EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement is made and entered into effective as of January 1, 2007
(the “Effective Date”), by and between Neoprobe
Corporation, a
Delaware Corporation with a place of business at 000 Xxxxx Xxxxx Xxxxx, Xxxxx
000, Xxxxxx, Xxxx 00000-0000 (the “Company”) and Xxxxx
X. Xxxx
of
Dublin, Ohio (the “Employee”).
WHEREAS,
the Company and the Employee entered into an Employment Agreement dated as
of
January 1, 1996 (the “1996 Employment Agreement”); and
WHEREAS,
the Company and the Employee entered into an Employment Agreement dated as
of
January 1, 1998 (the “1998 Employment Agreement”); and
WHEREAS,
the Company and the Employee entered into an Employment Agreement dated as
of
July 1, 1999 (the “1999 Employment Agreement”); and
WHEREAS,
the Company and the Employee entered into an Employment Agreement dated as
of
July 1, 2000 (the "2000 Employment Agreement"); and
WHEREAS,
the Company and the Employee entered into an Employment Agreement dated as
of
July 1, 2001 (the "2001 Employment Agreement"); and
WHEREAS,
the Company and the Employee entered into an Employment Agreement dated as
of
January 1, 2004 (the "2004 Employment Agreement"); and
WHEREAS,
the Company and the Employee wish to establish new terms, covenants, and
conditions for the Employee’s continued employment with the Company through this
agreement (“Employment Agreement”).
NOW,
THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto agree as follows:
| 1. |
Duties.
From and after the Effective Date, and based upon the terms and conditions
set forth herein, the Company agrees to employ the Employee and the
Employee agrees to be employed by the Company, as President and Chief
Executive Officer of the Company and in such equivalent, additional
or
higher executive level position or positions as shall be assigned
to him
by the Company’s Board of Directors. While serving in such executive level
position or positions, the Employee shall report to, be responsible
to,
and shall take direction from the Board of Directors of the Company.
The
Board of Directors shall not require the Employee to perform any
task that
is inconsistent with the office of President or the position of Chief
Executive Officer. During the Term of this Employment Agreement (as
defined in Section 2 below), the Employee agrees to devote substantially
all of his working time to the position he holds with the Company
and to
faithfully, industriously, and to the best of his ability, experience
and
talent, perform the duties which are assigned to him. The Employee
shall
observe and abide by the reasonable corporate policies and decisions
of
the Company in all business matters.
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|
The
Employee represents and warrants to the Company that Exhibit A attached
hereto sets forth a true and complete list of (a) all offices,
directorships and other positions held by the Employee in corporations
and
firms other than the Company and its subsidiaries and (b) any investment
or ownership interest in any corporation or firm other than the Company
beneficially owned by the Employee (excluding investments in life
insurance policies, bank deposits, publicly traded securities that
are
less than five percent (5%) of their class and real estate). The
Employee
will promptly notify the Board of Directors of the Company of any
additional positions undertaken or investments made by the Employee
during
the Term of this Employment Agreement if they are of a type which,
if they
had existed on the date hereof, should have been listed on Exhibit
A
hereto. As long as the Employee’s other positions or investments in other
firms do not create a conflict of interest, violate the Employee’s
obligations under Section 7 below or cause the Employee to neglect
his
duties hereunder, such activities and positions shall not be deemed
to be
a breach of this Employment
Agreement.
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| 2. |
Term
of this Employment Agreement.
Subject to Sections 4 and 5 hereof, the Term of this Employment Agreement
shall be for a period of Thirty-six (36) months, commencing January
1,
2007 and terminating December 31,
2009.
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|
3.
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Compensation.
During the Term of this Employment Agreement, the Company shall pay,
and
the Employee agrees to accept as full consideration for the services
to be
rendered by the Employee hereunder, compensation consisting of the
following:
|
| A. |
Salary.
Beginning on the first day of the Term of this Employment Agreement,
the
Company shall pay the Employee a salary of Three Hundred Five Thousand
Dollars ($305,000) per year, payable in semi-monthly or monthly
installments as requested by the Employee. Further, the Company agrees
to
review the Employee’s salary every twelve (12) months
hereafter.
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| B. |
Bonus.
The Compensation Committee of the Board of Directors will, on an
annual
basis, review the performance of the Company and of the Employee
and will
pay such bonus as it deems appropriate, in its discretion, to the
Employee
based upon such review. Such review and bonus shall be consistent
with any
bonus plan adopted by the Compensation Committee, which covers the
executive officers and employees of the Company
generally.
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| C. |
Benefits.
During the Term of this Employment Agreement, the Employee will receive
such employee benefits as are generally available to all employees
of the
Company.
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| D. |
Stock
Options.
The Compensation Committee of the Board of Directors may, from
time-to-time, grant stock options, restricted stock purchase opportunities
and such other forms of stock-based incentive compensation as it
deems
appropriate, in its discretion, to the Employee under the Company’s Stock
Option and Restricted Stock Purchase Plan and the 1996 and 2002 Stock
Incentive Plan (the “Stock Plans”). The terms of the relevant award
agreements shall govern the rights of the Employee and the Company
thereunder in the event of any conflict between such agreement and
this
Employment Agreement.
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| E. |
Vacation.
The Employee shall be entitled to thirty (30) days of vacation during
each
calendar year during the Term of this Employment
Agreement.
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| F. |
Expenses.
The Company shall reimburse the Employee for all reasonable out-of-pocket
expenses incurred by him in the performance of his duties hereunder,
including expenses for travel, entertainment and similar items, promptly
after the presentation by the Employee, from time-to-time, of an
itemized
account of such expenses.
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| 4. |
Termination.
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| A. |
For
Cause.
The Company may terminate the employment of the Employee prior to
the end
of the Term of this Employment Agreement “for cause.” Termination “for
cause” shall be defined as a termination by the Company of the employment
of the Employee occasioned by the failure by the Employee to cure
a
willful breach of a material duty imposed on the Employee under this
Employment Agreement within 15 days after written notice thereof
by the
Company or the continuation by the Employee after written notice
by the
Company of a willful and continued neglect of a duty imposed on the
Employee under this Employment Agreement. In the event of termination
by
the Company “for cause,” all salary, benefits and other payments shall
cease at the time of termination, and the Company shall have no further
obligations to the Employee.
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| B. |
Resignation. If
the Employee resigns for any reason, all salary, benefits and other
payments (except as otherwise provided in paragraph G of this Section
4
below) shall cease at the time such resignation becomes effective.
At the
time of any such resignation, the Company shall pay the Employee
the value
of any accrued but unused vacation time, and the amount of all accrued
but
previously unpaid base salary through the date of such termination.
The
Company shall promptly reimburse the Employee for the amount of any
expenses incurred prior to such termination by the Employee as required
under paragraph F of Section 3
above.
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| C. |
Disability, Death.
The Company may terminate the employment of the Employee prior to
the end
of the Term of this Employment Agreement if the Employee has been
unable
to perform his duties hereunder for a continuous period of Twelve
(12)
months due to a physical or mental condition that, in the opinion
of a
licensed physician, will be of indefinite duration or is without
a
reasonable probability of recovery. The Employee agrees to submit
to an
examination by a licensed physician of his choice in order to obtain
such
opinion, at the request of the Company, made after the Employee has
been
absent from his place of employment for at least six (6) months.
Any
requested examination shall be paid for by the Company. However,
this
provision does not abrogate either the Company’s or the Employee’s rights
and obligations pursuant to the Family and Medical Leave Act of 1993,
and
a termination of employment under this paragraph C shall not be deemed
to
be a termination for cause.
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If
during
the Term of this Employment Agreement, the Employee dies or his employment
is
terminated because of his disability, all salary, benefits and other payments
shall cease at the time of death or disability, provided, however, that the
Company shall provide such health, dental and similar insurance or benefits
as
were provided to Employee immediately before his termination by reason of death
or disability, to Employee or his family for the longer of Twenty-four (24)
months after such termination or the full unexpired Term of this Employment
Agreement on the same terms and conditions (including cost) as were applicable
before such termination. In addition, for the first six (6) months of
disability, the Company shall pay to the Employee the difference, if any,
between any cash benefits received by the Employee from a Company-sponsored
disability insurance policy and the Employee’s salary hereunder. At the time of
any such termination, the Company shall pay the Employee, the value of any
accrued but unused vacation time, and the amount of all accrued but previously
unpaid base salary through the date of such termination. The Company shall
promptly reimburse the Employee for the amount of any expenses incurred prior
to
such termination by the Employee as required under paragraph F of Section 3
above.
| D. |
Termination
without Cause. A
termination without cause is a termination of the employment of the
Employee by the Company that is not “for cause” and not occasioned by the
resignation, death or disability of the Employee. If the Company
terminates the employment of the Employee without cause, (whether
before
the end of the Term of this Employment Agreement or, if the Employee
is
employed by the Company under paragraph E of this Section 4 below,
after
the Term of this Employment Agreement has ended) the Company shall,
at the
time of such termination, pay to the Employee the severance payment
provided in paragraph F of this Section 4 below together with the
value of
any accrued but unused vacation time and the amount of all accrued
but
previously unpaid base salary through the date of such termination
and
shall provide him with all of his benefits under paragraph C of Section
3
above for the longer of Thirty-six (36) months or the full unexpired
Term
of this Employment Agreement. The Company shall promptly reimburse
the
Employee for the amount of any expenses incurred prior to such termination
by the Employee as required under paragraph F of Section 3
above.
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If
the
Company terminates the employment of the Employee because it has ceased to
do
business or substantially completed the liquidation of its assets or because
it
has relocated to another city and the Employee has decided not to relocate
also,
such termination of employment shall be deemed to be without cause.
| E. |
End
of the Term of this Employment Agreement.
Except as otherwise provided in paragraphs F and G of this Section
4
below, the Company may terminate the employment of the Employee at
the end
of the Term of this Employment Agreement without any liability on
the part
of the Company to the Employee but, if the Employee continues to
be an
employee of the Company after the Term of this Employment Agreement
ends,
his employment shall be governed by the terms and conditions of this
Agreement, but he shall be an employee at will and his employment
may be
terminated at any time by either the Company or the Employee without
notice and for any reason not prohibited by law or no reason at all.
If
the Company terminates the employment of the Employee at the end
of the
Term of this Employment Agreement, the Company shall, at the time
of such
termination, pay to the Employee the severance payment provided in
paragraph F of this Section 4 below together with the value of any
accrued
but unused vacation time and the amount of all accrued but previously
unpaid base salary through the date of such termination. The Company
shall
promptly reimburse the Employee for the amount of any reasonable
expenses
incurred prior to such termination by the Employee as required under
paragraph F of Section 3 above.
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| X. | Xxxxxxxxx. If the employment of the Employee is terminated by the Company, at the end of the Term of this Employment Agreement or, without cause (whether before the end of the Term of this Employment Agreement or, if the Employee is employed by the Company under paragraph E of this Section 4 above, after the Term of this Employment Agreement has ended), the Employee shall be paid, as a severance payment at the time of such termination, the amount of Four Hundred Six Thousand Two Hundred Fifty Dollars ($406,250) together with the value of any accrued but unused vacation time. |
| G. |
Change
of Control Severance.
In
addition to the rights of the Employee under the Company’s employee
benefit plans (paragraphs C of Section 3 above) but in lieu of any
severance payment under paragraph F of this Section 4 above, if there
is a
Change in Control of the Company (as defined below) and the employment
of
the Employee is concurrently or subsequently terminated (a) by the
Company
without cause, (b) by the expiration of the Term of this Employment
Agreement, or (c) by the resignation of the Employee because he has
reasonably determined in good faith that his titles, authorities,
responsibilities, salary, bonus opportunities or benefits have been
materially diminished, that a material adverse change in his working
conditions has occurred, that his services are no longer required
in light
of the Company’s business plan, or the Company has breached this
Employment Agreement, the Company shall pay the Employee, as a severance
payment, at the time of such termination, the greater of the amount
equal
to Thirty (30) months of the Employee’s Salary as defined in Section 3 (A)
above or Seven Hundred Sixty-two Thousand Five Hundred Dollars ($762,500)
together with the value of any accrued but unused vacation time,
and the
amount of all accrued but previously unpaid base salary through the
date
of termination and shall provide him with all of the Employee benefits
under paragraph C of Section 3 above for the longer of Thirty-six
(36)
months or the full unexpired Term of this Employment Agreement. The
Company shall promptly reimburse the Employee for the amount of any
expenses incurred prior to such termination by the Employee as required
under paragraph F of Section 3
above.
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For
the
purpose of this Employment Agreement, a Change in Control of the Company has
occurred when: (a) any person (defined for the purposes of this paragraph G
to
mean any person within the meaning of Section 13(d) of the Securities Exchange
Act of 1934 (the “Exchange Act”)), other than Neoprobe, an employee benefit plan
created by its Board of Directors for the benefit of its employees, or a
participant in a transaction approved by its Board of Directors for the
principal purpose of raising additional capital, either directly or indirectly,
acquires beneficial ownership (determined under Rule 13d-3 of the Regulations
promulgated by the Securities and Exchange Commission under Section 13(d) of
the
Exchange Act) of securities issued by Neoprobe having thirty percent (30%)
or
more of the voting power of all the voting securities issued by Neoprobe in
the
election of Directors at the next meeting of the holders of voting securities
to
be held for such purpose; (b) a majority of the Directors elected at any meeting
of the holders of voting securities of Neoprobe are persons who were not
nominated for such election by the Board of Directors or a duly constituted
committee of the Board of Directors having authority in such matters; (c) the
stockholders of Neoprobe approve a merger or consolidation of Neoprobe with
another person other than a merger or consolidation in which the holders of
Neoprobe’s voting securities issued and outstanding immediately before such
merger or consolidation continue to hold voting securities in the surviving
or
resulting corporation (in the same relative proportions to each other as existed
before such event) comprising eighty percent (80%) or more of the voting power
for all purposes of the surviving or resulting corporation; or (d) the
stockholders of Neoprobe approve a transfer of substantially all of the assets
of Neoprobe to another person other than a transfer to a transferee, eighty
percent (80%) or more of the voting power of which is owned or controlled by
Neoprobe or by the holders of Neoprobe’s voting securities issued and
outstanding immediately before such transfer in the same relative proportions
to
each other as existed before such event. The parties hereto agree that for
the
purpose of determining the time when a Change of Control has occurred that
if
any transaction results from a definite proposal that was made before the end
of
the Term of this Employment Agreement but which continued until after the end
of
the Term of this Employment Agreement and such transaction is consummated after
the end of the Term of this Employment Agreement, such transaction shall be
deemed to have occurred when the definite proposal was made for the purposes
of
the first sentence of this paragraph G of this Section 4.
| H. |
Benefit
and Stock Plans.
In
the event that a benefit plan or Stock Plan which covers the Employee
has
specific provisions concerning termination of employment, or the
death or
disability of an employee (e.g.,
life insurance or disability insurance), then such benefit plan or
Stock
Plan shall control the disposition of the benefits or stock
options.
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| 5. |
Proprietary
Information Agreement.
Employee has executed a Proprietary Information Agreement as a condition
of employment with the Company. The Proprietary Information Agreement
shall not be limited by this Employment Agreement in any manner,
and the
Employee shall act in accordance with the provisions of the Proprietary
Information Agreement at all times during the Term of this Employment
Agreement.
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| 6. |
Non-Competition.
Employee
agrees that for so long as he is employed by the Company under this
Employment Agreement and for one (1) year thereafter, the Employee
will
not:
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| A. |
enter
into the employ of or render any services to any person, firm, or
corporation, which is engaged, in any part, in a Competitive Business
(as
defined below);
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| B. |
engage
in any directly Competitive Business for his own
account;
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| C. |
become
associated with or interested in through retention or by employment
any
Competitive Business as an individual, partner, shareholder, creditor,
director, officer, principal, agent, employee, trustee, consultant,
advisor, or in any other relationship or capacity;
or
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| D. |
solicit,
interfere with, or endeavor to entice away from the Company, any
of its
customers, strategic partners, or sources of
supply.
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Nothing
in this Employment Agreement shall preclude Employee from taking
employment in the banking or related financial services industries
nor
from investing his personal assets in the securities or any Competitive
Business if such securities are traded on a national stock exchange
or in
the over-the-counter market and if such investment does not result
in his
beneficially owning, at any time, more than one percent (1%) of the
publicly-traded equity securities of such Competitive Business.
“Competitive Business” for purposes of this Employment Agreement shall
mean any business or enterprise
which:
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| a. |
is
engaged in the development and/or commercialization of products and/or
systems for use in intraoperative detection of cancer,
or
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| b. |
reasonably
understood to be competitive in the relevant market with products
and/or
systems described in clause a
above,
or
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| c. |
the
Company engages in during the Term of this Employment Agreement pursuant
to a determination of the Board of Directors and from which the Company
derives a material amount of revenue or in which the Company has
made a
material capital investment.
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The
covenant set forth in this Section 6 shall terminate immediately
upon the
substantial completion of the liquidation of assets of the Company
or the
termination of the employment of the Employee by the Company without
cause
or at the end of the Term of this Employment
Agreement.
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7.
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Arbitration.
Any dispute or controversy arising under or in connection with this
Employment Agreement shall be settled exclusively by arbitration
in
Columbus, Ohio, in accordance with the non-union employment arbitration
rules of the American Arbitration Association (“AAA”) then in effect. If
specific non-union employment dispute rules are not in effect, then
AAA
commercial arbitration rules shall govern the dispute. If the amount
claimed exceeds $100,000, the arbitration shall be before a panel
of three
arbitrators. Judgment may be entered on the arbitrator’s award in any
court having jurisdiction. The Company shall indemnify the Employee
against and hold him harmless from any attorney’s fees, court costs and
other expenses incurred by the Employee in connection with the
preparation, commencement, prosecution, defense, or enforcement of
any
arbitration, award, confirmation or judgment in order to assert or
defend
any right or obtain any payment under paragraph C of Section 4 above
or
under this sentence; without regard to the success of the Employee
or his
attorney in any such arbitration or
proceeding.
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8.
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Governing
Law.
The Employment Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio.
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9.
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Validity.
The invalidity or unenforceability of any provision or provisions
of this
Employment Agreement shall not affect the validity or enforceability
of
any other provision of the Employment Agreement, which shall remain
in
full force and effect.
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10.
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Compliance
with Section 409A of the Internal Revenue Code. If,
when the Employee's employment with the Company terminates, the Employee
is a "specified employee" as defined in Section 409A(a)(1)(B)(i)
of the
Internal Revenue Code, and if any payments under this Employment
Agreement, including payments under Section 4, will result in additional
tax or interest to the Employee under Section 409A(a)(1)(B) ("Section
409A
Penalties"), then despite any provision of this Employment Agreement
to
the contrary, the Employee will not be entitled to payments until
the
earliest of (a) the date that is at least six months after termination
of
the Employee's employment for reasons other than the Employee's death,
(b)
the date of the Employee's death, or (c) any earlier date that does
not
result in Section 409A Penalties to the Employee. As soon as practicable
after the end of the period during which payments are delayed under
this
provision, the entire amount of the delayed payments shall be paid
to the
Employee in a lump sum. Additionally, if any provision of this Employment
Agreement would subject the Employee to Section 409A Penalties, the
Company will apply such provision in a manner consistent with Section
409A
of the Internal Revenue Code during any period in which an arrangement
is
permitted to comply operationally with Section 409A of the Internal
Revenue Code and before a formal amendment to this Employment Agreement
is
required.
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11.
Entire
Agreement.
| A. |
The
2004 Employment Agreement is terminated as of the effective date
of this
Employment Agreement, except that awards under the Stock Plans granted
to
the Employee in the 2004 Employment Agreement or in any previous
employment agreement or by the Compensation Committee remain in full
force
and effect, and survive the termination of the 1999, 2001 and 2004
Employment Agreements and remain in full force and effect, and survive
the
termination of the 2004 Employment
Agreement.
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B.
This Employment Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof, superseding all negotiations,
prior discussions, and preliminary agreements. This Employment Agreement may
not
be amended except in writing executed by the parties hereto.
12.
Effect
on Successors of Interest.
This
Employment Agreement shall inure to the benefit of and be binding upon heirs,
administrators, executors, successors and assigns of each of the parties hereto.
Notwithstanding the above, the Employee recognizes and agrees that his
obligation under this Employment Agreement may not be assigned without the
consent of the Company.
IN
WITNESS WHEREOF,
the
parties hereto have executed and delivered this Employment Agreement as of
the
date first written above.
| NEOPROBE CORPORATION | EMPLOYEE | ||
| By: | |||
|
Xxxxx X. Xxxxxx, Vice President and Chief Financial Officer |
Xxxxx X. Xxxx |
