Exhibit 10.1

 

May 30, 2007

PERSONAL AND CONFIDENTIAL

Mark Carbeau
8023 Vantage Drive
San Antonio, TX 78230

                         RE:     Employment Separation and Release Agreement

Dear Mark:

          As discussed, I am confirming that your employment with Kinetic
Concepts, Inc. (“KCI”) will end on a date to be mutually agreed, but in no event
later than June 30, 2007 unless otherwise mutually agreed.  To assist you, we
are offering you a separation package that provides you additional benefits, if
you otherwise accept the terms and conditions set forth in this agreement.  You
have forty-five (45) days to consider the terms and whether you will sign this
agreement and seven (7) days to revoke the agreement after you sign it.

          KCI will pay you a lump sum payment, subject to applicable withholding
requirements, of Seven Hundred Thirty Thousand Dollars ($730,000).  This lump
sum payment will be paid to you within two weeks of your termination date and
will be paid in exchange for the promises, releases and consideration provided
by you in this agreement.  You will also be entitled to any accrued but unpaid
salary through your termination date, in accordance with normal KCI payroll
practices.  You will also be paid for any accrued but unused vacation as of your
termination date within two weeks of your termination date. You will also be
entitled to reimbursement by KCI for legal fees incurred in connection with this
agreement, up to an amount not to exceed five thousand dollars ($5,000).  You
waive any right to further employment or reinstatement with KCI and any and all
rights you may have as to compensation, bonuses, stock, stock options or other
benefits provided by KCI, except as specifically set forth in this agreement or
as required by the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). 
COBRA election materials will be provided to you upon your termination.

          You will be also provided up to $20,000 in outplacement assistance
(this assistance would be paid directly by the Company to an outplacement
provider on your behalf).

          Upon your termination, you will have 30 days to exercise any vested
stock options pursuant to the terms of the KCI 2004 Equity Plan, including the
30,000 stock options granted to you on November 6, 2006 which will accelerate
and become fully vested on your termination date as a result of your termination
other than for cause.

          You will also be provided with a target bonus opportunity of One
Hundred Thousand Dollars ($100,000) based on your achievement of the objectives
set forth on Appendix A hereto.  Assessment of your performance against these
objectives and payment of all, part or none of this bonus opportunity will be at
the sole discretion of the President and Chief Executive Officer of KCI;
provided that, if it is determined that the objectives set forth on Appendix A
hereto are substantially achieved, then you shall be entitled to the full target
bonus opportunity of One Hundred Thousand Dollars ($100,000); and provided
further that, the President and Chief Executive Officer of KCI shall make a good
faith, reasonable assessment of your performance against the objectives set
forth on Appendix A hereto.

          These payments will be paid in full satisfaction of any and all claims
you may have against KCI, its parent's, affiliates, subsidiaries, directors,
officers, employees, trustees, agents, stockholders, representatives and/or
attorneys (the “Releasees”).  With full understanding of the contents and legal
effects of this agreement, you individually and on behalf of your spouse, heirs,
executors, dependents and successors, and each of them (“Releasors”), hereby
knowingly and voluntarily waive and release any claim against the Releasees
relating to salary, commissions, wages, benefits, stock, stock options,
severance pay, bonuses, sick leave, workers’ compensation benefits, holiday pay,
vacation pay, personal injury, insurance, demands, rights, liens, agreements,
contracts, covenants, causes of action, attorneys’ fees, damages or any other
alleged liability arising out of or in any way connected with any claim or
controversy arising out of or relating to this agreement, your employment
relationship with KCI, your separation or resignation from employment, and any
other transaction, occurrence, act or omission prior to the date of this
agreement between you and the Releasees.

          This release also includes any cause of action you may have based upon
public policy, claims involving discrimination or harassment of any form
(including, without limitation, sex, race, national origin, age, religion or
disability), or retaliation.  This release further covers any claim you may have
under the Equal Pay Act, the Fair Labor Standards Act, the Family and Medical
Leave Act, Title VII of the Civil Rights Act of 1964, as amended, the Civil
Rights Act of 1991, the Texas Commission on Human Rights Act, the Americans with
Disabilities Act, Texas Workers’ Compensation Act or any other similar federal,
state or local law or regulation and any claim for salary, wages, commissions
severance pay, bonus, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefits.

          You knowingly and voluntarily waive any possible rights or claims you
may have against KCI under the Age Discrimination in Employment Act and similar
state or local statute, and you understand and agree that:

          (A)     this waiver is written in a manner that you understand;

          (B)     you are not waiving any claims against KCI that may arise
after this agreement is
                    executed;

          (C)     this Payment is in addition to any other consideration or
benefits owed to you by
                    KCI;

          (D)     you have the right and have had the opportunity to consult
with an attorney of your
                    choice regarding the terms of this agreement;

          (E)     you have forty-five (45) days to consider the terms of this
agreement and whether
                    you will execute it; and

          (F)     this agreement will only become effective or enforceable if
you execute it timely and
                    do not revoke it during the seven (7) day revocation period.

          The release of the Releasees is intended to be construed as broadly as
possible and as all encompassing as permitted by law and it is the intent of the
parties that this release shall fully and finally resolve any claims you have
against the Releasees.  To the extent that any claims are found not to be within
the terms of the release, you agree that those claims are assigned to KCI by
this agreement.

          You acknowledge that on or before your separation from KCI you will
return all property in your possession, custody or control which belongs to KCI,
including without limitation, keys, credit cards, computers, phone cards and any
of KCI’s documents, whether kept in paper or electronic format.  Neither you nor
anyone acting on your behalf have maintained copies of any of these documents.

          Further, in consideration for the payments made by KCI pursuant to
this agreement, and because of your close contact with many confidential affairs
of KCI, including all matters related to KCI’s business, such as information
concerning customers, plans to acquire prospective customers, business plans,
costs, profits, markets, operations, sales, trade secrets, and plans for future
developments and any other proprietary information which is not publicly
available or readily ascertainable by independent investigation, which
information was imparted to you because of and during your employment by KCI
(hereinafter collectively referred to as “Confidential Matters”), you agree at
all times to keep secret and confidential all Confidential matters of KCI. 
Additionally, you agree not to disclose any Confidential Matters to anyone
outside of KCI or otherwise use those Confidential Matters or your knowledge of
the Confidential Matters for your own benefit or for the benefit of any other
person other than KCI.

          In further consideration for the Payments made to you by KCI, for a
period of one (1) year after you execute this agreement you will not, without
the consent of the President and Chief Executive Officer of KCI, directly or
indirectly contact for the purpose of soliciting employment, solicit, employ or
otherwise engage any of the employees of KCI or any of its respective
subsidiaries or affiliates to leave his or her employment to work for any
business, individual, company, firm, corporation, or other entity then in
competition with the business of KCI or any subsidiary or affiliate of KCI (for
this purpose the term “employee” shall include any persons having such status
with regard to KCI or any of its respective subsidiaries and affiliates at any
time during the six (6) months preceding any solicitation in question).  You
acknowledge and agree that your engaging in the solicitation of employees
prohibited under this paragraph will disrupt, damage or impair KCI’s business or
the business of its present or future subsidiaries or affiliates, as the case
may be, and will necessarily involve the use of Confidential Matters which you
are prohibited from disclosing.

          Except as required by applicable law, the terms and conditions of this
agreement shall remain confidential and you shall not respond to or participate
in any public discussion or other publicity concerning or relating to
confidential matters associated with your employment, resignation or separation
from KCI.  You agree and covenant not to make any derogatory or negative
comments about KCI, its management, operations or financial condition and agree
to cooperate with KCI to the extent reasonably necessary regarding the
transition of matters worked on by you during your employment with KCI.

          You should direct any contact for references to Human Resources. If
contacted, Human Resources will provide the dates of your employment and job
title, with salary being verified if provided by the contacting entity.

          This agreement is being executed voluntarily and without duress or
coercion.  Acceptance of any Settlement Payment by you constitutes ratification
of the terms and conditions of this agreement.  This agreement is being entered
into to provide you assistance and settle potentially disputed claims, and it is
not an admission of any liability by KCI or any of the other Releasees for any
wrongdoing, nor shall it be construed as such.

          Any claim or controversy arising out of or relating to this agreement,
your employment with, resignation or separation from KCI, or arising out of any
other transaction or occurrence with the Releasees, shall be submitted to final
and binding arbitration in Bexar County Texas according to the procedures set
out in KCI's Arbitration Policy.

          With an adequate opportunity to consult with legal counsel, you have
knowingly and voluntarily waived any right to trial by jury of any dispute with
any of the Releasees, including without limitation, any dispute pertaining to or
relating to this agreement, and your employment separation from KCI,
notwithstanding contrary provisions of any federal, state or local law,
regulation or ordinance.  Notwithstanding the foregoing provisions, if you
breach any of the non-disclosure provisions of this agreement, KCI shall have
the right to seek immediate injunctive relief in the form of a temporary
restraining order or preliminary injunction, enjoining you from such further
breach of those provisions of this agreement, pending a final ruling by the
arbitrator.  This agreement is governed by the laws of the state of Texas,
without regard to conflict of laws rules.

          Please indicate your agreement to the foregoing terms by signing and
dating the agreement in the space provided below.  If you decide to revoke the
agreement, it must be in writing and be received by me at the above-address
before the close of business on the seventh day after execution of this
agreement.

We wish you the best of luck in your future endeavors.

Kinetic Concepts, Inc.

  /s/  Jim Cravens                             
Jim Cravens, Senior Vice President

Human Resources

 

 

 

                                                                       ACCEPTED
AND AGREED TO:

                                                                      
   /s/  Mark Carbeau                                                
                                                                      Mark
Carbeau
                                                                      Date:
     June 12, 2007                                           

 

Appendix A

Target Bonus Opportunity:  $100,000

Objective 1

Deliver current budgeted monthly US VAC revenue plus the budgeted Medicare
adjustments (approximately $1.5 million per month) for the months of April, May
and June, 2007.

Objective 2

Deliver  “reduced service date changes” project  identified by Bain. 
Specifically, roll out program to 1000 hospitals  in April and May (with the
remainder in June) that provides that customers will be billed for the time a
VAC is assigned to a patient (with the exception of a one-day leeway period).

If your employment terminates prior to June 30, 2007 per mutual agreement, the
full target opportunity may be paid out at the CEO’s discretion.