SECOND AMENDED AND RESTATED ASSIGNMENT AND BORROWER SECURITY AGREEMENT

 

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                                                                   EXHIBIT 10.24

 

                   SECOND AMENDED AND RESTATED ASSIGNMENT AND

 

                           BORROWER SECURITY AGREEMENT

 

         This SECOND AMENDED AND RESTATED ASSIGNMENT AND BORROWER SECURITY

AGREEMENT (this "AGREEMENT") is dated as of July __, 2003 and entered into by

and between AMERICAN HOMEPATIENT, INC., A DELAWARE CORPORATION ("GRANTOR"), and

BANK OF MONTREAL, as agent for and representative of (in such capacity herein

called "SECURED PARTY"), the financial institutions ("LENDERS") that hold a

promissory note payable to such Lenders as set forth on Exhibit A attached

hereto (the "PROMISSORY NOTE") and amends and restates the Amended and Restated

Assignment and Borrower Security Agreement dated as of July 31, 2001 between

Grantor and Bankers Trust Company as the predecessor to the Secured Party (the

"PRIOR SECURITY AGREEMENT").

 

                             PRELIMINARY STATEMENTS

 

         A.        Grantor, Bankers Trust Company and Lenders previously entered

into that certain Fifth Amended and Restated Credit Agreement dated as of May

25, 2001.

 

         B.        Grantor filed a voluntary petition under 11 U.S.C. Sections

101 et seq. on July 30, 2002 in the United States Bankruptcy Court for the

Middle District of Tennessee. On May 27, 2003, the Bankruptcy Court confirmed

Grantor's Second Amended Joint Plan of Reorganization (herein "Joint Plan") in

all respects. The Fifth Amended and Restated Credit Agreement is no longer in

effect and as part of the Joint Plan, the Grantor will execute the Promissory

Note to the Lenders on terms and in amounts provided in the Joint Plan to

evidence Grantor's indebtedness and obligations to the Lenders.

 

         C.        Pursuant to the Joint Plan and the Bankruptcy Court's order

issued May 27, 2003, Grantor is required to amend the Prior Security Agreement

as provided herein.

 

         NOW, THEREFORE, in consideration of the premises set forth herein and

for other good and valuable consideration, the receipt and adequacy of which are

hereby acknowledged, Grantor hereby agrees with Secured Party as follows:

 

         SECTION 1. GRANT OF SECURITY. Grantor has pledged and assigned, hereby

ratifies such prior pledge and assignment and further pledges and assigns to

Secured Party, for Secured Party's benefit and the benefit of Lenders, and has

granted, hereby ratifies such prior grant and hereby further grants to Secured

Party, for Secured Party's benefit and the benefit of Lenders, a security

interest in all of Grantor's right, title and interest in and to all personal

property, including, without limitation, the following, in each case whether now

or hereafter existing or in which Grantor now has or hereafter acquires an

interest and wherever the same may be located (the "COLLATERAL"):

 

                  (a)       all equipment in all of its forms, all parts thereof

and all accessions thereto (any and all such equipment, parts and accessions

being the "EQUIPMENT");

 

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                   (b)       all inventory in all of its forms (including, but not

limited to, (i) all goods held by Grantor for sale or lease or to be furnished

under contracts of service or so leased or furnished, (ii) all raw materials,

work in process, finished goods, and materials used or consumed in the

manufacture, packing, shipping, advertising, selling, leasing, furnishing or

production of such inventory or otherwise used or consumed in Grantor's

business, (iii) all goods in which Grantor has an interest in mass or a joint or

other interest or right of any kind, and (iv) all goods that are returned to or

repossessed by Grantor) and all accessions thereto and products thereof (all

such inventory, accessions and products being the "INVENTORY") and all

negotiable documents of title (including without limitation warehouse receipts,

dock receipts and bills of lading) issued by any person covering any Inventory

(any such negotiable document of title being a "NEGOTIABLE DOCUMENT OF TITLE");

 

                  (c)       all accounts, receivables, contract rights, other

payment rights of any kind, chattel paper (whether tangible or electronic),

documents, instruments (including, without limitation, promissory notes),

investment property, letter-of-credit rights (whether or not such letter of

credit is evidenced by a writing), health-care-insurance receivables, supporting

obligations, general intangibles, including, without limitation, payment

intangibles, software, all intangible personal property relating to the

recordation, monitoring, collection, servicing and payment of Accounts (as

hereinafter defined), (including, without limitation, all rights, whether for

payment or performance, under (a) managed care contracts, preferred provider

contracts, and other contracts with health or medical insurance companies or

public or governmental entities relating to the payment of or reimbursement for

medical, health care and other services and products provided by the Grantor,

including, without limitation, all rights in any way related to the Medicare,

Medicaid or any other state or federal programs and (b) data processing

contracts, computer software licenses, cash management contracts and other

contracts and licenses relating to the servicing of Accounts), and, to the

extent not listed above as original Collateral, proceeds and products of the

foregoing (collectively, the "ACCOUNTS"), and any and all security agreements,

leases and other contracts securing or otherwise relating to the Accounts

(collectively, the "RELATED CONTRACTS"), whether now owned or hereafter

acquired;

 

                  (d)       to the extent not included in any other paragraph of

this Section 1, all agreements, contracts and assignments including without

limitation those whereby Grantor obtains goods, services or rights that are

useful or necessary to the business or operations of Grantor as each such

agreement, contract and assignment may be amended, supplemented, restated or

otherwise modified from time to time (said agreements, contracts and

assignments, as so amended, supplemented, restated or modified, are referred to

herein individually as an "ASSIGNED AGREEMENT" and collectively as the "ASSIGNED

AGREEMENTS"), including without limitation (i) all rights of Grantor to receive

moneys due or to become due under or pursuant to the Assigned Agreements, (ii)

all rights of Grantor to receive proceeds of any insurance, indemnity, warranty

or guaranty with respect to the Assigned Agreements, (iii) all claims of Grantor

for damages arising out of any breach of or default under the Assigned

Agreements, (iv) all rights of Grantor to terminate, amend, supplement, modify

or exercise rights or options under the Assigned Agreements, to perform

thereunder and to compel performance and otherwise exercise all remedies

thereunder, and (v) all agreements, permits, certifications or other rights

related to the operation of Grantor's businesses;

 

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                  (e)       all deposit accounts, including without limitation

any account for the concentration or collection of the funds of Grantor and its

Subsidiaries maintained with PNC Bank, National Association, and its successors

and assigns (the agreement with such bank being herein referred to as the

"Concentration Bank Agreement"), and all deposit accounts maintained with

Secured Party or any Lender or any other party;

 

                  (f)       all trademarks and tradenames, tradesecrets, business

names, patents, patent applications, licenses, certificates, operating

agreements, permits, copyrights, registrations and franchise rights, and all

goodwill associated with any of the foregoing;

 

                  (g)       to the extent not included in any other paragraph of

this Section 1, all other general intangibles (including without limitation tax

refunds, rights to payment or performance, choses in action and judgments taken

on any rights or claims, whether included in the Collateral or otherwise), and

commercial tort claims, whether now owned or hereafter acquired;

 

                  (h)       all plant fixtures, business fixtures and other

fixtures and storage and office facilities, and all accessions thereto and

products thereof;

 

                  (i)       all books, records, ledger cards, files,

correspondence, computer programs, tapes, disks and related data processing

software that at any time evidence or contain information relating to any of the

Collateral or are otherwise necessary or helpful in the collection thereof or

realization thereupon;

 

                  (j)       all of Grantor's right, title and interest as a

general partner or member in a single-purpose corporation, partnership, joint

venture or other similar legal arrangement (whether created pursuant to contract

or conducted through a separate legal entity) now or hereafter formed by Grantor

with another person (other than Grantor or any of its subsidiaries) in order to

conduct a common venture or enterprise with such other person. (each a "Joint

Venture" and collectively, the "Joint Ventures"), whether now owned or hereafter

acquired, including without limitation all of Grantor's right, title and

interest in, to and under all partnership agreements or limited liability

agreements entered into from time to time by Grantor (as amended to the date

hereof and as they may hereafter be amended, supplemented or otherwise modified

from time to time, the "JOINT VENTURE AGREEMENTS"), including without limitation

Grantor's right to vote and to manage and administer the business of such Joint

Ventures, together with all other rights, interests, claims and other property

of Grantor in any manner arising out of or relating to its general partnership

or membership interests in the Joint Ventures, whatever their respective kind or

character, whether they are tangible or intangible property, and wheresoever

they may exist or be located, and further including, without limitation, all of

the rights of such Grantor as a general partner or member of any of such Joint

Ventures: (i) to (x) receive money due and to become due (including without

limitation dividends, distributions, interest, income from partnership or

limited liability company properties and operations, proceeds of the sale of

partnership or limited liability company assets and returns of capital) under or

pursuant to any of such Joint Venture Agreements, (y) receive payments upon

termination of any of such Joint Venture Agreements, and (z) receive any other

payments or distributions, whether cash or noncash, in respect of such Grantor's

general partnership or membership interests evidenced by any of such Joint

Venture Agreements; (ii) in and with respect to claims and causes of action

arising out of or relating to

 

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any of such Joint Ventures; and (iii) to have access to the books and records of

any of such Joint Ventures and to other information concerning or affecting such

Joint Ventures;

 

                  (k)       all of Grantor's right, title and interest as a

member of any limited liability company that is a Subsidiary (each, an "LLC"

and, collectively, the "LLC'S"), whether now owned or hereafter acquired,

including without limitation all of Grantor's right, title and interest in, to

and under each limited liability company agreement, as amended to the date

hereof and as it may hereafter be amended, supplemented or otherwise modified

from time to time, (each an "LLC AGREEMENT" and collectively, the "LLC

AGREEMENTS") of such LLC (including without limitation, Grantor's right to vote

and to manage and administer the business of such LLC), together with all other

rights, interests, claims and other property of Grantor in any manner arising

out of or relating to its interest in such LLC, whatever their respective kind

or character, whether they are tangible or intangible property, and wheresoever

they may exist or be located, further including, without limitation, all of the

rights of Grantor as a member of such LLC: (i) to (x) receive money due and to

become due (including without limitation dividends, distributions, interest,

income from LLC properties and operations, proceeds of sale of LLC assets and

return of capital) under or pursuant to such LLC Agreement, (y) receive payments

upon termination of such LLC Agreement, and (z) receive any other payments or

distributions, whether cash or noncash, in respect of Grantor's membership

interest evidenced by such LLC Agreement; (ii) in and with respect to claims and

causes of action arising out of or relating to such LLC; and (iii) to have

access to such LLC's books and records and to other information concerning or

affecting such LLC; and additionally including without limitation any

"certificate of interest" or "certificates of interest" (or other certificates

or instruments however designated or titled) issued by or on behalf of any LLC

and evidencing Grantor's interest as a member of such LLC (collectively, the

"CERTIFICATE" with respect to such LLC or Subsidiary) and any interest of

Grantor in the entries on the books of such LLC or of any financial intermediary

pertaining to Grantor's interest as a member of such LLC; and

 

                  (l)       all proceeds, products, rents and profits of or from

any and all of the foregoing Collateral and, to the extent not otherwise

included, all payments under insurance (whether or not Secured Party is the loss

payee thereof), or any indemnity, warranty or guaranty, payable by reason of

loss or damage to or otherwise with respect to any of the foregoing Collateral.

For purposes of this Agreement, the term "proceeds" includes whatever is

receivable or received when Collateral or proceeds are sold, exchanged,

collected or otherwise disposed of, whether such disposition is voluntary or

involuntary.

 

         SECTION 2. SECURITY FOR OBLIGATIONS.

 

                  (a)       This Agreement secures, and the Collateral is

collateral security for, the prompt payment or performance in full when due,

whether at stated maturity, by required prepayment, declaration, acceleration,

demand or otherwise (including the payment of amounts that would become due but

for the operation of the automatic stay under Section 362(a) of the Bankruptcy

Code, 11 U.S.C. Section 362(a)), of all obligations and liabilities of every

nature of Grantor now or hereafter existing under or arising out of in

connection with, or related to the Promissory Note, including to the extent all

or any portion of such obligations or liabilities that are paid, to the extent

all or any part of such payment is avoided or recovered directly or indirectly

from Secured Party or any Lender as a preference, fraudulent transfer or

otherwise (all such

 

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obligations and liabilities being the "UNDERLYING DEBT"), and all obligations of

every nature of Grantor now or hereafter existing under this Agreement (all such

obligations of Grantor, together with the Underlying Debt, being the "SECURED

OBLIGATIONS").

 

                  (b)       It is the parties' desire through this Agreement to

cover all of the personal property of the Grantor to the maximum extent

permitted by law, including the provisions of Revised Article 9 of the Uniform

Commercial Code as presently existing or as hereafter adopted or modified.

Notwithstanding the foregoing, this Agreement and the related security

agreements dated of even date herewith represent the entire agreement between

the parties with respect to the subject matter herein and all oral agreements

and earlier versions of this Agreement, including without limitation that

certain Amended and Restated Borrower Security Agreement dated as of July 31,

2001, shall have no effect or validity.

 

         SECTION 3. GRANTOR REMAINS LIABLE; NO ASSUMPTION.

 

                  (a)       Anything contained herein to the contrary

notwithstanding, (i) Grantor shall remain liable under any contracts and

agreements included in the Collateral, to the extent set forth therein, to

perform all of its duties and obligations thereunder to the same extent as if

this Agreement had not been executed, (ii) the exercise by Secured Party of any

of its rights hereunder shall not release Grantor from any of its duties or

obligations under the contracts and agreements included in the Collateral, and

(iii) Secured Party shall not have any obligation or liability under any

contracts and agreements included in the Collateral by reason of this Agreement,

nor shall Secured Party be obligated to perform any of the obligations or duties

of Grantor thereunder or to take any action to collect or enforce any claim for

payment assigned hereunder.

 

                  (b)       Notwithstanding any of the foregoing, this Agreement

shall not in any way be deemed to obligate Secured Party, any Lender or any

purchaser at a foreclosure sale under this Agreement to assume any of Grantor's

obligations, duties, expenses or liabilities under the Joint Venture Agreements

or the LLC Agreements (including without limitation Grantor's obligations as a

general partner or member for the debts and obligations of any Joint Venture or

LLC and to manage the business and affairs of such Joint Venture or LLC) or

under any and all other agreements now existing or hereafter drafted or executed

(collectively, the "GRANTOR OBLIGATIONS"), unless Secured Party, any Lender or

any such purchaser otherwise expressly agrees to assume any or all of said

Grantor Obligations in writing. In the event of foreclosure by Secured Party on

behalf of Lenders, Grantor shall remain bound and obligated to perform the

Grantor Obligations and neither Secured Party nor any Lender shall be deemed to

have assumed any of such Grantor Obligations except as provided in the preceding

sentence. Without limiting the generality of the foregoing, neither the grant of

the security interest in the Collateral in favor of Secured Party as provided

herein nor the exercise by Secured Party of any of its rights hereunder nor any

action by Secured Party in connection with a foreclosure on the Collateral shall

be deemed to constitute Secured Party or any Lender a general partner or member

of any Joint Venture or a member of any LLC; provided, however, that in the

event Secured Party or any purchaser of Collateral at a foreclosure sale elects

to become a substituted general partner or member of any Joint Venture or member

of any LLC in place of Grantor, Secured Party or such purchaser, as the case may

be, shall adopt in writing the respective Joint Venture Agreement or LLC

Agreement, as the case may be, and agree to be bound by the terms and provisions

thereof.

 

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         SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor represents and

warrants as follows:

 

                  (a)       Ownership of Collateral. Except for the security

interest created by this Agreement or the Prior Security Agreement, Grantor owns

the Collateral as legal and beneficial owner free and clear of any Lien. Except

such as may have been filed in favor of Secured Party relating to the Prior

Security Agreement or this Agreement, no effective financing statement or other

instrument similar in effect covering all or any part of the Collateral is on

file in any filing or recording office. Except for the security interest created

by this Agreement or the Prior Security Agreement, Grantor's title to the

Collateral is free of all adverse claims, security interests, and restrictions

on transfer or pledge.

 

                  (b)       [Reserved]

 

                  (c)       Office Locations; Other Names. The chief place of

business, the chief executive office and the office where Grantor keeps its

records regarding the Accounts and all originals of all tangible chattel paper

(and the electronic equivalent thereof for electronic chattel paper) that

evidence Accounts is, and has been for the four month period preceding the date

hereof, located at the address specified on Schedule I annexed hereto. The state

of incorporation is the state identified on Schedule I annexed hereto. The

organization number is the number specified on Schedule I annexed hereto.

Grantor has not in the past done, and does not now do, business under any other

name (including any trade-name or fictitious business name) except as set forth

on Schedule II annexed hereto.

 

                  (d)       Delivery of Certain Collateral. All chattel paper and

all notes and other instruments (excluding checks) comprising any and all items

of Collateral have been delivered to Secured Party duly endorsed and accompanied

by duly executed instruments of transfer or assignment in blank.

 

                  (e)       Consents or Governmental Authorizations. No consent

of any other Person (including, without limitation, any other partner or member

of any Joint Venture, any member of any LLC or any creditor of Grantor), and no

authorization, approval or other action by, and no notice to or filing with, any

governmental authority or regulatory body is required for the assignment or

transfer of or the creation, attachment or perfection of a security interest in

any Joint Venture, and there is no rule of law, regulation or statute that

prohibits or restricts any of the foregoing.

 

                  (f)       [Reserved]

 

                  (g)       [Reserved]

 

                  (h)       Joint Venture Agreements. The Joint Venture

Agreements, true and complete copies of which have been furnished to Secured

Party, have been duly authorized, executed and delivered by Grantor and are in

full force and effect and have not been amended or modified except as disclosed

in writing to Secured Party. No default by Grantor exists under any Joint

Venture Agreement and no event has occurred or exists that with notice or lapse

of time or both,

 

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would constitute a default by Grantor thereunder. To the best knowledge of

Grantor, except as disclosed to Secured Party, no default by any other partner

exists under such Joint Venture Agreement and no event has occurred or exists

that, with notice or lapse of time or both, would constitute a default by any

other partner thereunder.

 

                  (i)       Deposit Accounts. Schedule III sets forth a complete

list of all deposit accounts of Grantor in which Grantor deposits any Accounts

Receivable.

 

                  (j)       Other Information. All information heretofore, herein

or hereafter supplied to Secured Party by or on behalf of Grantor with respect

to the Collateral is accurate and complete in all material respects.

 

         SECTION 5. FURTHER ASSURANCES.

 

                  (a)       Grantor agrees that from time to time, at the expense

of Grantor, Grantor will promptly execute and deliver all further instruments

and documents, and take all further action, that may be reasonably necessary or

desirable, or that Secured Party may request, in order to perfect and protect

any security interest granted or purported to be granted hereby or to enable

Secured Party to exercise and enforce its rights and remedies hereunder with

respect to any Collateral. Without limiting the generality of the foregoing,

Grantor will promptly: (i) at the request of Secured Party, mark conspicuously

each item of chattel paper included in the Accounts (including electronically

placing an identification of Secured Party on the electronic chattel paper),

each Related Contract and each of its records pertaining to the Collateral, with

a legend, in form and substance satisfactory to Secured Party, indicating that

such Collateral is subject to the security interest granted hereby, (ii) at the

request of Secured Party, deliver and pledge to Secured Party hereunder all

promissory notes and other instruments (including checks) and all original

counterparts (and, for electronic chattel paper, the electronic equivalent

thereof) of chattel paper constituting Collateral, duly endorsed and accompanied

by duly authenticated instruments of transfer or assignment, all in form and

substance satisfactory to Secured Party, (iii) execute and file such financing

or continuation statements, or amendments thereto, and such other instruments or

notices, as may be necessary or desirable, or as Secured Party may request, in

order to perfect and preserve the security interests granted or purported to be

granted hereby, which shall be deemed to be all assets of Grantor; (iv) take

such action as Secured Party may request in order for Secured Party to obtain

"control" of any and all investment property, deposit accounts, electronic

chattel paper, and letter-of-credit rights (as such terms are now or hereafter

defined in Revised Article 9 of the Uniform Commercial Code ("REVISED ARTICLE

9") with corresponding provisions in Rev. Sections 9-104, 9-105, 9-106 and 9-107

pertaining to the construction of "control" for such items of Collateral), (v)

obtain the acknowledgement, in form and substance satisfactory to Secured Party,

of any bailee having possession of any of the Collateral that the bailee holds

such Collateral for Secured Party, (vi) at any reasonable time, upon request by

Secured Party, exhibit the Collateral to and allow inspection of the Collateral

by Secured Party, or persons designated by Secured Party, and (vii) at Secured

Party's request, appear in and defend any action or proceeding that may affect

Grantor's title to or Secured Party's security interest in all or any part of

the Collateral.

 

                  (b)       Grantor hereby authorizes Secured Party to file one

or more financing or continuation statements, and amendments thereto, relative

to all or any part of the Grantor's

 

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assets, without the signature of Grantor. Grantor agrees that a carbon,

photographic, electronic or other reproduction of this Agreement or of a

financing statement executed or authenticated by Grantor shall be sufficient as

a financing statement and may be filed as a financing statement in any and all

jurisdictions.

 

                  (c)       Grantor will furnish to Secured Party from time to

time statements and schedules further identifying and describing the Collateral

and such other reports in connection with the Collateral as Secured Party may

reasonably require, all in reasonable detail. Grantor will furnish to Secured

Party, within sixty (60) days following execution of this Agreement, thereafter

on an annual basis within sixty (60) days following the close of each of

Grantor's fiscal years, and at such additional times as the Secured Party may

reasonably require, a complete listing of each Account Debtor, including each

Account Debtor's name and complete address, in both hard copy and

machine-readable magnetic media formats.

 

         SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:

 

                  (a)       not use or permit any Collateral to be used

unlawfully or in violation of any provision of this Agreement or any applicable

statute, regulation or ordinance or any policy of insurance covering the

Collateral;

 

                  (b)       give Secured Party thirty (30) days prior written

notice of any change in Grantor's name or identity, corporate form or structure,

status of incorporation, state in which it is located, organization number,

chief place of business, chief executive office or residence or the office where

Grantor keeps its records regarding the Accounts and all originals of all

chattel paper that evidence Accounts;

 

                  (c)       pay promptly when due all property and other taxes,

assessments and governmental charges or levies imposed upon, and all claims

(including claims for labor, materials and supplies) against, the Collateral,

except to the extent the validity thereof is being contested in good faith;

provided that Grantor shall in any event pay such taxes, assessments, charges,

levies or claims not later than five days prior to the date of any proposed sale

under any judgment, writ or warrant of attachment entered or filed against

Grantor or any of the Collateral as a result of the failure to make such

payment; and

 

                  (d)       not without the written consent of Secured Party,

which shall not be unreasonably withheld, (i) cancel or terminate any Joint

Venture Agreement or consent to or accept any cancellation or termination

thereof, (ii) sell, assign (by operation of law or otherwise) or otherwise

dispose of any part of its general partnership or membership interest in any

Joint Venture, (iii) amend, supplement or otherwise modify any Joint Venture

Agreement (as in effect on the date hereof) except amendments that are

immaterial and would not have a material adverse effect on the business,

operations, property, assets, liability (contingent or otherwise), condition

(financial or otherwise) or prospects of the Grantor and subsidiaries taken as a

whole, (iv) waive any default under or breach of any Joint Venture Agreement or

waive, fail to enforce, forgive or relea