EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April 15, 2003,
is made by and among NeoGenomics, Inc., a Nevada corporation (the "Company");
NeoGenomics, Inc., a Florida corporation ("NeoGenomics Florida"), and Xxxxxxx X.
Xxxx, M.D. (the "Executive"). (The Company and NeoGenomics Florida are
hereinafter collectively referred to as the "Employers").
R E C I T A L S
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A. The Employers desire to employ the Executive as their President and
Chief Medical Officer on the terms and conditions of this Agreement.
B. The Executive desires to accept such employment on the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereby agree as follows:
1. Term of Employment. Subject to the provisions of Section 6 of this
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Agreement, the initial term of the Executive's employment under this Agreement
shall be twelve (12) months (the ""Initial Term"", commencing on April 15, 2003
(the "Effective Date"). The Executive's employment will be automatically
renewed for an unlimited number of additional terms of twelve (12) months each,
unless either Employer or the Executive delivers a Notice of Termination (as
defined in Section 6.2 below) at least thirty (30) days prior to the end of the
Initial Term or, after the Initial Term has expired, either Employer or the
Executive delivers a Notice of Termination at least ninety (90) days prior to
the proposed termination date.
2. Positions. The Executive shall be employed throughout the term of this
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Agreement as the President and Chief Medical Officer of each of the Employers
and shall report to the Board of Directors of each of the Employers.
3. Duties.
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3.1 Nature of Duties. Subject to the authority of the Board of
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Directors of each of the Employers, the Executive shall have duties,
responsibilities and authority consistent with those which normally attendant to
the position of President and Chief Medical Officer.
3.2 Efforts of Executive.
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(a) During the term of his employment, the Executive shall devote at
least twenty percent (20%) of his business time and effort to the business and
affairs of the Employers and the promotion of their interests. Such percentage
will be increased in accordance with Sections 4.1(d) or 4.1(e) providing the
conditions of either such Section have been met.
(b) The Employers acknowledge that the Executive intends to continue
his practice of medicine during the term of his employment.
4. Compensation.
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4.1 Base Salary.
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(a) During the term of his employment, the Executive shall be eligible
for a base salary in any given month equal to 20% of NeoGenomics Florida''s Cash
Flow From Operations (hereinafter referred to as ""CFFO"") of the preceding
month, subject to a $20,000 cap for any given month. For the purposes of this
Agreement, CFFO shall be defined as the Net Cash Provided by Operating
Activities from the NeoGenomics Florida''s Consolidated Statement of Cash Flows
prepared in accordance with generally accepted accounting principles for any
given month, it being generally understood that Net Cash Provided By Operating
Activities is equal to the sum of net income, any non-cash charges contained in
the income statement (such as depreciation), and any changes in the working
capital accounts. For purposes of calculating such CFFO for any given month,
the Employers agree that any payments made to MVP 3 or Medical Venture Partners
LLC under any consulting agreements in effect at that time will be added back to
the result.
(b) NeoGenomics Florida agrees to use its best efforts to prepare such
Consolidated Statement of Cash Flows for any given month within thirty days of
the close of such month and to promptly pay to the Executive any base salary
that may be due for such month within seven (7) days of the date of such
calculation; provided, however, that the NeoGenomics Florida shall have until
the earlier of (i) ninety (90) days from the end of the last month in the fiscal
year, or (ii) the date on which the Company files its annual report on Form 10K
to calculate the Executive''s base salary for such final month of a fiscal year.
The Employers and the Executive agree that any such base salary payments made to
the Executive will be booked in the month in which they are paid as compensation
expense.
(c) In the event that the NeoGenomics Florida undertakes any accounting
adjustments after any given monthly CFFO is calculated, the Employers and the
Executive agree to offset the impacts of any such adjustments, whether positive
or negative, in the base salary calculation in the next succeeding month or
months as the case may be.
(d) After NeoGenomics Florida has achieved a positive CFFO of at least
$50,000 per month for three consecutive months, the Executive agrees to increase
his percentage time devoted to the Employers pursuant to Section 3.2 to such
percentage as may be mutually agreed upon by the parties at that time, but in no
event less than 30%.
(e) The Boards of Directors of the Employers may, at their discretion, grant
additional increases in such salary based on the Executive's performance at any
time.
4.2 Bonus.
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(a) It is the desire of the Company''s Board of Directors to provide a
positive incentive to the Executive to grow the revenues of the business as
quickly as possible. During the term of the Executive''s employment, the
Executive will be entitled to receive a bonus, on a quarterly basis, equal to
10% of the amount by which NeoGenomics Florida''s quarterly net revenues exceed
targets established by the Company''s Board of Directors. For the purposes of
this agreement, net revenues shall be defined as gross revenues less any offsets
to revenue (such as anticipated insurance adjustments, known bad debt, or
courtesy discounts) that NeoGenomics Florida has booked for any such quarter.
Such targets will be determined in good faith by the Board of Directors after
consulting with the Executive no later than Feb 28th of any given fiscal year.
For fiscal year 2003, such targets are as follows:
PERIOD TARGET
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For the Quarter Ending June 30, 2003 $125,000
For the Quarter Ending September 30, 2003 $250,000
For the Quareter Ending December 31, 2003 $500,000
(b) NeoGenomics Florida agrees to use its best efforts to determine its
net revenues for any given quarter within forty-five (45) days of the close of
such quarter and to promptly pay to the Executive any bonus that may be due for
such quarter within fifteen (15) days of the date of such calculation; provided,
however, that NeoGenomics Florida shall have until the earlier of (i) ninety
(90) days from the end of the last quarter in a fiscal year, or (ii) the date on
which the Company files its annual report on Form 10K, to calculate any bonus
due to the Executive for such final quarter of a fiscal year. The Employers and
the Executive agree that any such bonus payments made to the Executive will be
booked in the month in which it is paid as compensation expense.
(c) In the event that NeoGenomics Florida undertakes any accounting
adjustments after any given quarterly net revenue amount is calculated, the
Employers and the Executive agree to offset the impacts of any such adjustments,
whether positive or negative, in the bonus calculation for the next succeeding
quarter or quarters as the case may be.
5. Other Benefits.
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5.1 Health Insurance. Once the Executive is devoting 50% or more of
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his time to the business in accordance with Section 3.2 hereof, The Employers
shall pay the premiums for health insurance covering the Executive and his
family.
5.2 Vacation. The Executive shall be entitled to take vacation in
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accordance with the Companies' vacation policy. The Executive shall also be
entitled to all paid holidays given by the Companies to their other officers.
5.3 Reimbursement. The Executive shall be entitled to reimbursement,
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in accordance with policies established by the Boards of Directors, of
reasonable out-of--pocket expenses incurred in the performance of his duties
here-under including, but not limited to, travel and entertainment expenses.
Such expenses shall be reimbursed by the Employers, from time to time, upon
presentation of appropriate receipts therefor which have been approved by a
designated member of the Boards of Directors.
5.4 Other Benefits. The Executive shall, during the term of this
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Agreement, be entitled to participate in all fringe benefit programs which the
Employers currently or hereafter provide to their other executive employees.
6. Termination.
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6.1 Types of Termination. The Executive's employment under this
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Agreement may be terminated without breach under the following circumstances:
(a) Death. The Executive's employment shall terminate upon his
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death.
(b) Disability. The Employers may terminate the Executive's
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employment if, as a result of the Executive's incapacity due to physical or
mental injury or illness, the Executive shall have been absent from his duties
under this Agreement on a full-time basis for a period of one hundred twenty
(120) days during any one-year period during the term of this Agreement
("Disability").
(c) Cause. The Employers may terminate the Executive's employment
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for Cause. For purposes of this Agreement, the Employers shall have "Cause" to
terminate the Executive's employment hereunder upon: (i) the willful and
repeated failure of the Executive to perform the duties assigned to him by the
Employers' Board of Directors (provided that the Boards have notified the
Executive in writing of the nature of such failure and, in the case of any
failure which is capable of being cured, the Executive has failed to cure such
failure within twenty (20) days after notice of such failure and, in the case of
any other failure, the Executive has repeated such failure); (ii) any use of
alcohol or a controlled substance which materially interferes with the
Executive's ability to perform his duties; (iii) the conviction of a felony, or
such other crime as, in the reasonable opinion of the Boards of Directors of the
Employers, causes a lack of confidence in the Executive; or (iv) the
Executive''s commission of a material act of fraud or dishonesty.
(d) Termination by the Executive for Good Reason. The Executive
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may terminate his employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean a failure by the Employers to comply with any material
provision of this Agreement which has not been cured within twenty (20) days
after notice of such noncompliance has been given by the Executive to the
Employers.
(e) Non-Renewal. The Executive's employment shall terminate upon
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the expiration of the Initial Term of this Agreement if either party provides
Notice of Termination at least thirty (30) days prior to the end of such Initial
Term ("Non-Renewal").
(f) Termination with Ninety Days Notice. After the Initial Term,
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the Executive''s employment may be terminated if either party provides Notice of
Termination at least ninety (90) days prior to the proposed date of termination
(""Ninety Day Notice"").
6.2 Notice of Termination. Any termination of the Executive's
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employment by the Employers or by the Executive (other than termination pursuant
to Section 6.1(a) above) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under such provision.
6.3 Date of Termination. "Date of Termination" shall mean: (i) if the
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Executive's employment is terminated by his death, the date of his death; (ii)
if the Executive's employment is terminated due to Non-Renewal, at the end of
the the Initial Term of this Agreement; (iii) if the Executive''s employment is
terminated after the Initial Term due to Ninety Day Notice, the date which is
the later of ninety days from the date of the Notice of Termination or such
later date as may be specified in the Notice of Termination; and (iv) if the
Executive's employment is terminated for any other reason, the date on which
Notice of Termination is given.
7. Compensation During Disability and Upon Termination
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7.1 Compensation During Disability. During any period that the
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Executive does not perform his duties hereunder as a result of incapacity due to
physical or mental injury or illness (the "Disability Period"), the Executive
shall continue to receive his salary and other benefits to which he is entitled
under this Agreement for such period until his employment is terminated,
provided that payments so made to the Executive during the disability period
shall be reduced by any amounts payable to the Executive at or prior to the time
of any such payment under any disability benefit plan provided by the Employers.
7.2 Compensation Upon Termination.
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(a) If the Executive's employment is terminated during the Initial Term
of this Agreement due to: (i) death; (ii) Disability; (iii) Good Reason; or (iv)
by the Employers without Cause, then the Employers shall continue to pay to the
Executive his salary (in accordance with normal payroll practices and at the
rate in effect on the date of termination) during a period equal to the
remainder of the Initial Term of this Agreement.
(b) If the Executive's employment is terminated after the Initial Term
of this Agreement due to: (i) death; (ii) Disability; (iii) Good Reason; (iv) by
the Employers without Cause; or (v) with Ninety Day Notice, then the Employers
shall continue to pay to the Executive his salary (in accordance with normal
payroll practices and at the rate in effect on the date of termination) during a
period equal to ninety (90) days from the date of the Notice of Termination (or
in the case of Death, the ninety (90) days from the date of Death).
(c) If the Executive's employment is terminated due to: (i) Cause;
(ii) Non-Renewal; or (iii) the voluntary resignation of the Executive (other
than for Good Reason), then the Employers shall not pay any additional
compensation or severance benefits to the Executive.
8. Miscellaneous.
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8.1 Modification and Waiver. Any term or condition of this Agreement
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may be waived at any time by the party that is entitled to the benefit thereof;
provided, however, that no such waiver of any breach or default under this
Agreement is to be implied from the omission of the other party to take any
action on account thereof. A waiver on one occasion shall not be deemed to be a
waiver of the same or of any other breach on a subsequent occasion. This
Agreement may be modified or amended only by a writing signed by the Employers
and the Executive.
8.2 Governing Law; Choice of Forum. The validity and effect of this
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Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Florida, without giving effect to any conflicts-of-law rule
or principle that would give effect to the law of another jurisdiction. In any
action or proceeding arising out of or relating to this Agreement (an "Action"),
each of the parties hereto hereby irrevocably submits to the non-exclusive
jurisdiction of any federal or state court sitting in Naples, Florida, and
further agrees that any Action may be heard and determined in such federal court
or in such state court. Each of the parties hereto hereby irrevocably waives,
to the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of any Action in Naples, Florida.
8.3 Successors and Assigns. This Agreement requires the personal
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services of, and shall not be assignable by, the Executive. This Agreement
shall be binding upon, and shall inure to the benefit of, the Employers and
their successors and assigns.
8.4 Section Captions. Section captions contained in this Agreement are
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for reference purposes only and are not intended to describe, interpret, define
or limit the scope, extent of this Agreement or any provision of this Agreement.
8.5 Severability. Every provision of this Agreement is intended to be
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severable. If any term or provision is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.
8.6 Entire Agreement. This Agreement constitutes the entire
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understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understandings, restrictions,
representations or warranties among the parties other than those set forth or
provided for in this Agreement.
8.7 Attorney's Fees. In the event of any litigation between the
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parties to enforce the terms of this Agreement, the prevailing party shall be
entitled to recover from the other party, any and all reasonable attorney's fees
(including fees incurred in pre-trial investigation, at trial and on appeal) and
court costs incurred in enforcing such terms.
8.8 Notices. Any notices required to be given under this Agreement
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shall be in writing and shall be deemed to have been duly given when personally
delivered or deposited in the United States mail, certified or registered,
return receipt requested, postage prepaid, addressed to the parties at their
respective addresses listed below:
If to the Employers: NeoGenomics, Inc.
0000 Xxxxxxx Xxxx, Xxxxx000
Xxxxxx, Xxxxxxx 00000
If to Executive: Xxxxxxx X. Xxxx, M.D.
0000 Xxxxxxx Xxxx, Xxxxx000
Xxxxxx, Xxxxxxx 00000
8.9 Payment of Accrued Compensation Due and Owing to Executive. The
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Employers acknowledge that as of the Effective Date of this Agreement, the
Executive has $30,498 of accrued, but unpaid compensation from NeoGenomics
Florida. The Employers agree that, at a minimum, they will begin making
payments on such accrued compensation to the Executive in an amount not less
than $2,500/month beginning in October 2003 and continuing each month until the
balance is paid in full. The Executive agrees that in the event the Employers
determine, in their sole discretion, that it is advantageous for accounting
purpose to convert such accrued compensation into a debt obligation of
NeoGenomics Florida, he will enter into an agreement evidencing such
indebtedness on commercially reasonable terms
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
NEOGENOMICS, INC., A NEVADA CORPORATION
NEOGENOMICS, INC., A FLORIDA CORPORATION
By:
Name: Xxxxx X. Xxxxxxxx
Title: Member, Board of Directors
Xxxxxxx X. Xxxx, M.D., Individually
