EXHIBIT 99.1
CHANGE IN CONTROL, INVENTION, CONFIDENTIALITY, NON-COMPETE AND NON-
SOLICITATION AGREEMENT
This Change in Control, Invention, Confidentiality, Non-Compete and
Non-Solicitation Agreement (the "Agreement") is entered into as of June __, 2005
between Somanetics Corporation, a Michigan corporation (the "Company"), and
[Xxxxxxx X. Xxxxxx] [Xxxxxxx X. Xxxxxxxx] [Xxxx Xxx Xxxxxx] [Xxxxxx X. Xxxxxx]
[Xxxxxx X. Xxxxxxx] ("Employee").
RECITALS
A. Employee is currently the Company's Vice President[, Finance,
Controller and Treasurer] [, Research and Development] [, Communications and
Administration and Secretary] [, Medical Affairs] [, Operations], and is a key
employee of the Company.
B. The Company and Employee desire to provide for severance payments to
Employee upon specified terminations of employment in connection with a change
in control and to protect the Company's technology, proprietary information and
personnel.
Therefore, the Company and Employee agree as follows:
1. Change in Control Severance.
1.1. Right to Receive Benefits. Employee shall receive the severance
benefits described in Section 1.2 if (1) a "Change in Control" (as defined
in Section 1.3) occurs during the "Period" (as defined in Section 1.4),
and (2) at any time during the period beginning 90 days before the Change
in Control occurs and ending one year after the Change in Control occurs,
Employee terminates Employee's employment with the "Entity" (as defined in
Section 1.5) for "Good Reason" (as defined in Section 1.6) or the Entity
terminates Employee's employment without "Cause" (as defined in Section
1.9).
1.2. Severance Benefits. If Employee is entitled to the severance
benefits under Section 1.1, the Company shall pay Employee an amount in
cash equal to one times Employee's annualized base salary at the rate in
effect on the date of this Agreement, or, if higher, Employee's base
salary in effect immediately before the earlier of Employee's termination
of employment or the date the Change in Control occurs. This severance
benefit shall be paid to Employee in one undiscounted lump sum within 10
business days after the date all of the conditions to receiving the
severance benefit, described in Section 1.1, are met. The Company may
withhold from such payment all federal, state, city and other taxes to the
extent such taxes are required to be withheld by applicable law.
1.3. "Change in Control". For purposes of this Agreement, a "Change in
Control" shall mean:
1.3.1. Acquisition of Shares. the acquisition by any individual,
entity or group (a "Person"), including any "person" within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
beneficial ownership within the meaning of Rule
13d-3 promulgated under the Exchange Act, of 40% or more of either (1) the then
outstanding Common Shares of the Company (the "Outstanding Common Shares") or
(2) the combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the "Outstanding Voting
Securities"); excluding, however, the following: (A) any acquisition directly
from the Company (excluding any acquisition resulting from the exercise of an
exercise, conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the Company), (B)
any acquisition by the Company, (C) any acquisition by an employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition by any corporation pursuant to
a transaction which complies with clauses (1), (2) and (3) of Section 1.3.3;
provided further, that for purposes of clause (B), if any Person (other than the
Company or any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company) shall become the
beneficial owner of 40% or more of the Outstanding Common Shares or 40% or more
of the Outstanding Voting Securities by reason of an acquisition by the Company,
and such Person shall, after such acquisition by the Company, become the
beneficial owner of any additional Outstanding Common Shares or any additional
Outstanding Voting Securities and such beneficial ownership is publicly
announced, such additional beneficial ownership shall constitute a Change in
Control;
1.3.2. Change in Board Control. individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of such Board; provided that any individual who becomes a
director of the Company subsequent to the date hereof whose election, or
nomination for election, by the Company's shareholders was approved by the vote
of at least a majority of the directors then comprising the Incumbent Board
shall be deemed a member of the Incumbent Board;
1.3.3. Reorganization, Merger or Asset Sale. the consummation of a
reorganization, merger or consolidation, or sale or other disposition of all or
substantially all of the assets, of the Company (a "Corporate Transaction");
excluding, however, a Corporate Transaction pursuant to which (1) all or
substantially all of the individuals or entities who are the beneficial owners,
respectively, of the Outstanding Common Shares and the Outstanding Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than 60% of, respectively, the outstanding
Common Shares, and the combined voting power of the outstanding securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Common Shares and the Outstanding Voting Securities, as the case may
be, (2) no Person
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(other than: the Company; any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company; the corporation resulting from such Corporate Transaction;
and any Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 40% or more of the
Outstanding Common Shares or the Outstanding Voting Securities, as the
case may be) will beneficially own, directly or indirectly, 40% or more
of, respectively, the outstanding Common Shares of the corporation
resulting from such Corporate Transaction or the combined voting power of
the outstanding securities of such corporation entitled to vote generally
in the election of directors and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate
Transaction; or
1.3.4. Dissolution or Liquidation. the consummation of a plan of complete
liquidation or dissolution of the Company.
1.4. "Period". For purposes of this Agreement, the "Period" will begin on the
date of this Agreement and end on the first to occur of (1) Employee's death,
(2) Employee's "Disability" (as defined in Section 1.6), (3) 90 days after the
termination of Employee's employment (voluntarily or involuntarily and with or
without good reason or cause) if such termination occurs before a Change in
Control, and (4) three years after the date of this Agreement. Notwithstanding
the foregoing, (1) if Employee becomes entitled to the severance benefit under
Section 1.1, the provisions of this Section 1 will continue until Employee is
paid the severance benefit pursuant to this Section 1, and (2) the other
provisions of this Agreement are not limited by the Period and will survive the
end of the Period.
1.5. "Entity". For purposes of this Agreement, the "Entity" shall mean (1) in
connection with a Change in Control that results in an entity other than the
Company being a successor to the Company's business, such new entity (the
"Successor") beginning on the date of the Change in Control, but the Successor
shall be the Entity only if the Successor is either bound by the terms of this
Agreement as a successor to the Company or offers to employ Employee beginning
on the date of the Change in Control on such terms that would not constitute
"Good Reason" for termination of Employee's employment if imposed by the
Company, and (2) in all other cases, the Company. For purposes of this Section
1.5, Employee shall not be deemed to have terminated Employee's employment with
the Entity for "Good Reason" and the "Entity" shall not be deemed to have
terminated Employee's employment without Cause if (1) a Successor who has
purchased all or substantially all of the Company's assets has offered to employ
Employee on such terms that would not constitute "Good Reason" for termination
of Employee's employment if imposed by the Company, (2) Employee refuses such
employment, and (3) the Company terminates Employee's employment for any reason
or for no reason.
1.6. "Good Reason". Termination of Employee's employment for "Good Reason"
means Employee's termination of employment with the Entity before or after a
Change in Control as a result of (1) any decrease by the Entity (without
Employee's consent) in Employee's compensation,
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incentives and benefits from Employee's compensation, incentives and
benefits immediately before such Change in Control; provided that
Employee's bonus shall not be deemed to have decreased if Employee has a
substantially similar opportunity to earn a bonus as Employee did in the
last full fiscal year before the Change in Control, (2) a substantial
change by the Entity (without Employee's consent) in Employee's duties or
responsibilities from Employees duties and responsibilities immediately
before such Change in Control, (3) any requirement by the Entity (to which
Employee does not consent) that Employee change Employee's primary place
of business to be outside the metropolitan Detroit area, or (4) if the
Change in Control results in a new entity being a successor to the
Company's business, the failure of the new entity to assume the Company's
obligations under this Agreement. "Good Reason" will not include
Employee's death, "Disability" (as defined below) or "Retirement" (as
defined below), or Employee's resignation other than as provided in the
preceding sentence.
1.7. "Disability". For purposes of this Agreement, "Disability" means (A)
if Employee is covered by a Company-, Successor- or affiliate-provided
disability insurance policy, the definition of disability contained in,
and entitling Employee to benefits under, that policy, or (B) if Employee
is not covered by such a policy, Employee's inability, whether physical or
mental, to perform the normal duties of his position for six consecutive
months.
1.8. "Retirement". For purposes of this Agreement, "Retirement" means
Employee's retirement from the Entity in accordance with the Entity's
normal policies.
1.9. Without "Cause". The Entity's termination of Employee's employment
without "Cause" means a termination other than for (1) Employee's
continued failure (after notice and at least 30 days to cure such failure)
to make a good faith effort to perform Employee's employment duties; (2)
any breach by Employee of the provisions of Section 2, or (3) Employee's
conviction of a felony involving dishonesty or fraud.
2. Invention, Confidentiality, Non-Competition, and Non-Solicitation. In
consideration of both Employee's initial and continued employment with the
Company, of the consideration paid to Employee in connection with Employee's
employment with the Company and of the positions that Employee now holds or may
in the future hold, which may include having access to, or learning information
concerning, the business activities of the Company and acquiring confidential or
otherwise proprietary facts and information concerning technological and other
activities of the Company, Employee agrees to the provisions of this Section 2.
2.1. Inventions.
2.1.1. Company Ownership. Any and all improvements, discoveries,
innovations, inventions, conceptions and/or reductions to practice,
"Confidential Information" (as defined in Section 2.2.2), problem
solutions and, in general, all technological conceptions and
developments, whether patentable or not, (collectively referred to
in this Agreement as "Inventions") which Employee makes or comes to
know of, either alone or with others, during the term of Employee's
employment or other association with the Company, and relating in
any way to the business interests or business activities of the
Company, whether
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past or present or future, or relating to its technological or product
research and/or development programs, are understood and agreed to be, and
are by this Agreement expressly made to be, the exclusive property of the
Company.
2.1.2. Disclosure to the Company. Employee shall disclose promptly and
fully to the Company and to its attorneys all Inventions, and Employee
shall, when requested to do so either before or after the termination of
Employee's employment with the Company, formally assign and convey to the
Company Employee's entire right, title and interest in and to all
Inventions; Employee shall assist the Company and its agents in preparing
patent applications, both United States and foreign, covering any
Invention; Employee shall promptly review, execute and deliver all said
applications and assignments of the same to the Company, and shall, as
promptly as reasonably possible, generally give all information and
testimony, sign all papers and do all things which may be needed or
requested by the Company, to the end that the Company may obtain, extend,
reissue, maintain and enforce United States and foreign patents covering
said Inventions.
2.1.3. Company Expenses. It is and shall be the sole responsibility of the
Company to bear all expenses incurred in obtaining, extending, reissuing,
maintaining and enforcing the aforementioned patents and in vesting and
perfecting title thereto in the Company and also to pay all reasonable
expenses which Employee incurs at the Company's request.
2.2. Confidentiality.
2.2.1. Obligation to Keep Confidential. Except as authorized in writing by
the Company, Employee shall not at any time, either prior to, during or
after Employee's association with the Company, disseminate, disclose or
otherwise appropriate, directly or indirectly, any Confidential
Information of the Company of which Employee gains knowledge prior to,
during or after termination of such employment, and Employee shall retain
all such information in trust in a fiduciary capacity for the sole use and
benefit of the Company. Employee acknowledges that the Confidential
Information of the Company is valuable, special and unique to its
business, that on such Confidential Information the Company's business
depends, that such Confidential Information is proprietary to the Company,
and that the Company wishes to protect such Confidential Information by
keeping it secret and confidential for the sole use and benefit of the
Company. Employee shall take all steps necessary, and all steps reasonably
requested by the Company, to ensure that all such Confidential information
is kept secret and confidential for the sole use and benefit of the
Company.
2.2.2. "Confidential Information". Confidential Information of the Company
means information known or apprehended by the Company and/or developed by
or for the Company, by any person, including Employee, which is not
otherwise explicitly, consciously, properly, legally and generally known
in any industry in which the Company is or may become engaged.
Confidential Information
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includes, but is not limited to, such information, whether now possessed
or hereafter obtained, concerning plans, marketing and sales methods,
materials, processes, procedures or devices utilized or considered by the
Company, or by consultants, technicians, employees, or medical clinics or
other medical organizations with which the Company deals (or organizations
or other entities or persons associated with such medical clinics or other
medical organizations), or by contractors, representatives and customers
of the Company, plans for development of new products, services and
expansion into new areas or markets, internal operations, trade secrets,
Inventions, patent applications, trade names, trademarks, service marks,
copyrights, proprietary information and other confidential information of
any type, together with all written, graphic, and other materials relating
to all or any part of the same (collectively, "Confidential Information").
2.2.3. Property of the Company. All records and other materials pertaining
to the Confidential Information, whether developed by Employee or not,
shall be and remain the exclusive property of the Company. Upon
termination of Employee's association with the Company or at any other
time the Company may in writing so request, Employee shall promptly
deliver to the Company all materials concerning any Invention or
Confidential Information, copies thereof and any other materials of the
Company which are in Employee's possession or under Employee's control,
and Employee shall not make or retain any copy or extract thereof.
2.3. Non-Compete. During the term of Employee's employment with the Company and
for a period of one year following the termination of Employee's employment with
the Company (voluntarily or involuntarily and with or without good reason or
cause), Employee shall not, directly or indirectly, himself, or through or for
any individual, person or entity wherever located:
2.3.1. Competing Activities. Engage in any activities or perform any
services in connection with, or sell, any products that are patches for
ventricular restoration, cerebral oximeters, related sensors, or other
products sold by the Company during the term of Employee's employment with
the Company; or
2.3.2. Employee or Owner of Competitor. Be employed by, consult with, own
any capital stock of, or have any financial interest of any kind in, any
individual, person or entity, wherever located, that manufactures,
assembles or sells patches for ventricular restoration, cerebral
oximeters, related sensors, or other products sold by the Company during
the term of Employee's employment with the Company; provided that Employee
may own, for investment purposes only, up to 3% of the stock of any
publicly traded business whose stock is either listed on a national stock
exchange or on The Nasdaq National Market, if Employee is not otherwise
affiliated with such business; or
2.3.3. Solicit Customers. Solicit any entity that, to Employee's
knowledge, was a customer of the Company within the year before that date
Employee's
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employment with the Company terminates to supply patches for
ventricular restoration, cerebral oximeters, related sensors, or
other products sold by the Company during the term of Employee's
employment with the Company to such customer.
2.4. Non-Solicitation. During the term of Employee's employment with the
Company and for a period of five years following the termination of
Employee's employment with the Company (voluntarily or involuntarily and
with or without good reason or cause), Employee shall not, directly or
indirectly, himself, or through or for any individual, person or entity
wherever located (1) solicit or attempt to hire any person who is then
employed by, or is a consultant to, the Company or who, to Employee's
knowledge, was employed by, or was a consultant to, the Company at any
time during the year before the termination of Employee's employment with
the Company, or (2) encourage any such person to terminate his or her
employment or consultation with the Company.
2.5. Equitable Remedies. Sections 2.1, 2.2, 2.3, and 2.4 are intended,
among other things, to protect the Confidential Information described in
Section 2.2.2 and the Company's technology, proprietary information and
personnel, and Employee acknowledges and agrees that the covenants and
undertakings contained in this Section 2 relate to matters which are of a
special, unique and extraordinary character, and a violation or any of
their terms will cause irreparable injury to the Company, the amount of
which will be extremely difficult, if not impossible, to estimate or
determine and which cannot be adequately compensated by monetary damages
alone. Therefore, Employee agrees that if Employee breaches or threatens
to breach any of those sections, in addition to any other rights and
remedies which may be available to the Company under this Agreement, under
the applicable law or at law or equity, the Company shall be entitled, as
a matter of course, to obtain an injunction, restraining order, or other
equitable relief from any court of competent jurisdiction, restraining any
violation or threatened violation of any such terms by Employee and/or by
such other persons and entities as the court shall order.
2.6. Company's Right to Adapt and Develop. It is understood and agreed
that the Company shall have the royalty-free, worldwide, assignable right
to use, or to adapt and to develop in any way, all Inventions conceived or
made by Employee, whether or not patentable, including, but not limited
to, processes, methods, formulae, and techniques, as well as improvements
thereof or know-how related thereto, or not to use them at all should the
Company so choose.
3. Representation. Employee represents and warrants that Employee's
performance of this Agreement does not and will not breach any agreement or duty
that Employee has to anyone else to keep in confidence confidential information
belonging to others.
4. Survival. Notwithstanding anything in this Agreement to the contrary, the
provisions of this Agreement shall survive the termination of Employee's
employment or other association with the Company, shall be fully effective
thereafter, and shall be binding upon Employee and upon Employee's heirs,
executors, administrators and other legal representatives.
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5. Employment Status. Nothing in this Agreement changes the present status of
Employee's continued employment with the Company or otherwise affects Employee's
present employment status with the Company, which shall remain employment "at
will".
6. Modification. This Agreement is the complete agreement between the parties
with respect to its subject matter and may be modified only by a written
instrument executed by Employee and the Company.
7. Governing Law; Choice of Forum. The laws of the State of Michigan shall
govern this Agreement, its construction, and the determination of any rights,
duties or remedies of the parties arising out of or relating to this Agreement.
The parties acknowledge that the United States District Court for the Eastern
District of Michigan or the Michigan Circuit Court for the County of Oakland
shall have exclusive jurisdiction over any case or controversy arising out of or
relating to this Agreement and that all litigation arising out of or relating to
this Agreement shall be commenced in the United States District Court for the
Eastern District of Michigan or in the Oakland County (Michigan) Circuit Court.
8. Severability. The provisions of this Agreement will be deemed severable,
and if one or more of the provisions contained in the Agreement shall, for any
reason, be held invalid, illegal or unenforceable in any respect, (1) such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision has never been contained in this Agreement,
and (2) such provisions may be changed to the extent reasonably necessary to
make the provision, as so changed, legal, valid and binding. If, moreover, any
one or more of the provisions contained in this Agreement shall for any reason
be held to be excessively broad as to time, duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it so as to
be enforceable to the extent compatible with the applicable law as it shall then
appear.
9. No Waiver. No waiver of any breach of any agreement or provision contained
in this Agreement shall be deemed a waiver of any preceding or succeeding breach
of such agreement or provision or of any other agreement or provision contained
in this Agreement. No extension of time for performance of any obligation or
acts shall be deemed an extension of time for the performance of any other
obligation or act.
10. Successor Obligations. This Agreement will be binding upon and inure to
the benefit of the Company and its successors and assigns. This Agreement will
be binding upon Employee and will inure to Employee's benefit, but Employee may
not assign this Agreement or delegate any of his rights or obligations under
this Agreement.
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IN WITNESS WHEREOF, the Company and Employee have signed this Agreement as
of the date set forth in the introductory paragraph of this Agreement.
SOMANETICS CORPORATION
By: ___________________________________________
Xxxxx X. Xxxxxxx
Its: President and Chief Executive Officer
_______________________________________________
[Xxxxxxx X. Xxxxxx] [Xxxxxxx X. Xxxxxxxx] [Xxxx
Xxx Xxxxxx] [Xxxxxx X. Xxxxxx] [Xxxxxx X.
Xxxxxxx]
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