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Exhibit 10.1.38
NEOPROBE CORPORATION
March 31, 1999
The Aries Master Fund
The Aries Domestic Fund, L.P.
c/o Paramount Capital Asset Management, Inc.
Attn: Xxxxxxx X. Xxxxx
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx XX 00000
RE: PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (THE "AGREEMENT") DATED
AS OF FEBRUARY 16, 1999, AMONG NEOPROBE CORPORATION, A DELAWARE
CORPORATION, THE ARIES MASTER FUND, A CAYMAN ISLAND EXEMPTED COMPANY,
THE ARIES DOMESTIC FUND, L.P. (COLLECTIVELY THE ARIES MASTER FUND AND
THE ARIES DOMESTIC FUND, L.P. ARE REFERRED TO HEREIN AS "ARIES"), AND
THE CERTIFICATE OF DESIGNATIONS OF 5% SERIES B CONVERTIBLE PREFERRED
STOCK OF THE COMPANY (THE"CERTIFICATE").
Dear Sirs:
KPMG LLP audited Neoprobe Corporation's (the "Company's) financial
statements for fiscal year 1998. KPMG LLP did not complete their audit for
fiscal year 1998 by March 31, 1999 even though the Company fully cooperated with
them. Subsequently, KPMG informed the Company that KPMG's audit opinion will
contain a going concern qualification. These events have caused the Company to
be unable to comply with some of its obligations under the Agreement and
Certificate, including the following.
o The Company was unable to file by March 31, 1999 a Form S-3
("Form S-3") to register its common stock issuable in
connection with the Agreement.
o The Company was unable to file its Form 10-K for fiscal year
1998 and deliver an annual report of the Company, including
audited financial statements and an unqualified audit report,
within 90 days after year end.
o The Company will receive an audit opinion containing a going
concern qualification.
Because of these violations of the Agreement and the Certificate, Aries
has the right to redeem their shares of Series B Preferred Stock, to receive a
cash payments from the Company and to receive additional warrants (the
"Warrants") to purchase common stock, par value $.001, of the Company.
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The Aries Master Fund
The Aries Domestic Fund, L.P.
c/o Paramount Capital Asset Management, Inc.
Attn: Xxxxxxx X. Xxxxx
March 31, 1999
Page Two
The Company and Aries agree:
o The Company will file a complete Form 10-K/A for the fiscal
year ended December 31, 1998 by April 15, 1999 and will file
the Form S-3 immediately thereafter.
o That the term "Outside Target Date" in the Agreement shall
mean April 15, 1999.
o That the deadline for the Company delivering to Aries an
annual report of the Company, including audited financial
statements and an audit report, is extended to April 15, 1999.
o That the Company receiving an audit opinion relating to fiscal
year 1998 which contains a going concern qualification will
not violate the terms of the Agreement or the Certificate.
o Aries waives its rights to redeem its shares of Series B
Preferred Stock, to receive cash payments from the Company and
to receive the Warrants for the period of time from March 31,
1999 until the date that Aries signs this waiver letter.
o This letter is a Certificate of Compliance with regard to the
issues discussed herein as required by Section 7.3 of the
Agreement.
o This letter is notification of material adverse changes as
required by Section 7.7 of the Agreement.
Except as expressly described above, this waiver letter shall not
constitute (a) a modification or alteration of the terms, conditions or
covenants of the Agreement or the Certificate or (b) a waiver, release or
limitation on Aries' exercise of any of its rights and remedies thereunder,
which are hereby expressly reserved. Except as described above, this waiver
letter shall not relieve or release the Company in any way from its duties,
obligations, covenants or agreements under the Agreement or Certificate or from
the consequences of any default thereunder. This waiver letter will not obligate
Aries, or be construed to obligate Aries, to waive any other defaults, whether
now existing or which may occur after the date on which Aries signs this waiver
letter.
If the foregoing correctly reflects our agreement, please evidence your
acceptance of this agreement by signing and returning to me a copy of this
waiver letter.
Very truly yours,
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
President
Chief Executive Officer
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The Aries Master Fund
The Aries Domestic Fund, L.P.
c/o Paramount Capital Asset Management, Inc.
Attn: Xxxxxxx X. Xxxxx
April 1, 1999
Page Three
AGREED TO AND ACCEPTED AS OF THE DATE SET FORTH ABOVE.
THE ARIES MASTER FUND, A CAYMAN ISLAND EXEMPTED COMPANY
BY: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
NAME: Xxxxxxx Xxxxxxxxx
---------------------------------
TITLE:
--------------------------------
THE ARIES DOMESTIC FUND, L.P.
BY: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
NAME: Xxxxxxx Xxxxxxxxx
---------------------------------
TITLE:
--------------------------------
cc: Xxx Xxxxx, Esq.
Xxxxxxx, Xxxxxxxx & Xxxxx
Xxxxxx X. Xxxxxxxx, Esq.
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
