EXECUTION COPY THIRD AMENDMENT, dated as of February 24, 2000 (this "Amendment"), to the CREDIT AND GUARANTEE AGREEMENT, dated as of November 3, 1997 (as amended prior to the date hereof and as the same may be further amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among KINETIC CONCEPTS, INC., a Texas corporation (the "Company"), The Subsidiary Borrowers (as defined in the Credit Agreement) from time to time parties to the Credit Agreement, the several banks and other financial institutions from time to time parties thereto (collectively, the "Lenders"), BANK OF AMERICA, N.A., a national banking association ("Bank of America"), as administrative agent for the Lenders thereunder, and BANKERS TRUST COMPANY, a New York banking corporation ("Bankers Trust"), as syndication agent for the Lenders thereunder. W I T N E S S E T H : WHEREAS, the Company and the Subsidiary Borrowers have requested that the Lenders amend the Credit Agreement in the manner provided for herein; and WHEREAS, the Lenders are willing to amend the Credit Agreement in the manner and on the terms and conditions provided for herein; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. DEFINITIONS AND SECTION REFERENCES 1.1 Defined Terms. Unless otherwise defined herein, terms which are defined in the Credit Agreement and used herein are so used as so defined. 1.2 Section References. Unless otherwise indicated, all Section and subsection references are to the Credit Agreement. SECTION 2. AMENDMENTS TO CREDIT AGREEMENT 2.1 Amendment to Subsection 1.1. Subsection 1.1 of the Credit Agreement is hereby amended as follows: (a) by amending and restating in their entireties the following definitions contained in such subsection to read as follows: "Leverage Ratio Level": as to the Company, the existence of Leverage Ratio Level I, Leverage Ratio Level II, Leverage Ratio Level III, Leverage Ratio Level IV or Leverage Ratio Level V, as the case may be. "Leverage Ratio Level V": as to the Company, shall exist on an Adjustment Date if the Leverage Ratio for the period of four consecutive fiscal quarters ending on the last day of the period covered by the financial statements relating to such Adjustment Date is less than 4.00 to 1.00. (b) by deleting in its entirety the definition of "Leverage Ratio Level VI" contained in such subsection. (c) by adding the following definitions in the proper alphabetical order: "Third Amendment": the Third Amendment to this Agreement dated as of February 24, 2000. "Third Amendment Effective Date" the Effective Date under the Third Amendment. (d) by adding the following proviso at the end of clause (iv) of the definition of "EBITDA" contained in such subsection: ", provided that the aggregate amount of non-cash charges and expenses that may be added back pursuant to this clause (iv) in connection with the calculation of EBITDA of the Company subsequent to the Third Amendment Effective Date may not exceed $25,000,000, and" (e) by adding the following proviso at the end of the definition of "Net Income" contained in such subsection: ", provided, however, that the net income of the Company and its Consolidated Subsidiaries shall only include 50% of any net income resulting from the collection of some or all of the $15,000,000 of outstanding receivables related to sales and services pertaining to the Vacuum Assisted Closure Devise prior to December 31, 1999." (f) by amending and restating in its entirety clause (d) of the definition of "Permitted Acquisition" as follows: "(d) the purchase price (including assumed indebtedness and the fair market value of the non-cash consideration in connection with such Acquisition) of such Acquisition does not exceed $15,000,000 individually and the purchase price of all such Acquisitions (i) in any given fiscal year does not exceed $25,000,000 in the aggregate and (ii) since the Closing Date does not exceed $70,000,000 in the aggregate (provided that, if the Company or any of its Subsidiaries receives Net Cash Proceeds of capital contributions by, or from the issuance of any Capital Stock to, the Buyers after the Merger Date which are not used to repay Senior Subordinated Bridge Loans, such aggregate limitation in clause (ii) above shall be increased by the aggregate amount of such Net Cash Proceeds, but such increase shall not be in excess of $25,000,000 in the aggregate)," 2.2 Amendment to Subsection 10.1. Subsection 10.1 of the Credit Agreement is hereby amended by deleting such Section in its entirety and substituting in lieu thereof the following new Section 10.1: "10.1 Financial Condition Covenants. (a) Interest Coverage. Permit for any period of four consecutive fiscal quarters ending at the end of any fiscal quarter set forth below the ratio of (i) EBITDA of the Company for such period to (ii) Consolidated Cash Interest Expense of the Company for such period to be less than the ratio set forth opposite such period below: Fiscal Quarter Ending Interest Coverage Ratio December 31, 1999 1.75 to 1.00 March 31, 2000 1.75 to 1.00 June 30, 2000 1.75 to 1.00 September 30, 2000 1.75 to 1.00 December 31, 2000 1.75 to 1.00 March 31, 2001 1.75 to 1.00 June 30, 2001 1.75 to 1.00 September 30, 2001 1.75 to 1.00 December 31, 2001 2.00 to 1.00 March 31, 2002 2.00 to 1.00 June 30, 2002 2.00 to 1.00 September 30, 2002 2.00 to 1.00 December 31, 2002 2.25 to 1.00 March 31, 2003 2.25 to 1.00 June 30, 2003 2.25 to 1.00 September 30, 2003 2.25 to 1.00 December 31,2003 March 2.50 to 1.00 31, 2004 2.50 to 1.00 June 30, 2004 2.50 to 1.00 September 30, 2004 2.50 to 1.00 December 31, 2004 2.75 to 1.00 March 31, 2005 2.75 to 1.00 June 30, 2005 2.75 to 1.00 September 30, 2005 2.75 to 1.00 December 31, 2005 and each Fiscal Quarter ending thereafter 3.00 to 1.00 (b) Leverage Ratio. Permit the Leverage Ratio as of the last day of any fiscal quarter of the Company set forth below, or at any time thereafter prior to the last day of the next succeeding fiscal quarter, to be greater than the ratio set forth opposite such fiscal quarter below: Fiscal Quarter Ending Ratio December 31, 1999 6.00 to 1.00 March 31, 2000 6.00 to 1.00 June 30, 2000 6.00 to 1.00 September 30, 2000 6.00 to 1.00 December 31, 2000 5.50 to 1.00 March 31, 2001 5.50 to 1.00 June 30, 2001 5.50 to 1.00 September 30, 2001 5.50 to 1.00 December 31, 2001 5.00 to 1.00 March 31, 2002 5.00 to 1.00 June 30, 2002 5.00 to 1.00 September 30, 2002 5.00 to 1.00 December 31, 2002 4.50 to 1.00 March 31, 2003 4.50 to 1.00 June 30, 2003 4.50 to 1.00 September 30,2003 4.50 to 1.00 December 31, 2003 4.00 to 1.00 March 31, 2004 4.00 to 1.00 June 30, 2004 4.00 to 1.00 September 30, 2004 4.00 to 1.00 December 31, 2004 and each Fiscal Quarter ending thereafter 3.50 to 1.00 (c) Minimum EBITDA. Permit EBITDA of the Company for any period of four consecutive fiscal quarters ending at the end of any fiscal quarter set forth below to be less than the amount set forth opposite such period: Fiscal Quarter Ending EBITDA December 31, 1999 85,000,000 March 31, 2000 85,000,000 June 30, 2000 85,000,000 September 30, 2000 85,000,000 December 31, 2000 94,000,000 March 31, 2001 94,000,000 June 30, 2001 94,000,000 September 30, 2001 94,000,000 December 31, 2001 99,000,000 March 31, 2002 99,000,000 June 30, 2002 99,000,000 September 30, 2002 99,000,000 December 31, 2002 107,000,000 March 31, 2003 107,000,000 June 30, 2003 107,000,000 September 30, 2003 107,000,000 December 31, 2003 115,000,000 March 31, 2004 115,000,000 June 30, 2004 115,000,000 September 30, 2004 115,000,000 December 31, 2004 119,000,000 March 31, 2005 119,000,000 June 30, 2005 119,000,000 September 30, 2005 119,000,000 December 31, 2005 124,000,000" 2.3 Amendment to Subsection 10.8. Subsection 10.8 of the Credit Agreement is hereby amended by deleting the table in such subsection in its entirety and substituting in lieu thereof the following new table: "Fiscal Year Amount 1999 30,000,000 2000 30,000,000 2001 30,000,000 2002 35,000,000 2003 35,000,000 2004 and each Fiscal Year thereafter 40,000,000" 2.4 Amendment to Annex A to the Credit Agreement. Annex A to the Credit Agreement is hereby amended by deleting such Annex A in its entirety and substituting in lieu thereof a new Annex A to read in its entirety as set forth on Annex A attached hereto. 2.5 Termination of Unused Acquisition Loan Commitments. On the Effective Date, all unfunded Acquisition Loan Commitments under the Credit Agreement shall be automatically terminated. SECTION 3. MISCELLANEOUS 3.1 Representations and Warranties. On and as of the date hereof, the Company and the Subsidiary Borrowers hereby confirm, reaffirm and restate the representations and warranties set forth in Section 7 of the Credit Agreement mutatis mutandis (after giving effect to any amendments thereto pursuant to this Amendment), except to the extent that such representations and warranties expressly relate to a specific earlier date in which case the Company and the Subsidiary Borrowers hereby confirm, reaffirm and restate such representations and warranties as of such earlier date. 3.2 Effectiveness. This Amendment shall become effective as of the date upon which the conditions set forth below shall first be satisfied (the "Effective Date"): (a) Amendment. The Administrative Agent shall have received this Amendment, executed and delivered by a duly authorized officer of the Company, the Subsidiary Borrowers and the Required Lenders with a counterpart for the Administrative Agent and a counterpart or a conformed copy for each Lender. (b) Amendment Fee. The Administrative Agent shall have received for each Lender which executes this Amendment on or prior to February 24, 2000 (and which committed to approve this Amendment on or prior to February 16, 2000), an amendment fee in an amount equal to .15% of the sum of (i) such Lender's Revolving Credit Commitment, (ii) such Lender's unused Acquisition Loan Commitment and (iii) the aggregate principal amount of the then outstanding Term Loans and Acquisition Loans of such Lender. (c) Representations and Warranties. The Administrative Agent shall have received a certificate of the chief financial officer of the Company to the effect that each of the representations and warranties made by the Company, the Subsidiary Borrowers and the other Loan Parties in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of the Effective Date, except to the extent such representations and warranties expressly relate to an earlier date in which case such representations and warranties shall be true and correct in all material respects as of such earlier date. (d) Consent. Each Guarantor under the Guarantee and Collateral Agreement shall have consented to this Amendment (e) Expenses. The Company shall have paid all other fees and expenses payable in connection with this Amendment. 3.3 Continuing Effect; No Other Amendments. Except as expressly amended hereby, all of the terms and provisions of the Credit Agreement are and shall remain in full force and effect. The amendments provided for herein are limited to the specific subsections of the Credit Agreement specified herein and shall not constitute an amendment of, or an indication of the Administrative Agent's or the Lenders' willingness to amend, any other provisions of the Credit Agreement or the same subsection for any other date or time period (whether or not such other provisions or compliance with such subsections for another date or time period are affected by the circumstances addressed in this Amendment). 3.4 Expenses. The Company agrees to pay and reimburse the Administrative Agent for all reasonable costs and out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation and delivery of this Amendment, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. 3.5 Counterparts. This Amendment may be executed in any number of counterparts by the parties hereto (including by facsimile transmission), each of which counterparts when so executed shall be an original, but all the counterparts shall together constitute one and the same instrument. 3.6 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date first above written. KINETIC CONCEPTS, INC. By: /s/ Martin J. Landon Name: Martin J. Landon Title: Vice President BANK OF AMERICA N.A., as Administrative Agent and as a Lender By: /s/F.SCOTT SINGHOFF Name: F. Scott Singhoff Title: Managing Director BANKERS TRUST COMPANY, as Syndication Agent and as a Lender By: /s/ROBERT R. TELESCA Name: Robert R. Telesca Title: Assistant Vice President ALLIANCE CAPITAL FUNDING, L.L.C., as assignee, By: /s/L.I. SAVITRI ALEX Name: L.I. Savitri Alex Title: Vice President ALLIANCE INVESTMENTS LIMITED By: /s/L.I. SAVITRI ALEX Name: L.I. Savitri Alex Title: Vice President ARCHIMEDES FUNDING II LTD. By: /s/ Name: Title: BANKBOSTON, N.A. By: /s/RICHARD D. HILL, JR. Name: Richard D. Hill, Jr. Title: Managing Director BEDFORD CDO LIMITED By: Pacific Investment Management Company as its Investment advisor By: PIMCO Management Inc., a general partner By: /s/MOHAN V. PHANSALKAR Name: Mohan V. Phansalkar Title: Senior Vice President BHF (USA) CAPITAL CORPORATION By: /s/ DAN DOBRJANSKYJ By: /S/ PATRICK S. MARSH Name: Dan Dobrjanskyj Name: Patrick S. Marsh Title: Asst. Vice President Associate CAPTIVA III FINANCE LTD. As advised by Pacific Investment Management Company By: /s/DAVID DYER Name: David Dyer Title: Director CAPTIVA IV FINANCE LTD. As advised by Pacific Investment Management Company By: /s/DAVID DYER Name: David Dyer Title: Director THE CHASE BANK OF TEXAS, NATIONAL ASSOCIATION By: /s/ DAVID P. MCGEE Name: David P. McGee Title: Senior Vice President CITY NATIONAL BANK By: /s/RANDALL WATSEK Name: Randall Watsek Title: Vice President CRESCENT/MACH I PARTNERS L.P. By: TCW Asset Management Company as its Investment Manager By: /s/JONATHAN I. BERG Name: Jonathan I. Berg Title: Assistant Vice President CYPRESSTREE INVESTMENT FUND LLC By: CypressTree Investment Management Company, Inc. its Managing Member By: /s/CATHERINE C. MCDERMOTT Name: Catherine C. McDermott Title: Principal CYPRESSTREE INVESTMENT PARTNERS I LTD. By: CypressTree Investment Management Company, Inc. its Managing Member By: /s/CATHERINE C. MCDERMOTT Name: Catherine C. McDermott Title: Principal CYPRESSTREE INVESTMENT PARTNERS II LTD. By: CypressTree Investment Management Company, Inc. its Managing Member By: /s/CATHERINE C. MCDERMOTT Name: Catherine C. McDermott Title: Principal DEUTSCHE BANK AKTIENGESELLSCHAFT By: /s/ Name: Title: FLEET NATIONAL BANK By: /s/PAULINE SO Name: Pauline So Title: Assistant Vice President FREMONT INVESTMENT & LOAN By: /s/MAUREEN NUNNARI Name: Maureen Nunnari Title: Vice President THE FUJI BANK LIMITED By: /s/JOHN D. DOYLE Name: John D. Doyle Title: Vice President & Manager HSBC BANK USA By: /s/JOHN LYONS Name: John Lyons Title: Senior Vice President INDOSUEZ CAPITAL FUNDING III LIMITED By: /s/MELISSA MARANO Name: Melissa Marano Title: Vice President INDOSUEZ CAPITAL FUNDING IV LIMITED By: /s/MELISSA MARANO Name: Melissa Marano Title: Vice President THE INDUSTRIAL BANK OF JAPAN LIMITED By: /s/J. KENNETH BIEGEN Name: J. Kenneth Biegen Title: Senior Vice President PPM AMERICA, INC. AS ATTORNEY IN FACT, ON BEHALF OF JACKSON NATIONAL LIFE INSURANCE COMPANY By: /s/JOHN WALDING Name: John Walding Title: Managing Director KZH ING-2 LLC By: /s/SUSAN LEE Name: Susan Lee Title: Authorized Agent KZH CYPRESSTREE-1 LLC By: /s/SUSAN LEE Name: Susan Lee Title: Authorized Agent KZH LANGDALE LLC By: /s/SUSAN LEE Name: Susan Lee Title: Authorized Agent MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/DAVID L. BABSON AND COMPANY, INC. Name: David L. Babson and Company, Inc. Title: Investment Advisor MITSUBISHI TRUST AND BANKING CORPORATION By: /s/NOBUO TOMINAGA Name: Nobuo Tominaga Title: Chief Manager ML CLO XII PILGRIM AMERICA (CAYMAN) LTD. By: Pilgrim Investment, Inc., as its investment manager By: /s/CHARLES E. LEMIEUX, CFA Name: Charles E. LeMieux, CFA Title: Assistant Vice President MOUNTAIN CAPITAL CLO I LTD. By: /s/DARREN P. RILEY Name: Darren P. Riley Title: Director NATEXIS BANQUE BFCE By: /s/LOUIS P. LAVILLE, III By:/s/ DANIEL PAYER Name: Louis P. LaVille, III Name: Daniel Payer Title: Vice President & Mgr. Title: Asst. VP NATIONAL CITY BANK By: /s/JOSEPH D. ROBISON Name: Joseph D. Robison Title: Vice President NORTHERN LIFE INSURANCE COMPANY By: /s/ Name: Title: OAK MOUNTAIN LIMITED By: /s/ Name: Title: PARIBAS By: /s/ SUSAN BOWES Name: Susan Bowes Title: Vice President By: /s/LEE S. BUCKNER Name: Lee S. Buckner Title: Managing Director SENIOR DEBT PORTFOLIO By: Boston Management and Research, as Investment Advisor By: /s/BARBARA CAMPBELL Name: Barbara Campbell Title: Vice President SUMMIT BANK By: /s/ROBERT P. HARVEY Name: Robert P. Harvey Title: Vice President VAN KAMPEN CLO I LIMITED By: Van Kampen Management Inc., as Collateral Manager By: /s/DARVIN D. PIERCE Name: Darvin D. Pierce Title: Vice President VAN KAMPEN PRIME RATE INCOME TRUST By: Van Kampen Investment Advisory Corp. By: /s/DARVIN D. PIERCE Name: Darvin D. Pierce Title: Vice President WELLS FARGO BANK, N.A. By: /s/DAVID NEUMANN Name: David Neumann Title: Senior Vice President ACKNOWLEDGMENT AND CONSENT Each of the undersigned hereby consents to the foregoing Amendment and hereby confirms, reaffirms and restates that its obligations under or in respect of the Credit Agreement and the documents related thereto to which it is a party are and shall remain in full force and effect after giving effect to the foregoing Amendment, and in the case of KCI Licensing, Inc., hereby becomes a party to the Guarantee and Collateral Agreement as a Grantor thereunder: KCI HOLDINGS COMPANY, INC. By: /s/ MARTIN J. LANDON Title: Vice President KCI INTERNATIONAL HOLDING COMPANY By: /s/ MARTIN J. LANDON Title: Vice President KCII HOLDINGS, L.L.C. By: /s/ MARTIN J. LANDON Title: Vice President PLEXUS ENTERPRISES, INC. By: /s/ MARTIN J. LANDON Title: Vice President MEDICAL RETRO DESIGN, INC. By: /s/ MARTIN J. LANDON Title: Vice President KCI PROPERTIES, INC. By: /s/ MARTIN J. LANDON Title: Vice President KCI-RIK ACQUISITION CORP. By: /s/ MARTIN J. LANDON Title: Vice President KCI REAL PROPERTY LIMITED By: /s/ MARTIN J. LANDON Title: Vice President KCI USA, INC. (f/k/a Therapeutic Services, Inc.) By: /s/ MARTIN J. LANDON Title: Vice President KCI AIR, INC. By: /s/ MARTIN J. LANDON Title: Vice President KCI INTERNATIONAL, INC. By: /s/ MARTIN J. LANDON Title: Vice President KCI LICENSING, INC. By: /s/ MARTIN J. LANDON Title: Vice President ANNEX A PRICING GRID Revolving Loans (other than Revolving Offshore Loans), Tender Loans, Tranche A Term Loans and Tranche B Term Loans Tranche C Term Loans Acquisition Loans -------------------- -------------------- -------------------- Applicable Applicable Applicable Applicable Applicable Applicable Margin Margin Margin Margin Margin Margin Leverage for for Base for for Base for for Base Revolving Ratio Eurdollar Rate Eurodolla Rate Eurodollar Rate Offshore Commitment Level Loans Loans Loans Loans Loans Loans Loans Fees - -------- ----------- --------- ----------- --------- ---------- --------- -------- ---------- Leverage Ratio Level I 2.75% 1.75% 3.00% 2.00% 3.25% 2.25% 2.75% 0.50% Leverage Ratio Level II 2.50% 1.50% 3.00% 2.00% 3.25% 2.25% 2.50% 0.375% Leverage Ratio Level III 2.25% 1.25% 3.00% 2.00% 3.25% 2.25% 2.25% 0.375% Leverage Ratio Level IV 2.00% 1.00% 2.75% 1.75% 3.00% 2.00% 2.00% 0.30% Leverage Ratio Level V 1.75% 0.75% 2.50% 1.50% 2.75% 1.75% 1.75% 0.30%