Exhibit 10.3

 

Award Number:                                                         
Grantee Name:                                                         

FORM OF KINETIC CONCEPTS, INC.
2004 EQUITY PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT

          THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Award Agreement”) is
made and entered into as of _______________, 200__ (the “Date of Grant”), by and
between Kinetic Concepts, Inc., a Texas corporation (the “Company”), and
[_________________________] (the “Grantee”).  Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company’s 2004 Equity Plan
(the “Plan”).  Where the context permits, references to the Company or any of
its Subsidiaries or affiliates shall include the successors to the foregoing.

          Pursuant to the Plan, the Administrator has determined that the
Grantee is to be granted Restricted Stock Units, subject to the terms and
conditions set forth in the Plan and herein, and hereby grants such Restricted
Stock Units.  Each Restricted Stock Unit represents a hypothetical Common Share
and will, at all times the Award Agreement is in effect, be equal in value to
one Common Share.

          1.     Grant of Restricted Stock Units.  The Company hereby grants to
the Grantee [_______] Restricted Stock Units (the "Award") on the terms and
conditions set forth in the Award Agreement and as otherwise provided in the
Plan.

          2.     Terms and Conditions of Award.  The Award shall be subject to
the following terms, conditions and restrictions:

                  (a)     Vesting.  TheRestricted Stock Units shall vest at such
time or times,
                           and/or upon the occurrence of such events as are set
forth in Appendix A
                           hereto.

                  (b)     Nontransferability.  Restricted Stock Units and any
interest therein, may
                            not be sold, transferred, pledged, hypothecated,
assigned or otherwise
                            encumbered or disposed of, except by will or the
laws of descent and
                            distribution, to the extent applicable.  Any attempt
to dispose of any
                            Restricted Stock Units in contravention of any such
restrictions shall be
                            null and void and without effect.

                  (c)     Rights as a Shareholder.  Restricted Stock Units
represent only
                            hypothetical shares; therefore, the Grantee is not
entitled to any of the
                            rights or benefits generally accorded to
stockholders with respect
                            thereto, except upon vesting, to the extent provided
in Paragraph 2(d).

                  (d)     Benefit Upon Vesting.  Upon the vesting of a
Restricted Stock Unit, the
                            Grantee shall be entitled to receive, within 30 days
of the date on which
                            such Restricted Stock Unit vests, an amount in cash,
Shares or a
                            combination of the foregoing, as determined by the
Administrator in its
                            sole discretion equal, per Restricted Stock Unit, to
the sum of (1) the
                            Fair Market Value of a Share on the date on which
such Restricted Stock
                            Unit vests and (2) the aggregate amount of cash
dividends paid with
                            respect to a Share during the period commencing on
the Date of Grant
                            and terminating on the date on which such unit
vests.

                  (e)     Effect of Conduct Constituting Cause; Termination of
Employment o
                            Service; or Change in Control.

                           (i)     If at any time (whether before or after
termination of employment
                                     or service) the Administrator determines
that the Grantee has
                                     engaged in conduct that would constitute
Cause for termination,
                                     the Administrator may provide for the
immediate forfeiture of the
                                     Award (including any securities, cash or
other property issued
                                     upon settlement of the Award), whether or
not the Restricted Stock
                                     Units have vested.  Any such determination
by the Administrator
                                     shall be final, conclusive and binding on
all persons.

                          (ii)     If the Grantee’s employment with or service
to the Company and
                                     any Subsidiary terminates for any reason,
then the Grantee shall
                                     immediately forfeit any rights to the
Restricted Stock Units that
                                     have not vested as of the date of
termination, if any, the Grantee
                                     shall have no further rights thereto and
such Restricted Stock Units
                                    shall immediately terminate; provided that
if a Subsidiary ceases to
                                    be a Subsidiary of the Company, then, as of
such date of cessation,
                                    the Grantee's employment with or service to
the Subsidiary shall
                                    be deemed to have terminated.

                         (iii)     Upon the occurrence of a Change in Control,
all unvested
                                     Restricted Stock Units shall immediately
vest, unless the Award is
                                     either assumed or an equitable substitution
is made therefor.  In
                                     addition, if the Grantee’s employment with
or service to the
                                     Company and any Subsidiary thereof is
terminated other than for
                                     Cause within 24 months following a Change
in Control, all
                                     outstanding unvested Restricted Stock Units
shall immediately
                                     vest.

                  (f)     Taxes.  Pursuant to Section 14 of the Plan, the
Company (or Subsidiary
                           or affiliate, as the case may be) has the right to
require the Grantee to
                           remit to the Company (or Subsidiary or affiliate, as
the case may be) in
                           cash an amount sufficient to satisfy any federal,
state and local tax
                           withholding requirements related to the Award.  With
the approval of
                           the Administrator, the Grantee may satisfy the
foregoing requirement by
                           electing to have the Company withhold from delivery
Shares (to the
                           extent applicable) or by delivering Shares, in each
case, having a value
                           equal to the aggregate required minimum tax
withholding to be collected
                           by the Company or any Subsidiary or affiliate
thereof.  Such Shares shall
                           be valued at their Fair Market Value on the date on
which the amount of
                           tax to be withheld is determined.   Fractional share
amounts shall be
                           settled in cash.

          3.     Adjustments.  The Award and all rights and obligations under
the Award Agreement are subject to Section 5 of the Plan.

          4.     Notice.  Whenever any notice is required or permitted
hereunder, such notice shall be in writing and shall be given by personal
delivery, facsimile, first class mail, certified or registered with return
receipt requested.  Any notice required or permitted to be delivered hereunder
shall be deemed to have been duly given on the date that it is personally
delivered or, whether actually received or not, on the third business day after
mailing or 24 hours after transmission by facsimile to the respective parties
named below.

                      If to the Company:          Kinetic Concepts, Inc.
                                                              Attn.:  Chief
Financial Officer
                                                              8023 Vantage Drive
                                                              San Antonio, TX 
78230
                                                              Phone:  (210)
255-6456
                                                              Fax:  (210)
255-6125

                      If to the Grantee:            [Name of Grantee]
                                                              [Address]
                                                              ______________________
                                                              Facsimile: 
_____________

                      Either party may change such party’s address for notices
by duly giving notice pursuant hereto.

          5.     Compliance with Laws.

                  (a)     Shares (to the extent payable hereunder) shall not be
issued pursuant to
                           the Award granted hereunder unless the issuance and
delivery of such
                           Shares pursuant thereto shall comply with all
relevant provisions of law,
                           including, without limitation, the Securities Act of
1933, as amended,
                           the Exchange Act and the requirements of any stock
exchange upon
                           which the Shares may then be listed, and shall be
further subject to the
                           approval of counsel for the Company with respect to
such compliance.
                           The Company shall be under no obligation to effect
the registration
                           pursuant to the Securities Act of 1933, as amended,
of any interests in
                           the Plan or any Shares to be issued hereunder or to
effect similar
                           compliance under any state laws.

                  (b)     All certificates for Shares delivered under the Plan
(to the extent
                           applicable) shall be subject to such stock-transfer
orders and other
                           restrictions as the Administrator may deem advisable
under the rules,
                           regulations, and other requirements of the Securities
and Exchange
                           Commission, any stock exchange upon which the Shares
may then be
                           listed, and any applicable federal or state
securities law, and the
                           Administrator may cause a legend or legends to be
placed on any such
                           certificates to make appropriate reference to such
restrictions.  The
                           Administrator may require, as a condition of the
issuance and delivery of
                           certificates evidencing Shares pursuant to the terms
hereof, that the
                           recipient of such Shares make such agreements and
representations as
                           the Administrator, in its sole discretion, deems
necessary or desirable.

          6.     Protections Against Violations of Agreement.  No purported
sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift,
transfer in trust (voting or other) or other disposition of, or creation of a
security interest in or lien on, any of the Shares underlying the Award by any
holder thereof in violation of the provisions of the Award Agreement, the Plan
or the Articles of Incorporation or the Bylaws of the Company, will be valid,
and the Company will not transfer any such Shares on its books nor will any such
Shares be entitled to vote, nor will any dividends be paid thereon, unless and
until there has been full compliance with such provisions to the satisfaction of
the Company.  The foregoing restrictions are in addition to and not in lieu of
any other remedies, legal or equitable, available to enforce said provisions.

          7.     Failure to Enforce Not a Waiver.  The failure of the Company to
enforce at any time any provision of the Award Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.

          8.     Governing Law.  The Award Agreement shall be governed by and
construed according to the laws of the State of Texas without regard to its
principles of conflict of laws.

          9.     Incorporation of the Plan.  The Plan, as it exists on the date
of the Award Agreement and as amended from time to time, is hereby incorporated
by reference and made a part hereof, and the Award and the Award Agreement shall
be subject to all terms and conditions of the Plan.  In the event of any
conflict between the provisions of the Award Agreement and the provisions of the
Plan, the terms of the Plan shall control, except as expressly stated
otherwise.  The term “Section” generally refers to provisions within the Plan
(except where denoted otherwise); provided, however, the term “Paragraph” shall
refer to a provision of the Award Agreement.

         10.     Amendments.  The Award Agreement may be amended or modified at
any time, but only by an instrument in writing signed by each of the parties
hereto.

         11.     Agreement Not a Contract of Employment.  Neither the Plan, the
granting of the Award, the Award Agreement nor any other action taken pursuant
to the Plan shall constitute or be evidence of any agreement or understanding,
express or implied, that the Grantee has a right to continue to be employed by,
or to provide services as a director, consultant or advisor to, the Company, any
Subsidiary or affiliate thereof for any period of time or at any specific rate
of compensation.

         12.     Authority of the Administrator.  The Administrator shall have
full authority to interpret and construe the terms of the Plan and the Award
Agreement.  The determination of the Administrator as to any such matter of
interpretation or construction shall be final, binding and conclusive.

         13.     Binding Effect.  The Award Agreement shall apply to and bind
the Grantee and the Company and their respective permitted assignees or
transferees, heirs, legatees, executors, administrators and legal successors.

         14.     Tax Representation.  The Grantee has reviewed with his or her
own tax advisors the federal, state, local and foreign tax consequences of the
transactions contemplated by the Award Agreement.  The Grantee is relying solely
on such advisors and not on any statement or representations of the Company or
any of its agents.  The Grantee understands that he or she (and not the Company)
shall be responsible for any tax liability that may arise as a result of the
transactions contemplated by the Award Agreement.

         15.     Acceptance.  The Grantee hereby acknowledges receipt of a copy
of the Plan and the Award Agreement.  Grantee has read and understands the terms
and provisions thereof, and accepts the Award subject to all the terms and
conditions of the Plan and the Award Agreement.

 

                                                   [SIGNATURE PAGE FOLLOWS]

 

 

          IN WITNESS WHEREOF, the parties hereto have executed and delivered the
Award Agreement on the day and year first above written.

                                                                KINETIC
CONCEPTS, INC.

 

                                                                By:  
                                                                     
                                                                Name: 
                                                                
                                                                Title: 
                                                                  

                                                                GRANTEE

                                                                Signature: 
                                                            
                                                                Name: 
                                                                  
                                                                Address:  
                                                              
                                                                                
                                                              
                                                                Telephone No.: 
                                                    
                                                                Social Security
No.:                                              

 

 

Number of                                

Date of Grant                          

Restricted StockUnits                       

 

 

___________     

_________________      

 

 

APPENDIX A

[This Appendix sets forth the procedure for determining whether and when the
Restrictions on the Award will lapse.  The Restrictions on the Award will lapse
according to the following schedule, subject to acceleration as described
below:]

 

Lapse Date,

Portion of Award with respect to which

Anniversary of Grant Date

                    Restricted Lapse                   

2010

1/3

2011

1/3

2012

1/3

 

Performance Based Acceleration

 

[Acceleration of lapsing is based on the Company’s performance against the prior
fiscal year’s Consolidated Financial Metric (“CFM”) for the Company, which will
be calculated by the Compensation Committee in accordance with the Company’s
Annual Incentive Bonus Guidelines (the “AIB”).  For each 25% increase in the CFM
over the prior fiscal year’s CFM, lapsing of Restrictions will be accelerated by
1 year for the entire Award, as follows:

 

% Improvement

First Lapse Date,

Second Lapse Date

Third Lapse Date

over prior year's CFM

Anniv. of Grant Date

Anniv. of Grant Date

Anniv. of Grant Date

25%

2009

2010

2011

50%

2008

2009

2010

75%

2007

2008

2009

 

The Compensation Committee will determine the Company’s CFM performance against
the prior fiscal year’s CFM on a quarterly basis at the next regularly scheduled
Board meeting following the end of each fiscal quarter.  The CFM will be
calculated in the same manner as under the AIB, with such adjustments for
special and non-recurring items as the Compensation Committee deems
appropriate.  The quarterly CFM measurement will be made based on performance
over the last twelve months ending with the coinciding fiscal quarter.  If a CFM
target is achieved after the date to which lapsing would be accelerated, then
the Restrictions on the corresponding portion of the Award will lapse on the
date that the Compensation Committee makes the determination that the CFM target
has been achieved.]

[Acceleration of lapsing will be based on the following performance criteria, as
determined by the Compensation Committee of the Board of Directors.  Restricted
Stock Units may be subject to complete forfeiture and vesting may ensue after
employee's services cease.]