EXHIBIT 10.19

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”), is made and entered into as of the
18th day of June, 2000 (the “Effective Date”), by and between INTERLEUKIN
GENETICS, INC., a Texas corporation (“Employer”), and FENEL ELOI, an individual
(“Employee”).

 

RECITALS

 

A. Employer desires to obtain the benefit of the services of Employee and
Employee desires to render such services to Employer.

 

B. The Board of Directors of Employer (the “Board”) has determined that it is in
Employer’s best interest to employ Employee and to provide certain benefits to
Employee.

 

C. Employer and Employee desire to set forth the terms and conditions of
Employee’s employment with Employer on the terms and subject to the conditions
of this Agreement.

 

AGREEMENT

 

In consideration of the foregoing recitals and of the mutual covenants and
conditions contained herein, the parties, intending to be legally bound, agree
as follows:

 

1. Term. Employer agrees to employ Employee, and Employee agrees to serve
Employer, in accordance with the terms of this Agreement, for a term (the
“Term”) beginning on the Effective Date and continuing for a period of four (4)
years thereafter unless earlier terminated in accordance with the provisions
hereof.

 

2. Employment of Employee.

 

(a) Specific Positions. Employer and Employee hereby agree that, subject to the
provisions of this Agreement, Employer will employ Employee and Employee will
serve as an employee of Employer. Employee shall have the titles and perform the
duties of Chief Operating Officer and Chief Financial Officer and such other
reasonable, usual and customary duties of such office as may be delegated to
Employee from time to time by the Board, subject always to the policies as
reasonably determined from time to time by the Board.

 

(b) Promotion of Employer’s Business. During the Term, Employee shall not engage
in any business competitive with Employer. Employee agrees to devote his full
business time, attention, knowledge, skill and energy to the business, affairs
and interests of Employer and matters related thereto, and shall use his best
efforts and abilities to promote Employer’s interests; provided, however, that
Employee is not precluded from devoting reasonable periods to time required: (i)
for serving as a director or committee member of any organization that does not
compete with Employer or that does not involve a conflict of interest with
Employer; or (ii) for managing his personal investments; so long as in either
case, such activities do not materially interfere with the regular performance
of his duties under this Agreement.

 

3. Salary. Employer shall pay to Employee during the term of this Agreement a
base salary (“Base Salary”) of $195,000.00 per year, payable in equal monthly
installments. The Base Salary may be increased (but not decreased) annually at
the Employer’s sole discretion throughout the Term on each anniversary of the
Effective Date in the discretion of Employer’s Board.

 

4. Bonus. In addition to the Base Salary, Employee shall also receive a bonus,
if any, as determined annually by the Board of Directors of Employer in its sole
discretion.

 

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5. Benefits.

 

(a) Stock Options. The Employer shall issue to Employee stock options to
purchase 200,000 shares of the Employer’s stock. These options will be issued
under the Employer’s 2000 Employee Stock Compensation Plan which will be
approved by shareholders at the June 2000 Annual Meeting. The options will be
issued as soon as practical after shareholder approval of the Plan and the
strike price will be set at the closing price of the stock on the date the
options are issued. The options will vest as follows:

 

•              20,000 shares on December 31, 2000

 

•              3,333 shares each month from January 31, 2001 through June 30,
2001

 

•              4,167 shares each month from July 31, 2001 through June 30, 2002

 

•              5,000 shares each month from July 31, 2002 through June 30, 2003

 

•              4,167 shares each month from July 31, 2003 through May 31, 2004

 

•              4,161 shares on June 30, 2004

 

We will maximize the ISO portion of the award, utilizing the maximum allowable
under IRS code ($100,000 per year), The strike price for the ISOs will be the
closing price on the first business day following the effective date of this
agreement. All remaining options will be nonqualified stock options with a
strike price based on the closing price on the date this agreement is executed
by both parties.

 

In the event there is a change of control of the Company, all outstanding
unvested options will immediately vest.  A change in control of the Company
shall be defined here as a purchase of the majority of the outstanding common
stock by an outside entity not organized solely for the purpose of investment.

 

(b) Fringe Benefits. During Employee’s employment by Employer under this
Agreement, Employee shall be eligible for participation in and shall be covered
by any and all such medical, disability, vision, dental, life and other
insurance plans and such other similar benefits available to other employees.

 

(c) Reimbursements. During Employee’s employment with Employer under this
Agreement, Employee shall be entitled to receive prompt reimbursement of all
reasonable expenses incurred by Employee in performing services hereunder,
including all expenses of travel at the request of, or in the service of,
Employer provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by Employer.

 

(d) Vacation. During Employee’s employment with Employer hereunder, Employee
shall be entitled to an annual vacation leave of three (3) weeks at full pay,
which shall be adjusted in accordance with the vacation policy generally
applicable to employees of the Employer.

 

6. Termination.

 

(a) Termination for Cause. Employer shall have the right, exercisable
immediately upon written notice, to terminate Employee’s employment for “Cause.”

 

(i) Definition of Cause. As used herein, “Cause” means any of the following: (A)
habitual drunkenness under the influence of alcohol by Employee or illegal use
of narcotics; (B) Employee is convicted by a court of competent jurisdiction, or
pleads “no contest” to, a felony or any other conduct of a criminal nature
(other than minor traffic violations) by Employee; (C) Employee engages in
fraud, embezzlement, or any other illegal conduct; (D) Employee imparts
confidential information relating to Employer or its business to competitors or
to other third parties other than in the course of carrying out Employee’s
duties; (E) Employee refuses to perform his duties hereunder or otherwise
breaches any covenant, warranty or representation of this Agreement or
Employee’s Non-Disclosure and Confidentiality Agreement executed concurrently
herewith, and, except for any conduct described in clauses (A) through (D) of
this Section 6(a)(i), fails to cure such breach (if

 

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such breach is then capable of being cured) within ten (10) business days
following written notice thereof specifying in reasonable detail the nature of
such breach, or if such breach is not capable of being cured in such time, a
cure shall not have been diligently initiated within such ten (10) business day
period.

 

(ii) Effect of Termination. Upon termination in accordance with this Section
6(a), Employee shall be entitled to no further compensation hereunder other than
the Base Salary and other benefits accrued hereunder through, but not including,
the effective date of such termination. Employer’s exercise of its right to
terminate for Cause shall be without prejudice to any other remedy to which it
may be entitled at law, in equity or under this Agreement.

 

(b) Voluntary Termination. Employee may terminate his employment at any time by
giving no less than thirty (30) days’ written notice to Employer.

 

(i) No Reason. Upon termination in accordance with this Section 6(b), except as
otherwise provided in Section 6(b)(ii) below, Employee shall be entitled to no
further compensation hereunder other than the Base Salary and other benefits
accrued hereunder through, but not including, the effective date of such
termination.

 

(ii) Good Reason. Notwithstanding anything to the contrary in Section 6(b)(i)
above, if Employee terminates his employment under this Section 6(b) for Good
Reason (as defined below), Employee shall be entitled to receive from Employer
all of the compensation and benefits provided for in Section 6(e) below. As used
herein, “Good Reason” means any of the following: (A) the assignment to Employee
of duties materially inconsistent with those of other employees of Employer in
like positions where Employee provides written notice to Employer within six (6)
months of such assignment that such duties are materially inconsistent with
those duties of similarly situated employees and Employer fails to release
Employee from his obligation to perform such inconsistent duties within twenty
(20) business days after Employer’s receipt of such notice; or (B) a failure by
Employer to comply with any other material provision of Sections 3 through 5,
inclusive, of this Agreement which has not been cured within fifteen (15)
business days after notice of such noncompliance has been given by Employee to
Employer, or if such failure is not capable of being cured in such time, a cure
shall not have been diligently initiated by Employer within such fifteen (15)
business day period.

 

(c) Termination Due to Death or Disability. This Agreement shall automatically
terminate upon the death of Employee. In addition, if Employee, is unable to
perform the essential functions of his job with or without a reasonable
accommodation because of a physical or mental impairment for a period of six (6)
months, Employer may terminate Employee’s employment upon written notice to
Employee. Upon termination in accordance with this Section 6(c), Employee (or
Employee’s estate, as the case may be) shall be entitled to no farther
compensation hereunder other than the Base Salary and other benefits accrued
hereunder through, but not including, the date of death or, in the case of
disability, the date of termination.

 

(d) Termination Upon Cessation of Business. Employer shall have the right to
immediately terminate Employee’s employment under this Agreement upon a
“Cessation of Business.” For purposes of this Agreement, a “Cessation of
Business” shall mean Employer’s ceasing to operate in the ordinary course of
business, whether by dissolution, liquidation, sale of assets, consolidation,
merger or otherwise, in connection with, pursuant to or arising out of a good
faith determination by the Board that the continuing operation of the business
in its ordinary course is reasonably likely to render Employer unable to meet
its liabilities as they mature. Upon termination in accordance with this Section
6(d), Employee shall be entitled to no further compensation hereunder other than
the Base Salary and other benefits accrued hereunder through, but not including,
the effective date of such termination. If Employee is so terminated by Employer
pursuant to this Section 6(d) during the Term, Employer shall (i) pay to
Employee the Base Salary, and (ii) provide the same health insurance benefits to
which Employee was entitled hereunder, in each case (i.e., the Base Salary and
health insurance benefits), until the earlier to occur of (A) the expiration of
the remaining portion of the Term, or (B) the expiration of the twelve (12)
month period

 

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commencing on the date Employee is terminated. Employer may make such payments
in accordance with its regular payroll schedule or in a single lump sum payment
in its sole discretion.

 

(e) Termination Without Cause. Employer shall have the right, exercisable upon
30 days’ prior written notice, to terminate Employee’s employment under this
Agreement for any reason other than set forth in Sections 6(a), (c) and (d)
above, at any time during the Term. If Employee is so terminated by Employer
pursuant to this Section 6(e) during the Term, Employer shall (i) pay to
Employee the Base Salary, and (ii) provide the same health insurance benefits to
which Employee was entitled hereunder, in each case (i.e., the Base Salary and
health insurance benefits), until the expiration of the twelve (12) month period
commencing on the date Employee is terminated.

 

7. Publicity. During the term of this Agreement and for a period of one (1) year
thereafter, Employee shall not, directly or indirectly, originate or participate
in the origination of any publicity, news release or other public announcements,
written or oral, whether to the public press or otherwise, relating to this
Agreement, to any amendment hereto, to Employee’s employment hereunder or to the
Company, without the prior written approval of the Company.

 

8. Restrictive Covenants.

 

(a) Non-Competition. In consideration of the benefits of this Agreement,
including Employee’s access to and limited use of proprietary and confidential
information of the Company, as well as training, education and experience
provided to Employee by the Company directly and/or as a result of work projects
assigned by the Company with respect thereto, Employee hereby covenants and
agrees that during the term of this Agreement and for a period of twelve (12)
months following termination of this Agreement, regardless of how such
termination may be brought about, Employee shall not, directly or indirectly, as
proprietor, partner, stockholder, director, officer, employee, consultant, joint
venture, investor or in any other capacity, engage in, or own, manage, operate
or control, or participate in the ownership, management, operation or control,
of any entity which engages anywhere in the world in any business activity which
is competitive to current business activities in which the Company participates
during Employee’s employment with the Company; provided, however, the foregoing
shall not, in any event, prohibit Employee from purchasing and holding as an
investment not more than 1% of any class of publicly traded securities of any
entity which conducts a business in competition with the business of the
Company, so long as Employee does not participate in any way in the management,
operation or control of such entity. It is further recognized and agreed that,
even though an activity may not be restricted under the foregoing provision,
Employee shall not during the term of this Agreement and for a period of twelve
(12) months following termination of this Agreement, regardless of how such
termination may be brought about, provide any services to any person or entity
which may be used against, or in conflict with the interests of, the Company or
its customers or clients.

 

(b) Judicial Reformation. Employee acknowledges that, given the nature of the
Company’s business, the covenants contained in Section 8(a) establish reasonable
limitations as to time, geographic area and scope of activity to be restrained
and do not impose a greater restraint than is reasonably necessary to protect
and preserve the goodwill of the Company’s business and to protect its
legitimate business interests. If, however, Section 8(a) is determined by any
court of competent jurisdiction to be unenforceable by reason of its extending
for too long a period of time or over too large a geographic area or by reason
of it being too extensive in any other respect or for any other reason, it will
be interpreted to extend only over the longest period of time for which it may
be enforceable and/or over the largest geographic area as to which it may be
enforceable and/or to the maximum extent in all other aspects as to which it may
be enforceable, all as determined by such court.

 

(c) Customer Lists; Non-Solicitation. In consideration of the benefits of this
Agreement, including Employee’s access to and limited use of proprietary and
confidential information of the Company, as well as training, education and
experience provided to Employee by the Company directly and/or as a result of
work projects assigned by the Company with respect thereto, Employee hereby
further covenants and agrees that for a period of twelve (12) months following
the termination of this Agreement, regardless of how such termination may be
brought about, Employee shall not, directly or indirectly, (i) use or make

 

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known to any person or entity the names or addresses of any clients or customers
of the Company or any other information pertaining to them, (ii) call on for the
purpose of competing, solicit, take away or attempt to call on, solicit or take
away any clients or customers of the Company on whom Employee called or with
whom he became acquainted during his employment with the Company, nor (iii)
recruit or attempt to recruit any employees of the Company.

 

(d) Affiliates. When used in this Section 8, the term “Company” includes
Interleukin Genetics, Inc. and all affiliates and subsidiaries of Interleukin
Genetics, Inc.

 

9. Miscellaneous.

 

(a) Withholdings. All payments to Employee hereunder shall be made after
reduction for all federal, state and local withholding and payroll taxes, all as
determined under applicable law and regulations, and Employer shall make all
reports and similar filings required by such law and regulations with respect to
such payments, withholdings and taxes.

 

(b) Succession. This Agreement shall inure to the benefit of and shall be
binding upon Employer, its successors and assigns. The obligations and duties of
Employee hereunder shall be personal and not assignable.

 

(c) Notices. Any and all notices, demands, requests or other communications
hereunder shall be in writing and shall be deemed duly given when personally
delivered to or transmitted overnight express delivery or by facsimile to and
received by the party to whom such notice is intended (provided the original
thereof is sent by mail, in the manner set forth below, on the next business day
after the facsimile transmission is sent), or in lieu of such personal delivery
or overnight express delivery or facsimile transmission, on receipt when
deposited in the United States mail, first-class, certified or registered,
postage prepaid, return receipt requested, addressed to the applicable party at
the address set forth below such party’s signature to this Agreement. The
parties may change their respective addresses for the purpose of this Section
9(c) by giving notice of such change to the other parties in the manner which is
provided in this Section 9(c).

 

(d) Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof, and it replaces and supersedes
any prior agreements between the parties relating to said subject matter.

 

(e) Headings. The headings of Sections herein are used for convenience only and
shall not affect the meaning of contents hereof.

 

(f) Waiver; Amendment. No provision hereof may be waived except by a written
agreement signed by the waiving party. The waiver of any term or of any
condition of this Agreement shall not be deemed to constitute the waiver of any
other term or condition. This Agreement may be amended only by a written
agreement signed by the parties hereto.

 

(g) Severability. If any of the provisions of this Agreement shall be held
unenforceable by the final determination of a court of competent jurisdiction
and all appeals therefrom shall have failed or the time for such appeals shall
have expired, such provision or provisions shall be deemed eliminated from this
Agreement but the remaining provisions shall nevertheless be given full effect.
In the event this Agreement or any portion hereof is more restrictive than
permitted by the law of the jurisdiction in which enforcement is sought, this
Agreement or such portion shall be limited in that jurisdiction only to the
extent required by the law of that jurisdiction.

 

(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

 

(i) Arbitration. Except for the provisions of Sections 7 and 8 with regard to
which the Company expressly reserves the right to petition a court directly for
injunctive or other relief, any dispute arising

 

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out of or relating to this Agreement, or the breach, termination or the validity
hereof, shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. THE ARBITRATOR OR ARBITRATORS ARE NOT EMPOWERED TO
AWARD DAMAGES IN EXCESS OF COMPENSATORY DAMAGES (INCLUDING REASONABLE ATTORNEYS
FEES AND EXPERT WITNESS FEES) AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
TO RECOVER SUCH DAMAGES (INCLUDING, WITHOUT LIMITATION, PUNITIVE DAMAGES) IN ANY
FORUM. The arbitrator or arbitrators may award equitable relief in those
circumstances where monetary damages would be inadequate. The arbitrator or
arbitrators shall be required to follow the applicable law as set forth in the
governing law section of this Agreement. The arbitrator or arbitrators shall
award reasonable attorneys fees and costs of arbitration to the prevailing party
in such arbitration.

 

(j) Equitable Relief. In the event of a breach or a threatened breach by
Employee of any of the provisions contained in Sections 7 or 8 of this
Agreement, Employee acknowledges that the Company will suffer irreparable injury
not fully compensable by money damages and, therefore, will not have an adequate
remedy available at law. Accordingly, the Company shall be entitled to obtain
such injunctive relief or other equitable remedy from any court of competent
jurisdiction as may be necessary or appropriate to prevent or curtail any such
breach, threatened or actual, without having to post bond. The foregoing shall
be in addition to and without prejudice to any other rights that the Company may
have under this Agreement, at law or in equity, including, without limitation,
the right to sue for damages.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

 

“EMPLOYER”

 

“EMPLOYEE”

 

 

 

INTERLEUKIN GENETICS, INC.

 

 

 

 

 

By:

/s/ Kenneth S. Kornman

 

/s/ Fenel Eloi

 

 

Kenneth S. Kornman

 

Fenel Eloi

 

 

 

Address:

 

Address:

100 N.E. Loop 410, Suite 820

 

135 Beaver Street, 2nd Floor

San Antonio, Texas 78216

 

Waltham, Massachusetts 02452

 

Execution date April 17, 2000

 

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