AMENDED AND RESTATED SUBSIDIARY PARTNERSHIP SECURITY AGREEMENT

 

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                                                                   EXHIBIT 10.27

 

                         AMENDED AND RESTATED SUBSIDIARY

                         PARTNERSHIP SECURITY AGREEMENT

 

         This AMENDED AND RESTATED SUBSIDIARY PARTNERSHIP SECURITY AGREEMENT

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

the undersigned, each a subsidiary of AMERICAN HOMEPATIENT, INC., a Delaware

corporation, (collectively and/or individually, "GRANTOR"), and BANK OF

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

"SECURED PARTY") the financial institutions ("BANKS") that hold a promissory

note payable to such Banks as set forth on Exhibit A attached hereto (the

"Promissory Note") and amends and restates the Subsidiary Partnership Security

Agreement dated as of December 28, 1995 between Grantor and Bankers Trust

Company as the predecessor to the Secured Party (the "Prior Security

Agreement").

 

                             PRELIMINARY STATEMENTS

 

         A.        American HomePatient, Inc. ("AHP"), Bankers Trust Company and

Banks previously entered into that certain Fifth Amended and Restated Credit

Agreement dated as of May 25, 2001.

 

         B.        AHP 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 AHP's

Second Amended Joint Plan of Reorganization (herein "Joint Plan") in all

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 The Fifth Amended and Restated Credit Agreement is no longer in effect

and as part of the Joint Plan, the Grantor will execute The Promissory Note to

the Banks on terms and in amounts provided in the Joint Plan to evidence

Grantor's indebtedness and obligations to the Banks.

 

         B.        Grantor is or may become a party to certain partnership

agreements in which a majority of all partnership interests in the partnerships

formed pursuant thereto are owned by Grantor and/or its Subsidiaries (each such

partnership agreement, as amended to the date hereof and as it may hereafter be

amended, supplemented or otherwise modified from time to time, a "PARTNERSHIP

AGREEMENT" and collectively, the "PARTNERSHIP AGREEMENTS"), and Grantor is or

may become a general partner of and/or a limited partner in the partnerships

formed pursuant thereto (each a "COMPANY" and collectively, the "COMPANIES").

 

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

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

as provided herein.

 

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

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

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

 

         SECTION 1. GRANT OF SECURITY. Grantor hereby pledges and assigns to

Secured Party, for Secured Party's benefit and the benefit of Banks, and hereby

further grants a security interest in, all of Grantor's right, title and

interest in and to the following (the "COLLATERAL"):

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

limited partner in each Company, whether now owned or hereafter acquired,

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

and under the Partnership Agreement of such Company (including without

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

such Company), together with all other rights, interests, claims and other

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

and/or limited partnership interest in such Company, whatever their respective

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

wheresoever they may exist or be located, and further including, without

limitation, all of the rights of Grantor as a general and/or limited partner:

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

dividends, distributions, interest, income from partnership properties and

operations, proceeds of sale of partnership assets and returns of capital) under

or pursuant to such Partnership Agreement, (y) receive payments upon termination

of such Partnership Agreement, and (z) receive any other payments or

distributions, whether cash or noncash, in respect of Grantor's general and/or

limited partnership interest evidenced by such Partnership Agreement; (ii) in

and with respect to claims and causes of action arising out of or relating to

such Company; and (iii) to have access to such Company's books and records and

to other information concerning or affecting such Company;

 

         (b)       any "certificate of interest" or "certificates of interest"

(or other certificates or instruments however designated or titled) issued by

any Company and evidencing Grantor's interest as a limited partner in such

Company (collectively, the "Certificate" with respect to such Company) and any

interest of Grantor in the entries on the books of such Company or of any

financial intermediary pertaining to Grantor's interest as a limited partner in

such Company;

 

         (c)       all books, records, ledger cards, files, correspondence,

computer programs, tapes, disks and related data processing software that at any

time evidence or contain information relating to any of the Collateral or are

otherwise necessary or helpful in the collection thereof or realization

thereupon; and

 

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

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

payments under insurance (whether or not Secured Party is the loss payee

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

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

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

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

otherwise disposed of, whether such disposition is voluntary or involuntary.

 

         SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the

Collateral is collateral security for, the prompt payment or performance in full

when due, whether at stated maturity, by required prepayment, declaration,

acceleration, demand or otherwise (including the payment of amounts that would

become due but for the operation of the automatic stay under Section 362(a) of

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

liabilities of every nature of Grantor now or hereafter existing under or

arising out of or in connection with the Promissory Note, and all or any portion

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

of such payment is avoided or recovered directly or indirectly from Secured

Party or any Bank as a preference, fraudulent transfer or otherwise (all such

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

every nature of Grantor now or

 

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hereafter existing under this Agreement (all such obligations of Grantor,

together with the Underlying Debt, being the "SECURED OBLIGATIONS").

 

         SECTION 3. NO ASSUMPTION. Notwithstanding any of the foregoing, this

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

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

Grantor's obligations, duties, expenses or liabilities under any Partnership

Agreement (including without limitation Grantor's obligations as a general

partner for the debts and obligations of any respective Company and to manage

the business and affairs of such Company) or under any and all other agreements

now existing or hereafter drafted or executed (collectively, the "GRANTOR

OBLIGATIONS") unless Secured Party, such Bank or such purchaser otherwise

expressly agrees to assume any or all of said Grantor Obligations in writing. In

the event of foreclosure by Secured Party on behalf of Banks, Grantor shall

remain bound and obligated to perform the Grantor Obligations and neither

Secured Party nor any Bank shall be deemed to have assumed any of such Grantor

Obligations except as provided in the preceding sentence. Without limiting the

generality of the foregoing, neither the grant of the security interest in the

Collateral in favor of Secured Party as provided herein nor the exercise by

Secured Party of any of its rights hereunder nor any action by Secured Party in

connection with a foreclosure on the Collateral shall be deemed to constitute

Secured Party or any Bank a general partner of any Company; provided, however,

that in the event Secured Party or any purchaser of Collateral at a foreclosure

sale elects to become a substituted general partner of any Company in place of

Grantor, Secured Party or such purchaser, as the case may be, shall adopt in

writing the respective Partnership Agreement and agree to be bound by the terms

and provisions thereof.

 

         SECTION 4. DELIVERY OF CERTIFICATE; INSTRUCTIONS TO COMPANY REGARDING

REGISTRATION OF PLEDGE. Any certificate shall be delivered to and held by or on

behalf of Secured Party pursuant hereto and shall be in suitable form for

transfer by delivery or shall be accompanied by duly executed instruments of

transfer or assignment in blank, all in form and substance satisfactory to

Secured Party. Upon request by Secured Party, Grantor, at its own expense, shall

deliver to each Company an order, satisfactory in form and substance to Secured

Party, requesting that the pledge of Grantor's interest as a limited partner in

such Company be registered on the books of such Company.

 

         SECTION 5. REPRESENTATIONS AND WARRANTIES. Grantor represents and

warrants as follows:

 

         (a)       Partnership Interests in Companies. Schedule A annexed hereto,

as amended from time to time, correctly sets forth (i) all Partnership

Agreements and (ii) the partnership interests of all partners of each Company.

The partnership interests described in Schedule A annexed hereto constitute 100%

of the partnership interests in each Company.

 

         (b)       Partnership Agreement. Each Partnership Agreement, a true and

complete copy of which has been furnished to Secured Party, has been duly

authorized, executed and delivered by Grantor and is in full force and effect

and has not been amended or modified except as disclosed in writing to Secured

Party.

 

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         (c)       Ownership of Collateral. Grantor is the legal and beneficial

owner of the Collateral free and clear of any Lien except for the security

interest created by this Agreement. No effective financing statement or other

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

file in any filing or recording office except such as may have been filed in

favor of Secured Party relating to this Agreement.

 

         (d)       Consents or Governmental Authorizations. No consent of any

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

any creditor of Grantor), and no authorization, approval or other action by, and

no notice to or filing with, any governmental authority or regulatory body is

required for either (i) the grant by Grantor of the security interest granted

hereby, (ii) the execution, delivery or performance of this Agreement by

Grantor, or (iii) the perfection of or the exercise by Secured Party of its

rights and remedies hereunder (except as may have been taken by or at the

direction of Grantor).

 

         (e)       Other Information. All information heretofore, herein or

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

the Collateral is accurate and complete in all material respects.

 

         SECTION 6. FURTHER ASSURANCES; AMENDMENTS.

 

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

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

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

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

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

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

with respect to any Collateral. Without limiting the generality of the

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

each of its records pertaining to the Collateral with a legend, in form and

substance satisfactory to Secured Party, indicating that such Collateral is

subject to the security interest granted hereby, (ii) execute and file such

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

instruments or notices, as may be necessary or desirable, or as Secured Party

may request. in order to perfect and preserve the security interests granted or

purported to be granted hereby, and (iii) at Secured Party's request, appear in

and defend any action or proceeding that may affect Grantor's title to or

Secured Party's security interest in all or any part of the Collateral.

 

         (b)       Grantor hereby authorizes Secured Party to file one or more

financing or continuation statements, and amendments thereto, relative to all or

any part of the Collateral without the signature of Grantor. Grantor agrees that

a carbon, photographic or other reproduction of this Agreement or of a financing

statement signed by Grantor shall be sufficient as a financing statement and may

be filed as a financing statement in any and all jurisdictions.

 

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

statements and schedules further identifying and describing the Collateral and

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

reasonably request, all in reasonable detail.

 

         (d)       Grantor further agrees that it will, upon obtaining any

interests required to be pledged hereunder as provided in Section 7(h), promptly

(and in any event within ten Business

 

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Days) deliver to Secured Party an amendment to this Agreement (a "SECURITY

AMENDMENT"), in respect of the additional Collateral to be pledged pursuant to

this Agreement. Grantor hereby authorizes Secured Party to attach each Security

Amendment to this Agreement and agrees that all additional Collateral listed on

any Security Amendment shall for all purposes hereunder be considered

Collateral; provided that the failure of Grantor to execute a Security Amendment

with respect to any additional Collateral shall not impair the security interest

of Secured Party therein or otherwise adversely affect the rights and remedies

of Secured Party hereunder with respect thereto.

 

         SECTION 7. CERTAIN COVENANTS OF GRANTOR. Grantor shall:

 

         (a)       not without the prior written consent of Secured Party, which

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

Partnership Agreement or consent to or accept any cancellation or termination

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

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

Company, (iii) amend, supplement or otherwise modify any Partnership Agreement

(if now held, as in effect on the date hereof or, if hereinafter acquired, as in

effect on the date of such acquisition) except amendments that are immaterial

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

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

otherwise), or prospects of the respective Company, (iv) waive any default under

or breach of any Partnership Agreement or waive, fail to enforce, forgive or

release any right, interest or entitlement of any kind, howsoever arising, under

or in respect of any Partnership Agreement or vary or agree to the variation in

any respect of any of the provisions of any Partnership Agreement or of the

performance of any other Person under any Partnership Agreement, or (v)

petition, request or take any other legal or administrative action which seeks,

or may reasonably be expected, to rescind, terminate or suspend any Partnership

Agreement or to amend or modify any Partnership Agreement;

 

         (b)       at its expense (i) perform and comply in all material respects

with all terms and provisions of each Partnership Agreement required to be

performed or complied with by it, (ii) maintain each Partnership Agreement in

full force and effect, (iii) enforce each Partnership Agreement in accordance

with its terms, and (iv) take all such action to that end as from time to time

may be reasonably requested by Secured Party;

 

         (c)       not create or suffer to exist any lien upon or with respect to

any of the Collateral to secure the indebtedness or other obligations of any

person, except for the security interest created by this Agreement;

 

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

consent shall not be unreasonably withheld, (i) vote to permit any Company in

which it holds a limited partnership interest to enter into any transaction of

merger or consolidation, or liquidate, wind up or dissolve itself (or suffer any

liquidation or dissolution) and (ii) not permit any Company in which it holds a

general partnership interest to enter into any transaction of merger or

consolidation, or liquidate, wind up or dissolve itself (or suffer any

liquidation or dissolution);

 

         (e)       notify Secured Party of any change in Grantor's name, identity

or corporate structure within 15 days of such change;

 

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         (f)       give Secured Party 30 days' prior written notice of any change

in Grantor's chief place of business, chief executive office or residence or the

office where Grantor keeps its records regarding the Collateral;

 

         (g)       pay promptly when due all taxes, assessments and governmental

charges or levies imposed upon, and all claims against, the Collateral, except

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

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

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

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

of the Collateral as a result of the failure to make such payment;

 

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

(i) any and all additional general and/or limited partnership interests acquired

after the date of this Agreement in, to and under any Partnership Agreement, and

(ii) any and all general and/or limited partnership interests in partnerships,

that become, after the date of this Agreement, partnerships in which a majority

of all partnership interests are owned by Grantor and/or its Subsidiaries.

 

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

 

         (a)       So long