
COUNTERCLAIM, SETOFF, OR CROSSCLAIM AGAINST THE TRUSTEE IN ANY PROCEEDING
BROUGHT BY THE TRUSTEE UNDER THIS SECURITY AGREEMENT OR THE INDENTURE OTHER
THAN A COUNTERCLAIM, SETOFF, OR CROSSCLAIM THAT, IF NOT ASSERTED IN THAT
PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.  THE PLEDGOR WAIVES ANY OBJECTION BASED ON
THE GROUNDS OF IMPROPER VENUE OR FORUM NON CONVENIENS TO THE TRUSTEE’S
COMMENCEMENT


 


15

















 


AND
PROSECUTION OF SUCH A PROCEEDING IN ANY COURT IN THE CITY OF NEW YORK.


 


(c)           THE PLEDGOR AGREES
THAT NEITHER ANY HOLDER OF NOTES, THE TRUSTEE, THE SECURITIES INTERMEDIARY, NOR
ANY OTHER INDEMNIFIED PERSON SHALL BE LIABLE TO THE PLEDGOR FOR LOSSES ARISING
FROM, RELATING TO, OR IN CONNECTION WITH THIS SECURITY AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY OR IN THE INDENTURE OR THE DUTIES IMPOSED
HEREUNDER, UNLESS A COURT DETERMINES (THE DETERMINATION HAVING BECOME FINAL)
THAT THE LOSSES RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
PERSON ON WHOM THE PLEDGOR SEEKS TO IMPOSE LIABILITY.


 


(d)           TO THE EXTENT
PERMITTED BY LAW, THE PLEDGOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED
OF THE TRUSTEE OR ANY HOLDER OF NOTES IN CONNECTION WITH ANY JUDICIAL
PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED AGAINST THE
PLEDGOR RELATING TO THIS SECURITY AGREEMENT OR ANY RELATED AGREEMENT OR
DOCUMENT OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR
PRELIMINARY OR PERMANENT INJUNCTION, THIS SECURITY AGREEMENT OR ANY RELATED
AGREEMENT OR DOCUMENT AGAINST THE PLEDGOR.


 


SECTION
16.16  No Conflict.


 


The
Pledgor acknowledges that U.S. Bank, National Association (“U.S. Bank”), is
acting in two capacities in the transactions contemplated herein: as Trustee
under the Indenture and as Securities Intermediary under this Security
Agreement.  The Pledgor has requested
that U.S. Bank serve in those two capacities and anticipates that it will enjoy
significant benefits from U.S. Bank’s agreement to do so.  Accordingly, the Pledgor consents to U.S.
Bank’s service in those two capacities and agrees that, if any dispute arises
hereunder between the Pledgor and U.S. Bank, the Pledgor will not assert that
U.S. Bank’s service in those two capacities presented either an actual or a potential
conflict of interest.


 


16

















 


IN
WITNESS WHEREOF, the Pledgor, the Trustee and the Securities Intermediary have
each caused this Security Agreement to be duly executed and delivered as of the
date first above written.


 


	
   

  	
  Pledgor:

  
	
   

  	
   

  
	
   

  	
  KINETIC
  CONCEPTS, INC.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Trustee:

  
	
   

  	
   

  
	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION as

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION as

  Securities Intermediary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


17

















 


EXHIBIT A


 


CERTIFICATE


 


On and as of August 11,
2003, and in accordance with Section 3(d) of the Security and Control
Agreement, dated of even date herewith (the “Security Agreement”), by
and among Kinetic Concepts, Inc. (the “Pledgor”), U.S. Bank National
Association, as indenture trustee (the “Trustee”) for the holders of the
Pledgor’s $205,000,000 aggregate principal amount of 7 3/8% Senior Subordinated
Notes due 2013 (the “Notes,”), and U.S. Bank, National Association, as
securities intermediary (the “Securities Intermediary”), the undersigned
officers of the Trustee and the Securities Intermediary, on behalf of the
Trustee and the Securities Intermediary respectively, hereby make the following
certifications to the Pledgor and the initial purchasers of the Notes.  Capitalized terms used and not defined in
this certificate have the meanings given them in the Security Agreement or in the
documents referenced therein.


 


1.             Substantially contemporaneously with the execution and
delivery of this Certificate, the Trustee has established and will maintain the
Securities Account with the Securities Intermediary.  The Securities Intermediary has received $199,875,000 from the
net proceeds from the sale of the Notes and has used those funds to purchase
the Pledged Securities (or will do so as soon as practicable).  The Securities Intermediary has made or will
(upon purchase of the Pledged Securities) make appropriate book entries in its
records establishing that the Pledged Securities and the Trustee’s Security
Entitlement thereto have been credited to and are held in the Securities
Account.


 


2.             The Trustee has established and maintained and will
maintain the Securities Account, all Security Entitlements thereto, and all
rights with respect to the Pledged Collateral solely in its capacity as Trustee
and has not asserted and will not assert any claim to or interest in the
Pledged Collateral except in that capacity.


 


3.             The Trustee and the Securities Intermediary have
acquired their Security Entitlements to the Pledged Securities for value and
without notice of any adverse claim thereto but, with the Pledgor’s permission,
have not performed any UCC searches with respect thereto.  Without limiting the generality of the
foregoing, neither the Pledged Securities nor the Security Entitlements thereto
of the Securities Intermediary and the Trustee are, to their knowledge, subject
to any Lien granted by either of them in favor of any other securities
intermediary or any other person.


 


4.               Each signatory represents and warrants that he or she
is duly authorized to execute this certificate.


 


A - 1

















 


IN
WITNESS WHEREOF, the undersigned officers have executed this Certificate on
behalf of the Trustee and the Securities Intermediary, respectively, on the
date first shown above.


 


	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION, as

  Securities Intermediary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A - 2

















 


EXHIBIT B


 


REDEMPTION
DISBURSEMENT REQUEST


 


[Issuer Letterhead.]


 


[date]


 


 


U.S. BANK, NATIONAL ASSOCIATION

60 Livingston Ave.

St. Paul, Minnesota 55107-2292


 


Attention: Corporate Trust Services


 


Ladies and Gentlemen:


 


I am
the [title] of Kinetic Concepts, Inc. (the “Company”).  I refer you to the Security and Control
Agreement, dated as of August 11, 2003 (the “Security Agreement”), among
the Company and you in your separate capacities as Trustee under the Indenture
identified in the Security Agreement’s Recitals and as Securities Intermediary
under the Security Agreement.  Unless
otherwise indicated, capitalized terms used but not otherwise defined herein
have the meanings given them, as applicable, in the Security Agreement or in
the documents referenced therein.


 


The
Company hereby requests, in accordance with Section 6 of the Security
Agreement, that you cause the liquidation of the assets in the Securities
Account and deliver net liquidation proceeds (after deducting any applicable
Securities Intermediary and Trustee fees and charges) to the Paying Agent under
the Indenture on behalf of the Company on
                         ,
2003 (the “Disbursement Date,” which day is (x) a Business Day not more than
twenty nor less than two Business Days after the date hereof and (y) on or
before 5:00 p.m. New York time on November 7, 2003), in accordance with the
wire instructions given below.


 


The
Company hereby certifies that its representations and warranties in the
Security Agreement are true in all material respects on the date hereof and
will be true on the Disbursement Date, and that no Event of Default has
occurred and is continuing on the date hereof.


 


The
Company further certifies that:


 


B - 1

















 


1.             The Redemption will occur on the
Disbursement Date for consideration not in excess of the amount required to
redeem the Existing Notes (as defined in the Indenture) in accordance with the
indenture governing the Existing Notes.


 


2.             The Company will use all amounts
delivered in accordance with this Request solely to pay a portion of the
redemption consideration and related costs and expenses in connection with the
redemption of the outstanding Existing Notes.


 


3.             The Company makes the foregoing
certifications in accordance with the Indenture and Security Agreement but
acknowledges that you have no obligation to monitor our use of any funds
released in connection herewith.


 


B - 2

















 


The
undersigned signatory represents and warrants that [he/she] is authorized to
execute this Request on the Company’s behalf and that to the best of [his/her]
knowledge, all of the Company’s certifications herein are true and correct.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KINETIC
  CONCEPTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  Wire Instructions:

  	
   

  
	
   

  	
   

  
	
  [to come]

  	
   

  



 


B - 3