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a.
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Base
Salary. Unless otherwise adjusted by the Compensation
Committee of the Board (the “Compensation Committee”), the Company shall
pay Executive a base salary of $325,000 per annum (the “Base Salary”),
payable in equal installments at such times as is consistent with normal
Company payroll policy.
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b.
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Bonus. Executive
will be eligible for a performance-based bonus as a participant in the
Company’s Management Incentive Plan (“MIP”), which
shall set annual target incentives for the Executive and other senior
ranking employees that are determined by the Compensation Committee of the
Board (the “Compensation
Committee”). The Company will target an annual
bonus of 60% of the Executive’s Base Salary (the “Target Bonus”),
pro-rated for the number of months of service in any given year in the
event that the Executive’s employment is terminated by the Company or the
Executive for any reason prior to the end of any such
year. Upon meeting the performance thresholds established
by the Compensation Committee in the MIP for any such year, the actual
bonus payout for such year will be no less than 100% of the Target
Bonus. However, the Executive shall be eligible to receive up
to 150% of the Target Bonus in the event that the Company’s and/or the
Executive’s performance exceeds the thresholds set for the Target
Bonus.
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c.
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Benefits. Subject
to the eligibility requirements (including, but not limited to,
participation by part-time employees), and enrollment provisions of the
Company’s employee benefit plans, Executive may, to the extent he so
chooses, participate in any and all of the Company’s employee benefit
plans, at the Company’s expense. All Company benefits are
identified in the Employee Handbook and are subject to change without
notice or explanation. In addition, subject to the eligibility
requirements (including, but not limited to, participation by a part-time
employee) and enrollment provisions of the Company’s executive benefit
programs, Executive shall also be entitled to participate in any and all
other benefits programs established for officers of the
Company.
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d.
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Stock
Options. On the Effective Date, Executive will be
granted an option to purchase 1,000,000 shares of the Company’s common
stock (the “Options”) on
the terms and conditions listed below. Such Options will have a
strike price equal to the fair market value of the common stock as of the
Effective Date, which pursuant to NeoGenomics’ Amended and Restated Equity
Incentive Plan (the “Plan”), shall be equal to the closing price per share
of NeoGenomics’ common stock on the last trading day immediately preceding
the Effective Date. The vesting provisions of such Options
shall be as outlined below. These Options shall be treated as
incentive stock options (ISOs) to the maximum extent permitted under
applicable law, and the remainder of the Options, if any, shall be treated
as non-qualified stock options. The grant of these Options will
be made pursuant to the Company’s Plan and will be evidenced by a separate
“Option
Agreement” to be executed by the Company and Executive, which will
contain all the terms and conditions of the Options (including, but not
limited to, the provisions set forth in this Section 3(d)). So
long as Executive remains employed by the Company, such Options will have
a seven-year term before
expiration.
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200,000
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will
vest on the first anniversary of the Effective Date; provided, however,
that if the Executive’s employment hereunder is terminated by the Employer
without “cause” (as such term is defined in the Option Agreement) at any
time prior to the first anniversary of the Effective Date, then the pro
rata portion of these 200,000 Options up until the date of termination,
shall be deemed vested; and
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12,500
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will
vest each month beginning on the 13th
monthly anniversary of the Effective Date and continuing on each monthly
anniversary thereafter until the second anniversary of the Effective Date;
and
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8,000
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will
vest each month beginning on the 25th
monthly anniversary of the Effective Date and continuing on each monthly
anniversary thereafter until the third anniversary of the Effective Date;
and
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4,500
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will
vest each month beginning on the 37th
monthly anniversary of the Effective Date and continuing on each monthly
anniversary thereafter until the fourth anniversary of the Effective
Date.
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100,000
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will
vest if the Company’s actual consolidated revenue for FY 2009, after
excluding the effects of any Revenue Exclusions for such fiscal year,
meets or exceeds the consolidated revenue goal established by the Board
for the vesting of performance options, which goal will be based on the
Company’s Board approved budget for such fiscal year;
and
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100,000
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will
vest if the Company’s actual Adjusted EBITDA for FY 2009, after excluding
the effects of any Adjusted EBITDA Exclusions for such fiscal year, meets
or exceeds the Adjusted EBITDA goal established by the Board for the
vesting of performance options, which will be based on the Company’s
Board-approved budget for such fiscal year;
and
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75,000
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will
vest if the Company’s actual consolidated revenue for FY 2010, after
excluding the effects of any Revenue Exclusions for such fiscal year,
meets or exceeds the consolidated revenue goal established by the Board
for the vesting of performance options, which goal will be based on the
Company’s Board approved budget for such fiscal year;
and
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75,000
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will
vest if the Company’s actual Adjusted EBITDA for FY 2010, after excluding
the effects of any Adjusted EBITDA Exclusions for such fiscal year, meets
or exceeds the Adjusted EBITDA goal established by the Board for the
vesting of performance options, which will be based on the Company’s
Board-approved budget for such fiscal year;
and
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50,000
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will
vest if the Company’s actual consolidated revenue for FY 2011, after
excluding the effects of any Revenue Exclusions for such fiscal year,
meets or exceeds the consolidated revenue goal established by the Board
for the vesting of performance options, which goal will be based on the
Company’s Board approved budget for such fiscal year;
and
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50,000
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will
vest if the Company’s actual Adjusted EBITDA for FY 2011, after excluding
the effects of any Adjusted EBITDA Exclusions for such fiscal year, meets
or exceeds the Adjusted EBITDA goal established by the Board for the
vesting of performance options, which will be based on the Company’s
Board-approved budget for such fiscal year;
and
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25,000
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will
vest if the Company’s actual consolidated revenue for FY 2012, after
excluding the effects of any Revenue Exclusions for such fiscal year,
meets or exceeds the consolidated revenue goal established by the Board
for the vesting of performance options, which goal will be based on the
Company’s Board approved budget for such fiscal year;
and
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25,000
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will
vest if the Company’s actual Adjusted EBITDA for FY 2012, after excluding
the effects of any Adjusted EBITDA Exclusions for such fiscal year, meets
or exceeds the Adjusted EBITDA goal established by the Board for the
vesting of performance options, which will be based on the Company’s
Board-approved budget for such fiscal
year.
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Executive
understands that, pursuant to the Plan, upon termination of his
employment, he will only have ninety (90) days to exercise any vested
portion of the Options. All Options awarded pursuant to this
Section 3(d) will contain a provision in the Option Agreement that allows
for immediate vesting of any unvested portion of the Options in the event
of a change of control of
NeoGenomics.
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e.
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Revenue
and Adjusted EBITDA Exclusions Defined. For the purposes
of Section 3b and 3d above, to the extent the Company acquires any
companies or businesses during any given fiscal year and the financial
impact of such acquisition was not previously factored into the annual
operating budget approved by the Board, the following revenue and Adjusted
EBITDA adjustments shall be made to the Company’s fiscal results in
measuring whether or not the Company has met or exceeded the specific
performance targets outlined in Sections 3b or 3d
hereof.
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1.) “Revenue
Exclusions” shall be defined as the prorated annualized quarterly
GAAP revenue of any company or business acquired by the Company for the
most recent full fiscal quarter prior to the date such company or business
is acquired by the Company. Such annualized quarterly revenue
shall be prorated by multiplying the total annualized quarterly revenue
described above by a fraction, the numerator of which is the number of
days that the financial results of the acquired business or company are
included in the Company’s financial results during the fiscal year in
question, and the denominator of which is
365.
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2.) “Adjusted EBITDA
Exclusions” shall be defined as the prorated annualized quarterly
Adjusted EBITDA of any company or business acquired by the Company for the
most recent full fiscal quarter prior to the date such company or business
is acquired by the Company. Such annualized quarterly Adjusted
EBITDA shall be prorated by multiplying the total annualized quarterly
Adjusted EBITDA described above by a fraction, the numerator of which is
the number of days that the financial results of the acquired business or
company are included in the Company’s financial results during the fiscal
year in question, and the denominator of which is 365. The
Board, at its discretion, may add back any non-recurring or one time
charges that may have been included in the most recent full fiscal quarter
of the company or business being acquired when determining the appropriate
Adjusted EBITDA for such business or
company.
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f.
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Paid
Time-Off and Holidays. Executive’s paid time-off (“PTO”) and
holidays shall be consistent with the standards set forth in the Company’s
Employee Handbook, as revised from time to time or as otherwise published
by the Company. Notwithstanding the previous sentence,
Executive will be eligible for one hundred twenty (120) hours of PTO/year,
which will accrue on a pro-rata basis throughout the year, provided,
however, that it is the Company’s policy that no more than forty (40)
hours of PTO can be accrued beyond this annual limit for any employee at
any time. Thus, when accrued PTO reaches one hundred sixty
(160) hours, Executive will cease accruing PTO until accrued PTO is one
hundred twenty (120) hours or less, at which point Executive will again
accrue PTO until he reaches one hundred sixty (160) hours. In
addition to PTO, there are also six (6) paid national holidays and one (1)
“floater” day available to Company employees. Executive agrees
to schedule such PTO so that it minimally interferes with the Company’s
operations. Such PTO does not include Board excused
absences.
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g.
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Reimbursement
of Normal Business Expenses. The Company will reimburse
all reasonable business expenses of Executive, including, but not limited
to, cell phone expenses and business related travel, meals and
entertainment expenses in accordance with the Company’s polices for such
reimbursement.
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a.
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By
the Company for Cause. The Company shall have the right to
terminate this Agreement and to discharge the Executive for Cause (as
defined below), at any time during the Term. For the purposes
of this Agreement, the Company shall have “Cause” to terminate the
Executive’s employment hereunder
upon:
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b.
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Termination
by Company Without Cause. At any time during the Term,
the Company shall have the right to terminate this Agreement and to
discharge the Executive without Cause effective upon delivery of written
notice to the Executive. If the Company terminates the
Executive without “Cause” for any reason, then the Company agrees that (i)
as severance it will continue to pay the Executive’s Base Salary in
accordance with Section 3a. and maintain the Executive’s Executive
benefits in accordance with Section 3c. (the “Severance
Payments”) for twelve (12) months from the date of the notice of
termination and (ii) it will pay to the Executive at the next such time
that annual bonuses are paid by the Company to employees generally, the
pro rata portion of any bonus that would be due for the year in which the
termination occurs up to the date of written notice of
termination. The pro rata portion of any such bonus that would
be due and payable for the year in which termination occurs shall be
calculated by annualizing the revenue, adjusted EBITDA and net income of
the Company for the year up to the most recent full month prior to the
written notice of termination and comparing such annualized figures to the
performance thresholds for the Executive outlined in the MIP that was in
effect for such year at the time the written notice of termination was
delivered to the Executive. Executive further agrees that in
the event that he obtains employment during any period where Severance
Payments are being made, he will promptly notify the
Company. Provided that such employment does not violate the
terms of the Confidentiality, Non-Solicitation and Non-Competition
Agreement, such severance payments will continue to be
paid. Other than the Severance Payments, the Company shall have
no further obligation to the Executive after the date of such termination;
provided,
however, that the Executive shall only be entitled to continuation
of the Severance Payments as long as he is in compliance with the
provisions of the Confidentiality, Non-Compete and Non-Solicit Agreement,
which is part of this Agreement. If termination without cause
shall occur at anytime, then the pro rata portion of any unvested
Time-based options (as specified in Section 3(d)(1)) up until the date of
notice of termination that are due to vest in the year or month of
termination shall vest.
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c.
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By
Resignation of the Executive. The Executive may
terminate his employment hereunder, upon giving sixty (60) days written
notice to the Company. The Executive agrees that during such
sixty (60) day period no more than one week of unused PTO may be utilized
and that all other unused PTO up to the time of termination shall be
forfeited. In the event of such a termination, the Executive
shall comply with any reasonable request of the Company to assist in
providing for an orderly transition of authority, but such assistance
shall not delay the Executive’s termination of employment longer than
sixty (60) days beyond the Executive’s original notice of
termination. Upon such a termination, the Executive shall
become entitled to any accrued but unpaid salary and other benefits up to
and including the date of termination and the pro rata portion of any
unvested Time-based options (as specified in Section 3(d)(1)) up until the
date of separation that are due to vest in the year or month of separation
shall vest.
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.
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d.
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Disability
of the Executive. This Agreement may be terminated by
the Company upon the Disability of the Executive. "Disability"
shall mean any mental or physical illness, condition, disability or
incapacity which prevents the Executive from reasonably discharging his
duties and responsibilities under this Agreement for a period of ninety
(90) days in any one hundred eighty (180) day period. In the
event that any disagreement or dispute shall arise between the Company and
the Executive as to whether the Executive suffers from any Disability,
then, in such event, the Executive shall submit to the physical or mental
examination of a physician licensed under the laws of the State of
Florida, who is agreeable to the Company and the Executive, and such
physician shall determine whether the Executive suffers from any
Disability. In the absence of fraud or bad faith, the
determination of such physician shall be final and binding upon the
Company and the Executive. The entire cost of such examination
shall be paid solely by the Company. In the event the Company
has purchased disability insurance for Executive, the Executive shall be
deemed disabled if he is disabled as defined by the terms of the
disability policy. On the date that the Executive is deemed to
have a Disability, this Agreement will be deemed to have been terminated
and the Executive shall be entitled to receive from the Company his
accrued and unpaid Base Salary, bonus and other benefits through the
termination date. If a termination of the Executive by
Disability shall occur at anytime, than the pro rata portion of any
unvested Time-based options (as specified in Section 3d(1)) up until the
date of the Executive’s termination that were due to vest in the year or
month of the Executive’s termination shall vest. Other than as
set forth in the immediately preceding two sentences, the Company shall
have no further salary or bonus payment or other benefits obligations
under this Agreement from and after the date of termination due to
Disability.
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e.
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Death
of the Executive. In the event of the death of
Executive, the employment of the Executive by the Company shall
automatically terminate on the date of the Executive's death and the
Company shall be obligated to pay Executive’s estate (i) the Executive’s
accrued and unpaid Base Salary, bonus and other benefits through the
termination date. If the death of the Executive shall occur at
anytime, than the pro rata portion of any unvested Time-based options up
until the date of the Executive’s death that were due to vest in the year
or month of the Executive’s death shall vest. Other than as set
forth in the immediately preceding two sentences, the Company shall have
no further obligations under this Agreement from and after the date of
termination due to the death of the
Executive.
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a.
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They
have read and understand this
Agreement;
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b.
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They
have been given the opportunity to consult with an attorney if they so
desire;
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c.
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They
intend to be legally bound by the promises set forth in this Agreement and
enter into it freely, without duress or
coercion;
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d.
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They
have retained signed copies of this Agreement for their records;
and
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e.
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The
rights, responsibilities and duties of the parties hereto, and the
covenants and agreements contained herein, shall continue to bind the
parties and shall continue in full force and effect until each and every
obligation of the parties under this Agreement has been
performed.
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NEOGENOMICS,
INC., a Nevada Corporation
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By:
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/s/Steven
C. Jones
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Name:
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Steven
C. Jones
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Title:
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Acting
Principal Financial Officer
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EXECUTIVE:
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/s/Douglas
M. VanOort
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Douglas
M. VanOort
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