Document:

exhibit10_22.htm

    
      Exhibit
        10.22

       

      Kinetic
        Concepts, Inc. Compensation Policy for Outside Directors

      

      Adopted
        December 4, 2007

      

      Purpose:  The
        purpose of the Kinetic Concepts, Inc. Compensation Policy for Outside Directors
        (the "Policy") is to establish the compensation for Outside Directors, as
        defined herein, in a manner that aligns their interests with those of the
        shareholders of Kinetic Concepts, Inc. (the "Company") and is competitive
        with
        comparable companies.  Directors who are not Outside Directors will
        not  be compensated pursuant to the Policy.

      

      Effective
        Date:  The
        Policy was approved by the Board of Directors of the Company (the "Board")
        on
        December 4, 2007 and will become effective commencing for the 2008 calendar
        year, and, at that time, will replace any other policies previously in effect
        for this purpose.  The Policy will remain in effect until amended or
        terminated by the Board.

      

      Components:  Outside
        Directors' compensation will consist of the components described
        below.

      

      Annual
        Retainer:

      

      
        	
                 

              	
                An annual
                  retainer in
                  the amount of $45,000 will be paid in cash increments of $11,250
                  within 10
                  days following each regularly-scheduled quarterly Board meeting.
                  

              

      

      

      
        	
                Additional
                  Retainer for Chairperson and Committee Chairpersons:
                  

              

      

      

      
        	
                 

              	
                An
                  additional amount will be paid annually within 10 days following
                  each
                  annual meeting of shareholders in cash to the following Outside
                  Directors
                  as follows: 

              

      

       

      
        	
                Chairperson
                  of the Board

              	
                $35,000

              
	
                Chairperson
                  of the Audit Committee

              	
                $20,000

              
	
                Chairperson
                  of the Compensation Committee

              	
                $20,000

              
	
                Chairperson
                  of all other committees

              	
                $10,000

              

      

       

      
        	
                Payment
                  for Meetings: 

              

      

      

      
        	
                 

              	
                Meeting
                  Fee:  Each Outside Director will be paid a cash fee of
                  $1,500 for each Board meeting he or she attends in person or by
                  telephone,
                  other than a regularly-scheduled quarterly Board meeting, and for
                  each
                  committee meeting he or she attends in person or by telephone,
                  regardless
                  of whether such committee meeting is scheduled in conjunction with
                  a
                  regularly-scheduled quarterly Board meeting; provided, that an
                  Outside
                  Director may only be paid for a maximum of four meetings on any
                  given day.
                  

              

      

       

      
        	
                Annual
                  Stock Option Grant: 

              

      

      

      
        	
                 

              	
                On
                  the date of each annual meeting of shareholders, commencing with
                  the 2008
                  annual meeting of shareholders, each Outside Director (other than
                  the
                  Chairperson of the Board) will automatically receive a grant of
                  nonqualified stock options to purchase that number of shares of
                  Company
                  common stock with a Black-Scholes calculation value approximately
                  equal to
                  $100,000 ($200,000 for the Chairperson of the Board) and a per
                  share
                  exercise price equal to the fair market value of the Company common
                  stock
                  as of the date of such annual meeting. The actual number of shares
                  subject
                  to the option shall conclusively be determined by the CFO and set
                  forth in
                  the stock option award agreement. The term of the options will
                  be seven
                  years and the options will vest at a rate of 1/12th
                  of the grant at every three-month anniversary of the date of grant,
                  over a
                  period of three years.  If an Outside Director's service with
                  the Board terminates by reason of the Outside Director’s death or
                  disability the unvested portion of the options will vest in full
                  and the
                  options must be exercised within one year following the date of
                  termination.  If an Outside Director's service with the Board
                  terminates by reason of the Outside Director’s failure to be renominated
                  or reelected to the Board, then the unvested portion of the options
                  will
                  be forfeited at the time of termination, and the vested portion
                  of the
                  options must be exercised within one year following the date
                  termination.  In the event of termination for any other reason,
                  the unvested portion of the options will be forfeited at the time
                  of
                  termination, and the vested portion of the options must be exercised
                  within three months of termination.  These and the remaining
                  terms of the option grant will be governed by, but shall not supersede,
                  the terms of the applicable plan and award agreement pursuant to
                  which it
                  is granted. 

              

      

      

      
        	
                Initial
                  Stock Option Grant: 

              

      

      

      If
        an
        Outside Director first becomes an Outside Director at any time other than
        at an
        annual meeting of shareholders, such director shall receive the annual stock
        option grant described above that an Outside Director is entitled to receive
        at
        the annual meeting of shareholders.  However, with the unanimous
        approval of the Board, an initial grant (or grants) to an Outside Director
        may
        differ from the initial grant described herein.

      

      
        	
                Annual
                  Restricted Stock Award: 

              

      

      

      
        	
                 

              	
                At
                  each annual meeting of shareholders, commencing with the 2008 annual
                  meeting of shareholders, each Outside Director (other than the
                  Chairperson
                  of the Board) will automatically receive a grant of restricted
                  shares of
                  common stock of Company ("Restricted Shares") approximately equal
                  in value
                  to $100,000 ($200,000 for the Chairperson of the Board) as of the
                  date of
                  grant. The actual number of Restricted Shares shall be determined
                  by the
                  CFO and set forth in the Restricted Shares award agreement. The
                  Restricted
                  Shares granted will vest in full on the third anniversary of the
                  date of
                  the grant (the “Vesting Date”), provided that the Outside Director has
                  served continuously from the date of grant until the Vesting
                  Date.  If an Outside Director's service with the Board
                  terminates by reason of the Outside Director’s death, disability or
                  failure to be renominated or reelected to the Board, then any unvested
                  Restricted Shares will become vested at the rate of one-third of
                  the
                  Restricted Shares vesting for each full year the Outside Director
                  served
                  on the Board after the date of grant.  These and the remaining
                  terms of the Restricted Shares will be governed by the terms of
                  the
                  applicable plan and award agreement.

              

      

      

      Stock
        Ownership Requirement:
In accepting these awards stock options and Restricted Shares, each
        Outside Director agrees not to sell any shares of Company stock (including
        shares acquired as a result of the exercise of a stock option) granted hereunder
        (except to pay the exercise price of stock options granted hereunder or taxes
        generated as a result of equity grants under the Policy) until such time
        as his
        or her ownership of shares of Company stock equals or exceeds five times
        the
        then Annual Retainer, as conclusively determined by the CFO.  This
        stock ownership requirement may be waived by the Board, in its sole and absolute
        discretion, at any time, and from time to time.  In addition, this
        requirement shall terminate with respect to an Outside Director when such
        director ceases to serve on the Board.

      

      Director’s
        and Officer’s
        Insurance:  The Company will provide D&O insurance in the
        amount of $35,000,000 for the Outside Directors, unless such insurance is
        not
        available on commercially reasonable terms.

      

      Status
        as Outside Director:

      

      For
        purposes of the Policy, an Outside Director is any
        director:  (i)  who is not employed by the Company, and (ii)
        who satisfies such other criteria for Outside Directors as established from
        time
        to time by the Board.

      

      For
        purposes of the Policy, annual compensation and equity grants will be based
        on
        the date the Outside Director is elected to the Board or, in the case of
        existing Board members, the date on which the Policy is approved by the Board
        and becomes effective.  In the case of an existing Board member who
        becomes an Outside Director as a result of a change in status, the grants
        will
        be as of the date the director's status changes to Outside
        Director.

      

      Amendment
        or Termination of the
        Policy:  The Board reserves the right to amend or terminate the
        Policy at any time or waive any of the provisions generally or
        specifically.exhibit10_25.htm

    Exhibit
      10.25

    

    

    EXECUTIVE
      RETENTION AGREEMENT

    

              This
      Executive Retention Agreement (the "Agreement") is effective as of February
      21,
      2007 (the "Effective Date"), by and between Lynne D. Sly (the "Executive"),
      and
      Kinetic Concepts, Inc. ("KCI" or the "Company") (together the
      "Parties").

    

    RECITALS

    

                      WHEREAS,
      the Executive is presently employed by the Company as President Therapeutic
      Surfaces and has significant strategic and management responsibilities necessary
      to the continued successful operation of the Company’s business;

    

                      WHEREAS,
      the Board of Directors of the Company (the "Board") has determined that it
      is in
      the best interests of the Company and its stockholders to assure that the
      Company will have the continued dedication and objectivity of the
      Executive;

    

                      WHEREAS,
      the Board believes that it is imperative to provide the Executive with certain
      severance benefits upon the Executive’s termination of employment under the
      circumstances described herein that provide the Executive with the financial
      incentive and encouragement necessary to remain with the Company on a long-term
      basis.

    

                      NOW,
      THEREFORE, in
      consideration of the mutual covenants contained herein, the Parties agree as
      follows:

    

              1.     Term
      of
      Agreement.  The Company and the Executive agree that this
      Agreement will be in effect from the Effective Date until the termination of
      the
      Executive's employment with the Company as set forth in Section 2
      herein.

    

              2.     At-Will
      Employment.  While this Agreement is in effect, the Executive's
      employment with the Company shall continue to be at-will and, as such, may
      be
      terminated by the Executive or the Company at any time, for any reason and
      with
      or without advance notice, subject to the Company's severance obligations set
      forth herein.

    

              3.     Definition
      of
      Terms.  The following terms referred to in this Agreement shall
      have the following meanings:

    

                      (a)     Change
      in
      Control.  A Change in Control means the first to occur of any
      one of the following events: (i) consummation of 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 or Group
      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; or (iii) the shareholders of the
      Company approve a plan of complete liquidation or dissolution of the
      Company.

    

                      (b)     Qualifying
      Termination.  A "Qualifying Termination" shall mean the
      Executive's (i) termination of employment by the Company without "Cause;" or
      (ii) the Executive's resignation from employment for "Good Reason."

    

                      (c)     Cause.  "Cause"
      shall mean conduct involving one or more of the following:  (i) the
      substantial and continuing failure of the Executive to render services to the
      Company or any subsidiary or affiliate in accordance with the Executive’s
      obligations and position with the Company, subsidiary or affiliate; provided that the
      Company or any subsidiary or affiliate provides the Executive with adequate
      notice of such failure and, if such failure is capable of cure, the Executive
      fails to cure such failure within 30 days of the notice; (ii) dishonesty, gross
      negligence, or breach of fiduciary duty; (iii) the Executive'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 Executive and the Company or any subsidiary or affiliate
      on the other hand or a material breach of any Company policy.

    

                      (d)     Good
      Reason.  "Good Reason" shall mean one or more of the
      following:  (i) the material reduction of Executive’s duties and/or
      responsibilities, which is not cured within 30 days after the Executive provides
      written notice to the Company; provided, however,
      it
      shall not be considered Good Reason if, upon or following a Change in Control,
      the Executive's duties and responsibilities remain the same as those prior
      to
      the Change in Control but the Executive's title and/or reporting relationship
      is
      changed; (ii) the material reduction of Executive's base salary, other than
      across-the-board decreases in base salary applicable to all executive officers
      of the Company; or (iii) the relocation of the Executive to a business location
      in excess of fifty (50) miles from the Company’s headquarters in San
      Antonio.

    

                      (e)     Disability.  For
      purposes of this Agreement, "Disability" shall mean that the Executive is
      unable, with or without reasonable accommodation, to perform one or more
      essential functions of his or her position as an employee of the Company as
      the
      result of his or her incapacity due to physical or mental impairment for more
      than 90 days (not necessarily consecutive) in any 180-day period.

    

              4.     Severance
      Benefits Upon a
      Qualifying Termination.

    

                      (a)     Qualifying
      Termination in
      Connection with a Change in Control.  If the Executive
      experiences a Qualifying Termination upon or within 24 months following a Change
      of Control, then the Executive shall be entitled to receive the following
      severance benefits, which shall be in addition to any salary earned and vacation
      accrued up to and including the date of termination, as determined by the
      Company: (i) a severance payment in the amount of two times  the sum
      of the Executive's annual base salary plus annual target bonus, payable as
      a
      lump sum payment within five business days of the date the Executive executes
      and returns a full waiver and release of all claims in a form provided by the
      Company; and (ii) if the Executive timely elects COBRA health insurance
      continuation coverage, reimbursement of COBRA premiums for up to 18 months
      following the date of termination.

    

                      (b)     Qualifying
      Termination not
      in Connection with a Change in Control.  If the Executive
      experiences a Qualifying Termination that is not in connection with a Change
      of
      Control as described in Section 4(a) herein, then the Executive shall be
      entitled to receive the following severance benefits, which shall be in addition
      to any salary earned and vacation accrued up to and including the date of
      termination, as determined by the Company: (i) a severance payment in the amount
      of the Executive's annual base salary plus annual target bonus, payable as
      a
      lump sum payment within five business days of the date the Executive executes
      and returns a full waiver and release of all claims in a form provided by the
      Company; and (ii) if the Executive timely elects COBRA health insurance
      continuation coverage, reimbursement of COBRA premiums for up to 12 months
      following the date of termination.

    

              5.     Termination
      of Executive's
      Employment Other than a Qualifying Termination

    

                      (a)     Termination
      on Account of
      Executive's Disability or Death.  If the Company terminates the
      Executive’s employment as a result of the Executive’s Disability or due to the
      death of the Executive, then the Executive shall not be entitled to receive
      any
      severance benefits and shall only be entitled to receive any salary earned
      and
      vacation accrued up to and including the date of termination; provided, however,
      that this provision shall not have any effect upon any rights the Executive
      or
      his estate may have under the terms of any Company short or long-term disability
      policy or life insurance policy.

    

                      (b)     Termination
      for Cause or
      Resignation without Good Reason.  If the Executive is
      terminated for Cause or resigns from employment without Good Reason, then the
      Executive shall not be entitled to receive any severance benefits and shall
      only
      be entitled to receive any salary earned and vacation accrued up to and
      including the date of termination

    

              6.     Conditions
      to Severance
      Benefits.

    

                      (a)     No
      severance benefits shall be made under Sections 4(a) and (b) unless and until
      the Executive shall, in consideration of such benefits, execute a full waiver
      and release of all claims in a form provided by the Company.

    

                      (b)
           The Executive acknowledges and agrees that he or
      she is not entitled to any severance or change in control benefits provided
      under the terms of the 1997 KCI Severance Pay Plan or any similar agreement,
      plan or arrangement, other than the Company's stock option plans.

    

                      (c)     All
      payment of severance benefits under this Agreement shall comply with section
      409A of the Internal Revenue Code.

    

              7.     Successors.

    

                      (a)     Company’s
      Successors.  Any successor (or parent thereof) to the Company
      (whether direct or indirect and whether by purchase, lease, merger,
      consolidation, liquidation or otherwise) or to all or substantially all of
      the
      Company’s business and/or assets shall assume the obligations under this
      Agreement and agree expressly to perform the obligations under this Agreement
      in
      the same manner and to the same extent as the Company would be required to
      perform such obligations in the absence of a succession.  For all
      purposes under this Agreement, the term "Company" shall include any successor
      (or parent thereof) to the Company’s business and/or assets.

    

                      (b)     Executive’s
      Successors.  All rights of the Executive hereunder shall inure
      to the benefit of, and be enforceable by, the Executive’s personal or legal
      representatives, executors, administrators, successors, heirs, distributees,
      devisees and legatees.  Executive shall have no right to assign any of
      his obligations or duties under this Amended Agreement to any other person
      or
      entity.

    

              8.     Notice.

    

                      (a)     General.  Notices
      and all other communications contemplated by this Agreement shall be in writing
      and shall be deemed to have been duly given when personally delivered or when
      mailed by U.S. registered or certified mail, return receipt requested and
      postage prepaid.  In the case of the Executive, mailed notices shall
      be addressed to him at the home address which he most recently communicated
      to
      the Company in writing.  In the case of the Company, mailed notices
      shall be addressed to its corporate headquarters, and all notices shall be
      directed to the attention of its General Counsel.

    

                      (b)     Notice
      of
      Termination.  Any termination by the Company for Cause or by
      the Executive for Good Reason shall be communicated by a written notice of
      termination to the other party hereto.  Such notice shall indicate the
      specific termination provision in this Agreement relied upon and shall set
      forth
      in reasonable detail the facts and circumstances claimed to provide a basis
      for
      termination under the provision so indicated.

    

              9.     Arbitration.  All
      disputes relating to or arising out of this Agreement or otherwise in connection
      with the Executive's employment with, or termination from, the Company, shall
      be
      settled by binding arbitration in accordance with the Company's standard
      arbitration policy and procedures.

    

             10.    Miscellaneous
      Provisions.

    

                      (a)     Waiver.  No
      provision of this Agreement shall be amended, modified, waived or discharged
      unless the modification, waiver or discharge is agreed to in writing and signed
      by the Executive and by an authorized officer of the Company (other than the
      Executive).  No waiver by either party of any breach of, or of
      compliance with, any condition or provision of this Agreement by the other
      party
      shall be considered a waiver of any other condition or provision or of the
      same
      condition or provision at another time.

    

                      (b)     Choice
      of
      Law.  The validity, interpretation, construction and
      performance of this Amended Agreement shall be governed by the laws of the
      State
      of Texas.

    

                      (c)     Severability.  The
      invalidity or unenforceability of any provision or provisions of this Agreement
      shall not affect the validity or enforceability of any other provision hereof,
      which shall remain in full force and effect.

    

                      (d)     Employment
      Taxes.  All payments made pursuant to this Agreement will be
      subject to withholding of applicable income and employment taxes and other
      authorized deductions.

    

                      (e)     No
      Representations.  Each party acknowledges that it is not
      relying and has not relied on any promise, representation or statement made
      by
      or on behalf of the other party that is not set forth in this Amended
      Agreement.

    

                      (f)     Counterparts.  This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original, but all of which together will constitute one and the same
      instrument.

    

                      (g)     Prior
      Agreements.  Except as specifically set forth on Exhibit A
      hereto, this Agreement shall supersede all prior arrangements, whether written
      or oral, and understandings regarding the subject matter of this
      Agreement.

    

    

    

    

    [Signatures
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                      IN
      WITNESS WHEREOF, each of
      the Parties has executed this Agreement, in the case of the Company by its
      duly
      authorized officer, as of the day and year first above written.

    

    
      	
              COMPANY

            	
              KINETIC
                CONCEPTS,
                INC.

               

              
              

              By:    
                          /s/
                Catherine
                M.
                Burzik                       

                             
                    Catherine M. Burzik,                        

                               
                  President and Chief Executive Officer

              
              

            
	
              EXECUTIVE

            	
                           

                                   /s/
                Lynne D.
                Sly                                               

                               
                  Lynne D. Sly    

                                        

              
              

              Address:  
                  To the
                address as last set forth in the

                             
                    Company's
                employment
                records     

               

              
              

              SSN:      
                    On
                File

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