Exhibit 10.11

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is made as of September 22, 2008, at San Diego,
California among Lpath, Inc., a Nevada corporation (the “Company”), and John
Bender, Pharm.D. (the “Employee”) with reference to the following facts:

 

In consideration of their respective promises contained herein, the parties
hereto agree as follows:

 

1.    EMPLOYMENT

 

Company hired Employee, effective September 22, 2008, as its Senior Vice
President R&D.  Employee and Company now desire to memorialize the terms and
conditions associated with such hiring, which terms and conditions shall be
contained in this Agreement.

 

2.    EMPLOYEE’S DUTIES

 

The Employee shall, while contributing his services hereunder:

 

(a) Serve the Company in the capacity set forth in Section 1, or in such other
similar capacity as Company’s Chief Executive Officer (“CEO”) or the Board of
Directors (hereinafter, referred to as “the Board”) may direct, on a full-time
basis and exclusive to the Company, using his best efforts, skills, and
diligence in the performance of such duties, at such place or places as may be
required for valid business reasons and as determined in the reasonable
determination of the Board;

 

(b) Report to the Chief Executive Officer and perform the duties and exercise
the powers assigned or vested in him by the CEO or the Board;

 

(c) Comply with and conform to any lawful instructions or directions given or
made by the CEO and the Board, and faithfully, industriously, diligently, and to
the best of the Employee’s ability, experience, and talents, serve the Company
and perform all of the duties that may be required by the terms and conditions
of this Agreement to the reasonable satisfaction of the CEO and the Board, so as
to promote the Company’s business interests; and

 

(d) Devote himself diligently to the business interests of the Company and
personally attend thereto at all times during usual business hours and during
such other times as the Board may reasonably require, except in case of
incapacity through illness or accident, in which case he shall furnish to the
CEO such evidence thereof as it may reasonably require.

 

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3.    COMPENSATION

 

In consideration of the performance by the Employee of his duties hereunder, the
remuneration of the Employee shall be (and the Company shall pay to the
Employee):

 

(a)          Effective on the date of hire, a base salary (“Salary”) of $280,000
per annum payable in accordance with the Company’s normal payroll procedure,
subject to normal payroll deductions, with an increase to $290,000 at that point
in time that merit increases are given generally at the Company (expected to be
around February, 2009),

 

(b)         Paid vacation, which shall accrue at the rate of four weeks per
year,

 

(c)          Other benefits and perquisites normally available to executives of
the Company, as may be changed from time to time,

 

(d)         Annual bonuses of up to 30% of base pay, to be based on individual
and Company performance, all at the sole discretion of the Company’s Board of
Directors, with it being agreed that for the “stub” year of 2008, a bonus of
$20,000 will be paid early in the 2009 year, and

 

(e)          Effective on the date of hire, a grant of Restricted Stock Units
(“RSUs”) to purchase up to 480,000 shares of Lpath Class A Common Stock.  RSUs
representing 240,000 shares will time-vest on a quarterly basis over 16
quarters, with a four-quarter “cliff.”  RSUs representing an additional 240,000
shares will vest based upon the achievement of specific milestones, which are
expected to be similar to those described in the offer letter.

 

(f)            Such additional remuneration as Employee and the Company shall
negotiate in the future.

 

4.    EXPENSES

 

The Company shall pay on behalf of the Employee or reimburse the Employee
(against the Employee’s submission to the Company of proper receipts therefore)
for all expenses properly incurred by him in the course of his employment
hereunder or otherwise in connection with the business of the Company in
accordance with Company policies, as such policies may be established and
revised by the Board from time to time.

 

5.    AT-WILL EMPLOYMENT

 

Employee and the Company understand and expressly agree that Employee’s
employment with the Company is at-will, is not for a specified term, and may be
terminated by the Company or by Employee at any time, with or without notice and
with or without cause.  While not required, as a courtesy, the parties shall
attempt if possible to give thirty (30)

 

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days’ notice of termination.  This clause shall not be interpreted to conflict
with Employee’s at-will employment status.  Employee and the Company further
understand and agree that no representation contrary to this section is valid,
and that this section may not be augmented, contradicted, or modified in any
way, by any representative or agent of the Company or any other person, except
by a writing signed by the Employee and by the Board.

 

6.  TERMINATION

 

6.1    Upon termination for any reason, including voluntary resignation,
Employee shall:

 

(a) Be entitled to the compensation set forth in Section 3(a) hereof, prorated
to the effective date of such termination;

 

(b) Remain subject to the provisions of the Proprietary Information and
Inventions Agreement, in the form attached hereto as Exhibit A, signed
concurrently herewith;

 

(c) Be entitled to receive a termination payment for any accrued, unused
vacation.

 

(d) Not be entitled to severance, unless as provided in Section 6.2.

 

6.2       If Company terminates the employment of Employee without Cause (to be
defined later in this section), the Company will, in addition to the provisions
of Section 6.1, and in exchange for employee’s execution of a full and complete
release of all claims as described herein:

 

(i)  Pay Employee seven months’ base compensation if the termination occurs
before there has been a Corporate Transaction (to be defined later in this
section) or pay Employee twelve months’ base compensation if the termination
occurs after there has been a Corporate Transaction.  Such payments are to be
made in accordance with Company’s normal payroll procedures with normal payroll
deductions.

 

(ii)  Continue to provide to Employee all heath-care benefits, and other
benefits that might apply, for the remainder of the month in which the
termination occurs and reimburse Employee for Employee’s COBRA coverage for
another seven-month period beyond that, or for a twelve-month period if the
termination occurs after there has been a Corporate Transaction.

 

(iii)  If the termination occurs within 24 months after there has been a
Corporate Transaction: (a) accelerate-vest by 24 months Employee’s unvested
stock options, unvested stock grants, and any other such assets that vest over
time and (b) allow Employee up to 24 months to exercise such options except to
the extent that any such options expire before the end of this 24-month period
or to the extent that earlier exercise is required by the Company to effect a
sale or a merger.

 

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(iv) The term “Cause” is defined to mean conduct that in the good faith judgment
of the Board constitutes a material breach of duty and is to include one or more
of the following: falsification of company documents, fraud, moral turpitude,
theft, embezzlement, criminal conduct, indictment on felony criminal charges,
serious violations of Company policies, material breach of Employee’s employment
agreement, extended or repeated absence from work that in the reasonable
judgment of the Board is unjustifiable, inability to perform duties for a period
of thirty (30) or more days without reasonable excuse and notice, or
insubordination (e.g., refusal to carry out the reasonable instructions of the
Board). If the material breach of duty is reasonably curable, Company shall
provide notice to Employee of such breach of duty and shall give Employee a
30-day cure period.  Refusal to relocate to a facility more than 50 miles from
the current facility is NOT considered Cause.

 

(v) The term “Corporate Transaction” is defined to mean (a) a transaction
whereby the Company is party to a merger or consolidation whereby the Company is
NOT the surviving entity and whereby the transaction results in the voting
securities of the Company outstanding immediately prior thereto failing to
continue to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or another entity) at least fifty (50%)
percent of the combined voting power of the voting securities of the Company or
such surviving or other entity outstanding immediately after such merger or
consolidation; or (b) the sale or disposition of all or substantially all of the
Company’s assets (or consummation of any transaction having similar effect).

 

(vi) Employee will be eligible for no other severance compensation, benefits, or
vesting other than that which is provided for in this Section 6.2 when he is
terminated.  A condition precedent to the Company’s obligation to fulfill the
severance terms in this Section 6.2 shall be Employee’s execution of a full and
complete release of all claims against the Company, its Board, officers, agents,
and affiliates in reasonable form as provided by the Company.  Nothing in this
severance provision supersedes or in any way alters the at-will provisions of
Section 5 above.

 

(vii)  Employee agrees that he will surrender to the Company, at its request, or
at the conclusion of his employment, all accounts, notes, data, sketches,
drawings and reproductions, and copies thereof, any of which (a) relate in any
way to the business, products, practices, or techniques of the Company,
(b) contain Confidential Information, whether or not created by him, or (c) come
into his possession by reason of his employment with the Company; and Employee
agrees further that all of the foregoing are the property of the Company.

 

7.  LOYAL PERFORMANCE

 

7.1  Employee shall not, during the period of his employment by the Company,
engage in any employment or activity in any business competitive with the
Company.  Employee agrees to notify the Company in writing of any outside
employment or business activity,

 

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including the name of the business and the general nature of employee’s
involvement, during the period of Employee’s employment with the Company.

 

7.2   If, at any time during the period ending two years after Employee has
ceased to be an employee of the Company (or of any subsidiary or affiliate of
the Company), whether or not pursuant to this agreement, Employee:

 

(a) directly or indirectly engages with...

 

(b) assists or has an active interest in, whether as owner, partner,
shareholder, joint venturer, corporate officer, director, employee, consultant,
principal, agent, trustee or licensor, or in any other similar capacity
whatsoever (provided that ownership of not more than two percent of the
outstanding stock of a corporation traded on a National securities exchange or
quoted on NASDAQ OTC shall not of itself be viewed as assisting or having an
active interest)...

 

or

 

(c) enters the employment of or acts as an agent for or advisor or consultant
to...

 

... any person, firm, partnership, association, corporation, business
organization, entity, or enterprise (the Business”) that is, or is about to
become, directly or indirectly, engaged in any business or program that competes
directly with or is substantially similar to any business or program that the
Company (or any subsidiary or affiliate of the Company) was involved in (or was
in the planning or development stage) during the 120-day period immediately
prior to Employee’s ceasing to provide services to the Company (or any
subsidiary or affiliate of the Company) [such business or program shall include,
but not be limited to, those that involve: (a) any composition of matter or
method that is protected by (i) any Company trade secret or (ii) any Company
intellectual property that is either issued, pending, or filed at the time of
termination or (b) the use, research or development, for any therapeutic or
diagnostic purpose, of (i) any sphingolipid, (ii)  lysophosphatidic acid,
Ceramide-1-phosphate, PAF, or HETE or (iii) any component of their respective
pathways], then Employee shall immediately notify Company in writing of such
involvement, including the name of the Business and the nature of Employee’s
involvement, and Employee agrees to fully respond to reasonable questions by the
Company regarding such involvement and to provide such further assurances
reasonably requested by Company that Employee is not and will not be in breach
of the Proprietary Information and Inventions Agreement attached hereto as
Exhibit A.

 

7.3   Employee will not, at any time, without prior written consent of the
Company:

 

(a) Directly or indirectly take any action or make or cause to be made any
statements which would disparage the reputation of the Company or any subsidiary
or affiliate of the Company, or

 

(b) Induce or attempt to influence any employee or consultant of the Company or

 

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any of its or their subsidiaries or affiliates to terminate his or her
employment.

 

7.4  Nothing contained in this Section 7 is intended to supercede or alter in
any way the provisions of the Proprietary Information and Inventions Agreement
attached hereto as Exhibit A.

 

8.    CONFIDENTIALITY MATTERS

 

8.1    It is an express condition to the employment of Employee by Company that
Employee sign and deliver a Proprietary Information and Inventions Agreement in
the form attached hereto as Exhibit A concurrently with the execution of this
Agreement.

 

8.2  .  THE COVENANTS CONTAINED IN THE PROPRIETARY INFORMATION AND INVENTIONS
AGREEMENT CONSTITUTE SEPARATE COVENANTS.  IF IN ANY JUDICIAL PROCEEDING, A COURT
SHALL HOLD THAT ANY OF THE COVENANTS SET FORTH IN THE PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT IS NOT PERMITTED BY APPLICABLE LAWS, EMPLOYEE AND
COMPANY AGREE THAT SUCH PROVISION SHALL AND IS HEREBY REFORMED TO THE MAXIMUM
TIME, GEOGRAPHIC, OR OCCUPATIONAL LIMITATIONS PERMITTED BY SUCH LAWS.  FURTHER,
IN THE EVENT A COURT SHALL HOLD UNENFORCEABLE ANY OF THE SEPARATE COVENANTS
DEEMED INCLUDED HEREIN, THEN SUCH UNENFORCEABLE COVENANT OR COVENANTS SHALL BE
DEEMED ELIMINATED FROM THE PROVISIONS OF THIS AGREEMENT FOR THE PURPOSE OF SUCH
PROCEEDING TO THE EXTENT NECESSARY TO PERMIT THE REMAINING SEPARATE COVENANTS TO
BE ENFORCED IN SUCH PROCEEDING.  EMPLOYEE AND COMPANY FURTHER AGREE THAT THE
COVENANTS IN THE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT SHALL EACH BE
CONSTRUED AS A SEPARATE AGREEMENT INDEPENDENT OF ANY OTHER PROVISIONS OF THIS
AGREEMENT, AND THE EXISTENCE OF ANY CLAIM OR CAUSE OF ACTION BY EMPLOYEE AGAINST
THE COMPANY WHETHER PREDICATED ON THIS AGREEMENT OR OTHERWISE, SHALL NOT
CONSTITUTE A DEFENSE TO THE ENFORCEMENT BY THE COMPANY OF ANY OF THE COVENANTS
SET FORTH IN THE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT.

 

9.    ACKNOWLEDGMENT

 

Employee acknowledges that he has been advised by Company to consult with
independent counsel of his own choice, at his expense, as to the entering into
this Agreement, that he has had the opportunity to do so, and that he has taken
advantage of the opportunity to the extent that he desires.  The Employee
further acknowledges that he has read and that he understands this Agreement, is
fully aware of its legal effect, and has entered into it freely based on his own
judgment and such professional advice as he has seen fit to obtain.

 

10.    ARBITRATION

 

Employee and the Company agree that in the event of any dispute concerning,
arising out of, or related in any way to this Agreement, such dispute shall be
submitted to arbitration.  Except as otherwise provided for herein, the disputes
subject to this agreement to arbitrate include, to the fullest extent allowable
by law, all potential claims between

 

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Employee and Company including, but not limited to, breach of contract, tort,
discrimination, harassment, wrongful termination, compensation and benefits
claims, constitutional claims and claims for the violation of any local, state
or federal statute, ordinance or regulation. Arbitration proceedings may be
commenced by either party by giving the other party written notice thereof and
proceeding thereafter in accordance with the rules and procedures of the
American Arbitration Association and California law.  Any such arbitration shall
take place before a single arbitrator only in San Diego, California.  Any such
arbitration shall be governed by and be subject to the applicable laws of the
State of California and the then-prevailing rules of the American Arbitration
Association (the “AAA”).  If the parties are unable to agree on a single neutral
arbitrator, the arbitrator shall be selected pursuant to the AAA rules.  The
arbitrator’s award in any such arbitration shall be final and binding, and a
judgment upon such award may be entered and enforced by any court of competent
jurisdiction.  Each party to this Agreement understands that by agreeing to
arbitrate their disputes, they are giving up their right to have their disputes
heard in a court of law and, if applicable, by a jury.  Company shall bear the
costs of the arbitrator, the forum, and filing fees.  Each party shall bear its
own respective attorney’s fees and all other costs, unless otherwise required or
allowed by law and awarded by the arbitrator.

 

11.    VIOLATION OF THE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

 

The Employee agrees and acknowledges that the violation of any of the provisions
contained in the Proprietary Information and Inventions Agreement attached
hereto as Exhibit A would cause irreparable injury to the Company, the remedy at
law for any violation or threatened violation thereof would be inadequate, and
that the Company shall be entitled to temporary and permanent injunctive or
other equitable relief without the necessity of proving actual damages.  The
Employee agrees that such relief shall be available in a court of law in San
Diego, California, regardless of the arbitration provisions contained in
Section 10 of this Agreement.

 

12.    MISCELLANEOUS

 

12.1    Amendment.  This Agreement may not be modified or amended without the
express prior written consent of the Company and the Employee.

 

12.2    Notices.  All notices required or permitted under this Agreement shall
be in writing, shall be sent either certified mail, return receipt requested, or
by facsimile transmission and mailed or sent to the relevant party at its
address (or facsimile number) set out below (or such other address or facsimile
number as the addressee has given to the other parties in accordance with the
terms of this Section):

 

To the Company:

Lpath, Inc.

6335 Ferris Square, Suite A

San Diego, CA 92121

Facsimile (858) 678-0900

 

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To the Employee:

John F. Bender, PharmD

2342 Casa Hermosa CT.

Encinitas, CA 92024

 

Any notice, demand or other communication so addressed to the relevant party
shall be deemed to have been delivered (a) if given or made by certified letter,
return receipt requested, when actually delivered to the relevant party; and
(b) if given or made by facsimile, upon receipt of a transmission report
confirming receipt.

 

12.3    Entire Agreement.  This Agreement and the Exhibits attached hereto
contain the entire agreement of the parties regarding the employment of the
Employee, and there are no other promises or conditions regarding the Employee’s
employment in any other agreement, whether oral or written.  This Agreement
shall terminate and supersede any previous employment agreements or arrangements
between Employee and Company.

 

12.4    Assignment.  The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the respective corporation.  Employee shall not be entitled to
assign any of his rights or obligations under this Agreement.

 

12.5    Sections.  References herein to Sections are to the sections in this
Agreement, unless the context requires otherwise.

 

12.6   Headings.   The section headings are inserted for convenience only and
shall not affect the construction of this Agreement.

 

12.7    Rules of Construction.  Unless the context requires otherwise, words
importing the singular include the plural and vice versa, and words importing a
gender include every gender.

 

12.8    SEVERABILITY.  WHENEVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT WILL
BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW,
BUT IF ANY PROVISION OF THIS AGREEMENT IS HELD TO BE INVALID, ILLEGAL OR
UNENFORCEABLE IN ANY RESPECT UNDER APPLICABLE LAW OR RULE IN ANY JURISDICTION,
SUCH INVALIDITY, ILLEGALITY OR UNENFORCEABILITY WILL NOT AFFECT ANY OTHER
PROVISION OR ANY OTHER JURISDICTION, BUT THIS AGREEMENT WILL BE REFORMED,
CONSTRUED AND ENFORCED IN SUCH JURISDICTION AS IF SUCH INVALID, ILLEGAL OR
UNENFORCEABLE PROVISION HAD NEVER BEEN CONTAINED THEREIN.

 

12.9    Survival.  Any variation in salary or conditions mutually agreed upon
after the effective date of this Agreement shall not constitute a new agreement;
instead, the terms and conditions of this Agreement, except as to such
variation, shall continue in force.

 

12.10   Waiver.  The failure of either party to enforce any provision of this
Agreement

 

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shall not be construed as a waiver or limitation of that party’s right to
subsequently enforce and compel strict compliance with every provision of this
Agreement.

 

12.11    Interpretation.  This Agreement shall not be construed against any
party on the grounds that such party drafted the Agreement or caused it to be
drafted.

 

12.12    Governing Law.  This Agreement shall be governed by the laws of the
State of California.  Any controversy or claim arising out of or relating to
this Agreement or the breach thereof, whether involving remedies at law or
equity, shall be adjudicated in San Diego, California.

 

12.13    No Conflicting Agreements.  Employee represents and warrants to the
Company that he is not a party to or bound by any confidentiality,
noncompetition, nonsolicitation or other agreement or restriction which could
conflict with or be violated by the performance of Employee’s duties to the
Company under this Agreement or otherwise.  Employee agrees that he will not
disclose to the Company, use, or induce the Company to use, any invention or
confidential information belonging to any third party.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first written above.

 

LPATH, INC.

 

EMPLOYEE

 

 

 

 

 

 

By:

/s/ Scott R. Pancoast

 

/s/ John F. Bender

 

 

Signature

Its: President & Chief Executive Officer

 

John F. Bender

 

 

Print Name

 

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EXHIBIT A

 

(PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT)

 

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