Exhibit 99.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of January 1, 2006,
at San Diego, California among LPATH, INC., a Nevada corporation (the
"Company"), and SCOTT R. PANCOAST ("Employee") with reference to the following
facts:
In consideration of their respective promises contained herein, the parties
hereto agree as follows:
1. EMPLOYMENT
Employee and the Company now desire to memorialize the terms and
conditions associated with the Employee's hiring as Chief Executive
Officer and President, which terms and conditions shall be contained in
this Agreement.
2. EMPLOYEE'S DUTIES
Employee shall, while contributing his services hereunder:
(a) Serve the Company in the capacity set forth in Section 1, or
in such other similar chief executive capacity as the Company's
Board of Directors (hereinafter, referred to as "the Board") may
direct, on a full-time basis and exclusive to the Company
[excluding the agreed-upon duties relating to Western States
Investment Corporation ("WSIC")], 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 Board and perform the duties and exercise the
powers assigned or vested in him by the Board;
(c) Comply with and conform to any lawful instructions or
directions given or made by the Board, and faithfully,
industriously, diligently, and to the best of 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 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 Board such
evidence thereof as it may reasonably require; however, Company
understands, and finds acceptable, that (i) Employee still
serves on the Board of Directors of various WSIC portfolio
companies ("Portfolio Boards") and/or monitors such portfolio
companies' performance and still serves on the board of
publicly-traded
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iVOW, Inc. (ii) that Employee will not join any other Boards
unless granted permission by Company's Board of Directors, (iii)
upon a change of control with respect to any of the Portfolio
Boards, Employee will resign, unless granted permission
otherwise by the Company's Board of Directors, and (iv) WSIC has
agreed to reimburse the Company for the time and effort Employee
expends serving on the Portfolio Boards.
3. COMPENSATION
In consideration of the performance by Employee of his duties hereunder,
the remuneration of Employee shall be (and the Company shall pay to
Employee):
(a) A base salary ("Salary") of $330,000 per annum payable
in accordance with the Company's normal payroll
procedure, subject to normal payroll deductions.
(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) Such additional remuneration as Employee and the Company
shall negotiate after January 1, 2006.
In addition, the Company shall, at least on an annual basis, review
Employee's stock-option/stock-grant holdings and make reasonable efforts
to keep the level of such holdings competitive with companies that are
similar to the Company or, in the alternative, provide to Employee its
good-faith business reasons for not doing so.
4. EXPENSES
The Company shall pay on behalf of Employee or reimburse Employee
(against 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)
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
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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 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 one year's base compensation if the
termination occurs BEFORE there has been a Corporate Transaction (to be
defined later in this section) or pay Employee 18 months' base
compensation if the termination occurs AFTER there has been a Corporate
Transaction. Such payments are to be made in accordance with the
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 twelve-month period beyond that, or for an 18-month
period if the termination occurs AFTER there has been a Corporate
Transaction.
(iii) Accelerate a certain amount of Employee's unvested stock
options, as follows:
(a) If the termination occurs BEFORE there has been
a Corporate Transaction, Company will (i) accelerate-vest by 24
months Employee's unvested stock options, unvested stock grants,
and any other such assets that vest over time, unless the
termination occurs after December 31, 2006, in which case the
accelerated vesting shall be 18 months, and (ii) allow
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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.
(b) If the termination occurs within 24 months AFTER
there has been a Corporate Transaction, Company will (i)
accelerate vest by 24 months Employee's unvested stock options,
unvested stock grants, and any other such assets that vest over
time and (ii) 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. . (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 that results in a material adverse
impact to the Company: 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 unjustified, 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
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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, 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) any
lysophosphatidic acid, 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
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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 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 supersede 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.
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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. 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 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
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. 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.
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12. MISCELLANEOUS
12.1 Amendment. This Agreement may not be modified or amended without
the express prior written consent of the Company and 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
TO THE EMPLOYEE:
Scott Pancoast
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 Employee, and there are no other promises or conditions
regarding 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.
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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 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first written above.
THE COMPANY EMPLOYEE
By:
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Its: Signature
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Print Name
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