Document:

<PAGE>   1
                                                                    EXHIBIT 10.3

                    RESTATED 2001 INCENTIVE COMPENSATION PLAN

PURPOSE: The purpose of the 2001 Incentive Compensation Plan is to motivate and
retain key employees in order to maximize the performance of the Company against
pre-defined operating objectives.

BACKGROUND: Somanetics pursues a compensation program that includes salary,
incentive compensation, stock options and standard benefits (e.g. health
insurance) to achieve a market competitive package to attract, motivate and
retain key employees. The Incentive Compensation Plan is a core component of the
overall compensation package for Somanetics employees and has been offered since
1996. The program affords employees the opportunity to be financially rewarded
based on actual results and affords the Company the benefit of conserving cash
when business objectives are not achieved.

PLAN SUMMARY: All non-officer, non-commissioned, non-manufacturing full-time
employees participate in the 2001 Incentive Compensation Plan. Potential
incentive compensation under the Plan is based on each participant's position,
salary level, individual performance against pre-defined objectives and Company
performance against pre-defined objectives. One half of actual incentive
compensation is paid quarterly based on year-to-date sales results versus the
2001 Sales Plan and the remaining one half is paid at the end of the fiscal year
based on performance against a variety of pre-defined individual and Company
objectives.

PLAN DETAIL:

         PLAN A: All non-officer, non-commissioned, non-manufacturing full-time
employees participate in Plan A of the program. This portion of the Plan
represents 50% of the incentive compensation potential for participants. The
basis for incentive compensation for this portion of the program is the
Company's year-to-date results versus the 2001 Sales Plan evaluated quarterly.
In the event that year-to-date performance versus the 2001 Sales Plan is 85%,
no payment is made under this portion of the Plan. Actual payment, if any, is
made in the month following the completion of each fiscal quarter, except for
payment relating to sales >100% to Plan. Over achievement, if any, is measured
and paid at year-end, subject to the Company's achievement of its Net Loss Plan.

         PLAN B. Certain employees participate in Plan B of the program. This
portion of the Plan represents the other 50% of the incentive compensation
potential for these participants. The basis for incentive compensation for this
portion of the program is the individual's performance against pre-defined
objectives and the Company's performance versus the 2001 Sales Plan and Net Loss
Plan. An individual must achieve at least 50% of his or her individual
objectives to be considered for any incentive compensation under this portion of
the Plan. To the extent that actual sales results are at least 85% of the 2001
Sales Plan and the Company achieves its year-end Net Loss Plan, individuals
receive incentive compensation in relation to their achievement of pre-defined
individual objectives. Measurement, and actual payment, if any, is made at
year-end.

         PLAN C. Employees who participate in Plan A, but do not participate in
Plan B, participate in Plan C. This portion of the Plan represents the other 50%
of the incentive compensation potential for these participants. The basis for
incentive compensation for this portion of the program is the individual's
performance against pre-defined objectives and the Company's achievement of its
year-end net loss plan. If the Company achieves its year-end Net Loss Plan, an
individual must achieve at least 50% of his or her individual objectives to be
considered for any incentive compensation under this portion of the Plan.
Measurement, and actual payment, if any, is made at year-end.

<PAGE>   2
                2001 INCENTIVE COMPENSATION PAYMENT CALCULATIONS

PLAN A:  QUARTERLY PAYMENT

     YTD% TO SALES PLAN    X    FACTOR    X    SALARY    X    RATE    X    .125

         FACTOR DETERMINATION:
<TABLE>
<CAPTION>
                  % TO SALES PLAN                    FACTOR
                  ---------------                    ------
<S>                                                  <C>
                          85%                            0
                      85% to 90%                        .5
                      90% to 95%                       .75
                      95% to 100%                       .9
                        100%+                          1.0
</TABLE>

PLAN B:  YEAR-END PAYMENT:

     % GOALS X SALARY X RATE X % SALES PLAN X % NET LOSS PLAN X .5

PLAN C:  YEAR-END PAYMENT:

% GOALS    X    SALARY    X    RATE    X    .5

Note: The President and/or the Compensation Committee reserve the right to
adjust actual incentive compensation paid to individuals under Plan B or Plan C
by +/- 25%.

<PAGE>   3

                     2001 PROGRAM ADMINISTRATION GUIDELINES

-    This Plan shall be administered by the Company's Compensation Committee,
     which is authorized to interpret this Plan, to make, amend and rescind
     rules and regulations relating to this Plan, to make awards under this
     Plan, and to make all other determinations under this Plan necessary or
     advisable for its administration.

-    All determinations, interpretations and constructions made by the
     Compensation Committee shall be final and conclusive.

-    The Board reserves the right to pay bonuses to participants beyond those,
     if any, called for by the Plan.

-    Rights under this Plan may not be transferred, assigned or pledged.

-    Nothing in this Plan confers any participant any right to continued
     employment and does not interfere with the Company's right to terminate an
     employee's employment at any time, at will.

-    Revenue and net income will be as reported in the Company's Form 10-Qs and
     10-K.

-    A participant must be a full-time employee in good standing at the time of
     actual payment in order to receive any payment under the Plan. No payment
     will be made to any person who leaves the full-time employ of the Company
     before the payment date. And, no payment will be made to any person who is
     subject to a formal, written performance action plan.

-    Any over achievement payment earned due to actual revenue exceeding Plan
     revenue will be paid after the end of the fiscal year based on final
     year-end sales results versus the 2001 Sales Plan.

-    Participation in this Plan will be suspended during periods of unapproved
     absences beyond the allowable amount, long-term disability periods, or any
     other extended leave of absence. Actual payment reductions and/or
     discontinuation of participation in the program for the remainder of the
     fiscal year will be at the discretion of the President and/or the
     Compensation Committee.

-    Earned payments under Plan A, except for payments relating to over
     achievement, are intended to be paid after the close of each fiscal quarter
     based on year-to-date performance versus the 2001 Sales Plan. Payments
     under Plan B and Plan C, and any over achievement relating to Plan A, shall
     be paid at year-end. In either case, actual payment will be made as soon as
     practicable after sales and net income are determined and the payment
     confirmed by the Compensation Committee.

-    Payments under Plan A will be made for "catching up" on a year-to-date
     basis. For example, if the Company finishes the first quarter below Plan,
     participants can recoup their full first quarter bonus not earned at the
     conclusion of the first quarter by "catching up" by the end of the second
     quarter.

Dated:  March 5, 2001<PAGE>   1
                                                                    EXHIBIT 10.4

March 29, 2001

Mr. Adam Gurney
KINGSBRIDGE CAPITAL LIMITED
c/o Kingsbridge Corporate Services Limited
Main Street
Kilcullen, County Kildare
Republic of Ireland

Dear Adam,

Per our discussion with regards to the Private Equity Line Agreement between
Somanetics Corporation and Kingsbridge Capital Limited, we have agreed to the
following:

Upon receipt of $200,000 from Somanetics Corporation, Kingsbridge Capital agrees
to terminate 1) the Private Equity Line Agreement, 2) the related Registration
Rights Agreement and 3) Kingsbridge's right to the discount on any unsold shares
(as defined in the Agreement).

Adam, I appreciate your cooperation in this matter. If you could sign and return
a copy of this letter as acknowledgment of our Agreement for our files, I would
appreciate it. Please fax signed copy to (248) 689-4272.

Warmest regards,

/s/ Bruce J. Barrett

Bruce J. Barrett
President & CEO
Somanetics Corporation

Agreed by:/s/ Adam Gurney                             Date: April 3, 2001
          ----------------------------                      -------------

Cc:      Robert Krueger, Somanetics' Counsel
         Bill Iacona, Somanetics' Vice President of Finance<PAGE>   1
                                                                    EXHIBIT 10.5

                                       March 29, 2001

Mr. Bruce Barrett
President & Chief Executive Officer
Somanetics Corporation
1653 East Maple Road
Troy, MI 48083

Re:      Private Placement of Common Shares

Dear Bruce:

         This letter agreement (the "Letter Agreement") confirms the agreement
of Somanetics Corporation (the "Company") to retain Brean Murray & Co., Inc.
("Brean Murray") as the Company's exclusive placement agent in connection with
the proposed private placement of the Company's Common Shares.

1.       The Retainer. The Company hereby retains Brean Murray as its exclusive
placement agent in connection with the Placement (defined in paragraph 2)
effective as of the date of the Company's acceptance of this Letter Agreement
(the "Retainer").

2.       The Placement. Pursuant to the Retainer, Brean Murray hereby agrees to
assist the Company in arranging a private placement or similar financing
transaction (the "Placement") of up to 1,325,000 of the Company's Common Shares
(the "Stock"). Final terms and conditions of the Placement will be subject to,
among other things, the satisfactory completion by Brean Murray of such inquiry
and investigation of the transactions contemplated hereby and of the Company as
Brean Murray deems reasonably appropriate and to the absence in Brean Murray's
reasonable determination of a material adverse change in the conditions in the
markets for the Bridge or the Placement or the financial markets generally.

3.       Compensation. In consideration of Brean Murray's services in connection
with the Placement, the Company hereby agrees to pay to Brean Murray at the
closing of the Placement, in immediately available funds, a cash fee equal to
five Percent (5%) of the aggregate gross proceeds (the "Placement Fee") except
in regards to monies received from the Brean Murray & Co. Profit Sharing Plan
and Robert Henry for which there shall be no fee. The Company will also sell to
Brean Murray for $100 a five- year warrant (the "Warrant"), with cashless
exercise and customary anti-dilution provisions (similar to the warrant granted
in 1997), to purchase at a price equal to 120% of the purchase price of the
Stock, 25,000 shares of common stock.

                                       1
<PAGE>   2

4.       Costs. In addition to the consideration payable to Brean Murray
pursuant to paragraph 3 hereof, the Company hereby agrees to reimburse Brean
Murray from time to time for its reasonable and actual documented out-of-pocket
expenses incurred by it in connection with the Placement including, but not
limited to, accounting and legal expenses, payable upon Brean Murray's request
and regardless of whether the Placement shall be consummated. However, any
expenses in excess of $1,000 will be reimbursed by the Company only if the
Company approved the incurrence of such expenses by Brean Murray. In addition,
the Company shall pay all fees and expenses relating to Blue Sky matters,
printing costs, Company counsel and accounting costs and any other costs
incurred by the Company in connection with the Placement.

5.       Indemnification. The Company and Brean Murray hereby agree to the terms
and conditions of the Indemnification Agreement attached hereto as Exhibit A and
incorporated herein by reference.

6.       Termination. This Letter Agreement shall terminate Two (2) months after
the Company's acceptance hereof, unless extended by mutual consent in writing.
Notwithstanding the foregoing, it is agreed that the provisions of paragraphs 3
through 7 and paragraph 9 hereof will survive any such termination. In the event
that this Letter Agreement terminates and no closing of the Placement occurs,
Brean Murray will be entitled to the Placement Fee and the Warrant with respect
to any financing transaction (whether equity, debt or a combination) with any
prospective investor that was specifically introduced to the Company by Brean
Murray for the purposes of the Placement and that is consummated within twelve
(12) months following the termination of this Letter Agreement. The Company
shall have the absolute right at any time to terminate this Agreement and to
refrain from selling any Stock to prospective investors.

7.       Due Authorization. Each of the parties represents that it is duly
authorized to execute this Letter Agreement.

8.       Counterparts. This Letter Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be the same agreement.

9.       Governing Law; Jurisdiction. This Letter Agreement shall be governed by
the laws of the State of New York governing contracts made and to be performed
in such state without giving effect to the principles of conflicts of laws.

10.      Miscellaneous. This Letter Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof and
supersedes and cancels any prior communications, understandings and agreements
between the parties. Neither this Letter Agreement nor its substance shall be
disclosed except to those who are in a confidential relationship with the
Company or where the same is required by law or Nasdaq rules. This Letter
Agreement may not be amended, nor may any of its provisions be waived, except by
written agreement signed by both parties. This Letter Agreement shall be binding
upon and inure to the benefit of any successors and assigns of the Company and
Brean Murray.

                                       2

<PAGE>   3

         We appreciate the opportunity to provide this Letter Agreement to you
and look forward to working with you toward a successful completion of the
financing. If the foregoing is in accord with your understanding of our
agreement, please sign in the space provided on the duplicate original hereof
and return a signed duplicate to Brean Murray, whereupon it shall constitute our
binding agreement.

                                                 Very truly yours,
                                                 BREAN MURRAY & CO., INC.

                                                 By:/s/ John Fletcher
                                                    ----------------------------
                                                        John Fletcher
                                                        Vice President

Accepted this 29 day of March 2001.
SOMANETICS CORPORATION

By:/s/ Bruce Barrett
   ----------------------------------------
       Bruce Barrett
       President & Chief Executive Officer

                                       3

<PAGE>   4

                                   SCHEDULE A

                            INDEMNIFICATION AGREEMENT

         Exhibit A to the Letter Agreement (the "Letter Agreement") dated March
29, 2001 by and between Somanetics Corporation (the "Company") and Brean Murray
& Co., Inc. ("BMC").

         The Company agrees to indemnify and hold BMC and its affiliates,
control persons, directors, officers, advisors, representatives, employees and
agents (each an "Indemnified Person") harmless from and against all losses,
claims, damages, liabilities, costs or expenses, including those resulting from
any threatened or pending investigation, action, proceeding or dispute, whether
or not BMC or any such other Indemnified Person is a party to such
investigation, action, proceeding or dispute, arising out of BMC's entering into
or performing services under this Letter Agreement, or arising out of any matter
including, without limitation, any material misstatement or omission of a
material fact in any information provided to BMC or any prospective investor
referred to in this Letter Agreement. This indemnity shall also include BMC
and/or any such other Indemnified Person's reasonable attorneys' and
accountants' fees and out-of-pocket expenses incurred in connection with such
investigation, actions, proceedings or disputes, which fees and expenses shall
be periodically reimbursed to BMC and/or to any such other Indemnified Person as
they are incurred; provided, however, that the indemnity set forth herein shall
not apply where a court of competent jurisdiction has made a final determination
that BMC acted in a grossly negligent manner or engaged in gross misconduct in
the performance of its services hereunder which gave rise to the loss, claim,
damage, liability, cost or expense sought to be recovered hereunder (but pending
any such final determination, the indemnification and reimbursement provisions
herein above set forth shall apply and the Company shall perform its obligations
hereunder or reimburse BMC and/or such other Indemnified Person periodically for
its, his or their fees and expenses as they are incurred). The Company also
agrees that neither BMC nor any Indemnified Person shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
for, or in connection with, any act or omission to act by BMC as a result of its
engagement under this Letter Agreement, except for any such liability for
losses, claims, damages, liabilities or expenses incurred that is found in a
final determination by a court of competent jurisdiction to have resulted from
BMC's gross negligence or gross misconduct.

         If for any reason the foregoing indemnification is unavailable to BMC
or any such other Indemnified Person or insufficient to hold it harmless, then
the Company shall contribute to the amount paid or payable by BMC or any such
other Indemnified Person as a result of such loss, claim, damage, liability,
cost or expense in such proportion as is appropriate to reflect not only the
relative benefits received by the Company on the one hand, but also the relative
fault of the Company and BMC or any such other Indemnified Person, on the other
hand, as well as any relevant equitable considerations; provided that in no
event will the aggregate contribution by BMC and any such other Indemnified
Person hereunder exceed the amount of fees actually

                                       4
<PAGE>   5

received by BMC pursuant to this Letter Agreement. The reimbursement, indemnity
and contribution obligations of the Company herein above set forth shall be in
addition to any liability which the Company may otherwise have and these
obligations and the other provisions hereinabove set forth shall be binding upon
and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, BMC and any other Indemnified Person.

        The terms and conditions herein above set forth in this Exhibit A shall
survive the termination or expiration of this Letter Agreement and shall
continue indefinitely thereafter.

                                  Somanetics Corporation

                                  By:/s/ Bruce Barrett
                                     -------------------------------
                                         Bruce Barrett
                                         President and Chief Executive Officer

                                  Brean Murray & Co., Inc.

                                  By:/s/ John Fletcher
                                     --------------------------------------
                                         John Fletcher
                                         Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00024-of-00352.parquet"}]]