EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT), is made and entered into as
of the 1st day of April, 2000 (the "EFFECTIVE DATE"), by and between INTERLEUKIN
GENETICS, INC., a Texas corporation ("EMPLOYER"), and PHILIP R. REILLY, an
individual ("EMPLOYEE").
R E C I T A L S
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
A G R E E M E N T
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 three (3)
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 title
and perform the duties set forth on EXHIBIT A hereto 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. The place of employment will be
within a sixty mile radius of Boston, MA.
(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; (ii) for
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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 or (iii) for delivering lectures in the area of genetics and
bioethics. Employer acknowledges that Employee will maintain a consulting
relationship with Gene Sage Incorporated, based in San Francisco, California,
with the understanding that this relationship will not conflict with Employee's
duties with Employer.
3. SALARY. Employer shall pay to Employee during the term of this
Agreement a base salary ("BASE SALARY") of $325,000.00 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 of
Directors.
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.
5. STOCK OPTIONS. In addition, Employee shall receive an award of 500,000
stock options, of which 148,606 are incentive stock options and 351,394 are
non-qualified stock options. This award was made effective December 1, 1999, the
Employee's hire date under previous agreement, and is at a strike price of
$2.875. This award will vest over 36 months in equal increments commencing
December 1, 1999m unless Employee's employment is terminated prior to expiration
of that 36 month period. These awards will be covered in detail by separate
Option Agreements.
6. BENEFITS.
(a) 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, life and other insurance plans
and such other similar benefits available to other executive employees. Employer
will pay $2,720 to Employee each year on the annual anniversary date of this
agreement, as reimbursement for life insurance premiums. Employee shall receive
a monthly automobile allowance of $600.00.
(b) 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.
(c) VACATION. During Employee's employment with Employer hereunder,
Employee shall be entitled to an annual vacation leave of four (4) weeks at full
pay, which shall be adjusted in accordance with the vacation policy generally
applicable to employees of the Employer and Holdings.
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7. 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 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 accured 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
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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
further 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 or 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 the 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 three (3) month
period 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 earlier to occur of
(A) the expiration of the remaining portion of the Term, or (B) the expiration
of the twelve (12) month period 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.
8. MISCELLANEOUS.
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(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 8(c) by giving notice of such change to the other parties in the
manner which is provided in this Section 8(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.
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(i) ARBITRATION. Any dispute arising 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.
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/ PHILIP R. REILLY
KENNETH S. KORNMAN PHILIP R. REILLY
Address: Address:
100 N.E. Loop 410, Suite 820 145 Monument St.
San Antonio, TX 78216 Concord, MA 01742
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EXHIBIT A
DESCRIPTION OF JOB
TITLE:
Chairman of the Board and Chief Executive Officer
DUTIES AND RESPONSIBILITIES:
1. Plan and execute overall corporate strategy
2. Conduct Board of Directors meetings as required
3. Lead the Company's business development activities
4. Other activities as designated by the Board of Directors.
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