EXHIBIT 99(d)
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
ADMINISTRATOR OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THIS AGREEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION
OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE "RESTRICTED SECURITIES" UNDER
RULE 144 PROMULGATED PURSUANT TO THE ACT, AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
9.5% CONVERTIBLE SECURED NOTE PURCHASE AGREEMENT
NEOPROBE CORPORATION
THIS AGREEMENT is made this 26th day of March, 2003, between NEOPROBE
CORPORATION (the "COMPANY"), incorporated under the laws of the State of
Delaware, with its principal office at 000 Xxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx,
XX 00000 and Xxxxxx X. Xxxxxxxx an individual resident of the State of Ohio (the
"Purchaser").
In consideration of the mutual covenants contained in this Agreement,
the Company and the Purchaser agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement:
"Act" has the meaning specified in the legend appearing on the first
page.
"Agreement" means this 9.5% Convertible Secured Note Purchase Agreement
including all Exhibits and Attachments hereto, as the same may be amended,
modified or supplemented from time to time in accordance with the terms hereof.
"Alternate Conversion Price" has the meaning specified in Section 9.1.
"Average Market Price" means the average Closing Price for the twenty
(20) consecutive Trading Days immediately preceding the date of a Conversion
Notice.
"Business Day" means any day on which banks in the City of Columbus,
Ohio are open for business.
"Closing" means the completion of the purchase and sale of the Note and
Warrant on the Closing Date.
"Closing Date" means the date of the Closing.
"Closing Price" means for each Trading Day, the last transaction price
as reported on the principal exchange on which the Common Stock is listed or
admitted for quotation, or if the Common Stock is not listed or admitted for
quotation on any exchange, the last reported sale price regular way of the
Common Stock on the NASDAQ National Market or NASDAQ Small Cap Market, as the
case may be, or, if the Common Stock is not quoted on the NASDAQ National Market
or NASDAQ SmallCap Market, the closing bid price for the Common Stock on such
day in the over-the-counter market as reported by Bloomberg, the National
Quotation Bureau or NASDAQ..
"Common Stock" means the Common Stock of the Company, $.001 par value.
"Conversion Amount" has the meaning specified in Section 9.1.
"Conversion Date" has the meaning specified in Section 9.2.
"Conversion Notice" has the meaning specified in Section 9.2
"Conversion Shares" has the meaning specified in Section 9.1.
"Event of Default" has the meaning specified in Section 7.1.
"Exchange Act" has the meaning specified in Section 3.5.
"Maturity Date" has the meaning specified in Section 2.1.
"Note" means the of 9.5% Convertible Secured Note of the Company, due
June 30, 2004 in the Principal Sum that is issued pursuant to this Agreement
(including any notes issued in substitution therefor), as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.
"Other Agreement" has the meaning specified in Section 2.3.
"Other Purchaser" has the meaning specified in Section 2.3.
"Principal Sum" has the meaning specified in Section 2.1.
"Registration Rights Agreement" has the meaning specified in Section
2.5.
"Reports" has the meaning specified in Section 3.6.
"SEC" has the meaning specified in Section 3.7.
"Security Agreement" has the meaning specified in Section 2.3.
2
"Senior Note" has the meaning specified in Section 2.3.
"Trading Day" means any day on which transactions are effected on the
New York Stock Exchange, the NASDAQ National Market System and the NASDAQ
SmallCap Market.
"Transaction Documents" has the meaning specified in Section 2.1.
"Warrant" or "Warrants" means the Warrants purchased from the Company
on the Closing Date and any subsequent Warrant or Warrants issued in exchange or
replacement thereof pursuant to terms of the original Warrant.
"Warrant Shares" means shares of Common Stock issuable on exercise of
the Warrant.
Section 2. Authorization and Sale of Note.
2.1 Authorization. Subject to the terms and conditions of
this Agreement, the Company has authorized the execution and delivery to
Purchaser of (a) this Agreement, (b) the Note in the principal amount of
$250,000 (the "PRINCIPAL SUM"), with a maturity date on the earlier to occur of
June 30, 2004, or a date thirty (30) days following the date that Xxxxx X. Xxxx
is no longer the chief executive officer of the Company (the "MATURITY DATE"),
(c) the Security Agreement, (c) the Warrant, (d) the Registration Rights
Agreement, and (e) and all other agreements, documents, instruments and
certificates to be delivered by the Company under the foregoing (the
"TRANSACTION DOCUMENTS"). The Company promises to pay to the holder of the Note
the Principal Sum plus any accrued and unpaid interest in cash on the Maturity
Date. Simple interest shall accrue on the unpaid Principal Sum at the rate of
9.5% per annum from the Closing Date, and shall be payable in arrears on the
last day of each calendar month in cash. The form of the Note is annexed hereto
as Exhibit A. The Company, if not then in default hereunder, shall have the
right to prepay at any time and from time to time before the Maturity Date any
amount or amounts due under the Note, upon written notice to the holder at least
ten Business Days prior to the date of prepayment (during which period the
holder may exercise the conversion rights provided in Section 9 of this
Agreement). Any partial prepayment shall be in the minimum amount of $10,000 or
any integral multiple thereof.
2.2 Agreement to Sell and Purchase the Note. Subject to
the terms and conditions of this Agreement, the Company will issue and sell the
Note to Purchaser and Purchaser will purchase the Note from the Company, at the
Closing provided for in Section 2.6, at the purchase price of 100% of the
Principal Sum.
2.3 Security. Contemporaneously with entering into this
Agreement, the Company is entering into a separate note purchase agreement (the
"OTHER AGREEMENT") for the sale of a 8.5% Secured Senior Note in the principal
amount of $250,000 (the "SENIOR NOTE") to another purchaser (the "OTHER
PURCHASER"). As security for the obligations of the Company under the Note and
the Convertible Note, the Company shall grant to Purchaser and the Other
Purchaser a joint and several first perfected security interest in all its
inventory, equipment,
3
fixtures and other personal property of every kind and description (other than
its accounts), whether now owned or hereafter acquired or created by the
Company, pursuant to the terms of the Security Agreement attached hereto as
Exhibit B.
2.4 Warrants Issuable Upon Closing. As additional
consideration for the purchase of the Note, at the Closing the Company will
issue to Purchaser a warrant to purchase a total of 500,000 shares of the
Company's Common Stock, pursuant to the terms of a separate Warrant, the form of
which is attached hereto as Exhibit C. The Warrant shall have an exercise price
equal to the average Closing Price for the thirty Trading Days immediately
preceding the Closing Date.
2.5 Registration Rights. At the Closing, the Company will
enter into a Registration Rights Agreement with Purchaser and the Other
Purchaser in the form attached hereto as Exhibit D, providing for the filing of
a registration statement under the Act with respect to resales of the Warrant
Shares and Common Stock issuable upon conversion of the Note.
2.6 Time and Place of Closing. The Closing shall be held
at the offices of Porter, Wright, Xxxxxx & Xxxxxx, 00 Xxxxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxx 00000 on or before April 2, 2003.
2.7 Payment and Delivery. At the Closing, the following
shall occur:
(a) The Company shall deliver or cause to be delivered to
Purchaser an original Note and Warrant, substantially in the form set forth in
Exhibits A and C hereto, and a Security Agreement and a Registration Rights
Agreement, each bearing the original signatures of a duly authorized officer of
the Company.
(b) Purchaser shall cause payment to be made to the
Company in immediately available U.S. funds of the Principal Sum.
(c) The Company and the Other Purchaser shall execute and
deliver to each other the Security Agreement and the Other Agreement, the
Company shall issue and deliver to the Other Purchaser the Convertible Note, and
the Other Purchaser shall cause the Company to receive the Principal Sum in
immediately available U.S. funds.
2.8 Usury. All agreements which either now are or which
shall become agreements between the Company and Purchaser are hereby limited so
that in no contingency or event whatsoever shall the total liability for
payments in the nature of interest, additional interest and other charges exceed
the applicable limits imposed by any applicable usury laws. If any payments in
the nature of interest, additional interest and other charges made under this
Agreement or the Note are held to be in excess of the limits imposed by any
applicable usury laws, it is agreed that any such amount held to be in excess
shall be considered payment of principal hereunder, and the indebtedness
evidenced hereby shall be reduced by such amount so that the total liability for
payments in the nature of interest, additional interest and other charges shall
not exceed the applicable limits imposed by any applicable usury laws, in
compliance with
4
the desires of the Company and Purchaser. This provision shall never be
superseded or waived and shall control every other provision of the Transaction
Documents and all agreements between the Company and Purchaser, or their
successors and assigns.
Section 3. General Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchaser that the following are true
and correct as of the date hereof and as of the Closing Date.
3.1 Organization; Qualification. The Company is a
corporation duly organized and validly existing under the laws of the State of
Delaware and is in good standing under such laws. The Company has all requisite
corporate power and authority to own, lease and operate its properties and
assets, and to carry on its business as presently conducted. The Company is
qualified to do business as a foreign corporation in each jurisdiction in which
the ownership of its property or the nature of its business requires such
qualification, except where failure to so qualify would not have a material
adverse effect on the condition (financial or otherwise) or on the earnings,
business affairs, properties or assets of the Company.
3.2 Capitalization. The Company has authorized 50,000,000
shares of Common Stock, of which 38,688,725 are currently issued and
outstanding, and 3,343,124 are currently reserved for issuance under outstanding
warrants and options. The Company also has authorized 5,000,000 shares of
preferred stock, $.001 par value, of which 500,000 shares have been designated
as Series A Junior Participating Preferred Stock, reserved for issuance under
the Company's plan for issuance of rights in connection with certain changes in
control. No shares of preferred stock are issued or outstanding. All issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and nonassessable and no outstanding shares of Common Stock
are subject to, or have been issued in violation of, preemptive or similar
rights. As of the Closing Date, the Company covenants that it will from its
authorized but unissued shares of Common Stock reserve a sufficient number of
shares of Common Stock for issuance upon exercise of the Warrant and conversion
of the Note. The Company is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its Common
Stock or any warrants, options or other rights to acquire its Common Stock.
Except as disclosed in the Reports and excluding outstanding options to
employees and directors, and except for the securities issuable under this
Agreement and the Other Agreement, there are no contracts relating to the
issuance, sale or transfer of any equity securities, phantom stock or
appreciation rights, profit participation, or other securities (whether or not
convertible) of the Company, including options, warrants, puts, or calls.
3.3 Authorization. The Company has all requisite
corporate right, power and authority to execute and deliver the Transaction
Documents and to consummate the transactions contemplated thereby. All corporate
action on the part of the Company, its directors and shareholders necessary for
the authorization, execution, delivery and performance of the Transaction
Documents by the Company has been taken. Each Transaction Document has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific
5
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to the indemnification provisions set forth
in the Registration Rights Agreement. Upon their issuance and delivery pursuant
to the Warrant, the Warrant Shares will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances except for those
imposed by or on behalf of Purchaser, its creditors or agents.
3.4 No Conflict. The execution and delivery of each
Transaction Document does not, and the consummation of the transactions
contemplated thereby will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation or to a
loss of a material benefit, under, any provision of the certificate of
incorporation, and any amendments thereto, bylaws and any amendments thereto of
the Company or any material mortgage, indenture, lease or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree
statute, law, ordinance, rule or regulation applicable to the Company, its
properties or assets.
3.5 Accuracy of Reports and Information. The Company is
in compliance, to the extent applicable, with all reporting obligations under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), except where the failure to so comply would not have a material adverse
effect on the condition (financial or otherwise) or on the earnings, business
affairs, properties or assets of the Company. The Company has registered its
Common Stock pursuant to Section 12 of the Exchange Act and the Common Stock is
admitted for quotation on the OTC Bulletin Board.
3.6 Absence of Undisclosed Liabilities. The Company has
no material liabilities or obligations, absolute or contingent (individually or
in the aggregate), except as disclosed in the reports filed by the Company under
Section 13 of the Exchange Act in the twelve month period prior to the Closing
Date, and in its annual report on Form 10-KSB for the year ended December 31,
2002 (a draft of which has been provided to the Purchaser) (collectively, the
"REPORTS"), as incurred in the ordinary course of business after the date of the
Reports, and obligations to Purchaser and the Other Purchaser incurred under the
Transaction Documents and the Other Agreement.
3.7 Governmental Consent, etc. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement or any other Transaction Document, or
the offer, sale or issuance of the Note or Warrant, or the consummation of any
other transaction contemplated hereby or thereby, except the filing with the
United States Securities and Exchange Commission ("SEC") of a registration
statement for the purpose of registering resales by Purchaser of the Warrant
Shares and Conversion Shares as provided in the Registration Rights Agreement.
3.8 Material Contracts. Except as set forth in the
Reports, the material agreements to which the Company is a party described in
the Reports are valid agreements, in full force and effect, the Company is not
in material breach or material default (with or without
6
notice or lapse of time, or both) under any of such agreements, and, to the
Company's knowledge, the other contracting party or parties thereto are not in
material breach or material default (with or without notice or lapse of time, or
both) under any of such agreements.
3.9 Litigation. Except as disclosed in the Reports, there
is no action, proceeding or investigation pending, or to the Company's knowledge
threatened, against the Company which might result, either individually or in
the aggregate, in any material adverse change in the business, prospects,
conditions, affairs or operations of the Company. The Company is not a party to
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company currently intends to initiate which will materially affect the Company.
3.10 Title to Assets. Except as disclosed in the Reports,
and for the security interest to be created pursuant to the Security Agreement,
the Company has good and marketable title to all properties and material assets
described in the Reports as owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest other than such as
are not material to the business of the Company.
3.11 Required Governmental Permits. The Company is in
possession of and operating in material compliance with all authorizations,
licenses, certificates, consents, orders and permits from state, federal and
other regulatory authorities which are material to the conduct of its business,
all of which are valid and in full force and effect.
3.12 Other Outstanding Securities. Except as disclosed in
the Reports and excluding outstanding options to employees and directors, and
except for the securities issuable under this Agreement and the Other Agreement,
there are no other outstanding debt or equity securities of the Company
presently convertible into or exercisable for shares of Common Stock.
Section 4. Representations, Warranties and Covenants of Purchaser.
Purchaser represents and warrants to, and covenants with, the Company that the
following are true and correct as of the date hereof and as of the Closing Date.
4.1 Authority. The Purchaser has all requisite right,
power, authority and capacity to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and binding
obligation of Purchaser, enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy as they may apply
to the indemnification provisions set forth in the Registration Rights
Agreement.
4.2 Investment Experience. Purchaser is an "accredited
investor" as defined in Rule 501(a) under the Act. Purchaser is aware of the
Company's business affairs and financial condition, and has had access to and
has acquired sufficient information about the Company,
7
including the Reports, to reach an informed and knowledgeable decision to
acquire the Note and Warrant. Purchaser has such business and financial
experience as is required to give him the capacity to protect his own interests
in connection with the purchase of the Note and Warrant.
4.3 Investment Intent. Without limiting the ability to
resell the Warrant Shares and the Conversion Shares pursuant to an effective
registration statement, or upon any exemption from registration that may be
legally available, Purchaser represents that he is purchasing the Note and
Warrant, and will acquire the Warrant Shares and Conversion Shares, for
Purchaser's own account as principal for investment purposes, and not with a
view to a distribution. Purchaser understands that the acquisition of the Note
and Warrant have not been registered under the Act or registered or qualified
under any state securities law in reliance on specific exemptions therefrom,
which exemptions may depend upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein. Purchaser will not, directly
or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchaser or otherwise acquire or take a pledge of) any of
the Note, Warrant, Conversion Shares or Warrant Shares, except in compliance
with the Act and any applicable state securities laws, and the rules and
regulations promulgated thereunder.
4.4 Registration or Exemption Requirements. Purchaser
further acknowledges and understands that the Note, Warrant, Conversion Shares
and Warrant Shares may not be resold or otherwise transferred except in a
transaction registered under the Act and any applicable state securities laws or
unless an exemption from such registration is available. Purchaser understands
that the Note and Warrant, as well as any certificate for the Conversion Shares
and Warrant Shares, will be imprinted with a legend that prohibits the transfer
of such securities unless (i) it is registered or such registration is not
required pursuant to an exemption therefrom, and (ii) if the transfer is
pursuant to an exemption from registration other than Rule 144 under the Act and
an opinion of counsel reasonably satisfactory to the Company is obtained to the
effect that the transaction is so exempt.
4.5 No Legal, Tax or Investment Advice. Purchaser
understands that nothing in this Agreement or any other materials presented to
Purchaser in connection with the purchase and sale of the Note and Warrant
constitutes legal, tax or investment advice. Purchaser has consulted such legal,
tax and investment advisors as he, in his sole discretion, has deemed necessary
or appropriate in connection with his purchase of the Note and the Warrant.
4.6 Purchaser Review. Purchaser hereby represents and
warrants that he has carefully examined the Reports, and the financial
statements contained therein. Purchaser acknowledges that the Company has made
available to him all documents and information that Purchaser has requested
relating to the Company and has been provided answers to all of Purchaser's
questions concerning the Company, the Note and the Warrant.
4.7 Certain Risks. Purchaser recognizes that the purchase
of the Note and Warrant, and if issued, the Conversion Shares and Warrant
Shares, involves a high degree of risk in that:
8
(a) an investment in the Company is highly speculative and
only investors who can afford the loss of their entire investment should
consider investing in the Company and the Note, Warrant, Conversion Shares and
Warrant Shares;
(b) Purchaser may not be able to liquidate this investment;
(c) transferability of the Note, Warrant, Conversion Shares
and Warrant Shares is extremely limited;
(d) Purchaser could sustain the loss of the entire investment
in the Note, Warrant, Conversion Shares and Warrant Shares;
(e) no return on investment, whether through distributions,
appreciation, transferability or otherwise, and no performance by, through or of
the Company, has been promised, assured, represented or warranted by the
Company, or by any director, officer, employee, agent or representative thereof;
(f) while the Common Stock is presently quoted on the OTC
Bulletin Board and while Purchaser is the beneficiary of certain registration
rights provided herein: (i) the Note, Warrant, Conversion Shares and Warrant
Shares are not registered under applicable federal or state securities laws, and
thus may not be sold, conveyed, assigned or transferred unless registered under
such laws or unless an exemption from registration is available under such laws,
as more fully described below; and (i) the Note and Warrant are not quoted,
traded or listed for trading or admitted for quotation on any organized market
or quotation system, and there is therefore no present public or other market
for such Note or Warrant, and (ii) there can be no assurance that the Common
Stock will continue to be quoted, traded or listed for trading or authorized for
quotation on the OTC Bulletin Board or on any other organized market or
quotation system.
4.8 No Registration, Review or Approval. Purchaser
acknowledges and understands that the limited private offering and sale of the
Note and Warrant pursuant to this Agreement, and the offering and sale of the
Conversion Shares and Warrant Shares, have not been reviewed or approved by the
SEC or by any state securities commission, authority or agency, and is not
registered under the Act or under the securities or "blue sky" laws, rules or
regulations of any state. Purchaser acknowledges, understands and agrees that
the Note, Warrant, Conversion Shares and Warrant Shares are being offered and
sold hereunder pursuant to (i) a private placement exemption to the registration
provisions of the Act pursuant to Section 3(b) or Section 4(2) of such Act and
Regulation D promulgated under such Act, and (ii) a similar exemption to the
registration provisions of applicable state securities laws.
Section 5. Conditions to Purchaser's Obligation to Purchase. The
Company understands that Purchaser's obligation to purchase the Note and Warrant
is conditioned upon the truth and accuracy of the representations and warranties
of the Company in Section 3 as of the Closing Date, and:
9
(a) Execution and delivery by the Company of the original
Note and Warrant to Purchaser; and
(b) Execution and delivery by the Company of the Security
Agreement and Registration Rights Agreement, in the respective forms of Exhibits
B and D; and
(c) Execution, delivery and performance of the Other
Agreement by the parties thereto.
Section 6. Conditions to Company's Obligation to Sell. Purchaser
understands that the Company's obligation to sell the Note and Warrant is
conditioned upon the truth and accuracy of the representations and warranties of
Purchaser in Section 4 as of the Closing Date, and:
(a) Delivery by Purchaser to the Company of good funds as
payment in full for the purchase of the Note and Warrant.
(b) Execution and delivery by Purchaser of the of the
Security Agreement and Registration Rights Agreement, in the respective forms of
Exhibits B and D.
Section 7. Default.
7.1 Events of Default. An "Event of Default" shall exist
if any of the following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal
on the Note when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest
on the Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or
compliance with any term contained herein (other than those referred to in
paragraphs (a) and (b) of this Section 7.1) and such default is not remedied
within 30 days after the Company receives written notice of such default from
any holder of the Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (c) of Section 7.1); or
(d) A default under any bond, debenture, note or other
evidence of indebtedness of the Company owed to any person other than Purchaser,
or under any indenture or other instrument under which any such evidence of
indebtedness has been issued or by which it is governed, or under any lease of
any asset, in any case in excess of $100,000.00, and the expiration of the
applicable period of grace, if any, specified in such evidence of indebtedness,
indenture, other instrument or lease; or
10
(e) any representation or warranty made in writing by or
on behalf of the Company or by any officer of the Company in this Agreement or
in any writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date as of
which made; or
(f) the rendering against the Company of a final
judgment, decree or order for the payment of money in excess of $100,000.00 and
the continuance of such judgment, decree or order unsatisfied and in effect for
any period of 30 consecutive days without a stay of execution; or
(g) the Company (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company, or any such petition shall be filed
against the Company and such petition shall not be dismissed within 60 days; or
(i) an event of default shall occur under any other
Transaction Document; or
(j) the sale, exchange, or other disposition (in a single
transaction or a series of related transactions) of all or substantially all of
the assets of the Company, without the consent of the holder of the Note; or
(k) a merger or consolidation of the Company without the
consent of the holder of the Note, other than a merger or consolidation in which
the voting equity securities of the Company immediately prior to the merger or
consolidation continue to represent (either by remaining outstanding or being
converted into securities of the surviving entity) more than fifty percent (50%)
of the combined voting power of the Company or surviving entity immediately
after the merger or consolidation with another entity.
7.2. Acceleration and Remedies.
11
(a) If any Event of Default has occurred and is
continuing, the holder of the Note may at any time at its option, by notice or
notices to the Company, declare the Note to be immediately due and payable.
(b) Upon the Note becoming due and payable under this
Section 7.2, the Note will forthwith mature, and the entire unpaid Principal
Sum, plus (i) all accrued and unpaid interest thereon, and (ii) an amount equal
to ten percent (10%) of the unpaid Principal Sum, shall all be immediately due
and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived, and the holder thereof shall be
entitled to exercise its rights and remedies as a secured party under the
Security Agreement and the Uniform Commercial Code. If the Company shall fail to
pay the Principal Sum and all accrued and unpaid interest on the Maturity Date,
the Company shall immediately issue to the holder an additional warrant for the
purchase of 500,000 shares of Common Stock, with an exercise price equal to the
average Closing Price for the thirty (30) trading days immediately preceding the
Maturity Date, and otherwise in the form of the Warrant attached hereto as
Exhibit C.
(c) If any Event of Default has occurred and is
continuing, and irrespective of whether the Note has been declared immediately
due and payable under paragraph (a) of this Section 7.2, the holder of the Note
may proceed to protect and enforce its rights by an action at law, suit in
equity or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in the Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise.
8. Registration; Exchange; Substitution of Note.
8.1. Registration of Note. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of the Note. The name and address of each holder of the Note, each
transfer thereof and the name and address of each transferee shall be registered
in such register. Prior to due presentment for registration of transfer, the
person in whose name the Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the Company shall not
be affected by any notice or knowledge to the contrary.
8.2. Transfer and Exchange of Note. Upon surrender of the
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of the Note or his attorney duly authorized in
writing and accompanied by the address for notices of each transferee of such
Note or part thereof), the Company shall execute and deliver, at the Company's
expense (except as provided below), a new Note (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such person as such holder may request and shall be substantially in
the form of Exhibit A. Each such new Note shall be dated and bear interest from
the date to which
12
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company shall
not be required to register or otherwise recognize any transfer that purports to
be for less than the entire unpaid principal amount of the Note. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be required to make in writing the representations set forth in Sections
4.2 through 4.8. Notwithstanding any provision of this Agreement to the
contrary, the Company may refuse to register the transfer of the Note to any
person that is not an "accredited investor" as defined in Rule 501 of Regulation
D.
8.3. Replacement of Note. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note, and (a) in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it or (b) in the case of
mutilation, upon surrender and cancellation thereof, then in either case, the
Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
Section 9. Conversion of Note to Common Stock.
9.1 Optional Conversion. At the option of the Holder, at any
time following July 30, 2003 and prior to the Maturity Date, the Principal Sum
then outstanding (or any portion thereof equal to or greater than $10,000), plus
accrued and unpaid interest (the "CONVERSION AMOUNT"), may be converted, either
in whole or in part, into shares of Common Stock (the "CONVERSION SHARES")
(calculated as to each such conversion to the nearest whole share), at any time,
and from time to time at a price per share (the "CONVERSION PRICE") equal to the
greater of: (a) $.10, or (b) 85% of the Average Market Price, provided, however,
that if the Conversion Price determined hereunder is greater than $.20 per
share, fifty percent (50%) of the Conversion Amount shall be converted at a
price of $.20 per share (the "ALTERNATE CONVERSION PRICE"), and the balance at
the Conversion Price. The number of Conversion Shares due upon conversion shall
be determined by dividing the Conversion Amount by the Conversion Price, unless
the Conversion Price is greater than $.20 per share, in which case the number of
Conversion Shares due upon conversion shall be equal to the sum of (i) the
result of dividing 50% of the Conversion Amount by the Conversion Price, plus
(ii) the result of dividing 50% of the Conversion Amount by $.20.
9.2 Exercise of Conversion Privilege. The conversion right
provided in Section 9.1 may be exercised by the Purchaser by delivering to the
Company an executed and completed notice of conversion in the form of Exhibit E
to this Agreement (the "CONVERSION NOTICE"), accompanied by the Note. Each date
on which a Conversion Notice is delivered to the Company in accordance with the
provisions of this Section 10.2 shall constitute a "CONVERSION DATE." As
promptly as practicable after the receipt of the Conversion Notice as aforesaid,
but in any event not more than five Business Days after the Company's receipt of
such Conversion Notice, the Company shall (i) issue the Conversion Shares in
accordance with the provisions of Section 9.1, and (ii) cause to be mailed for
delivery by overnight courier to the Purchaser (x) a certificate or
13
certificate(s) representing the number of Conversion Shares to which the
Purchaser is entitled by virtue of such conversion, (y) cash, as provided in
Section 9.3, in respect of any fraction of a share issuable upon such
conversion, and (z) if less than all of the outstanding Principal Sum shall have
been converted, a new Note in the remaining unconverted Principal Sum, identical
in form to the Note, duly executed by an officer of the Company. The Conversion
Notice shall constitute a contract between the Purchaser and the Company,
whereby the Purchaser shall be deemed to subscribe for the number of Conversion
Shares which it will be entitled to receive upon such conversion and, in payment
and satisfaction of such subscription (and for any cash adjustment or new Note
to which it is entitled pursuant to Section 9.3), to surrender the Note and to
release the Company from all liability thereon.
9.3 Fractional Shares. No fractional Conversion Shares or scrip
representing fractional Conversion Shares shall be issued upon conversion of the
Conversion Amount. Instead of any fractional Conversion Shares which otherwise
would be issuable upon conversion of the Conversion Amount, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the same
fraction times the Conversion Price.
9.4 Reclassification, Consolidation, Merger or Mandatory Share
Exchange. At any time while the Note remains outstanding, in case of any
recapitalization, combination or reclassification of outstanding Common Stock,
or in case of any consolidation, merger or mandatory share exchange of the
Company with or into another Company (other than a merger or mandatory share
exchange with another corporation in which the Company is the surviving
corporation and which does not result in any reclassification of the Common
Stock), or in the case of any sale or transfer to another corporation of the
property of the Company as an entirety or substantially as an entirety, the
Purchaser shall have the right to convert the Principal Sum into and receive
upon such conversion, in lieu of each share of Common Stock theretofore issuable
upon conversion of the Note, the kind and amount of shares of stock, other
securities, money or property receivable upon such reclassification,
combination, recapitalization, consolidation, merger, mandatory share exchange,
sale or transfer by the holder of one share of Common Stock issuable upon
conversion of the Note had the Principal Sum been converted immediately prior to
such reclassification, combination, recapitalization, consolidation, merger,
mandatory share exchange or sale or transfer. The provisions of this Section 9.4
shall similarly apply to successive reclassifications, combinations,
recapitalizations, consolidations, mergers, mandatory share exchanges and sales
and transfers.
9.5 No Sales. The Purchaser agrees that it will not effect any
sale of Common Stock during the twenty Trading Day period immediately preceding
delivery of any Conversion Notice, and for so long as the Note is outstanding,
will make any short sale of the Common Stock or effect a transaction in any
option or right to purchase or sell the Common Stock having the same effect.
Section 10. Notices. All notices and communications provided for
hereunder shall be in writing and sent (a) by fax if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail
14
with return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice must be sent:
(a) if to the Company, to
Neoprobe Corporation
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Chief Financial Officer
(fax) (000) 000-0000
copy to:
Xxxxxxx X. Xxxxx, Xx.
Porter, Wright, Xxxxxx & Xxxxxx
00 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
or to such other person at such other place as the Company shall designate to
the Purchaser in writing;
(b) if to Purchaser, to
Xxxxxx X. Xxxxxxxx
The Garlikov Companies
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
(fax) (000) 000-0000
copy to:
Xxx X. Xxxx, Esq.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
or at such other address as Purchaser shall designate to the Company in writing;
or
(c) if to any transferee or transferees of Purchaser, at
such address or addresses as shall have been furnished to the Company at the
time of the transfer or transfers, or at such other address or addresses as may
have been furnished by such transferee or transferees to the Company in writing.
15
Section 11. Miscellaneous.
11.1 Entire Agreement. This Agreement, including all
Exhibits and Attachments embody the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and supersedes all
prior oral or written agreements and understandings relating to the subject
matter hereof. No statement, representation, warranty, covenant or agreement or
any kind not expressly set forth in this Agreement shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.
11.2 Amendments. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and by
Purchaser.
11.3 Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
11.4 Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
11.5 Governing Law/Jurisdiction. This Agreement will be
construed and enforced in accordance with and governed by the laws of the State
of Ohio, without reference to principles of conflicts of law. ach party hereby
agrees that if the other party to this Agreement obtains a judgment against it
in such a proceeding, the party which obtained such judgment may enforce same by
summary judgment in the courts of any country having jurisdiction over the party
against whom such judgment was obtained, and each party hereby waives any
defenses available to it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address set provided for
notices under Section 9. Nothing herein shall affect the right of any party to
serve process in any other manner permitted by law.
11.6 Disputes. Any controversy, claim or dispute arising
out of or relating to this Agreement or the breach, termination, enforceability
or validity of this Agreement, including the determination of the scope or
applicability of the agreement to arbitrate set forth in this Section 10.6 shall
be determined exclusively by binding arbitration in the City of Columbus, Ohio.
The arbitration shall be governed by the rules and procedures of the American
Arbitration Association (the "AAA") under its Commercial Arbitration Rules and
its Supplementary Procedures for Large, Complex Disputes; provided that persons
eligible to be selected as arbitrators shall be limited to attorneys-at-law each
of whom (i) is on the AAA's Large, Complex Case Panel or a Center for Public
Resources ("CPR") Panel of Distinguished Neutrals, or has professional
credentials comparable to those of the attorneys listed on such AAA and CPR
Panels and (ii) has actively practiced law (in private or corporate practice or
as a member of the judiciary) for at least 15 years in the State of Ohio
concentrating in either general commercial litigation or general corporate and
commercial matters. Any arbitration proceeding shall be
16
before one arbitrator mutually agreed to by the parties to such proceeding (who
shall have the credentials set forth above) or, if the parties are unable to
agree to the arbitrator within 15 business days of the initiation of the
arbitration proceedings, then by the AAA. No provision of, nor the exercise of
any rights under, this Section 10.6 shall limit the right of any party to
request and obtain from a court of competent jurisdiction in the State of Ohio,
County of Franklin (which shall have exclusive jurisdiction for purposes of this
Section 10.6) before, during or after the pendency of any arbitration,
provisional or ancillary remedies and relief including injunctive or mandatory
relief or the appointment of a receiver. The institution and maintenance of an
action or judicial proceeding for, or pursuit of, provisional or ancillary
remedies shall not constitute a waiver of the right of any party, even if it is
the plaintiff, to submit the dispute to arbitration if such party would
otherwise have such right. Each of the parties hereby submits unconditionally to
the exclusive jurisdiction of the state and federal courts located in the County
of Franklin, State of Ohio for purposes of this provision, waives objection to
the venue of any proceeding in any such court or that any such court provides an
inconvenient forum and consents to the service of process upon it in connection
with any proceeding instituted under this Section 10.6 in the same manner as
provided for the giving of notice under this Agreement. Judgment upon the award
rendered may be entered in any court having jurisdiction. The parties hereby
expressly consent to the nonexclusive jurisdiction of the state and federal
courts situated in the County of Franklin, State of Ohio for this purpose and
waive objection to the venue of any proceeding in such court or that such court
provides an inconvenient forum. The arbitrator shall have the power to award
recovery of all costs (including attorneys' fees, administrative fees,
arbitrators' fees and court costs) to the prevailing party. The arbitrator shall
not have power, by award or otherwise, to vary any of the provisions of this
Agreement.
11.7 Recovery of Attorneys' Fees. In any action arising
under this Agreement, the Note, the Security Agreement, or the Registration
Rights Agreement then the prevailing party shall be entitled to recovery of its
legal fees and expenses incurred in connection therewith.
11.8 Counterparts/Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.
11.9 Publicity. Neither Purchaser nor the Company shall
issue any press releases or otherwise make any public statement with respect to
the transactions contemplated by this Agreement without the prior written
consent of the other, except as may be required by applicable law or regulation.
11.10 Survival. The representations and warranties in this
Agreement shall survive Closing.
11.11 Expenses. Each of the parties shall bear its own
legal and other expenses in connection with the negotiation and closing of the
transactions contemplated hereby, except that the Company will reimburse
Purchaser for up to $17,500 in legal fees and expenses incurred
17
by Purchaser hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized representatives the day and year
first above written.
NEOPROBE CORPORATION
By /s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx, Vice President of Finance
PURCHASER
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxxx
18
