EXHIBIT 10.3

 

Icoria, Inc.

Retention Plan

2005-2006

 

PARTICIPANT NAME: «First» «Last»

 

This Amended and Restated Retention Plan (the “Plan”) supercedes and replaces
the Icoria, Inc. Retention Plan 2005-2006 in its entirety.

 

I. Purpose

 

The purpose of the Retention Plan is to:

 

  •   Align key employees’ goals and sustained performance with Icoria’s
strategic initiatives.

 

  •   Provide motivating compensation opportunity through a retention bonus
(“Bonus”) to retain key employees

 

II. Participants

 

Executives and a group of key employees who are designated in writing by the
Board of Directors and/or the Company as critical to the completion of strategic
initiatives and are otherwise in good standing, without a corrective plan are
eligible to participate in this Plan. The Board of Directors will determine in
its sole discretion who are the Executives and key employees eligible to
participate.

 

III. Administrative Guidelines

 

The Plan will be administered in accordance with the following Administrative
Guidelines.

 

A. Plan Funding: The Retention Plan may be funded upon the occurrence of one the
following strategic performance events which occurs in its totality prior to the
end of this Plan as defined herein: 1) a Strategic Alliance (‘SA”) which then
results in Financing, 2) Financing alone, 3) Strategic Alliance alone, or 4)
Merger and Acquisition (“M&A”). A percentage of the net proceeds designated by
the Compensation Committee of the Board from one of these occurrences will fund
a single pool (“Pool”). The Pool cannot exceed $1.2MM. If two or more strategic
events occur in their totality prior to the end of this Plan, the strategic
event with the largest funding opportunity will fund the Pool. In no event will
a combination of two strategic events fund the Pool.

 

1. SA which results in Financing: Funding for the Plan will be based on the
number of months of runway financed. Runway is the cash to be received pursuant
to the SA and/or financing divided by the then current monthly net cash utilized
by the Company (“Runway”). A minimum of 9 months of Runway beyond April 2006
must be exceeded to trigger any funding of the Plan.

 

2. Financing alone: Funding for the Plan will be based on the number of months
of Runway financed. A minimum of 9 months of Runway beyond April 2006 must be
exceeded to trigger any funding of the Plan.

 

3. Strategic Alliance alone: Funding for the Plan will be based on the quality
of the Strategic Alliance completed prior to July 31, 2006. The quality of the
SA and other relevant criteria will be evaluated and determined by the Board’s
Compensation Committee, in its sole discretion.

 

a. Minor: A meaningful alliance, which extends the Runway by more than 9 months
beyond April 2006.

 

1

--------------------------------------------------------------------------------

b. Material: A meaningful alliance, which extends the Runway by 12 months or
more beyond April 2006.

 

c. Major: A meaningful alliance, which extends the Runway by 15 months or more
beyond April 2006.

 

4. M&A: Funding for the Plan will be based on the amount of net proceeds after
investment banking fees. The net transaction must be at least $6MM in value. For
purposes of this Plan, M&A is a transaction, which results in a Change of
Control, as defined below.

 

B. Amount of Funding for the Pool (Aggregate)

 

The amount by which the Pool is funded is based on the type of strategic
occurrence and the criteria as indicated below and other factors deemed relevant
by the Compensation Committee of the Board of Directors. Only one strategic
performance event can fund the Pool. In order for the strategic performance
event to qualify to fund the Pool, there needs to be a written agreement signed
by all required parties and any required closing documents and procedures
completed to the satisfaction of the Board of Directors of the Company. The Pool
cannot exceed $1.2MM.

 

1. SA which results in Financing:

 

Result of Financing

--------------------------------------------------------------------------------

  

Amount Funded into Pool

--------------------------------------------------------------------------------

>9 to 11 months of

Runway

   5% of the amount of financing, less any fees payable in cash at closing

12 to 14 months of

Runway

   7.5% of the amount of financing, less any fees payable in cash at closing

15 months or more

of Runway

   10% of the amount of financing, less any fees payable in cash at closing

 

2. Financing Alone

 

Result of Financing

--------------------------------------------------------------------------------

  

Amount Funded into Pool

--------------------------------------------------------------------------------

>9 months or more of

Runway

   5% of the amount of financing, less any fees payable in cash at closing

 

3. Strategic Alliance Alone

 

Type of SA

--------------------------------------------------------------------------------

   Amount Funded into Pool

--------------------------------------------------------------------------------

Minor SA

   $ 300,000

Material SA

   $ 600,000

Major SA

   $ 900,000

 

2

--------------------------------------------------------------------------------

4. M&A

 

Amount of Proceeds less investment banking fees

--------------------------------------------------------------------------------

 

Amount Funded into Pool

--------------------------------------------------------------------------------

³ $6MM and < $10MM

  4% of the amount of proceeds less investment banking fees

$10 to $15 MM

  6% of the amount of proceeds less investment banking fees

> $15MM

  8% of the amount of proceeds less investment banking fees

 

C. Payment Opportunity Pool – There will only be single Pool, regardless of the
type or number of strategic performance events. The Pool cannot exceed $1.2MM.
The Pool shall be divided with 35% to the eligible Executive participants and
65% to the remaining eligible participants.

 

D. Individual Opportunity– Each Plan Participant’s potential Bonus will be
determined by the relative value units (RVU) assigned to each individual based
on the designated strategic performance events. The Board’s Compensation
Committee assigned the RVU to each eligible executive in its sole discretion.
The Executive team assigned the RVU for each of the remaining eligible
participants, in its sole discretion.

 

IV. General Plan Provisions and Procedures

 

The following provisions and procedures govern the administration of the Plan:

 

A. Plan Effective Date – The effective date of this Plan is August 1, 2005 and
will expire on July 31, 2006, unless terminated earlier by the Company in its
sole discretion.

 

B. Partial Year Participation (Newly Eligible) – Employees who become eligible
to participate in the Plan after the plan year has commenced but before
February 2, 2006 will have their retention Bonus, if any, prorated based on the
employee’s original date of eligibility. The employment date for eligibility
must occur on or before February 1, 2006.

 

C. Employment Status – Plan Participants must be employed by the Company on the
day the retention Bonuses are paid in order to be eligible to earn any payments
hereunder.

 

D. Performance- Plan Participants must be in good standing without any
corrective plan during the plan year in order to be eligible to continue to
participate in the Plan and to receive any Bonus.

 

E. Payments – Unless otherwise specifically provided herein, all Bonuses under
this plan will be paid to the eligible Participants within 45 days after the
termination of the Plan. The Bonuses are not earned by the eligible Participant
until the day they are paid.

 

3

--------------------------------------------------------------------------------

F. Change of Control - Notwithstanding the above, in the event a Change of
Control, (as defined below) occurs before the Bonus is paid, the Bonus will be
payable within forty-five (45) days of the Change of Control closing date to
eligible Participants. If an eligible Participant is terminated by the Company
between the Change of Control closing date and the payment date, for any reason
other than for cause, as defined in Icoria’s Policy and Procedures Manual, the
Bonus will be deemed earned as of the eligible Participant’s termination date,
and eligible Participant will be eligible for the Bonus.

 

“Change of Control” means the occurrence of any of the following events: (a) Any
“Person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by the Company’s
then outstanding voting securities (excluding for this purpose the Company or
its Affiliates or any employee benefit plan of the Company) pursuant to a
transaction or a series of related transactions which the Board of Directors
does not approve; or (b) A merger or consolidation of the Company whether or not
approved by the Board of Directors, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or the parent of
such corporation) at least 80% of the total voting power represented by the
voting securities of the Company or such surviving entity or parent of such
corporation outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets.

 

G. Approval Authority - Bonus payment calculations must be reviewed and approved
by the Compensation Committee of the Board of Directors and/or the governing
body of the successor entity.

 

H. Plan Modifications – The Company reserves the right, in its sole discretion
to modify, suspend or terminate the Retention 2005-2006 Plan at any time.

 

I. Income Tax Withholdings – Bonus payments made to Plan Participants will be
processed through normal payroll channels for lump sum payments and will be
subject to all applicable withholdings and/or taxes.

 

J. Payment Method – At the discretion of the Compensation Committee of Icoria
and/or the governing body of the successor entity, any Bonus payments under this
Plan can be made in cash or stock or a combination thereof.

 

K. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Employee and the Company, and their respective
successors, assigns, heirs, executors and administrators, except that Employee
may not assign any of his rights hereunder without the written consent of the
Company, which shall not be withheld unreasonably.

 

L. Governing Law. This Plan and any disputes arising hereunder shall be governed
by and construed in accordance with the laws of the State of North Carolina,
except to the extent preempted by federal law.

 

4

--------------------------------------------------------------------------------

M. Employment At-Will. Nothing herein shall be understood as modifying or
otherwise altering the Employee’s at-will relationship or in any other way
creating a contract of employment for a definite term. The Employee shall have
no right to be retained in the service of the Company because of the Agreement
that she would not otherwise have.

 

N. The terms “fund”, “funding”, or “funded”, as used in this Plan, refers to the
size of the Pool. The Company will not set aside or ear mark any funds or assets
for the Pool or payment of Bonuses.

 

5