NEOPROBE CORP
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>v010809_ex10-1.txt
<TEXT>
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

      This Employment Agreement is made and entered into effective as of January
1, 2005 (the "Effective Date"), by and between NEOPROBE CORPORATION,  a Delaware
Corporation  with a place of  business  at 425 Metro  Place  North,  Suite  300,
Dublin,  Ohio 43017-1367  (the "Company") and BRENT L. LARSON of Columbus,  Ohio
(the "Employee").

      WHEREAS, the Company and the Employee entered into an Employment Agreement
effective as of April 1, 2000 (the "2000 Employment Agreement"); and

      WHEREAS, the Company and the Employee entered into an Employment Agreement
effective as of October 1, 2001 (the "2001 Employment Agreement"); and

      WHEREAS,  the  Company  and  the  Employee  amended  the  2001  Employment
Agreement on August 1, 2002 (the "2001 Amendment"); and

      WHEREAS, the Company and the Employee entered into an Employment Agreement
effective as of February 1, 2003 (the "2003 Employment Agreement"); and

      WHEREAS, the Company and the Employee entered into an Employment Agreement
effective 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
            Vice-President,  Chief Financial  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 President and
            CEO.  While serving in such  executive  level position or positions,
            the  Employee  shall  report to, be  responsible  to, and shall take
            direction from the President and CEO of the Company. 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 that are  assigned to him.  The Employee
            shall  observe and abide by the  reasonable  corporate  policies and
            decisions  of the  Company  in all  business  matters  disclosed  to
            employee.

            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  that 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.


<PAGE>

      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  twenty-four  (24)  months,   commencing   January  1,  2005  and
            terminating December 31, 2006.

      3.    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 one hundred forty-seven thousand four hundred twenty
                  dollars  ($149,000.00)  per year,  payable in  semi-monthly or
                  monthly  installments  as requested by the Employee.  Further,
                  the  Company  agrees to review the  Employee's  base salary by
                  January 1, 2006.

            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.

            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.

            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 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.

            E.    VACATION.  The Employee shall be entitled to twenty-five  (25)
                  days of vacation  during each calendar year during the Term of
                  this Employment Agreement.

            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.

      4. TERMINATION.

            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.

            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


                                      -2-
<PAGE>

                  of all accrued but  previously  unpaid base salary through the
                  date of such termination,  excluding any salary deferred under
                  paragraph  A of Section 3 above.  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 G of Section 3 above.

            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 six (6) 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.  The Company
                  shall  pay  for  any  requested  examination.   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.

                  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 twelve  (12)  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 in accordance with paragraph A of
                  Section  3 above.  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 G 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 twelve (12)
                  months.  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.

                  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


                                      -3-
<PAGE>

                  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.

            F.    SEVERANCE.  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 one  hundred  forty-nine
                  thousand  ($149,000.00) 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  amount  of  two   hundred
                  ninety-eight thousand dollars ($298,000.00)  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 this
                  benefits  under  paragraph C of Section 3 above for the longer
                  of  twelve  (12)  months or the full  un-expired  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.

                  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 or an employee  benefit  plan created by its Board of
                  Directors for the benefit of its employees, 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


                                      -4-
<PAGE>

                  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.

      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.

      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:

            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);

            B.    engage  in any  directly  Competitive  Business  for  his  own
                  account;

            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

            D.    solicit,  interfere  with, or endeavor to entice away from the
                  Company, any of its customers,  strategic partners, or sources
                  of supply.

            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:

            a.    is  engaged in the  development  and/or  commercialization  of
                  gamma radiation  detection  products and/or systems for use in
                  intraoperative detection of cancer, or

            b.    reasonably understood to be competitive in the relevant market
                  with products and/or systems described in clause a above, or

            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.


                                      -5-
<PAGE>
            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.

      7.    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.

      8.    GOVERNING  LAW. The  Employment  Agreement  shall be governed by and
            construed in accordance with the laws of the State of Ohio.

      9.    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.

      10.   ENTIRE AGREEMENT.

            A.    The 2000,  2001, 2003 and 2004  Employment  Agreements and the
                  2001 Amendment are terminated as of the effective date of this
                  Employment Agreement, except that awards under the Stock Plans
                  granted  to the  Employee  in the  2000,  2001,  2003 and 2004
                  Employment  Agreements  and  the  2001  Amendment  or  in  any
                  previous employment agreement or by the Compensation Committee
                  remain in full force and effect.

            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.

      11.   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: /s/ David C. Bupp                                /s/ Brent L. Larson
    --------------------------------                 ---------------------------
    David C. Bupp, President and CEO                 Brent L. Larson


                                      -6-

</TEXT>
</DOCUMENT>
