Equity Plan [2004] (2004)Full Document 

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KINETIC CONCEPTS, INC.
2004 EQUITY PLAN

Section 1. Purpose of Plan.

        The name of this plan is the Kinetic Concepts, Inc. 2004 Equity Plan (the "Plan"). The purpose of the Plan is to provide additional incentive to those officers, employees, directors, advisors and consultants of the Company and its Subsidiaries (each, as defined below) and affiliates whose contributions are essential to the growth and success of the Company's business, in order to strengthen the long-term commitment of such persons to the Company and its Subsidiaries and affiliates, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability of the Company and its Subsidiaries and affiliates and enhance shareholder value. To accomplish such purposes, the Plan provides that the Company may grant Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units (each, as defined below). The Plan is intended to permit awards that satisfy the requirements of section 162(m) of the Code (as defined below) and shall be interpreted in a manner consistent with the requirements thereof.

Section 2. Definitions.

        For purposes of the Plan, in addition to terms defined elsewhere in the Plan, the following terms shall be defined as set forth below:

            (a)   "Administrator" means the Board, or if and to the extent the Board does not administer the Plan, the Committee, in accordance with Section 3 hereof.

            (b)   "Award" means an award of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units under the Plan.

            (c)   "Award Agreement" means, with respect to any Award, the written agreement between the Company and the Participant setting forth the terms and conditions of the Award.

            (d)   "Blum" means Blum Capital Partners, L.P., any other related fund managed by Blum Capital Partners, or an affiliate thereof, and their respective affiliates, together with any affiliated Person to whom any of the foregoing shall have directly or indirectly transferred any Shares.

            (e)   "Board" means the Board of Directors of the Company.

            (f)    "Cause" means, unless a Participant is a party to a written employment agreement with the Company, Subsidiary or affiliate which contains a definition of "cause," "termination for cause," or any other similar term or phrase, in which case "Cause" shall have the meaning set forth in such agreement, or unless otherwise provided in an Award Agreement, conduct involving one or more of the following: (i) the substantial and continuing failure of the Participant to render services to the Company or any Subsidiary or affiliate in accordance with the Participant's obligations and position with the Company, Subsidiary or affiliate, provided that the Company or any Subsidiary or affiliate provides the Participant with adequate notice of such failure and, if such failure is capable of cure, the Participant fails to cure such failure within 30 days of the notice; (ii) dishonesty, gross negligence, or breach of fiduciary duty; (iii) the Participant's indictment of, conviction of, or no contest plea to, an act of theft, fraud or embezzlement; (iv) the commission of a felony; or (v) a material breach of the terms of an agreement between the Participant, on the one hand, and the Company or any Subsidiary or affiliate on the other hand or a material breach of any material company policy.

            (g)   "Change in Capitalization" means any increase, reduction, or change or exchange of Shares for a different number or kind of shares or other securities or property by reason of a reclassification, recapitalization, merger, amalgamation, consolidation, reorganization, issuance of



    warrants or rights, stock dividend, stock split or reverse stock split, combination or exchange of shares, repurchase of shares, change in corporate structure or otherwise; or any other corporate action, such as declaration of a special dividend, that affects the capitalization of the Company; provided, however, that the conversion of the Company's preferred stock in connection with the Company's initial underwritten public offering of Shares will not be deemed to constitute a Change in Capitalization.

            (h)   "Change in Control" means, unless otherwise provided in an Award Agreement, the first to occur of any one of the events set forth in the following paragraphs; provided, however, that any public offering of Shares of the Company shall not constitute a Change in Control:

                (i)  any sale, lease, exchange, or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company (together with the assets of the Company's direct and indirect subsidiaries) to any Person or group of related Persons as that term is used in Section 13(d) of the Exchange Act (a "Group"), together with any affiliates thereof; or

               (ii)  any Person (other than any of the Investors) or Group (other than any Group including any of the Investors), becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Shares representing more than 50% of the aggregate voting power of the issued and outstanding stock entitled to vote in the election of directors of the Company ("Voting Stock") and such Person or Group has the power and authority to vote such Shares; or

              (iii)  the consummation of a merger or consolidation of the Company with another entity in which immediately following the consummation of the transaction, the Investors cease to own collectively at least 20% of the Voting Stock in the surviving corporation.

            (i)    "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

            (j)    "Committee" means the Compensation Committee of the Board of Directors or any other committee or subcommittee that the Board may appoint to administer the Plan. If at any time or to any extent the Board shall not administer the Plan, then the functions of the Administrator specified in the Plan shall be exercised by the Committee. Unless otherwise determined by the Board, the composition of the Committee shall at all times consist solely of persons who are (i) "nonemployee directors" as defined in Rule 16b-3 issued under the Exchange Act, and (ii) "outside directors" as defined in section 162(m) of the Code, and shall be constituted to satisfy any applicable stock exchange rules or requirements.

            (k)   "Common Shares" means the shares of common stock, par value $0.001 per share, of the Company.

            (l)    "Company" means Kinetic Concepts, Inc., a Texas corporation (or any successor corporation).

            (m)  "Disability" means, unless otherwise provided in an Award Agreement (i) any physical or mental condition that would qualify a Participant for a disability benefit under any long-term disability plan maintained by the Company or by the Subsidiary or affiliate by which he is employed; (ii) when used in connection with the exercise of an Incentive Stock Option following termination of employment, disability within the meaning of section 22(e)(3) of the Code; or (iii) such other condition as may be determined in the sole discretion of the Administrator to constitute Disability.

            (n)   "Eligible Recipient" means an employee, officer, director, advisor or consultant of the Company or of any Subsidiary or affiliate.

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