EXHIBIT 10.3
STOCK OPTION AGREEMENT
Dated as of: August 1, 2002
To: Xxxxxxx X. Xxxxxxxxx
Pursuant to resolutions of the Board of Directors of Somanetics
Corporation, a Michigan corporation (the "Company"), the Company hereby grants
to you an option (the "Option") to purchase up to One Hundred Thousand (100,000)
Common Shares, par value $.01 per share, of the Company (the "Shares") at $2.30
per Share, upon the terms and conditions contained in this Stock Option
Agreement.
1. The Option herein granted may not be transferred by you otherwise
than by will or by the laws of descent and distribution, and during your
lifetime the Option is exercisable only by you.
2. (a) Subject to the other terms of this Option, you may exercise the
Option in accordance with the following schedule:
(i) Between the date of this Option and August 1 2003, none of
the Shares may be purchased.
(ii) Commencing August 1, 2003, one-third (1/3) of the Shares
may be purchased.
(iii) Commencing August 1, 2004, an additional one-third (1/3)
of the Shares may be purchased.
(iv) Commencing August 1, 2005, the final one-third (1/3) of
the Shares may be purchased.
Notwithstanding anything in this Option to the contrary, the Option shall be
exercisable to purchase all of the Shares immediately, to the extent not already
purchased, (i) ten (10) business days before the consummation of a "Transaction"
as defined in Paragraph 16 of the Amended and Restated Somanetics Corporation
1997 Stock Option Plan (the "1997 Plan"), which definition is incorporated into
this Option by reference and shall bind you and the Company as if set forth in
full in this Option, and (ii) upon the acquisition by any person, entity or
group (as defined pursuant to Section 13(d) of the Securities Exchange Act of
1934, as amended) of 51% or more of the Company's outstanding voting securities.
(b) The Option shall expire (to the extent not previously
exercised) on the earliest of (1) August 1, 2012, (2) the date you cease to be
an employee of the Company or a subsidiary because of termination for cause, and
(3) (A) only with respect to the portion of this Option, if any, that is not
exercisable at the date of termination of your employment with the Company or a
subsidiary, the date you cease to be an employee of the Company or a subsidiary,
and (B) with respect to the remaining portion of this Option, if any, August 1,
2012.
3. The Option shall be exercised by giving a written notice of exercise
to the Treasurer of the Company. Such notice shall specify the number of Shares
to be purchased and shall be accompanied by payment in full (in the manner set
forth in Paragraph 10 of the 1997 Plan, which paragraph is incorporated into
this Option by reference and shall bind you and the Company as if set forth in
full in this Option) of the aggregate option price for the number of Shares
purchased. The Company shall cause the Common Shares underlying the Option to be
registered with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, on the appropriate form and as required
under any applicable state or foreign securities or Blue Sky laws. Such exercise
shall be effective only upon the actual receipt of such written notice and of
the option price, and no rights or privileges of a shareholder of the Company in
respect of any of the Shares issuable upon the exercise of any part of the
Option shall inure to you, or any other person entitled to exercise the Option,
unless and until certificates representing such Shares shall have been issued,
and prior to such issuance no adjustment shall be made for dividends,
distributions or other rights in respect of such Shares, except as provided in
paragraphs 6 and 7.
4. If upon exercise of the Option there shall be payable by the Company
or a subsidiary any amount for income tax withholding, in the Company's Board of
Directors' sole discretion, either you shall pay such amount to the Company, or
the number of Shares delivered by the Company to you shall be appropriately
reduced, to reimburse the Company for such payment. The Company's Board of
Directors may, in its sole discretion, permit you to satisfy such withholding
obligations, in whole or in part, by electing to have the number of Shares
delivered or deliverable by the Company upon exercise of this Option
appropriately reduced, or by electing to tender Common Shares back to the
Company subsequent to exercise of the Option, to reimburse the Company for such
income tax withholding. The Company's Board of Directors may make such other
arrangements with respect to income tax withholding as it shall determine.
5. It is understood and agreed that nothing contained in this
Agreement, nor any action taken by the Board, shall confer upon you any right
with respect to the continuation of your employment by the Company or any
subsidiary, nor interfere in any way with the right of the Company or a
subsidiary to terminate your employment at any time.
6. The provisions set forth in Paragraph 16 of the 1997 Plan are
incorporated into this Option by reference and shall bind you and the Company as
if set forth in full in this Option. References in such Paragraph 16 to
"Participant", "stock option" and "Plan" shall be deemed references to you, this
Option and this Option, respectively, for all purposes under this Option.
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7. Subject to Paragraph 16 of the 1997 Plan, the number and type of
shares subject to the Option and the option price with respect to the Option
shall be subject to such adjustment as the Committee (as defined in Paragraph
1(b) of the 1997 Plan, which definition is incorporated into this Option by
reference and shall bind you and the Company as if set forth in full in this
Option), in its discretion, deems appropriate to reflect such events as stock
dividends, stock splits, recapitalizations, mergers, statutory share exchanges
or reorganizations of or by the Company, such adjustments to be the same as the
adjustments such Committee deems appropriate for options outstanding under the
1997 Plan. However, no fractional shares shall be issued pursuant to the Option,
and any fractional shares resulting from such adjustments shall be eliminated
from this Option.
Very truly yours,
SOMANETICS CORPORATION,
a Michigan corporation
By: /s/ Xxxxx X. Xxxxxxx
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Its: President and CEO
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The above is agreed to and accepted.
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
Dated: August 1, 2002
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