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95ESOP2.doc
KINETIC CONCEPTS, INC.
SENIOR EXECUTIVE STOCK OPTION PLAN
1. Purpose.
The Kinetic Concepts, Inc. Senior Executive Stock Option
Plan (the "Plan") is intended to promote the best interests of
the Company and its shareholders by enabling the Company to
attract and retain senior executives of exceptional ability as
Senior Executives, giving an incentive to senior executives of
the Company by providing them with an opportunity to participate
in the Company's growth and rewarding those senior executives who
contribute to the operating progress and earning power of the
Company.
2. Definitions.
The following terms shall have the following meanings
when used herein unless the context clearly otherwise requires:
(a) "Change of Control Event" means a merger or
consolidation to which the Company is a party (other than as the
surviving entity), the sale or transfer of a majority of the
outstanding shares of the Common Stock, the transfer of all or
substantially all of the assets of the Company, or the Company's
liquidation or dissolution.
(b) "Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.
(c) "Committee" means a committee of the Board of
Directors appointed by the Board of Directors consisting of at
least two (2) members of the Board of Directors, each of whom is
both a Disinterested Person and an Outside Director.
(d) "Company" means KINETIC CONCEPTS, INC., a
Texas corporation, any successor in interest to the Company.
(e) "Company Stock" means common stock, par value
$.001 per share, of the Company.
(f) "Disinterested Person" means a member of the
Board of Directors who has not, during the one year prior to
service on the Committee, or during his service on the Committee,
been granted or awarded equity securities pursuant to this Plan
or any other plan of the Company or any of its affiliates (except
such grants or awards permitted to be received by a
"disinterested person" under Rule 16b-3).
(g) "Effective Date" means October 27, 1995.
(h) "Eligible Senior Executive" means any Senior
Executive of the Company or any subsidiary who is determined (in
accordance with the provisions of Article 5 hereof) to be
eligible to be granted an Option.
(i) "Exercise Price" means the price at which a
share of Company Stock may be purchased by a particular
Participant pursuant to the exercise of an Option, as determined
in accordance with Article 8 hereof.
(j) "Good Cause" shall be deemed to exist if the
Eligible Senior Executive willfully breaches or habitually
neglects his duties or willfully violates reasonable and
substantial rules governing employee performance.
(k) "Option Instrument" means an instrument
delivered by the Company to the Participant setting forth the
specific terms and conditions of an Option as well as the
specific terms and conditions under which Company Stock may be
purchased by such Participant pursuant to the exercise of such
Option. Such Option Instrument shall be subject to the
provisions of this Plan (which shall be incorporated by reference
therein) and shall contain such provisions as the Committee, in
its sole discretion, may authorize.
(l) "Option" means the right of a Participant to
purchase shares of Company Stock in accordance with the terms of
this Plan and the Option Agreement between such Participant and
the Company. An "Option" is not intended, and shall not be
treated, as meeting the requirements of Section 422 of the Code.
(m) "Outside Director" shall have the meaning
given to it in the Section 162(m) Regulations.
(n) "Participant" means any Eligible Senior
Executive who has been granted an Option.
(o) "Rule 16b-3" shall mean Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of
1934, as amended.
(p) "Section 162(m) Regulation" shall mean the
regulations promulgated under Section 162(m) of the Code, as may
be amended from time to time.
3. Adoption and Administration of Plan.
This Plan shall be effective as of October 27, 1995.
The Plan shall be administered by, and grants under the Plan
shall be made by, the Committee. Any action taken by the
Committee with respect to the implementation, interpretation or
administration of this Plan shall be final, conclusive and
binding.
4. Shares of Company Stock Issued Pursuant to this Plan.
(a) The number of shares of Company Stock which
may be issued in the aggregate by the Company under this Plan
pursuant to the exercise of Options granted hereunder shall not
exceed 1,400,000 shares, which number may be increased only by a
resolution adopted by the Board of Directors of the Company.
Such shares of Company Stock may be issued out of the authorized
and unissued or reacquired Company Stock of the Company. Any
shares of Company Stock subject to an Option which expires, is
surrendered to the Company by the Participant or is terminated
unexercised as to such shares may once again be subject to an
Option under this Plan. To the extent there shall be any
adjustment pursuant to the provisions of Article 12 hereof, the
aforesaid number of shares shall be appropriately adjusted.
(b) Subject to adjustments pursuant to the
provisions of Article 12 hereof, the number of shares of the
Company Stock which may be covered by Options granted hereunder
to any Participant during any fiscal year shall not exceed
200,000 shares. If an Option is canceled, the canceled Option
shall continue to be counted toward such share limit for the year
granted.
5. Eligibility and Awards.
Only members of the Company's Executive Committee (as
determined by the Company's Chief Executive Officer) shall be
eligible to participate in this Plan and be granted Options
hereunder. The Committee shall determine, at any time and from
time to time thereafter, (a) which Eligible Senior Executives
shall be granted Options, (b) the number of shares of Company
Stock subject to each Option to be granted to an Eligible Senior
Executive, (c) the Exercise Price of each Option, and (d) the
other terms of each particular Option, including, without
limitation, the term during which such Option shall remain in
effect, which term shall not be greater than ten (10) years. The
members of the Committee are not eligible to receive options
under the Plan during their term on the Committee. The Chairman
of the Board of Directors and each non-employee member of the
Board of Directors are not eligible to receive options under the
Plan.
6. Grant, Exercise Rights and Termination of Options.
(a) As soon as practicable after an Option is
granted by the Committee, the appropriate officer or officers of
the Company shall give notice to such effect to the person
granted an Option, which notice shall be accompanied by a copy or
copies of the Option Instrument.
(b) An Eligible Senior Executive shall have an
Option and shall become a Participant under an Option Agreement
in accordance with the terms of this Plan, the terms of this
Option Instrument and on such other terms as the Committee shall
determine.
(c) Any Option granted pursuant to this Plan must
be granted within ten (10) years from the Effective Date.
(d) Only vested portions of an Option are
exercisable. An Option may be exercised in accordance with this
Plan and the Option Instrument and only if compliance with all
applicable federal and state securities laws can be effected. An
Option may be exercised by the payment to the Company of the
aggregate Exercise Price, as provided under Article 8 hereof, for
the shares of Company Stock to be purchased in accordance with
the terms of this Plan and the Option Instrument. Such Option is
not transferable or assignable, voluntarily or involuntarily, or
by operation of law (including, without limitation, the laws of
Bankruptcy), except that they are transferable by will or by the
laws of descent and distribution or pursuant to a qualified
domestic relations order (as defined in the Code).
(e) The Committee may delegate to the appropriate
officer of the Company the authority to prepare, execute and
deliver an Option Instrument reflecting an Option granted under
this Plan in substantially the form approved by the Committee;
provided, however, that any such Option Instrument shall be
consistent with the terms and conditions of this Plan.
7. Vesting.
The vesting of the Options granted under the Plan shall be
determined by the Committee and set forth in the Option
Instrument delivered to a Participant in connection with each
grant.
8. Exercise Price.
The determination of the Exercise Price shall be made
by the Committee in its sole discretion. The determination of
the Exercise Price may be determined by utilizing the average
daily closing price of the Company's Common Stock as reported on
the NASDAQ National Market System (the "Daily Closing Price")
during the thirty (30) day period prior to the date of grant or
the Daily Closing Price on the day following the date of grant.
The fair market value of the shares of Company Stock shall be
determined for purposes of this Plan by the Committee and such
determination by the Committee shall be final, conclusive and
binding upon each Participant and the Company for purposes of
this Plan.
9. Payment for Shares of Company Stock.
The Option Agreement may permit payment in cash or in
the equivalent fair market value of previously owned Company
Stock or any combination thereof. The Option Instrument may
further permit the Participant to elect to have the Company
withhold from the shares of Company Stock which the Participant
is entitled to receive pursuant to the exercise of an Option, an
amount of Company Stock having a value equal to the amount
required to be withheld for income taxes under the Code or
otherwise.
10. Costs and Expenses.
All costs and expenses with respect to the adoption,
implementation, interpretation and administration of this Plan
shall be borne by the Company; provided, however, that, except as
otherwise specifically provided in this Plan or the applicable
Option Agreement between the Company and a Participant, the
Company shall not be obligated to pay any costs or expenses
(including legal fees) incurred by any Participant in connection
with any Option or Option Agreement, this Plan or any Company
Stock held by any Participant.
11. No Prior Right of Award.
Nothing in this Plan shall be deemed to give any Senior
Executive of the Company, or his legal representatives or
assigns, or any other person or entity claiming under or through
him, any contract or other right to participate in the benefits
of this Plan. NOTHING IN THIS PLAN SHALL BE CONSTRUED AS
CONSTITUTING A COMMITMENT, GUARANTEE, AGREEMENT OR UNDERSTANDING
OF ANY KIND OR NATURE THAT THE COMPANY SHALL CONTINUE TO EMPLOY
OR OTHERWISE ENGAGE ANY INDIVIDUAL (WHETHER OR NOT A
PARTICIPANT). THIS PLAN SHALL NOT EFFECT THE RIGHT OF THE
COMPANY TO TERMINATE THE EMPLOYMENT OR OTHER ENGAGEMENT OF ANY
INDIVIDUAL (WHETHER OR NOT A PARTICIPANT) AT ANY TIME AND FOR ANY
REASON WHATSOEVER. No change of a Participant's duties as a
Senior Executive of the Company shall result in a modification of
the terms of any rights of such Participant under this Plan or
any Option Instrument executed by such Participant.
12. Changes in Capital Structure.
Subject to any required action by the shareholders of
the Company and the provisions of the Texas Business Corporations
Act, the number of shares of Company Stock which has been
authorized or reserved for issuance hereunder (whether such
shares are unissued, reacquired or subject to an option that
expired, was surrendered or terminated unexercised as to such
shares) as well as the Exercise Price then existing with respect
to each share of Company Stock then subject to this Plan, shall
be proportionately adjusted for (i) any division or combination
of any of the shares of capital stock of the Company, (ii) any
dividend payable in shares of capital stock of the Company or
(iii) any reclassification of shares of capital stock of the
Company.
13. Amendment or Termination of Plan.
Except as otherwise provided herein, this Plan may be
amended or terminated in whole or in part by the Board of
Directors of the Company (in its sole discretion); provided,
however, to the extent required to comply with the requirements
of Rule 16b-3, as then in effect, or the Section 162(m)
Regulations, any amendment to the Plan shall be subject to the
approval of such amendment by the shareholders of the Company.
No such action shall adversely affect or alter any right or
obligation with respect to any Option or Option Instrument then
in effect, except to the extent that any such action shall be
required or desirable (in the opinion of the Company or its
counsel) in order to comply with any rule or regulation
promulgated or proposed under the Code by the Internal Revenue
Service.
14. Burden and Benefit.
The terms and provisions of this Plan shall be binding
upon, and shall inure to the benefit of, each Participant and
such Participant's executors and administrators, estate, heirs
and personal and legal representatives.
15. Choice of Law.
This Plan shall be governed by, and construed in
accordance with, the laws of the State of Texas without
application of conflict of laws principles.
This Plan was approved by the Company's Board of Directors
on this 5th day of December, 1996 to be effective as of the
Effective Date.
/s/ JAMES R. LEININGER, M.D. /s/ FRANK A. EHMANN
___________________________ _____________________________
James R. Leininger, M.D. Frank A. Ehmann
/s/ PETER A. LEININGER, M.D. /s/ WENDY L. GRAMM,PH.D.
___________________________ _____________________________
Peter A. Leininger, M.D. Wendy L. Gramm, Ph.D.
/s/ RAYMOND R. HANNIGAN /s/ BERNHARD T. MITTEMEYER,M.D.
___________________________ ___________________________
Raymond R. Hannigan Bernhard T. Mittemeyer, M.D.
/s/ SAM A. BROOKS
___________________________
Sam A. Brooks