Exhibit 10.1
 
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
“SECURITIES 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 SECURITIES ACT, AND MAY
NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.

10% CONVERTIBLE NOTE PURCHASE AGREEMENT
 
NEOPROBE CORPORATION

THIS AGREEMENT is made this 3rd day of July, 2007, between NEOPROBE CORPORATION
(the “Company”), incorporated under the laws of the State of Delaware, with its
principal office at 425 Metro Place North, Suite 300, Dublin, OH 43017 and David
C. Bupp, residing at 9095 Moors Place North, Dublin, Ohio 43017, Cynthia B.
Gochoco, residing at 1550 Chapel Drive, York, Pennsylvania 17404, and Walter H.
Bupp, residing at 2038 Wyntre Brook Drive, York, Pennsylvania 17403, as joint
tenants with right of survivorship (each a “Purchaser,” and collectively the
“Purchasers”).

In consideration of the mutual covenants contained in this Agreement, the
Company and the Purchasers 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 10% Convertible 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.

“Average Closing Price” has the meaning specified in Section 9.6(b).

“Average Market Price” means 125% of the average Closing Price of the Common
Stock for the five (5) consecutive Trading Days immediately preceding the
Closing Date.

“Business Day” means any day on which banks in the City of Columbus, Ohio are
open for business.

 
 

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“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 national securities exchange on which the Common Stock
is listed or admitted for quotation, or if the Common Stock is not listed or
quoted on an exchange, 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 Price” has the meaning specified in Section 9.1

“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.

“Holder” means the Purchasers and any transferee of the Note in a transfer
permitted under Section 8.2.

“Maturity Date” has the meaning specified in Section 2.1.

“Note” means the 10% Convertible Note of the Company, due July 8, 2008, 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.

“Person” shall mean any individual, corporation, partnership, limited liability
company, trust, incorporated or unincorporated organization, joint venture,
joint stock company, or a government or any agency or political subdivision
thereof or other entity of any kind.

“Principal Sum” has the meaning specified in Section 2.1.

“Reports” has the meaning specified in Section 3.6.
 
 
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“Registration Rights Agreement” has the meaning specified in Section 2.4.

“SEC” has the meaning specified in Section 3.7.

“Securities Act” has the meaning specified in the legend on the first page of
this Agreement.

“Senior Indebtedness” means all liabilities and obligations of the Company to
Biomedical Value Fund, L.P., Biomedical Offshore Value Fund, Ltd. and David C.
Bupp under the Series A Convertible Promissory Notes Due January 7, 2009, in the
aggregate original principal amount of $8,100,000, as amended, modified or
supplemented from time to time.

“Special Committee” has the meaning specified in Section 4.9.

“Trading Day” means any day on which transactions are effected on the New York
Stock Exchange, the American Stock Exchange, or the NASDAQ Stock Market.

“Transaction Documents” has the meaning specified in Section 2.1.

“Warrant” or “Warrants” means the Warrant purchased from the Company on the
Closing Date and any subsequent Warrant or Warrants issued in exchange or
replacement thereof pursuant to the 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 Purchasers of (a) this
Agreement, (b) the Note in the principal amount of $1,000,000 (the “Principal
Sum”), with a maturity date on July 8, 2008 (the “Maturity Date”), (c) the
Warrant, (d) the Registration Rights Agreement, and (e) 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 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 10% per annum from the Closing Date, and shall be payable in arrears on
the last day of each calendar quarter in cash, provided that from and after an
Event of Default the rate of interest shall increase to 12% per annum until the
Event of Default is cured. 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, subject to the terms of Section 9.3 of this Agreement. Any
partial prepayment shall be in the minimum amount of $100,000 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 Purchasers and
Purchasers will purchase the Note from the Company, at the Closing provided for
in Section 2.5, at the purchase price of 100% of the Principal Sum.

 
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2.3 Warrant Issuable Upon Closing. As additional consideration for the purchase
of the Note, at the Closing the Company will issue to Purchasers 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
B (the “Warrant”). The Warrant shall have an exercise price equal to the Average
Market Price.

2.4 Registration Rights. At the Closing, the Company will enter into a
Registration Rights Agreement with Purchasers in the form attached hereto as
Exhibit C, providing for the filing of a registration statement under the Act
with respect to resales of the Warrant Shares and Conversion Shares.

2.5 Time and Place of Closing. The Closing shall be held at the offices of
Porter, Wright, Morris & Arthur, 41 South High Street, Columbus, Ohio 43215 on
or before July 6, 2007.

2.6 Payment and Delivery. At the Closing, the following shall occur:

(a) The Company shall deliver or cause to be delivered to Purchaser

(i) an original Note and Warrant, substantially in the form set forth in
Exhibits A and B hereto, each bearing the original signatures of a duly
authorized officer of the Company;

(ii) a Registration Rights Agreement in the form set forth in Exhibit C each
bearing the original signatures of a duly authorized officer of the Company;

(iii) a certificate, dated the Closing of the Secretary of the Company
certifying (x) that complete and accurate copies of the resolutions of the board
of directors of the Company approving the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby are
attached thereto, (y) that such resolutions are in full force and effect and
have not been amended or repealed and (z) the names and titles of the officers
of the Company who have executed the documents, certificates and instruments
delivered at the Closing and their signatures; and

(iv) a copy of the Certificate of Incorporation of the Company (certified by the
Secretary of State of the State of Delaware).

(b) Purchasers shall cause payment to be made to the Company in immediately
available U.S. funds of the Principal Sum.
 
 
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2.7 Usury. All agreements which either now are or which shall become agreements
between the Company and Purchasers 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 the desires of the
Company and Purchasers. 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 Purchasers, or their successors and assigns.

Section 3. General Representations and Warranties of the Company. The Company
hereby represents and warrants to Purchasers 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 150,000,000 shares of Common
Stock, of which 62,869,731 are currently issued and outstanding, and 22,858,182
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 no shares 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 conversion of the Note and exercise of the
Warrant. 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, the Note
and the Warrant, 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.

 
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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 stockholders 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 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 (a) pursuant to the Warrant, the Warrant Shares, and
(b) pursuant to the Note, the Conversion 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 Purchasers, their 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 (collectively,
the “Reports”), as incurred in the ordinary course of business after the date of
the Reports, and obligations to Purchasers incurred under the Transaction
Documents.

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 under the Securities Act resales by Purchasers of the
Conversion Shares and Warrant Shares as provided in the Registration Rights
Agreement.

 
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3.8 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.

3.9 Title to Assets. Except as disclosed in the Reports, 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.

3.10 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.

3.11 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, the Note and the Warrant, 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 Purchasers. Each of the
Purchasers 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. Such 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 such Purchaser and constitutes the legal, valid and binding
obligation of such 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. Such Purchaser is an “accredited investor” as defined
in Rule 501(a) under the Act, and resides in the state described as his or her
state of residence in the first paragraph of this Agreement. Such Purchaser
acknowledges that David C. Bupp (“Mr. Bupp”), the chief executive officer and a
director of the Company, has acted as such Purchaser’s representative and
advisor in connection with the purchase of the Note and Warrant, that Mr. Bupp
is aware of the Company’s business affairs and financial condition, has had
access to and has acquired sufficient information about the Company, including
the Reports, and has communicated that information to such Purchaser, so as to
allow such Purchaser to reach an informed and knowledgeable decision to acquire
the Note and Warrant. Such Purchaser independently has such business and
financial experience as is required to give him or her the capacity to protect
his or her own interests in connection with the purchase of the Note and
Warrant.

 
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4.3 Investment Intent. Without limiting the ability to resell the Conversion
Shares and Warrant Shares pursuant to an effective registration statement, or
upon any exemption from registration that may be legally available, such
Purchaser represents that he or she is purchasing the Note and Warrant, and will
acquire the Conversion Shares and Warrant Shares, for such Purchaser’s own
account as principal for investment purposes, and not with a view to a
distribution. Such Purchaser understands that the acquisition of the Note and
Warrant has 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 such
Purchaser’s investment intent as expressed herein. Such 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. Such 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. Such Purchaser understands that the Note and
Warrant, as well as any certificate for the Conversion Shares or Warrant Shares,
will be imprinted with a legend that prohibits the transfer of such securities
unless (a) it is registered or such registration is not required pursuant to an
exemption therefrom, and (b) 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. Such Purchaser understands that nothing
in this Agreement or any other materials presented to Purchasers in connection
with the purchase and sale of the Note and Warrant constitutes legal, tax or
investment advice from the Company, or on its behalf by any director, officer,
employee, agent or representative of the Company. Such Purchaser has consulted
such legal, tax and investment advisors as such Purchaser, in his or her sole
discretion, has deemed necessary or appropriate in connection with the purchase
of the Note and the Warrant.

4.6 Purchaser Review. Such Purchaser hereby represents and warrants that he or
she has carefully examined the Reports, and the financial statements contained
therein. Such Purchaser acknowledges that the Company has made available to him
or her all documents and information that such Purchaser has requested relating
to the Company and has been provided answers to all of his or her questions
concerning the Company, the Note and the Warrant.
 
 
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4.7 Certain Risks. Such 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:

(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) such Purchaser may not be able to liquidate this investment;

(c) transferability of the Note, Warrant, Conversion Shares and Warrant Shares
is extremely limited;

(d) such Purchaser could sustain the loss of his or her 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; and

(f) while the Common Stock is presently quoted on the OTC Bulletin Board and
while such Purchaser is the beneficiary of certain registration rights provided
herein: (i) the issuance of the Note, Warrant, and Warrant Shares are not
registered under applicable federal or state securities laws, and thus may not
be sold, conveyed, assigned or transferred unless such transaction is 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 (iii) 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. Such 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,
and Warrant Shares are being offered and sold hereunder pursuant to (a) 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 (b) a similar exemption to the registration provisions of
applicable state securities laws.

 
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4.9 Disclosure by Purchaser. Such Purchaser represents and warrants that all
material facts as to Mr. Bupp’s relationship or interest in the transactions
contemplated by this Agreement have been disclosed to the special committee of
the Board of Directors (the “Special Committee”) that negotiated the terms of
this Agreement with Purchasers, and that Mr. Bupp has disclosed to the Special
Committee and to the Board of Directors all contracts, negotiations, events,
corporate developments, results of operations and other facts of which he has
knowledge that a reasonable person would consider likely to have a material
effect, whether positive or adverse, on the business, assets, liabilities,
operations, prospects, and condition (financial or otherwise) of the Company,
including without limitation all acquisition and financing proposals from third
parties and the substance of any discussions relating thereto in which he
participated.

4.10 Purchaser’s Knowledge of Breach. Such Purchaser is not aware of any facts
or circumstances that would be sufficient, in the absence of other facts or
circumstances not currently known to such Purchaser, to constitute a breach of
any of the representations and warranties of the Company contained in this
Agreement or in any of the Transaction Documents. Such Purchaser shall be deemed
to have waived in full any breach of any of the Company’s representations and
warranties of which any Purchaser has knowledge at the Closing.

Section 5. Conditions to Purchaser’s Obligation to Purchase. The Company
understands that Purchasers’ 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:

(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 Registration Rights Agreement,
in the form of Exhibit C.

Section 6. Conditions to Company’s Obligation to Sell. Purchasers understand
that the Company’s obligation to sell the Note and Warrant is conditioned upon
the truth and accuracy of the representations and warranties of Purchasers in
Section 4 as of the Closing Date, and:

(a) Delivery by Purchasers to the Company of good funds as payment in full for
the purchase of the Note and Warrant; and
 
(b) Execution and delivery by Purchasers of the Registration Rights Agreement,
in the form of Exhibit C.

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

 
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(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 (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) one or more defaults 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 which the aggregate amount of all such defaults are 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

(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,
and no Purchaser had knowledge at the Closing that such representation or
warranty was false or incorrect; or

(f) the rendering against the Company of one or more final judgments, decrees or
orders for the payment of money which in the aggregate exceed $100,000.00 and
the continuance of such judgments, decrees or orders 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

 
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(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 that is subject to Section 271(a) of the Delaware General Corporation
Law, without the consent of the Holder; or

(k) a merger or consolidation of the Company without the consent of the Holder,
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.

(a) If any Event of Default has occurred and is continuing, the Holder 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 all accrued and
unpaid interest thereon, 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.

(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 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, each transfer of the Note 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.
 
 
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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 or the Holder’s 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 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, and shall be bound by the provisions of this Agreement to the
same extent as if the transferee were originally a party to this Agreement.
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, 2007 and prior to the Maturity Date, the Principal Sum then outstanding (or
any portion thereof equal to or greater than $100,000), 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 Average Market
Price. The number of Conversion Shares due upon conversion shall be determined
by dividing the Conversion Amount by the Conversion Price.
 
 
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9.2 Exercise of Conversion Privilege. The conversion right provided in Section
9.1 may be exercised by the Holder by delivering to the Company an executed and
completed notice of conversion in the form of Exhibit D 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 9.2 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, at its sole cost and expense (i) issue the Conversion
Shares (together with any other securities or property to which the Holder is
entitled upon such exercise) in accordance with the provisions of Section 9.1 in
such denominations as the Holder may request, each registered in the name of the
Holder or such other name as may be designated by the Holder, and (ii) cause to
be mailed for delivery by overnight courier to the Holder (x) a certificate or
certificate(s) representing the number of Conversion Shares to which the Holder
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 Holder and the Company, whereby the Holder
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 under the Note.

9.4 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.

9.5 Certain Events. In case at any time prior to the conversion or payment of
all of the principal of the Note, the Company:

(a) declares any cash dividend (or authorizes any other distribution) on its
Common Stock;

(b) authorizes the granting to the holders of its Common Stock of rights to
subscribe for or purchase any shares of its capital stock or assets, other than
a dividend payable solely in shares of Common Stock;

(c) authorizes a reclassification, split or combination of the Common Stock, or
a consolidation or merger to which the Company is a party or a sale or transfer
of all or substantially all the assets of the Company that is subject to Section
271(a) of the Delaware General Corporation Law; or

 
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(d) authorizes a voluntary or involuntary dissolution, liquidation or winding up
of the Company;

then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the Holder at the address of such
Holder as shown on the books of the Company, (i) at least 30 days’ prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such dissolution, liquidation or
winding-up; (ii) at least 10 days’ prior written notice of the date on which the
books of the Company shall close or a record shall be taken for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger or sale, and (iii) in the case of any such reorganization,
reclassification, consolidation; merger, sale, dissolution, liquidation or
winding-up, at least 30 days’ written notice of the date when the same shall
take place. Any notice given in accordance with clause (i) above shall also
specify, in the case of any such dividend, distribution or option rights, the
date on which the holders of Common Stock shall be entitled thereto. Any notice
given in accordance with clause (iii) above shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, as the case may be. Anything herein to the contrary notwithstanding,
the Holder may give a notice of conversion of all or a portion of the Note as
contemplated in Section 9.1, which may be conditioned upon the actual occurrence
of the event which is the subject of the notice, it being the intention of
Company and Holder that Holder shall be entitled to obtain the benefits of such
conversion if such event actually occurs, but shall be entitled to retain this
Note in full at its option if such event does not occur for any reason, and the
Company agrees to take all such action, including issuing a new Note in order to
assure to the Holder the benefits contemplated by this Section 9.5.

9.6 Adjustment of Conversion Price. The Conversion Price shall be adjusted from
time to time in the following manner upon the occurrence of the following
events:

(a) Dividend, Subdivision, Combination or Reclassification of Common Stock. If
the Company shall, at any time or from time to time, (A) declare a dividend on
the Common Stock payable in shares of its capital stock (including Common
Stock), (B) subdivide the outstanding Common Stock into a larger number of
shares of Common Stock, (C) combine the outstanding Common Stock into a smaller
number of shares of its Common Stock, or (D) issue any shares of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each such case, the Conversion
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be
adjusted so that the Holder upon conversion after such date shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if this
Note had been converted immediately prior to such date, such holder would have
owned upon such conversion and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. Any such adjustment
shall become effective immediately after the record date of such dividend or the
effective date of such subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur. If a dividend is declared and such dividend is not paid, the Conversion
Price shall again be adjusted to be the Conversion Price, in effect immediately
prior to such record date (giving effect to all adjustments that otherwise would
be required to be made pursuant to this Section 9.6 from and after such record
date).
 
 
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(b) Certain Distributions. If the Company shall, at any time or from time to
time, fix a record date for the distribution to all holders of Common Stock
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of evidences of
indebtedness, assets or other property (other than regularly scheduled cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends payable in capital stock for which adjustment is made under
Section 9.6(a)) or subscription rights, options or warrants, upon conversion of
the Note after that corporate event, the Holder will be entitled to receive the
securities or assets the Holder would have received if the Holder had converted
the Note immediately before the first such corporate event and not disposed of
the securities or assets received as a result of the or any subsequent corporate
event.

(c) Issuance of Common Stock Below Conversion Price.

(i) If the Company shall, at any time and from time to time, after the date
hereof, directly or indirectly, sell or issue shares of Common Stock (regardless
of whether originally issued or from the Company’s treasury), or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock) at a price per share of
Common Stock (determined, in the case of rights, options, warrants or
convertible or exchangeable securities (collectively, “Securities”), by dividing
(x) the total consideration received or receivable by the Company in
consideration of the sale or issuance of such Securities, plus the total
consideration payable to the Company upon exercise or conversion or exchange
thereof, by (y) the total number of shares of Common Stock covered by such
Securities) which is lower than the Conversion Price in effect immediately prior
to such sale or issuance, then, subject to Section 9.6(c)(ii), the Conversion
Price shall be reduced to a price determined by multiplying the Conversion Price
in effect immediately prior thereto by a fraction, the numerator of which shall
be the sum of the number of shares of Common Stock outstanding immediately prior
to such sale or issuance plus the number of shares of Common Stock which the
aggregate consideration received (in the case of Securities, determined as
provided below) for such sale or issuance would purchase at the Conversion Price
in effect immediately prior to such sale or issuance and the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such sale or issuance. Such adjustment shall be made
successively whenever such sale or issuance is made. For the purposes of such
adjustments, the shares of Common Stock which the holder of any such Securities
shall be entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such sale or issuance of such Securities and the
consideration “received” by the Company therefor shall be deemed to be the
consideration actually received or receivable by the Company (plus any
underwriting discounts or commissions in connection therewith) for such
Securities, plus the consideration stated in such Securities to be payable to
the Company for the shares of Common Stock covered thereby. If the Company shall
sell or issue shares of Common Stock for a consideration consisting, in whole or
in part, of property other than cash or its equivalent, then in determining the
“price per share of Common Stock” and the “consideration” received or receivable
by or payable to the Company for purposes of the first sentence and the
immediately preceding sentence of this Section 9.6(c)(i), the fair value of such
property shall be determined in good faith by the Board of Directors of the
Company. Except as provided below, the determination of whether any adjustment
is required under this Section 9.6(c)(i) by reason of the sale or issuance of
Securities and the amount of such adjustment, if any, shall be made only at the
time of such issuance or sale and not at any subsequent time.

 
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(ii) No adjustment shall be made to the Conversion Price pursuant to Section
9.6(c)(i) in connection with the (A) issuance of shares in any of the
transactions described in Section 9.6(a), 9.6(b), or 9.6(e) hereof; (B) issuance
of shares upon exercise of the Warrants; (C) issuance of shares upon conversion
of the Notes; (D) issuance of shares of Common Stock upon the exercise of
options or the grant of options provided that such options were or are issued
pursuant to stock option plans approved by the stockholders of the Company; (E)
issuance of shares of Common Stock or rights, options, warrants or convertible
or exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock as part of a unit in connection with an arm’s length
institutional debt financing, (F) issuance of shares of Common Stock upon the
exercise or conversion of rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock outstanding on the Effective Date; (G) issuance of shares of
Common Stock or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock in connection with licenses, assignments or other transfers of
intellectual property of the Company or Subsidiaries, or rights therein, in
connection with cooperative research and development agreements, strategic
alliances, or agreements providing for the manufacturing, distribution or sale
of products or services of the Company or Subsidiaries; (H) issuance of shares
of Common Stock pursuant to the Common Stock Purchase Agreement, dated December
1, 2006, between the Company and Fusion Capital Fund II, LLC, and (I)
contributions of Common Stock to the Company’s 401(k) Plan.

(iii) In the event of any change in the number of shares of Common Stock
deliverable or any change in the consideration payable to the Company upon
exercise, conversion or exchange of any Securities (including, without
limitation, by operation of the anti-dilution provisions of such Securities
other than those anti-dilution provisions contained within the Securities that
are substantially similar to the provisions of Section 9.6(a) hereof), any
adjustment to the Conversion Price which was made upon the issuance of such
Securities, and any subsequent adjustments based thereon, shall be recomputed to
reflect such change, except as provided below, no further adjustment shall be
made for the actual issuance of Common Stock or any payment of such
consideration upon the exercise, conversion or exchange of any such Securities.
The Company shall make all necessary adjustments (including successive
adjustments if required) to the Conversion Price in accordance with Section 9.6.
Upon the expiration or termination of the right to exercise, convert or exchange
any Securities, any adjustment to the Conversion Price which was made upon the
issuance of such Securities, and any subsequent adjustments based thereon, shall
be recomputed to reflect the issuance of only the number of shares of Common
Stock actually issued upon the exercise, conversion or exchange of such
Securities and the actual consideration received therefor (as determined in this
Section 9.6).
 
 
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(d) De Minimis Adjustments. No adjustment shall be made under this Section 9.6
if the amount of such adjustment would result in a change in the Conversion
Price of less than one percent (1%), but in such case any adjustment that would
otherwise be required to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment, which together
with any adjustment so carried forward, would result in a change of at least one
percent (1%). Notwithstanding the provisions of the first sentence of this
Section 9.6(d), any adjustment postponed pursuant to this Section 9.6(d) shall
be made no later than the earlier of the Maturity Date or the date on which the
Note is converted.

(e) Reorganization, Reclassification, Merger and Sale of Assets. If there occurs
any capital reorganization or any reclassification of the Common Stock of the
Company, the consolidation or merger of the Company with or into another Person
(other than a merger or consolidation of the Company in which the Company is the
continuing corporation and which does not result in any reclassification or
change of outstanding shares of its Common Stock) or the sale or conveyance of
all or substantially all of the assets of the Company to another Person, then
the Holder will thereafter be entitled to receive, upon the conversion of this
Note in accordance with the terms hereof, the same kind and amounts of
securities (including shares of stock) or other assets, or both, which were
issuable or distributable to the holders of outstanding Common Stock of the
Company upon such reorganization, reclassification, consolidation, merger, sale
or conveyance, in respect of that number of shares of Common Stock then
deliverable upon the conversion of this Note if this Note had been exercised
immediately prior to such reorganization, reclassification, consolidation,
merger, sale or conveyance; and, in any such case, appropriate adjustments (as
determined in good faith by the Board of Directors of the Company) shall be made
to assure that the provisions hereof (including, without limitation, provisions
with respect to changes in, and other adjustments of, the Conversion Price)
shall thereafter be applicable, as nearly as reasonably may be practicable, in
relation to any securities or other assets thereafter deliverable upon
conversion of this Note.

(f) Certificate as to Adjustments. Whenever the Conversion Price shall be
adjusted pursuant to the provisions hereof, the Company shall promptly give
written notice thereof to the Holder, in accordance with Section 11, in the form
of a certificate signed by the Chairman of the Board, President or one of the
Vice Presidents of the Company, and by the Chief Financial Officer, Treasurer or
one of the Assistant Treasurers of the Company, stating the adjusted Conversion
Price, and setting forth in reasonable detail the method of calculation and the
facts requiring such adjustment and upon which such calculation is based. Each
adjustment shall remain in effect until a subsequent adjustment is required.
 
 
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9.7 Other Provisions Relating to Rights of The Holder. If all or any part of the
Note is duly converted, the Holder will for all purposes be deemed to become the
holder of record of the Conversion Shares as to which the Note is converted, and
the certificate for such shares will be dated on the date the Note (or any
successor Note) is surrendered for conversion, except if such date is not a
Business Day, the Holder will be deemed to become the record holder of the
Conversion Shares, and the certificate will be dated, on the next succeeding
Business Day. The Holder will not be entitled to any rights as a holder of the
Conversion Shares, including the right to vote and to receive dividends, until
the Holder becomes or is deemed to become the holder of such shares pursuant to
the terms hereof. The issuance of certificates for shares of Common Stock upon
the conversion of the Note shall be made without charge to the Holder for any
issue tax in respect thereof, provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than that of the
then Holder of the Note being exercised.

Section 10. Covenants.

10.1 Reservation of Shares. The Company shall at all times reserve and keep
available out of its authorized capital stock, solely for the purpose of
issuance or delivery upon conversion of the Notes and exercise of the Warrants,
the maximum number of shares of capital stock that may be issuable or
deliverable upon such conversion or exercise, as the case may be. Such shares of
capital stock shall, when issued or delivered in accordance with the Notes and
the Warrants, as the case may be, be duly and validly issued and fully paid and
non-assessable. The Company shall issue such capital stock in accordance with
the provisions of the Notes and the Warrants, as the case may be, and shall
otherwise comply, in each case, with the terms thereof. The Company covenants
that it will take all reasonable action as may be necessary to assure that such
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange or automated quotation system upon which the Common Stock may be
listed, or any agreement to which the Company may be a party.

10.2 Limitation on Indebtedness. Without the prior written consent of the
Holder, the Company shall not issue, assume or otherwise incur any indebtedness
for borrowed money, other than:

(a) indebtedness created under this Agreement;

(b) indebtedness to banks or other financial institutions under working capital
facilities not to exceed $500,000 in the aggregate;

 
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(c) the Senior Indebtedness; or

(d) indebtedness incurred to finance the acquisition of equipment or other
personal property by purchase or lease.

Section 11. 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 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
425 Metro Place North, Suite 300
Dublin, Ohio 43017
Attn: Chief Financial Officer
(fax) (614) 793-9376

copy to:

William J. Kelly, Jr.
Porter, Wright, Morris & Arthur
41 South High Street, Suite 2800
Columbus, Ohio 43215

 
or to such other Person at such other place as the Company shall designate to
Purchaser in writing;

(b)
if to the Purchasers, to
 
David C. Bupp
9095 Moors Place North
Dublin, Ohio 43017

copy to:

Kenneth J. Warren, Esq.
5134 Blazer Parkway
Dublin, Ohio 43017

or at such other address as a majority in interest of Purchasers shall designate
to the Company in writing; or

 
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(c) if to any transferee or transferees of Purchasers, 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.

Section 12. Miscellaneous.

12.1 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 of 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.

12.2 Amendments. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and by Purchaser.

12.3 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.

12.4 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.

12.5 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, except to the extent that the
Delaware General Corporation Law shall govern. Each 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 11. Nothing herein shall affect the right of any party to
serve process in any other manner permitted by law.

12.6 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 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 12.6 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
12.6) 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.

 
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12.7 Recovery of Attorneys’ Fees. In any action arising under this Agreement,
the Note, the Warrant, or the Registration Rights Agreement then the prevailing
party shall be entitled to recovery of its legal fees and expenses incurred in
connection therewith, to the extent such legal fees and expenses have not been
awarded by an arbitrator.

12.8 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.

12.9 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.
 
 
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12.10 Survival. The representations and warranties in this Agreement shall
survive Closing.

12.11 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 Purchasers for $25,000.00 in
legal and investment advisory fees and expenses incurred by Purchasers
hereunder.

12.12 No Strict Construction. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement and the other Transaction
Documents. In the event an ambiguity or question of intent or interpretation
arises under any provision of this Agreement or any Transaction Document, this
Agreement or such other Transaction Document shall be construed as if drafted
jointly by the parties thereto, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement or any other Transaction Document.

12.13 Power of Attorney. With respect to any Purchaser executing and delivering
this Agreement pursuant to a power of attorney, the attorney in fact so
appointed by such Purchaser represents and warrants that as of the date hereof
and on the Closing Date: (a) he is the attorney in fact designated by such power
of attorney; (b) the principal is not deceased, and has not revoked or partially
or fully terminated or suspended the power of attorney; (c) there is currently
no petition to determine incapacity or appoint a guardian for the principal; and
(d) the power of attorney is in full force and effect.

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.
 
[Signatures on following pages]
 
 
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NEOPROBE CORPORATION
 
   
   
  By    /s/ Brent L. Larson  

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Brent L. Larson, Vice President of Finance

 
Signature page to Note Purchase Agreement

 
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PURCHASERS
/s/ David C. Bupp  

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David C. Bupp

 

     
/s/ Cynthia B. Gochoco    
 

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Cynthia B. Gochoco

 

     
/s/ Walter H. Bupp     
 

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Walter H. Bupp, by David C. Bupp, his attorney in fact, under power of attorney
dated April 22, 2005

 
Signature page to Note Purchase Agreement
 
 
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