EXHIBIT 10.3
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (this "Agreement") is made and entered into as
of August 10, 2005 (the "Execution Date"), by and between IR BioSciences
Holdings, Inc., a Delaware corporation (the "Company") and Xxxxxxx Xxxxxxx (the
"Executive").
RECITALS
WHEREAS, the Executive is the President and Chief Executive Officer of
the Company;
WHEREAS, in order to induce Executive to maintain employment with the
Company, the Board desires to provide to Executive eligibility for severance
benefits in the event Executive's employment is terminated under certain
circumstances, and the Executive desires to be so induced; and
WHEREAS, Company and Executive desire to set forth in writing the terms
and conditions of their agreement with respect to Company's provision of
severance benefits to Executive in the event Executive's employment is
terminated under certain circumstances.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
obligations herein contained, it is mutually agreed between the parties hereto
as follows:
1. Term. This Agreement shall commence on the Execution Date of this
Agreement and continue until the earlier of (a) the date of termination of
Executive's employment with the Company absent Involuntary Termination or (b) a
Change of Control Date as that term is defined in the Change of Control
Agreement of even date herewith entered into between Executive and the Operating
Company.
2. At-Will Status. Notwithstanding any provision of this Agreement,
Executive is employed at-will and the Executive or Company may terminate
Executive's employment at any time, with or without notice, for any or no
reason.
3. Definitions. As used in this Agreement, the following terms shall
have the meanings set forth herein:
"Board" means the Board of Directors of Company.
"Cause" shall mean (i) a material act of dishonesty in
connection with the Executive's responsibilities as an Executive of
Company; (ii) the Executive's conviction of, or plea of nolo contendere
to, a felony or a crime involving moral turpitude, (iii) the
Executive's gross misconduct which has a material adverse effect on
Company, or (iv) the Executive's consistent and willful failure to
perform his or her employment duties where such failure is not cured
within thirty (30) days after written notice to Executive by Company.
"Constructive Termination" means Executive's voluntary
termination, upon thirty (30) days' prior written notice to the
Company, following: (A) Executive being designated to a divisional as
opposed to corporate role in the Company, (B) a material reduction or
change in job duties, responsibilities and requirements, including,
without limitation, any material increase in travel responsibilities,
inconsistent with Executive's position with the Company and Executive's
duties, responsibilities and requirements; (C) any reduction of
Executive's base compensation or incentive pay (bonus); or (D)
Executive's refusal to relocate to a facility or location more than
fifty (50) miles from Company's current headquarters.
"Involuntary Termination" means the termination of the
employment of Executive (i) by Company without Cause or (ii) due to
Constructive Termination.
4. Effect of Termination. If Executive's employment with Company is
terminated at any time for any reason, Executive shall be entitled to (i)
reimbursement for final expenses that Executive reasonably and necessarily
incurred on behalf of the Company prior to Executive's termination of employment
(provided that Executive submits expense reports and supporting documentation as
required by Company practice or policy), (ii) unpaid compensation and benefits
and (iii) unused vacation, accrued through the date of Executive's termination
of employment.
5. Effect of Involuntary Termination. Only in the event of an
Involuntary Termination, Executive shall be entitled to the following severance
benefits subject to Section 6 hereof:
a. continuation of Executive's base salary in effect on the
date of such Involuntary Termination for a period of eighteen (18)
months from the date of termination (the "Payment Period"), payable in
accordance with Company's prevailing compensation practice, as such
practice may be modified from time to time;
b. payment in an amount equal to the amount of executive
incentive pay (bonus) that Executive would have received for the year
in which the Involuntary Termination occurred had he met one hundred
percent (100%) of the target for such incentive pay;
c. should Executive elect continued medical insurance coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), payment of Executive's COBRA premiums during the Payment
Period, subject to and in accordance with the provisions of COBRA;
d. one-hundred percent (100%) of the unvested portion of each
outstanding stock option granted to Executive shall be accelerated so
that they become immediately exercisable upon the date of Involuntary
Termination and may be exercised during the Payment Period; provided
that, such stock options that remain unexercised upon expiration of the
Payment Period shall then terminate and cease to be outstanding; and:
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e. notwithstanding the terms and conditions of any written
stock option agreements between Executive and Company ("Stock Option
Agreements"), Executive shall have during the Payment Period the
ability to exercise any stock options that are vested as of Executive's
date of termination pursuant to the terms the applicable Stock Option
Agreement, but in no event shall any stock option be exercisable at any
time after the expiration date of such stock option, and upon the
expiration of the Payment Period, such stock options shall terminate
and cease to be outstanding.
6. Conditions of Severance Benefits. Executive shall receive the
severance benefits set forth in Section 5 hereof only if Executive (i) executes
a separation agreement, which includes a general release, in a form and of a
scope acceptable to Company in its discretion; (ii) presents satisfactory
evidence to Company that he has returned all Company property, confidential
information and documentation to Company; (iii) complies with, and does not
violate, any provision of any confidentiality and/or non-solicitation agreements
that Executive may have entered into with Company (a "Confidentiality
Agreement"); (iv) provides Company with a signed, written resignation of
Executive's status as an employee, officer and/or director of Company, as
applicable; and (v) shall not be entitled to receive any compensation, benefits,
or other payments from Company, except as set forth in this Agreement, as a
result of or in connection with the termination of Executive's employment at any
time and for any reason. In the event Company reasonably believes that Executive
has breached, or has threatened to breach, any provision of any Confidentiality
Agreement, Company shall immediately terminate all severance benefits and
Executive shall no longer be entitled to such benefits and payments under this
Agreement and further shall be required to reimburse all payments previously
made by Company pursuant to this Agreement. Such termination of severance
benefits shall be in addition to any and all legal and equitable remedies
available to Company, including injunctive relief.
7. Taxes. All payments and benefits described in this Agreement shall
be subject to any and all applicable federal, state and local withholding,
payroll, income and other taxes.
8. Governing Law/Interpretation. Executive and Company agree that this
Agreement and any claims arising out of or in connection with this Agreement
shall be governed by and construed in accordance with the laws of the State in
which Executive substantially performs his/her employment responsibilities or,
if none, the State of Delaware, and shall in all respects be interpreted,
enforced and governed under the internal and domestic laws of such State,
without giving effect to the principles of conflicts of laws thereof.
9. Entire Agreement. This Agreement embodies the entire agreement among
the parties and there have been and are no agreements, representations or
warranties, oral or written among the parties regarding the subject matter of
this Agreement other than those set forth or provided for in this Agreement.
10. Assignment. Executive acknowledges that the services to be rendered
hereunder are unique and personal in nature. Accordingly, Executive may not
assign any rights or delegate any duties or obligations under this Agreement.
The rights and obligations of Company under this Agreement shall automatically
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be assigned to the successors and assigns of Company, and shall inure to the
benefit of, and be binding upon, such successors and assigns, as well as
Executive's heirs and representatives.
11. Notices. All notices required hereunder shall be in writing and
shall be delivered in person, by facsimile or by certified or registered mail,
return receipt requested, and shall be effective upon sending if by facsimile,
or upon receipt if by personal delivery or certified or registered mail. All
notices shall be addressed as follows or to such other address as the parties
may later provide in writing:
if to Company: IR BioSciences Holdings, Inc.
0000 X. 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxxx, CFO
and, if to Executive: at the home address specified on the signature
page of this Agreement.
12. Severability/Reformation. If any one or more of the provisions (or
any part thereof) of this Agreement shall be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions (or any part thereof) shall not in any way be affected or
impaired thereby, and this Agreement shall be construed and reformed to the
maximum extent permitted by law. The language of all parts of this Agreement
shall in all cases be construed as a whole according to its fair meaning and not
strictly for or against either of the parties.
13. Modification and Waiver. This Agreement and the rights, remedies
and obligations contained in any provision hereof, may be modified or waived
only in accordance with this Section 13. No waiver by either party of any breach
by the other or any provision hereof shall be deemed to be a waiver of any later
or other breach thereof or as a waiver of any other provision of this Agreement.
This Agreement and its terms may not be waived, changed, discharged or
terminated orally or by any course of dealing between the parties, but only by a
written instrument signed by the party against whom any waiver, change,
discharge or termination is sought.
14. Arbitration. Any dispute, controversy or claim arising out of or in
connection with this Agreement shall be exclusively subject to arbitration
before the American Arbitration Association ("AAA"). Such arbitration shall take
place in the State as determined under Section 8 hereof, before a single
arbitrator in accordance with AAA's then current National Rules for the
Resolution of Employment Disputes. Judgment upon any arbitration award may be
entered in any court of competent jurisdiction. All parties shall cooperate in
the process of arbitration for the purpose of expediting discovery and
completing the arbitration proceedings. Nothing contained in this Section or
elsewhere in this Agreement shall in any way deprive Company of its right to
obtain injunctive relief in a court of competent jurisdiction for purposes of
enforcing any confidentiality agreement entered into between Company and
Executive.
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15. Survival of Obligations and Rights. The obligations and rights
contained in Sections 4 through 7, inclusive, and 10 hereof shall survive the
Executive's Involuntary Termination. Moreover, Section 14 hereof shall survive
the resignation or termination of Executive's employment for any reason.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
17. Section Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
IR BIOSCIENCES HOLDINGS, INC.
By: __________________________
Name:
____________________________
Title: _________________________
EXECUTIVE
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Xxxxxxx Xxxxxxx
Address for Notice to Executive:
00000 X. Xxxxxxxxx Xx.
Xxxxxxxx Xxxxx, XX. 00000
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