EXHIBIT 10.1 AMENDED AND RESTATED AGREEMENT AMONG SHAREHOLDERS

 

 

 

                                                                   EXHIBIT 10.1

 

 

               AMENDED AND RESTATED AGREEMENT AMONG SHAREHOLDERS

 

         This Amended And Restated Agreement Among Shareholders (this

"Agreement"), dated as of January 26, 2005, by and among Kinetic Concepts,

Inc., a Texas corporation (the "Company"), and each of the shareholders of the

Company identified on the signature pages hereto and their lawful successors

and assigns (each, a "Signatory" and collectively, the "Signatories") amends

and restates in its entirety that certain Agreement Among Shareholders, dated

November 5, 1997, as amended by (1) that certain Waiver and Consent, effective

as of September 27, 2002, (2) that certain Joinder and Amendment Agreement,

dated as of June 25, 2003, (3) that certain Amendment and Waiver, dated as of

August 11, 2003, (4) that certain Amendment, Acknowledgment and Waiver, dated

as of February 17, 2004 and (5) that certain Waiver of Registration Rights,

dated as of June 7, 2004 (as so amended, the "Prior Shareholder Agreement"),

effective as of the date hereof (the "Effective Date").

 

         WHEREAS, the Company and each of the Signatories are parties to the

Prior Shareholder Agreement or are hereby joined as parties to the Agreement

with the consent of each prior party evidenced by its entering into this

Agreement; and

 

         WHEREAS, the Company and the Signatories wish to amend and restate the

Prior Shareholder Agreement and enter into this Agreement in its stead;

 

         NOW THEREFORE, in consideration of the foregoing and of the mutual

covenants hereinafter set forth, the parties hereto agree that the Prior

Shareholder Agreement is hereby amended and restated in its entirety to read as

follows, effective as of the Effective Date:

 

SECTION 1.   Definitions.   The following terms shall have the following

meanings for the purposes of this Agreement:

 

            1.01 "Affiliated Shareholder" means with respect to any Fremont

Associate, any other Fremont Associate, and with respect to any RCBA Associate,

any other RCBA Associate.

 

            1.02 "Common Stock" or "shares of Common Stock" means the common

stock, par value $0.001 per share, of KCI, (i) held by the Shareholders as of

the date hereof or (ii) issued as a dividend or other distribution with respect

to, or in exchange for or in replacement of such shares of Common Stock.

Notwithstanding the foregoing, Common Stock shall not include any securities

sold by a Person to the public either pursuant to a registration statement or

Rule 144 or sold in a private transaction in which the transferor's rights

under this Agreement are not assigned in accordance with the terms hereof.

 

            1.03 "Dr. Leininger" means Dr. James R. Leininger, the founder of

KCI.

 

            1.04 "Form S-3" means such form under the Securities Act as is in

effect on the date hereof or any successor registration form under the

Securities Act subsequently adopted by the Securities and Exchange Commission

(the "SEC") which permits inclusion or incorporation of substantial information

by reference to other documents filed by the Company with the SEC as well as a

continuous offering pursuant to Rule 415 under the Securities Act.

 

            1.05 "Fremont Associates" means those Persons listed on Schedule

1.05.

 

            1.06 "KCI" or the "Company" means Kinetic Concepts, Inc.

 

            1.07 "Person" means any individual, firm, corporation, partnership,

limited liability company, trust, joint venture, pension fund, governmental

authority, or other entity.

 

            1.08 "RCBA Associates" means those Persons listed on Schedule 1.08.

 

            1.09 "Securities Act" means the Securities Act of 1933, as amended,

and the rules and regulations promulgated thereunder.

 

            1.10 "Shareholder" means the Principal Shareholders and their

Affiliated Shareholders party to this Agreement, as well as any Person to whom

a Shareholder transfers shares of Common Stock if such Person (i) agrees in

writing to become a party to this Agreement and to be bound by its terms

without limitation or qualification, (ii) specifies in such writing the address

and facsimile number at which notices may be given pursuant to this Agreement,

and (iii) delivers a copy of such writing to KCI and the Principal Shareholders

within 10 days after the transfer of such shares of Common Stock.

 

            1.11 "Principal Shareholders" means, collectively, the Dr.

Leininger, the Fremont Associates and the RCBA Associates.

 

            1.12 Terms and Usage Generally. The definitions in this Section 1

shall apply equally to both the singular and plural forms of the terms defined.

Whenever the context may require, any pronoun shall include the corresponding

masculine, feminine, and neuter forms. All references herein to Sections and

Schedules shall be deemed to be references to Sections of and Schedules to this

Agreement unless the context shall otherwise require. All Schedules attached

hereto shall be deemed incorporated herein as if set forth in full herein. The

words "include," "includes," and "including" shall be deemed to be followed by

the phrase "without limitation." The words "hereof," "herein," and "hereunder"

and words of similar import when used in this Agreement shall refer to this

Agreement as a whole and not to any particular provision of this Agreement.

References to a Person are also to its permitted successors and permitted

assigns.

 

SECTION 2.   Registration Rights.

 

            2.01 Shelf Registration.

 

                 (a) Mandatory Registration. Subject to the limitations herein,

upon the written request of any of the Principal Shareholders, the Company

shall prepare and file with the SEC as promptly as practicable a registration

statement on Form S-3 pursuant to Rule 415 that includes for resale all of the

shares of Common Stock requested to be included by the requesting Shareholders.

 

                 (b) Limitations and Suspension. Notwithstanding the foregoing,

the Company shall not be obligated to effect a registration (or may suspend

sales) if the Company furnishes to the Shareholders a certificate signed by an

officer of the Company stating that, in his or her good faith judgment, there

is in existence material undisclosed information or events which, if disclosed,

could be detrimental to the Company or its shareholders. In such event the

Company shall have the right to defer the initial filing of the registration

statement or suspend sales thereunder; provided, that the Company may not take

any such action more than once in any twelve (12) month period and that all of

the Company's executive officers and directors shall be precluded from trading

in the Company's capital stock during such period; and provided further, that

the Company shall not defer the initial filing of the registration statement or

suspend sales thereunder pursuant to this paragraph (b) for more than thirty

(30) days in such twelve (12) month period.

 

            2.02 Underwritten Take-down.

 

                 (a) Subject to paragraph (f) below, during calendar 2005:

 

                     (i) A Principal Shareholder then holding shares of Common

     Stock may make one (1) written request to KCI for an underwritten

     take-down from the shelf registration of at least thirty-three percent

     (33%) of the aggregate shares of Common Stock then held by such Principal

     Shareholder and its Affiliated Shareholders (a "Take-Down").

 

                     (ii) A request for a Take-Down under this Section 2.02(a)

     will not count as a Take-Down unless the Shareholders electing to

     participate in it are able to sell at least seventy-five percent (75%) of

     the shares requested to be included in the Take-Down.

 

                     (iii) If each of the Principal Shareholders has

     registration rights under this Agreement which have not expired under

     Section 2.02(f), a Take-Down made by the Principal Shareholders pursuant

     to this Section 2.02(a) must be made with the concurrence of the

     representatives of two of the three Principal Shareholders, whether or not

     they or their Affiliated Shareholders elect to participate in the proposed

     offering. If one or more of the Principal Shareholders has registration

     rights under this Agreement which have expired under Section 2.02(f), any

     Principal Shareholder with such registration rights may request a

     Take-Down.

 

                     (iv) If one or more Principal Shareholders request a

     Take-Down under this Section 2.02(a), such Principal Shareholders shall

     give three (3) business days written notice specifying the timing and

     principal terms and conditions of the proposed Take-Down (the "Notice") to

     the other Principal Shareholders with registration rights that have not

     expired (the "Other Shareholders"), and such Other Shareholders with their

     Affiliated Shareholders may join the requesting Principal Shareholder in

     such Take-Down by giving written notice to the Company and the requesting

     Principal Shareholder within one (1) business day after receiving the

     Notice.

 

                  (b) Subject to paragraph (f) below, at any time after

December 1, 2005:

 

                     (i) The Principal Shareholders then holding shares of

     Common Stock, collectively and not individually, may make one (1) written

     request to KCI for a Take-Down of at least two million (2,000,000) shares

     (as adjusted for any stock splits, dividends, and the like) of Common

     Stock then held in aggregate by the Principal Shareholders; provided,

     however, that the Company will not be required to effect a Take-Down

     contemplated by this provision prior to January 1, 2006.

 

                     (ii) A request for a Take-Down under this Section 2.02(b)

     will not count as a Take-Down unless the Principal Shareholders electing

     to participate in it are able to sell at least seventy-five percent (75%)

     of the shares of Common Stock requested to be included in the Take-Down.

 

                     (iii) A Take-Down made by the Principal Shareholders

     pursuant to this Section 2.02(b) must be made with the concurrence of the

     representatives of each of the Principal Shareholders with registration

     rights that have not expired under Section 2.02(f), whether or not they or

     their Affiliated Shareholders elect to participate in the proposed

     offering.

 

                 (c) If, in connection with a Take-Down the managing

underwriters advise KCI in writing that, in their opinion, the number of

securities in such offering exceeds the number that can be sold in an orderly

manner within a price range acceptable to the Shareholders and to KCI, then the

number of such shares that the managing underwriters believe that may be sold

in such offering shall be allocated to the Shareholders on a pro rata basis in

accordance with the number of shares requested for inclusion in such Take-Down.

 

                 (d) In connection with any Take-Down, the investment bankers

and managers for the offering will be selected by the selling Shareholders,

subject to the approval of KCI, which will not be unreasonably withheld.

 

                 (e) KCI shall pay the expenses described in Section 2.06 for

any registration pursuant to this Section 2.02.

 

                 (f) Notwithstanding anything to the contrary set forth herein,

no Shareholder shall be entitled to any registration rights pursuant to this

Section 2.02 with respect to the shares held by a Shareholder as of the date

that such shares become eligible for resale pursuant to Section 144(k) under

the Securities Act; provided, however, that this paragraph (f) shall not be

applicable to (1) Dr. Leininger so long as he holds 1,000,000 shares of Common

Stock, (2) Fremont Associates so long as Fremont Associates collectively holds

1,000,000 shares of Common Stock or (3) RCBA Associates so long as RCBA

Associates collectively holds 1,000,000 shares of Common Stock (in each case,

as adjusted for ay stock splits, dividends and the like).

 

            2.03 Piggyback Registration Rights.

 

                 (a) If at any time KCI shall determine to proceed with the

preparation and filing of a registration statement (other than a registration

statement on Form S-4, Form S-8, or other limited purpose form) under the

Securities Act in connection with KCI's or another securityholder's proposed

offer and sale of Common Stock or equity securities convertible into Common

Stock, KCI will give written notice of its determination to the Shareholders at

least twenty (20) days prior to filing the registration statement. Upon the

written request from a Shareholder given within ten (10) days after receipt of

any such notice from KCI, KCI will include the number of shares requested by

the Shareholder in such registration statement ("Piggyback Registration").

 

                 (b) If a Piggyback Registration is an underwritten primary

registration on behalf of KCI and the managing underwriters advise KCI in

writing that, in their opinion, the number of total securities to be registered

in such offering exceeds the number that can be sold in an orderly manner

within a price range acceptable to KCI, then the number of securities that the

managing underwriter believes may be sold in such offering shall be allocated

first to the shares being offered by KCI for inclusion in the registration

statement, then to the shares of the Shareholders and those of any other

shareholders ("Other Shareholders") who have registration rights under the

Investors' Rights Agreement (the "Investors' Rights Agreement"), dated August

11, 2003, including any amendments thereto as of the date of this Agreement, by

and among KCI, the Investors and the Sponsors (as those terms are defined in

the Investors' Rights Agreement) and the Management Equity Plan effective

October 2, 1997 submitted for registration, such that the number of shares

requested to be included by such shareholders shall be reduced pro rata among

the Shareholders and the Other Shareholders in accordance with the number of

shares they then hold that are entitled to registration rights.

 

                 (c) If a Piggyback Registration is an underwritten secondary

registration on behalf of the shareholders of KCI's securities and the managing

underwriters advise KCI in writing that, in their opinion, the number of total

securities to be registered in such offering exceeds the number that can be

sold in an orderly manner within a price range acceptable to the shareholders

initially requesting such registration, then the number of securities that the

managing underwriter believes may be sold in such offering shall be allocated

among the Shareholders and any Other Shareholders who are requesting shares to

be included in such registration statement such that the number of shares

requested to be included by such shareholders shall be reduced pro rata in

accordance with the number of shares they then hold that are entitled to

registration rights.

 

                 (d) KCI shall pay the expenses described in Section 2.06 for

registration statements filed pursuant to this Section 2.03.

 

                 (e) Notwithstanding anything to the contrary set forth herein,

no Shareholder shall be entitled to any registration rights pursuant to this

Section with respect to the shares held by a Shareholder as of the date that

such shares become eligible for resale pursuant to Section 144(k) under the

Securities Act; provided, however, that this paragraph (e) shall not be

applicable to (1) Dr. Leininger so long as he holds 1,000,000 shares of Common

Stock, (2) Fremont Associates so long as Fremont Associates collectively hold

1,000,000 shares of Common Stock or (3) RCBA Associates so long as RCBA

Associates collectively hold 1,000,000 shares of Common Stock (in each case, as

adjusted for ay stock splits, dividends and the like).

 

            2.04 Registration Procedures. Whenever a Shareholder has

requested that KCI, pursuant to the provisions of Section 2.01, Section 2.02 or

Section 2.03, as applicable, effect the registration of Common Stock under the

Securities Act, KCI will:

 

                 (a) upon request pursuant to Section 2.01(a) hereof, prepa