Document:

EX-10.7

 

Exhibit 10.7

REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this “Agreement”) is made and entered into as of
December 26, 2007, by and among Neoprobe Corporation, a Delaware corporation (the
“Company”), and Platinum-Montaur Life Sciences, LLC (the “Purchaser”).

     This Agreement is being entered into pursuant to the Securities Purchase Agreement dated as of
the date hereof among the Company and the Purchaser (the “Purchase Agreement”).

     The Company and the Purchaser hereby agree as follows:

     1. Definitions.

     Capitalized terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the
following meanings:

     “Advice” shall have meaning set forth in Section 3(m).

     “Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by or under common control with such Person. For the purposes
of this definition, “control,” when used with respect to any Person, means the possession,
direct or indirect, of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or otherwise; and the
terms of “affiliated,” “controlling” and “controlled” have meanings
correlative to the foregoing.

     “Board” shall have meaning set forth in Section 3(n).

     “Business Day” means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the state of New York generally are
authorized or required by law or other government actions to close.

     “Closing Date” means the date of the initial closing of the purchase and sale of
securities to the Purchaser pursuant to the Purchase Agreement.

     “Commission” means the Securities and Exchange Commission.

     “Common Stock” means the Company’s Common Stock, par value $.001 per share.

     “Effectiveness Period” shall have the meaning set forth in Section 2(a).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Filing Date” means the sixtieth (60th) day following the Closing Date.

 

 

     “Holder” or “Holders” means the holder or holders, as the case may be, from
time to time of Registrable Securities, including the Purchaser and its successors and assigns.

     “Indemnified Party” shall have the meaning set forth in Section 5(c).

     “Indemnifying Party” shall have the meaning set forth in Section 5(c).

     “Losses” shall have the meaning set forth in Section 5(a).

     “Notes” means the Series A Note and the Series B Note issued or to be issued to the
Purchaser pursuant to the Purchase Agreement.

     “Person” means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of any kind.

     “Preferred Shares” means the Series A Preferred Stock of the Company issued to the
Purchaser pursuant to the Purchase Agreement.

     “Proceeding” means an action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

     “Prospectus” means the prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such Prospectus.

     “Registrable Securities” means (A) the shares of Common Stock issuable upon conversion
of the Preferred Shares and the Notes, (B) the shares of Common Stock issuable upon exercise of the
Warrants and (c) shares of Common Stock issuable as dividends on the Preferred Shares or as
interest on the Notes; provided, that, such securities shall cease to be Registrable Securities
when such securities may be sold by the Holder pursuant to Rule 144 under the Securities Act
(without regard to volume limitations or any other condition of such Rule, including the
availability of current public information with respect to the Company).

     “Registration Statement” means the registration statements and any additional
registration statements contemplated by Section 2(a) and 2(b), including (in each case) the
Prospectus, amendments and supplements to such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material incorporated by reference in
such registration statement.

 

 

     “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.

     “Rule 158” means Rule 158 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.

     “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.

     “Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Warrants” means the warrants to purchase shares of Common Stock issued to the Holders
pursuant to the Purchase Agreement.

     2. Resale Registration.

          (a) On or prior to the Filing Date the Company shall prepare and file with the Commission a
“resale” Registration Statement providing for the resale of all Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall
be on Form SB-2 (except if the Company is not then eligible to register for resale the Registrable
Securities on Form SB-2, in which case such registration shall be on another appropriate form in
accordance with the Securities Act and the rules promulgated thereunder). The Company shall (i)
not permit any securities other than the Registrable Securities to be included in the Registration
Statement and (ii) subject to Section 2(b), use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as possible after the
filing thereof, and to keep such Registration Statement continuously effective under the Securities
Act until such date as is the earlier of (x) the date when all Registrable Securities covered by
such Registration Statement have been sold or (y) the date on which the Registrable Securities may
be sold without any restriction pursuant to Rule 144 (including any restriction on the availability
of current public information with respect to the Company) as determined by the counsel to the
Company pursuant to a written opinion letter, addressed to the Company’s transfer agent to such
effect (the “Effectiveness Period”). If at any time and for any reason, an additional
Registration Statement is required to be filed because at such time the actual number of shares of
Common Stock into which the Notes, Preferred Shares and the Warrants are exercisable or convertible
has increased, the Company shall have thirty-five (35) days to file such additional Registration
Statement, and the Company shall use its best efforts to cause such additional Registration
Statement to be declared effective by the Commission as soon as possible.

          (b) Notwithstanding anything to the contrary set forth herein, in the event the Commission
does not permit the Company to register all of the Registrable Securities in the

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Registration Statement because of the Commission’s application of Rule 415 as evidenced in a
comment letter from the Commission with respect to the Registration Statement, the Company
shall register in the Registration Statement such number of Registrable Securities as is permitted
by the Commission, provided, however, that the securities to be included in such Registration
Statement or any subsequent Registration Statement shall be determined in the following order: (i)
first, the Registrable Securities issuable upon conversion of the Notes and Preferred Shares; (ii)
second, the Registrable Securities issuable upon exercise of the Warrants (in each case of (i) and
(ii) above, pro rata among the Holders based on the amount of Registrable Securities held by such
Holders); (iii), third, the Registrable Securities issuable as interest or dividends on the Notes
and the Preferred Shares; and (iv) fourth, any other securities required to be included in the
Registration Statement. In the event the Commission does not permit the Company to register all of
the Registrable Securities in the initial Registration Statement, the Company shall use its best
efforts to file subsequent Registration Statements to register the Registrable Securities that were
not registered in the initial Registration Statement as promptly as possible, and, in any event, by
the Filing Date, and in a manner permitted by the Commission, and use its best efforts to cause
such subsequent Registration Statements to be declared effective. For purposes of a subsequent
filing under this paragraph, “Filing Date” means with respect to each subsequent Registration
Statement filed pursuant hereto, as promptly as practicable, but in no event more than 15 days
after the later of (i) sixty (60) days following the sale of substantially all of the Registrable
Securities, determined, to the extent permitted by the Commission, on a per holder (and its
affiliates) basis, included in the initial Registration Statement or any subsequent Registration
Statement and (ii) six (6) months following the effective date of the initial Registration
Statement or any subsequent Registration Statement, as applicable, or such earlier date as
permitted by the Commission. Such subsequent Registration Statement shall be subject to the terms
of this Agreement as a Registration Statement under Section 2 hereof.

     3. Registration Procedures.

     In connection with the Company’s registration obligations hereunder, the Company shall:

          (a) Prepare and file with the Commission on or prior to the Filing Date, a Registration
Statement on Form SB-2 (or if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2 such registration shall be on another appropriate form in
accordance with the Securities Act and the rules promulgated thereunder) in accordance with the
method or methods of distribution thereof as specified by the Holders (except if otherwise directed
by the Holders), and use its reasonable best efforts to cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not less
than five (5) Business Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall (i) furnish to the Holders or their counsel
copies of all such documents proposed to be filed, which documents (other than those incorporated
by reference) will be subject to the review of such Holders, and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond to such inquiries as
shall be necessary, in the reasonable opinion of the Holders, to conduct a reasonable investigation
within the meaning of the Securities Act. The Company shall not file the Registration Statement or
any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of
the Registrable Securities shall reasonably object in writing within three (3) Business Days of
their receipt thereof.

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          (b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration Statements as necessary in order
to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the
related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond as promptly as possible, but in no event later
than ten (10) Business Days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as possible provide the Holders
true and complete copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in accordance with the intended
methods of disposition by the Holders thereof set forth in the Registration Statement as so amended
or in such Prospectus as so supplemented.

          (c) Notify the Holders of Registrable Securities to be sold as promptly as possible (and, in
the case of (i)(A) below, not less than five (5) days prior to such filing) and (if requested by
any such Person) confirm such notice in writing no later than one (1) Business Day following the
day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is filed; (B) when the Commission notifies the Company whether there will be
a “review” of such Registration Statement and whenever the Commission comments in writing on such
Registration Statement and (C) with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the Registration Statement
or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose; (iv) if at any time
any of the representations and warranties of the Company contained in any agreement contemplated
hereby ceases to be true and correct in all material respects; (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any Proceeding for such purpose; and (vi) of the occurrence of any event that
makes any statement made in the Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect or that requires
any revisions to the Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.

          (d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of, (i) any order suspending the effectiveness of the Registration Statement or (ii)

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any suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

          (e) If requested by the Holders of a majority in interest of the Registrable Securities, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should be included therein and (ii)
make all required filings of such Prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.

          (f) Furnish to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.

          (g) Promptly deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and the Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto.

          (h) Prior to any public offering of Registrable Securities, use its reasonable best efforts to
register or qualify or cooperate with the selling Holders in connection with the registration or
qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by a Registration Statement; provided, however, that the Company
shall not be required to qualify generally to do business in any jurisdiction where it is not then
so qualified or to take any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.

          (i) Cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to a Registration Statement,
which certificates shall be free of all restrictive legends (provided that the issuance of such
unlegended certificates is in compliance with applicable securities laws), and to enable such
Registrable Securities to be in such denominations and registered in such names as any Holder may
request in writing at least two (2) Business Days prior to any sale of Registrable Securities.

          (j) Upon the occurrence of any event contemplated by Section 3(c)(vi), as promptly as
possible, prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such

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Prospectus will contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading.

          (k) Use its reasonable best efforts to cause all Registrable Securities relating to the
Registration Statement to be listed, traded or quoted, as the case may be, on the OTC Bulletin
Board or any other securities exchange, quotation system or market, if any, on which similar
securities issued by the Company are then listed, traded or quoted as and when required pursuant to
the Purchase Agreement and the Notes.

          (l) Comply in all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 not later than 45 days after the end
of any 3-month period (or 75 days after the end of any 12-month period if such period is a fiscal
year) commencing on the first day of the first fiscal quarter of the Company after the effective
date of the Registration Statement, which statement shall conform to the requirements of Rule 158.

          (m) The Company may require each Holder to furnish to the Company in writing information
regarding such Holder, the Registrable Securities held by such Holder and the intended manner of
distribution of such Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company may exclude from such registration the Registrable
Securities of any such Holder who unreasonably fails to furnish such information within a
reasonable time after receiving such request.

     If the Registration Statement refers to any Holder by name or otherwise as the holder of any
securities of the Company, then such Holder shall have the right to require (if such reference to
such Holder by name or otherwise is not required by the Securities Act or any similar federal
statute then in force) the deletion of the reference to such Holder in any amendment or supplement
to the Registration Statement filed or prepared subsequent to the time that such reference ceases
to be required.

     Each Holder covenants and agrees that (i) it will not sell any Registrable Securities under
the Registration Statement until it has received copies of the Prospectus as then amended or
supplemented as contemplated in Section 3(g) and notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will comply with the
prospectus delivery requirements of the Securities Act as applicable to them in connection with
sales of Registrable Securities pursuant to the Registration Statement.

     Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a
notice from the Company of the occurrence of any event of the kind described in Section 3(c)(ii),
3(c)(iii), 3(c)(iv), 3(c)(v), 3(c)(vi) or 3(n), such Holder will forthwith discontinue disposition
of such Registrable Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section
3(j), or until it is advised in writing (the “Advice”) by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has received copies of

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any additional or
supplemental filings that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement.

          (n) If (i) there is material non-public information regarding the Company which the Company’s
Board of Directors (the “Board”) reasonably determines not to be in the Company’s best
interest to disclose and which the Company is not otherwise required to
disclose, or (ii) there is a significant business opportunity (including, but not limited to,
the acquisition or disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to the Company which
the Board reasonably determines not to be in the Company’s best interest to disclose, then the
Company may (x) postpone or suspend filing of a registration statement for a period not to exceed
thirty (30) consecutive days or (y) postpone or suspend effectiveness of a registration statement
for a period not to exceed thirty (30) consecutive days; provided that the Company may not postpone
or suspend effectiveness or filing of a registration statement under this Section 3(n) for more
than sixty (60) days in the aggregate during any three hundred sixty (360) day period;
provided, however, that no such postponement or suspension shall be permitted for
consecutive thirty (30) day periods arising out of the same set of facts, circumstances or
transactions.

     4. Registration Expenses.

     All fees and expenses incident to the performance of or compliance with this Agreement by the
Company, except as and to the extent specified in this Section 4, shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect to filings required
to be made with the OTC Bulletin Board and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed, (B) with respect to filing fees
required to be paid to the National Association of Securities Dealers, Inc. and the NASD
Regulation, Inc. and (C) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Holders in connection with Blue Sky
qualifications of the Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions as the Holders of a
majority of Registrable Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of printing
prospectuses if the printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act
liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all
other Persons retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, the Company’s independent public
accountants (including the expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In addition, the Company
shall be responsible for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties), the expense

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of any
annual audit, the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

     5. Indemnification.

          (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents, brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, costs of preparation and attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that such Loss arises out of or is
based solely upon (i) an untrue or alleged untrue statement or omission or alleged omission made in
the Registration Statement or any Prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder expressly for use therein, or
(ii) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus
that was delivered to such Holder at least three business days prior to the pertinent sale or sales
by such Holder. The Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.

          (b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents and employees of such controlling Persons,
to the fullest extent permitted by applicable law, from and against all Losses (as determined by a
court of competent jurisdiction in a final judgment not subject to appeal or review), as incurred,
arising solely out of or based solely upon any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or arising solely out of or
based solely upon any omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not misleading, to the
extent, but only to the extent, that such untrue statement or omission is contained in any
information so furnished by such Holder or other Indemnifying Party to the Company specifically for
inclusion in the Registration Statement or such Prospectus. Notwithstanding anything to the
contrary contained herein, each Holder shall be liable under this Section 5(b) for only that amount
as does not exceed the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.

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          (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party promptly shall notify the Person from whom indemnity is sought (the
“Indemnifying Party) in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party
of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that
it shall be finally determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have materially adversely prejudiced
the Indemnifying Party.

     An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel (which shall be reasonably acceptable
to the Indemnifying Party) that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without
its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of
any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability on claims that are
the subject matter of such Proceeding.

     All fees and expenses reasonably incurred by the Indemnified Party in connection with such
Proceeding (including reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of
written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).

          (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to
enforce such indemnification in accordance with its terms (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative benefits received by the Indemnifying

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Party on the one hand and the Indemnified Party on the other from the offering of the Notes, the
Preferred Shares and the Warrants. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution shall be made in such
proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing
sentence but also the relative fault, as applicable, of the Indemnifying Party and Indemnified
Party in connection with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms. In no event shall any selling Holder be
required to contribute an amount under this Section 5(d) in excess of the net proceeds received by
such Holder upon sale of such Holder’s Registrable Securities pursuant to the Registration
Statement giving rise to such contribution obligation.

     The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

     The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties. Notwithstanding
anything to the contrary contained herein, the Holders shall be liable under this Section 5(d) for
only that amount as does not exceed the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such Registration Statement.

     6. Rule 144. As long as any Holder owns any Registrable Securities, Notes, Preferred
Shares or Warrants, the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder owns
any Registrable Securities, Notes, Preferred Shares or Warrants, if the Company is not required to
file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and furnish to
the Holders and make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a discussion and analysis
of such financial statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or 15(d) of the Exchange
Act, as well as any other information required thereby, in the time period that such filings would
have been required to have been made under the Exchange Act. The Company further covenants that it
will take such further action as any Holder may reasonably request all to the extent required from
time to time to enable such Person to sell the

-11-

 

Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including providing any legal opinions relating to such sale pursuant to Rule
144. Upon request of any Holder, the Company shall deliver to such Holder a written certification
of a duly authorized officer as to whether it has complied with such requirements.

     7. Miscellaneous.

          (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its rights under
this Agreement. The Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would be adequate.

          (b) No Inconsistent Agreements. Neither the Company nor any of its subsidiaries has,
as of the date hereof entered into and currently in effect, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as disclosed in Schedule 3.3 of the
Purchase Agreement, neither the Company nor any of its subsidiaries has previously entered into any
agreement currently in effect granting any registration rights with respect to any of its
securities to any Person. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable Securities, the Company
shall not grant to any Person the right to request the Company to register any securities of the
Company, under the Securities Act unless the rights so granted are subject in all respects to the
prior rights in full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

          (c) No Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the
Company in the Registration Statement, and the Company shall not after the date hereof enter into
any agreement providing such right to any of its securityholders, unless the right so granted is
subject in all respects to the prior rights in full of the Holders set forth herein, and is not
otherwise in conflict with the provisions of this Agreement.

          (d) [RESERVED]

          (e) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of three-fourths (3/4) of the Registrable Securities
outstanding.

-12-

 

          (f) Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earlier of (i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., New York City
time, on a Business Day, (ii) the Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number specified for notice
later than 5:00 p.m., New York City time, on any date and earlier than 11:59 p.m., New York City
time, on such date, (iii) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service or (iv) actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be with respect to each Holder
at its address set forth under its name on Schedule I attached hereto, or with respect to
the Company, addressed to:

	 	 	 
	 

	 	Neoprobe Corporation
	 

	 	425 Metro Place North Suite 300
	 

	 	Dublin, OH 43017
	 

	 	Attn: David Bupp, President and CEO
	 

	 	Tel. No.: [ ]
	 

	 	Fax No.: (614) 793-7520
	with copies (which copies
	 	 
	shall not constitute notice
	 	 
	to the Company to):

	 	Porter, Wright, Morris & Arthur, LLP
	 

	 	41 South High Street, Suite 2800
	 

	 	Columbus, Ohio 43215
	 

	 	Telecopier No.: (614) 227-2100
	 

	 	Attention: William J. Kelly, Jr., Esq.

or to such other address or addresses or facsimile number or numbers as any such party may most
recently have designated in writing to the other parties hereto by such notice. Copies of notices
to the Holders shall be sent to Burak Anderson & Melloni, PLC, 30 Main Street, Burlington, Vermont,
Attention: Shane W. McCormack, Tel. No.: (802) 862-0500, Fax. No.: (802) 862-8176.

          (g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns and shall inure to the benefit of
each Holder and its successors and assigns. The Company may not assign this Agreement or any of
its rights or obligations hereunder without the prior written consent of each Holder. Each Holder
may assign its rights hereunder in the manner and to the Persons as permitted under the Purchase
Agreement.

          (h) Assignment of Registration Rights. The rights of each Holder hereunder, including
the right to have the Company register for resale Registrable Securities in accordance with the
terms of this Agreement, shall be automatically assignable by each Holder to any transferee or
assignee of all or a portion of the Registrable Securities if: (i) the Holder agrees in writing
with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice of (a)

-13-

 

the name
and address of such transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is restricted under the
Securities Act and applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the transferee or assignee
agrees in writing with the Company to be bound by all of the provisions of this Agreement, and (v)
such transfer shall have been made in accordance with the applicable requirements of the Purchase
Agreement. The rights to assignment shall apply to the Holders (and to subsequent) successors and
assigns.

          (i) Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and, all of which taken together shall
constitute one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature were the original thereof.

          (j) Governing Law; Jurisdiction. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving effect to any of the
conflicts of law principles which would result in the application of the substantive law of another
jurisdiction. This Agreement shall not be interpreted or construed with any presumption against
the party causing this Agreement to be drafted. The Company and the Holders agree that venue for
any dispute arising under this Agreement will lie exclusively in the state or federal courts
located in New York County, New York, and the parties irrevocably waive any right to raise forum
non conveniens or any other argument that New York is not the proper venue. The Company and the
Holders irrevocably consent to personal jurisdiction in the state and federal courts of the state
of New York. The Company and the Holders consent to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing in this Section 7(j) shall affect or limit any right to serve
process in any other manner permitted by law. The Company and the Holders hereby agree that the
prevailing party in any suit, action or proceeding arising out of or relating to the this Agreement
or the Purchase Agreement, shall be entitled to reimbursement for reasonable legal fees from the
non-prevailing party. The parties hereby waive all rights to a trial by jury.

          (k) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

          (l) Severability. If any term, provision, covenant or restriction of this Agreement is
held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

-14-

 

          (m) Headings. The headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

          (n) Shares Held by the Company and its Affiliates. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or its Affiliates (other than any Holder or transferees or
successors or assigns thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.

          (o) [Reserved].

          (p) Notwithstanding anything to the contrary herein, each party’s obligations and agreements
under Sections 2, 3 and 4 of this Agreement shall terminate on the earliest to occur of
(i) the date as of which the Holders may sell all of the Registrable Securities held by them
pursuant to Rule 144 (or successor thereto) promulgated under the 1933 Act (without compliance with
any volume limitation, current public information requirement or any manner of sale requirement
thereunder), or (ii) the date on which the Holders shall have sold all of the Registrable
Securities.

     IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be
duly executed by their respective authorized persons as of the date first indicated above.

	 	 	 	 	 	 	 
	 	 	NEOPROBE CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David C. Bupp	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: David C. Bupp	 	 
	 

	 	 	 	Title: President & CEO	 	 
	 
	 	 	 	 	 	 
	 	 	PLATINUM-MONTAUR LIFE SCIENCES, LLC
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael Goldberg	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Michael Goldberg	 	 
	 

	 	 	 	Title: Portfolio Manager
	 	 

-15-

 

Schedule I

List of Holders 

Platinum-Montaur Life Sciences, LLC

152 West 57th Street, 54th Floor,

New York, New York 10019

Attention: Michael Goldberg, M.D.

-16-EX-10.8

 

Exhibit 10.8

SECURITY AGREEMENT

     This SECURITY AGREEMENT, dated as of December 26, 2007 (this “Agreement”), is between
Neoprobe Corporation, a Delaware corporation (the “Company” or the “Debtor”), and
Platinum-Montaur Life Sciences, LLC (the “Secured Party”), the holder of the Company’s
Senior Secured Notes (the “Notes”), issued or to be issued to the Secured Party pursuant
and subject to the terms of the Securities Purchase Agreement, dated as of the date hereof, between
the Debtor and the Secured Party (the “Purchase Agreement”), and its endorsees, transferees
and assigns.

W I T N E S S E T H:

     WHEREAS, pursuant to the Notes and subject to the terms of the Purchase Agreement, the Secured
Party has agreed to extend the loans to the Company evidenced by the Notes;

     WHEREAS, in order to induce the Secured Party to extend the loans evidenced by the Notes, the
Debtor has agreed to execute and deliver to the Secured Party this Agreement and to grant the
Secured Party a security interest in certain property of the Debtor to secure the prompt payment,
performance and discharge in full of all of the Company’s obligations under the Notes.

     NOW, THEREFORE, in consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:

     1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings
set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are
defined in Article 9 of the UCC (including the terms “account”, “chattel paper”, “commercial tort
claim”, “deposit account”, “document”, “equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”, “proceeds”,
“securities” and “supporting obligations”) shall have the respective meanings given such terms in
Article 9 of the UCC.

     (a) “Collateral” means the collateral in which the Secured Party is granted a
security interest by this Agreement and which shall include the following personal property
of the Debtor, whether presently owned or existing or hereafter acquired or coming into
existence, wherever situated, and all additions and accessions thereto and all substitutions
and replacements thereof, and all proceeds, products and accounts thereof, including,
without limitation, all proceeds from the sale or transfer of the Collateral and of
insurance covering the same and of any tort claims in connection therewith, and all
dividends, interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities (as defined below):

     (i) All goods, including, without limitation, (A) all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and

 

 

other equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, and all substitutes
for any of the foregoing and all other items used and useful in connection with the
Debtor’s businesses and all improvements thereto; and (B) all inventory, including
all materials, work in process and finished goods;

     (ii) All contract rights and other general intangibles, including, without
limitation, all partnership interests, membership interests, stock or other
securities, rights under any of the Organizational Documents, agreements related to
the Pledged Securities, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or developed by the
Debtor), computer software development rights, leases, franchises, customer lists,
quality control procedures, grants and rights, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent applications, copyrights, and income tax
refunds;

     (iii) All accounts, together with all instruments, all documents of title
representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and all
right, title, security and guaranties with respect to each account, including any
right of stoppage in transit;

     (iv) All documents, letter-of-credit rights, instruments and chattel paper;

     (v) All commercial tort claims;

     (vi) All deposit accounts and all cash (whether or not deposited in such
deposit accounts);

     (vii) All investment property;

     (viii) All supporting obligations;

     (ix) All files, records, books of account, business papers, and computer
programs; and

     (x) the products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(ix) above.

     Without limiting the generality of the foregoing, the “Collateral”
shall include all investment property and general intangibles respecting ownership
and/or other equity interests in each subsidiary, including, without limitation, the
shares of capital stock and the other equity interests listed on Schedule H
hereto (as the same may be modified from time to time pursuant to the terms hereof),
and any other shares of capital stock and/or other equity interests of any other
direct or

 

 

indirect subsidiary of the Debtor obtained in the future, and, in each
case, all
certificates representing such shares and/or equity interests and, in each
case, all rights, options, warrants, stock, other securities and/or equity interests
that may hereafter be received, receivable or distributed in respect of, or
exchanged for, any of the foregoing and all rights arising under or in connection
with the Pledged Securities, including, but not limited to, all dividends, interest
and cash.

     Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable law or the assignment of which is otherwise prohibited by
applicable law (in each case to the extent that such applicable law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by applicable law,
this Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in the proceeds of such asset.

     (b) “Intellectual Property” means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without limitation, (i) all
copyrights arising under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether published or
unpublished, all registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and applications in
the United States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions thereof, and all
applications for letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection therewith, whether
in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political subdivision thereof,
or otherwise, and all common law rights related thereto, (iv) all trade secrets arising
under the laws of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for infringement of the
foregoing.

     (c) “Necessary Endorsement” means undated stock powers endorsed in blank or
other proper instruments of assignment duly executed and such other instruments or documents
as the Secured Party may reasonably request.

     (d) “Obligations” means all of the liabilities and obligations (primary,
secondary, direct, contingent, sole, joint or several) due or to become due, or that are now

 

 

or may be hereafter contracted or acquired, or owing, of the Debtor to the Secured Party
under this Agreement, the Notes and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith, in each case,
whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether
or not from time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the extent all
or any part of such payment is avoided or recovered directly or indirectly from the Secured
Party as a preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without limiting the
generality of the foregoing, the term “Obligations” shall include, without limitation: (i)
principal of, and interest on, the Notes and the loans extended pursuant thereto; (ii) any
and all other fees, indemnities, costs, obligations and liabilities of the Debtor from time
to time under or in connection with this Agreement, the Notes and any other instruments,
agreements or other documents executed and/or delivered in connection herewith or therewith;
and (iii) all amounts (including but not limited to post-petition interest) in respect of
the foregoing that would be payable but for the fact that the obligations to pay such
amounts are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Debtor.

     (e) “Organizational Documents” means, with respect to the Debtor, the documents
by which the Debtor was organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including, without limitation, any
certificates of designation for preferred stock or other forms of preferred equity) and
which relate to the internal governance of the Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).

     (f) “Pledged Securities” shall have the meaning ascribed to such term in
Section 4(i).

     (g) “UCC” means the Uniform Commercial Code of the State of New York and/or any
other applicable law of any state or states which have jurisdiction with respect to all, or
any portion of, the Collateral or this Agreement, from time to time. It is the intent of
the parties that defined terms in the UCC should be construed in their broadest sense so
that the term “Collateral” will be construed in its broadest sense. Accordingly if there
are, from time to time, changes to defined terms in the UCC that broaden the definitions,
they are incorporated herein, and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.

     2. Grant of Security Interest in Collateral. As an inducement for the Secured Party to extend
the loans as evidenced by the Notes and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Debtor hereby unconditionally
and irrevocably pledges, grants and hypothecates to the Secured Party a security interest in and
to, a lien upon, and a right of set-off against, all of its right, title and interest of whatsoever
kind and nature in and to the Collateral (a “Security Interest” and collectively, the
“Security Interests”).

 

 

     3. Delivery of Certain Collateral. Contemporaneously with or prior to the execution of this
Agreement, the Debtor shall deliver or cause to be delivered to the Secured Party (a) any and all
certificates and other instruments representing or evidencing the Pledged Securities, and (b) any
and all certificates and other instruments or documents representing any of the other Collateral,
in each case, together with all Necessary Endorsements; provided that the certificates and
instruments representing the Ordinary Shares of Cardiosonix, Ltd. shall be delivered to the Secured
Party within thirty (30) days of the execution of this Agreement. The Debtor is, contemporaneously
with the execution hereof, delivering to the Secured Party, or has previously delivered to the
Secured Party, a true and correct copy of each Organizational Document governing any of the Pledged
Securities.

     4. Representations, Warranties, Covenants and Agreements of the Debtor. Except as set forth
under the corresponding section of the disclosure schedules delivered to the Secured Party
concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall be
deemed a part hereof, the Debtor represents and warrants to, and covenants and agrees with, the
Secured Party as follows:

     (a) The Debtor has the requisite corporate or other power and authority to enter into
this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery
and performance by the Debtor of this Agreement and the filings contemplated therein have
been duly authorized by all necessary action on the part of the Debtor and no further action
is required by the Debtor. This Agreement has been duly executed by the Debtor. This
Agreement constitutes the legal, valid and binding obligation of the Debtor, enforceable
against the Debtor in accordance with its terms except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization and similar laws of general application
relating to or affecting the rights and remedies of creditors and by general principles of
equity.

     (b) The Debtor has no place of business or offices where its books of account and
records are kept (other than temporarily at the offices of their attorneys or accountants)
or places where Collateral is stored or located, except as set forth on Schedule A
attached hereto. The Debtor owns of record, subject only to Permitted Encumbrances (as
defined in the Purchase Agreement), the real property where such Collateral is located, as
identified on Schedule A. Except as disclosed on Schedule A, none of such
Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.

     (c) Except for Permitted Encumbrances (as defined in the Purchase Agreement) and except
as set forth on Schedule B attached hereto, the Debtor is the sole owner of the
Collateral, free and clear of any liens, security interests, encumbrances, rights or claims,
and are fully authorized to grant the Security Interests. Except with respect to Permitted
Encumbrances (as defined in the Purchase Agreement) and except as set forth on Schedule
B attached hereto, there is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement, license or
transfer or any notice of any of the foregoing (other than those that

 

 

will be filed in favor of the Secured Party pursuant to this Agreement) covering or
affecting any of the Collateral. Except with respect to Permitted Encumbrances (as defined
in the Purchase Agreement), except as set forth on Schedule B attached hereto and
except pursuant to this Agreement, as long as this Agreement shall be in effect, the Debtor
shall not execute and shall not knowingly permit to be on file in any such office or agency
any other financing statement or other similar document or instrument (except to the extent
filed or recorded in favor of the Secured Party pursuant to the terms of this Agreement).

     (d) No written claim has been received by the Debtor that any Collateral or Debtor’s
use of any Collateral violates the rights of any third party. There has been no adverse
decision to the Debtor’s claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction or to the Debtor’s right to keep and maintain such Collateral
in full force and effect, and there is no proceeding involving said rights pending or, to
the best knowledge of the Debtor, threatened before any court, judicial body, administrative
or regulatory agency, arbitrator or other governmental authority.

     (e) The Debtor shall at all times maintain its books of account and records relating to
the Collateral at its registered office (except when temporarily kept at the offices of its
attorneys or accountants) and its Collateral at the locations set forth on Schedule
A attached hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Party at least 30 days prior to such relocation
(i) written notice of such relocation and the new location thereof (which must be within the
United States) and (ii) evidence that appropriate financing statements under the UCC and
other necessary documents have been filed and recorded and other steps have been taken to
perfect the Security Interests to create in favor of the Secured Party, subject to Permitted
Encumbrances (as defined in the Purchase Agreement), a valid, perfected and continuing
perfected first priority lien in the Collateral.

     (f) This Agreement creates in favor of the Secured Party a valid security interest in
the Collateral, subject only to Permitted Encumbrances (as defined in the Purchase
Agreement), securing the payment and performance of the Obligations. Upon making the
filings described in the immediately following paragraph, all security interests created
hereunder in any Collateral which may be perfected by filing UCC financing statements shall
have been duly perfected. Except for the filing of the UCC financing statements referred to
in the immediately following paragraph, the recordation of the Intellectual Property
Security Agreement (as defined below) in the United States Patent and Trademark Office, and
the delivery of the certificates and other instruments provided in Section 3, no action is
necessary to create, perfect or protect the security interests created hereunder. Without
limiting the generality of the foregoing, except for the filing of said financing statements
and the recordation of said Intellectual Property Security Agreement, no consent of any
third parties and no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required for (i) the execution,
delivery and performance of this Agreement, (ii) the creation or perfection of the Security
Interests created hereunder in the Collateral or (iii) the enforcement of the rights of the
Secured Party hereunder.

 

 

     (g) The Debtor hereby authorizes the Secured Party to file one or more financing
statements under the UCC with respect to the Security Interests with the proper filing and
recording agencies in any jurisdiction deemed proper by it, which UCC financing statement
may describe the collateral as “All assets”, or otherwise perfect the security interest
granted herein.

     (h) The execution, delivery and performance of this Agreement by the Debtor does not
(i) violate any of the provisions of any Organizational Documents of the Debtor or any
judgment, decree, order or award of any court, governmental body or arbitrator or any
applicable law, rule or regulation applicable to the Debtor or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing the Debtor’s debt or otherwise) or other
understanding to which the Debtor is a party or by which any property or asset of the Debtor
is bound or affected. If any, all required consents (including, without limitation, from
stockholders or creditors of the Debtor) necessary for the Debtor to enter into and perform
its obligations hereunder have been obtained.

     (i) The capital stock and other equity interests listed on Schedule H hereto
(the “Pledged Securities”) represent all of the capital stock and other equity
interests in the subsidiaries of the Company, and represent all capital stock and other
equity interests owned, directly or indirectly, by the Company. All of the Pledged
Securities are validly issued, fully paid and nonassessable, and the Company is the legal
and beneficial owner of the Pledged Securities, free and clear of any lien, security
interest or other encumbrance except for the security interests created by this Agreement
and other Permitted Encumbrances (as defined in the Purchase Agreement). The Debtor shall
cause the pledge and security interest of the Secured Party to be duly noted in its
corporate books and records.

     (j) The ownership and other equity interests in partnerships and limited liability
companies (if any) included in the Collateral (the “Pledged Interests”) by their
express terms do not provide that they are securities governed by Article 8 of the UCC and
are not held in a securities account or by any financial intermediary.

     (k) Except for Permitted Encumbrances (as defined in the Purchase Agreement), the
Debtor shall at all times maintain the liens and Security Interests provided for hereunder
as valid and perfected first priority liens and security interests in the Collateral in
favor of the Secured Party until this Agreement and the Security Interests hereunder shall
be terminated pursuant to Section 14 hereof. The Debtor hereby agrees to use commercially
reasonable efforts to defend the same against the claims of any and all persons and entities
and to safeguard and protect all Collateral for the account of the Secured Party. At the
reasonable request of the Secured Party, the Debtor will sign and deliver to the Secured
Party at any time or from time to time one or more financing statements pursuant to the UCC
in form reasonably satisfactory to the Secured Party and

 

 

will pay the cost of filing the same in all public offices wherever filing is necessary
to effect the rights and obligations provided for herein. Without limiting the generality of
the foregoing, the Debtor shall pay all fees, taxes and other amounts necessary to maintain
the Collateral and the Security Interests hereunder, and the Debtor shall obtain and furnish
to the Secured Party from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain in accordance with this Agreement the
priority of the Security Interests hereunder.

     (l) Except for Permitted Encumbrances (as defined in the Purchase Agreement), the
Debtor will not transfer, pledge, hypothecate, encumber, license, sell or otherwise dispose
of any of the Collateral (except for non-exclusive licenses granted by the Debtor in its
ordinary course of business and sales of inventory by the Debtor in its ordinary course of
business) without the prior written consent of the Secured Party.

     (m) The Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order (subject to ordinary wear and tear) and shall
not operate or locate any such Collateral (or cause to be operated or located) in any area
excluded from insurance coverage.

     (n) The Debtor shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral, including Collateral hereafter acquired, against loss or
damage of the kinds and in the amounts customarily insured against by entities of
established reputation having similar properties similarly situated and in such amounts as
are customarily carried under similar circumstances by other such entities and otherwise as
is prudent for entities engaged in similar businesses but in any event sufficient to cover
the full replacement cost thereof.

     (o) The Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Party promptly, in sufficient detail, of any material adverse change in the
Collateral, and of the occurrence of any event which would have a material adverse effect on
the value of the Collateral or on the Secured Party’s security interest therein.

     (p) The Debtor shall promptly execute and deliver to the Secured Party such further
deeds, mortgages, assignments, security agreements, financing statements or other
instruments, documents, certificates and assurances and take such further action as the
Secured Party may from time to time reasonably request as necessary to perfect, protect or
enforce the Secured Party’s security interest in the Collateral including, without
limitation, the execution and delivery of a separate security agreement with respect to the
Debtor’s Intellectual Property (“Intellectual Property Security Agreement”) to be
delivered on the date hereof, in which the Secured Party has been granted a security
interest hereunder, substantially in a form reasonably acceptable to the Secured Party,
which Intellectual Property Security Agreement, other than as stated therein, shall be
subject to all of the terms and conditions hereof.

     (q) The Debtor shall permit the Secured Party and its representatives and agents access
to inspect the Collateral during normal business hours, upon reasonable

 

 

prior written notice, and to make copies of records pertaining to the Collateral as may
be reasonably requested by the Secured Party from time to time, subject to such persons
executing a confidentiality agreement in a form reasonably requested by Debtor.

     (r) The Debtor shall take all commercially reasonable steps to diligently pursue and
seek to preserve, enforce and collect any rights, claims, causes of action and accounts
receivable in respect of the Collateral.

     (s) The Debtor shall promptly notify the Secured Party in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process levied
against any Collateral and of any other information received by the Debtor that would have a
material adverse effect on the value of the Collateral, the Security Interest or the rights
and remedies of the Secured Party hereunder.

     (t) All information heretofore, herein or hereafter supplied to the Secured Party by or
on behalf of the Debtor with respect to the Collateral is accurate and complete in all
material respects as of the date furnished.

     (u) The Debtor shall at all times preserve and keep in full force and effect its valid
existence and good standing and any rights and franchises material to its businesses.

     (v) The Debtor will not change its name, type of organization, jurisdiction of
organization, organizational identification number (if it has one), legal or corporate
structure, or identity, or add any new fictitious name unless it provides at least 30 days’
prior written notice to the Secured Party of such change and, at the time of such written
notification, the Debtor provides any financing statements or fixture filings necessary to
perfect and continue the perfection of the Security Interests granted and evidenced by this
Agreement.

     (w) Except in the ordinary course of business and except for Permitted Encumbrances (as
defined in the Purchase Agreement), the Debtor may not consign any of its Inventory or sell
any of its Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale without the consent of the Secured Party, which shall not be
unreasonably withheld.

     (x) The Debtor may not relocate its chief executive office to a new location without
providing 30 days’ prior written notification thereof to the Secured Party and so long as,
at the time of such written notification, the Debtor provides any financing statements or
fixture filings necessary to perfect and continue the perfection of the Security Interests
granted and evidenced by this Agreement.

     (y) The Debtor was organized and remains organized solely under the laws of the state
set forth next to the Debtor’s name in Schedule D attached hereto, which
Schedule D sets forth the Debtor’s organizational identification number or, if the
Debtor does not have one, states that one does not exist.

 

 

     (z) (i) The actual name of the Debtor is the name set forth in Schedule D
attached hereto; (ii) the Debtor has no trade names except as set forth on Schedule
E attached hereto; (iii) the Debtor has not used any name other than that stated in the
preamble hereto or as set forth on Schedule E for the preceding five years; and (iv)
no entity has merged into the Debtor or been acquired by the Debtor within the past five
years except as set forth on Schedule E.

     (aa) At any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by the secured
party to perfect the security interest created hereby, the applicable Debtor shall deliver
such Collateral to the Secured Party.

     (bb) The Debtor, in its capacity as issuer, hereby agrees to comply with any and all
reasonable orders and instructions of Secured Party regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of the Debtor as
contemplated by Section 8-106 (or any successor section) of the UCC. Further, the Debtor
agrees that it shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity.

     (cc) The Debtor shall cause all tangible chattel paper constituting Collateral to be
delivered to the Secured Party, or, if such delivery is not commercially reasonable, then to
cause such tangible chattel paper to contain a legend noting that it is subject to the
security interest created by this Agreement. To the extent that any Collateral consists of
electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper to
be “marked” within the meaning of Section 9-105 of the UCC (or successor section thereto).

     (dd) If there is any investment property or deposit account included as Collateral that
can be perfected by “control” through an account control agreement, the applicable Debtor
shall cause such an account control agreement, in form and substance in each case reasonably
satisfactory to the Secured Party, to be entered into and delivered to the Secured Party.

     (ee) To the extent that any Collateral consists of letter-of-credit rights, the
applicable Debtor shall endeavor to cause the issuer of each underlying letter of credit to
consent to an assignment of the proceeds thereof to the Secured Party.

     (ff) To the extent that any Collateral is in the possession of any third party, the
applicable Debtor shall join with the Secured Party in notifying such third party of the
Secured Party’s security interest in such Collateral and shall endeavor to obtain an
acknowledgement and agreement from such third party with respect to the Collateral, in form
and substance reasonably satisfactory to the Secured Party.

     (gg) If the Debtor shall at any time hold or acquire a commercial tort claim, the
Debtor shall promptly notify the Secured Party in a writing signed by the Debtor of the
particulars thereof and grant to the Secured Party in such writing a security interest

 

 

therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Secured Party.

     (hh) The Debtor shall promptly provide written notice to the Secured Party of any and
all accounts which arise out of contracts with any governmental authority and, to the extent
necessary to perfect or continue the perfected status of the Security Interests in such
accounts and proceeds thereof, shall execute and deliver to the Secured Party an assignment
of claims for such accounts and cooperate with the Secured Party in taking any other steps
required under the Federal Assignment of Claims Act or any similar foreign, federal, state
or local statute or rule to perfect or continue the perfected status of the Security
Interests in such accounts and proceeds thereof.

     (ii) [Reserved].

     (jj) [Reserved].

     (kk) The Debtor shall cause each issuer of Pledged Securities to register the pledge of
the applicable Pledged Securities in the name of the Secured Party on the books of such
issuer. Further, except with respect to certificated securities delivered to the Secured
Party, the Debtor shall endeavor to deliver to the Secured Party an acknowledgement of
pledge (which, where appropriate, shall comply with the requirements of the relevant UCC
with respect to perfection by registration) signed by the issuer of the applicable Pledged
Securities, which acknowledgement shall confirm that: (a) it has registered the pledge on
its books and records; and (b) at any time directed by the Secured Party during the
continuation of an Event of Default, such issuer will transfer the record ownership of such
Pledged Securities into the name of any designee of the Secured Party, will take such steps
as may be necessary to effect the transfer, and will comply with all other reasonable
instructions of the Secured Party regarding such Pledged Securities without the further
consent of the applicable Debtor. So long as no Event of Default is uncured and continuing,
the Debtor shall have the right to vote the Pledged Securities in all matters presented to
the stockholders of the Pledged Securities for vote thereon, provided that the Debtor shall
vote the Pledged Securities so as to comply with the covenants and agreements of the Debtor
set forth in the Notes and the Transaction Documents.

     (ll) In the event that, upon an occurrence of an Event of Default, the Secured Party
shall sell all or any of the Pledged Securities to another party or parties (herein called
the “Transferee”) or shall purchase or retain all or any of the Pledged Securities,
the Debtor shall, to the extent applicable: (i) deliver to the Secured Party or the
Transferee, as the case may be, the articles of incorporation, bylaws, minute books, stock
certificate books, corporate seals, deeds, leases, indentures, agreements, evidences of
indebtedness, books of account, financial records and all other Organizational Documents and
records of the Debtor and its direct and indirect subsidiaries; (ii) use its commercially
reasonable efforts to obtain resignations of the persons then serving as officers and
directors of the Debtor and its direct and indirect subsidiaries, if so requested by the
Secured Party; and (iii) use its commercially reasonable efforts to obtain any approvals

 

 

that are required by any governmental or regulatory body in order to permit the sale of
the Pledged Securities to the Transferee or the purchase or retention of the Pledged
Securities by the Secured Party and allow the Transferee or Secured Party to continue the
business of the Debtor and its direct and indirect subsidiaries.

     (mm) Without limiting the generality of the other obligations of the Debtor hereunder,
the Debtor shall promptly (i) cause to be registered at the United States Copyright Office
all of its material copyrights, (ii) cause the security interest contemplated hereby with
respect to all Intellectual Property registered at the United States Copyright Office or
United States Patent and Trademark Office to be duly recorded at the applicable office, and
(iii) give the Secured Party notice whenever it acquires (whether absolutely or by license)
or creates any additional material Intellectual Property.

     (nn) The Debtor will from time to time, at the sole expense of the Debtor, promptly
execute and deliver all such further instruments and documents, and take all such further
action as may be necessary or desirable, or as the Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be granted hereby
or to enable the Secured Party to exercise and enforce its rights and remedies hereunder and
with respect to any Collateral or to otherwise carry out the purposes of this Agreement.

     (oo) Schedule F attached hereto lists all of the patents, patent applications,
trademarks, trademark applications, registered copyrights, and domain names owned by the
Debtor as of the date hereof. Schedule F lists all material licenses in favor of
the Debtor for the use of any patents, trademarks, copyrights and domain names as of the
date hereof. All material patents and trademarks of the Debtor have been duly recorded at
the United States Patent and Trademark Office and all material copyrights of the Debtor have
been duly recorded at the United States Copyright Office.

     (pp) Except as set forth on Schedule G attached hereto, none of the account
debtors or other persons or entities obligated on any of the Collateral is a governmental
authority covered by the Federal Assignment of Claims Act or any similar foreign, federal,
state or local statute or rule in respect of such Collateral.

     5. Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement
consists of nonvoting equity or ownership interests (regardless of class, designation, preference
or rights) that may be converted into voting equity or ownership interests upon the occurrence of
certain events (including, without limitation, upon the transfer of all or any of the other stock
or assets of the issuer), it is agreed that the pledge of such equity or ownership interests
pursuant to this Agreement or the enforcement of any of the Secured Party’s rights hereunder shall
not be deemed to be the type of event which would trigger such conversion rights notwithstanding
any provisions in the Organizational Documents or agreements to which the Debtor is subject or to
which the Debtor is party.

     6. Defaults. The following events shall be “Events of Default”:

 

 

     (a) The occurrence of an Event of Default (as defined in the Notes) under any of the
Notes;

     (b) Any representation or warranty of the Debtor in this Agreement shall prove to
have been incorrect in any material respect when made; or

     (c) The failure by the Debtor to observe or perform any of its obligations hereunder
for five (5) business days after delivery to the Debtor of notice of such failure by or on
behalf of the Secured Party unless such default is capable of cure but cannot be cured
within such time frame and the Debtor is using best efforts to cure same in a timely
fashion.

     7. Duty To Hold In Trust.

     (a) Upon the occurrence and during the continuance of any Event of Default, the Debtor
shall, upon receipt of any revenue, income, dividend, interest or other sums subject to the
Security Interests, whether payable pursuant to the Notes or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an obligation to pay any such
sum, hold the same in trust for the Secured Party and shall forthwith endorse and transfer
any such sums or instruments, or both, to the Secured Party.

     (b) If the Debtor shall become entitled to receive or shall receive any securities or
other property (including, without limitation, shares of Pledged Securities or instruments
representing Pledged Securities acquired after the date hereof, or any options, warrants,
rights or other similar property or certificates representing a dividend, or any
distribution in connection with any recapitalization, reclassification or increase or
reduction of capital, or issued in connection with any reorganization of the Debtor or any
of its direct or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or otherwise),
the Debtor agrees to (i) accept the same as the agent of the Secured Party; (ii) hold the
same in trust on behalf of and for the benefit of the Secured Party; and (iii) deliver any
and all certificates or instruments evidencing the same to the Secured Party on or before
the close of business on the fifth business day following the receipt thereof by the Debtor,
in the exact form received together with the Necessary Endorsements, to be held by the
Secured Party subject to the terms of this Agreement as Collateral.

     8. Rights and Remedies Upon Default.

     (a) Upon the occurrence of any Event of Default and at any time thereafter, the Secured
Party shall have the right to exercise all of the remedies conferred hereunder and under the
Notes, and the Secured Party shall have all the rights and remedies of a secured party under
the UCC, including without limitation, the following rights and powers:

     (i) The Secured Party shall have the right to take possession of the
Collateral and, for that purpose, enter by reasonable means, with the aid and

 

 

assistance of any person, any premises where the Collateral, or any part
thereof, is or may be placed and remove the same, and the Debtor shall assemble the
Collateral and make it available to the Secured Party at places which the Secured
Party shall reasonably select, whether at the Debtor’s premises or elsewhere, and
make reasonably available to the Secured Party, without rent, all of the Debtor’s
premises and facilities for the purpose of the Secured Party taking possession of,
removing or putting the Collateral in saleable or disposable form.

     (ii) Upon written notice to the Debtor by the Secured Party, all rights of the
Debtor to exercise the voting and other consensual rights which it would otherwise
be entitled to exercise and all rights of the Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall cease.
Upon such notice, the Secured Party shall have the right to receive any interest,
cash dividends or other payments on the Collateral and, at the option of the Secured
Party, to exercise in the Secured Party’s discretion all voting rights pertaining
thereto. Without limiting the generality of the foregoing, the Secured Party shall
have the right (but not the obligation) to exercise all rights with respect to the
Collateral as if it were the sole and absolute owner thereof, including, without
limitation, to vote and/or to exchange, at its sole discretion, any or all of the
Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or the
Debtor or any of its direct or indirect subsidiaries.

     (iii) The Secured Party shall have the right to operate the business of the
Debtor using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public or
private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon commercially
reasonable terms and conditions Upon each such sale, lease, assignment or other
transfer of Collateral, the Secured Party, may, unless prohibited by applicable law
which cannot be waived, purchase all or any part of the Collateral being sold, free
from and discharged of all trusts, claims, right of redemption and equities of the
Debtor, which are hereby waived and released.

     (iv) The Secured Party shall have the right (but not the obligation) to notify
any account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Party, and to enforce the Debtor’s rights against such
account debtors and obligors.

     (v) The Secured Party, may (but is not obligated to) direct any financial
intermediary or any other person or entity holding any investment property to
transfer the same to the Secured Party, or its designee.

     (vi) The Secured Party may (but is not obligated to) transfer any or all
Intellectual Property registered in the name of the Debtor at the United States

 

 

Patent and Trademark Office and/or Copyright Office into the name of the
Secured Party or any designee or any purchaser of any Collateral, subject to the
terms of the Intellectual Property Security Agreement.

     (b) The Secured Party shall comply with any applicable law in connection with a
disposition of Collateral and such compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. The Secured Party may sell the
Collateral without giving any warranties and may specifically disclaim such warranties. If
the Secured Party sells any of the Collateral on credit, the Debtor will only be credited
with payments actually made by the purchaser. In addition, the Debtor waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of any of the
Secured Party’s rights and remedies hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and to exercise
its rights and remedies with respect thereto.

     (c) For the purpose of enabling the Secured Party to further exercise rights and
remedies under this Section 8 or elsewhere provided by agreement or applicable law, the
Debtor hereby grants to the Secured Party, an irrevocable, nonexclusive license to use,
license or sublicense following an Event of Default, any Intellectual Property now owned or
hereafter acquired by the Debtor, and wherever the same may be located, and including in
such license access to all media in which any of the licensed items may be recorded or
stored and to all computer software and programs used for the compilation or printout
thereof.

     9. Applications of Proceeds. The proceeds of any such sale, lease, license, sublicense or
other disposition of the Collateral hereunder or from payments made on account of any insurance
policy insuring any portion of the Collateral shall be applied first, to the reasonable expenses of
the Secured Party incurred in retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other costs reasonably
incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees and expenses
incurred by the Secured Party in enforcing the Secured Party’s rights hereunder and in connection
with collecting, storing and disposing of the Collateral, and then to satisfaction of the
Obligations, and to the payment of any other amounts required by applicable law, after which the
Secured Party shall pay to the applicable Debtor any surplus proceeds. If, upon the sale, license
or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Party is legally entitled, the Debtor will be liable for the deficiency, together
with interest thereon, at the default rate set forth in the Notes (the “Default Rate”), and
the reasonable fees of any attorneys employed by the Secured Party to collect such deficiency. To
the extent permitted by applicable law, the Debtor waives all claims, damages and demands against
the Secured Party arising out of the repossession, removal, retention or sale of the Collateral,
unless due solely to the gross negligence or willful misconduct of the Secured Party as determined
by a final judgment (not subject to further appeal) of a court of competent jurisdiction.

     10. Securities Law Provision. The Debtor recognizes that the Secured Party may be limited in
its ability to effect a sale to the public of all or part of the Pledged Securities by reason of
certain prohibitions in the Securities Act of 1933, as amended, or other federal or state

 

 

securities laws (collectively, the “Securities Laws”), and may be compelled to resort to
one or more sales to a restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to the distribution or
resale thereof. The Debtor agrees that sales so made may be at prices and on terms less favorable
than if the Pledged Securities were sold to the public, and that the Secured Party has no
obligation to delay the sale of any Pledged Securities for the period of time necessary to register
the Pledged Securities for sale to the public under the Securities Laws. The Debtor shall
cooperate with the Secured Party in its reasonable attempt to satisfy any requirements under the
Securities Laws (including, without limitation, registration thereunder if reasonably requested by
the Secured Party) applicable to the sale of the Pledged Securities by the Secured Party.

     11. Costs and Expenses. The Debtor agrees to pay all reasonable out-of-pocket fees, costs and
expenses incurred in connection with any filing required hereunder, including without limitation,
any financing statements pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches reasonably required by the
Secured Party. The Debtor shall also pay all other claims and charges which would, if unpaid, be
reasonably likely to prejudice, imperil or otherwise affect the Collateral or the Security
Interests therein. The Debtor will also, upon demand, pay to the Secured Party the amount of any
and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Secured Party, may incur in connection with (i) the enforcement of
this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights
of the Secured Party under the Notes or other Transaction Documents. Until so paid, any fees
payable hereunder shall be added to the principal amount of the Notes and shall bear interest at
the Default Rate.

     12. Responsibility for Collateral. The Debtor assumes all liabilities and responsibility in
connection with all Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for
any reason. Without limiting the generality of the foregoing, (a) in no event shall the Secured
Party (i) have any duty (either before or after an Event of Default) to collect any amounts in
respect of the Collateral or to preserve any rights relating to the Collateral, or (ii) have any
obligation to clean-up or otherwise prepare the Collateral for sale, and (b) the Debtor shall
remain obligated and liable under each contract or agreement included in the Collateral to be
observed or performed by the Debtor thereunder. The Secured Party shall not have any obligation or
liability under any such contract or agreement by reason of or arising out of this Agreement or the
receipt by the Secured Party of any payment relating to any of the Collateral, nor shall the
Secured Party be obligated in any manner to perform any of the obligations of the Debtor under or
pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Party in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any amounts which may have
been assigned to the Secured Party or to which the Secured Party may be entitled at any time or
times.

     13. Security Interests Absolute. All rights and all obligations of the parties hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity or

 

 

enforceability of this Agreement, the Notes or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment
or performance of, or in any other term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to any departure from the Notes or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other collateral for, or
any guarantee, or any other security, for all or any of the Obligations; (d) any action by the
Secured Party to obtain, adjust, settle and cancel in its reasonable discretion any insurance
claims or matters made or arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense available to the Debtor, or a
discharge of all or any part of the Security Interests granted hereby. Until the Obligations shall
have been paid and performed in full, the rights of the Secured Party shall continue even if the
Obligations are barred for any reason, including, without limitation, the running of the statute of
limitations or bankruptcy. The Debtor expressly waives presentment, protest, notice of protest,
demand, notice of nonpayment and demand for performance. In the event that at any time any transfer
of any Collateral or any payment received by the Secured Party hereunder shall be deemed by final
order of a court of competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Party, then, in any such event and to the extent
thereof, the Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation of this Agreement,
but shall remain a valid and binding obligation enforceable in accordance with the terms and
provisions hereof. The Debtor waives all right to require the Secured Party to proceed against any
other person or entity or to apply any Collateral which the Secured Party may hold at any time, or
to marshal assets, or to pursue any other remedy. The Debtor hereby waives any defense arising by
reason of the application of the statute of limitations of the obligations secured hereby.

     14. Term of Agreement. This Agreement and the Security Interests shall terminate on the date
on which all payments under the Notes have been indefeasibly paid in full or the Notes have been
fully converted and all other Obligations arising thereunder or hereunder (other than contingent
indemnification obligations) have been paid or discharged.

     15. Power of Attorney; Further Assurances.

     (a) The Debtor authorizes the Secured Party, and does hereby make, constitute and
appoint the Secured Party and its officers, agents, successors or assigns with full power of
substitution, as the Debtor’s true and lawful attorney-in-fact, with power, in the name of
the Secured Party or the Debtor, to, after the occurrence and during the continuance of an
Event of Default, (i) endorse any note, checks, drafts, money orders or other instruments of
payment (including payments payable under or in respect of any policy of insurance) in
respect of the Collateral that may come into possession of the Secured Party; (ii) to sign
and endorse any financing statement pursuant to the UCC or any invoice, freight or express
bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security

 

 

interests or other encumbrances at any time levied or placed on or threatened against
the Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies
due in respect of the Collateral; (v) to transfer any Intellectual Property or provide
licenses respecting any Intellectual Property; and (vi) generally, at the option of the
Secured Party, and at the expense of the Debtor, at any time, or from time to time, to
execute and deliver any and all documents and instruments and to do all acts and things
which the Secured Party reasonably deems necessary to protect, preserve and realize upon the
Collateral and the Security Interests granted therein in order to effect the intent of this
Agreement and the Notes all as fully and effectually as the Debtor might or could do; and
the Debtor hereby ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable
for the term of this Agreement and thereafter as long as any of the Obligations shall be
outstanding. The designation set forth herein shall be deemed to amend and supersede any
inconsistent provision in the Organizational Documents or other documents or agreements to
which the Debtor is subject or to which the Debtor is a party. Without limiting the
generality of the foregoing, after the occurrence and during the continuance of an Event of
Default, the Secured Party is specifically authorized to execute and file any applications
for or instruments of transfer and assignment of any patents, trademarks, copyrights or
other Intellectual Property with the United States Patent and Trademark Office and the
United States Copyright Office.

     (b) On a continuing basis, the Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies in any
jurisdiction, including, without limitation, the jurisdictions indicated on Schedule
C attached hereto, all such instruments, and take all such action as may reasonably be
deemed necessary or advisable, or as reasonably requested by the Secured Party, to perfect
the Security Interests granted hereunder and otherwise to carry out the intent and purposes
of this Agreement, or for assuring and confirming to the Secured Party the grant or
perfection of a perfected security interest in all the Collateral under the UCC.

     (c) The Debtor hereby irrevocably appoints the Secured Party as the Debtor’s
attorney-in-fact, with full authority in the place and stead of the Debtor and in the name
of the Debtor, from time to time in the Secured Party’s discretion, to take any action and
to execute any instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in its sole discretion, of
one or more financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of the Debtor where permitted by law, which financing
statements may (but need not) describe the Collateral as “all assets” or “all personal
property” or words of like import, and ratifies all such actions taken by the Secured Party.
This power of attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be outstanding.

     16. Notices. Any demand upon or notice to the Debtor hereunder shall be effective when
delivered by hand or when properly deposited in the mails postage prepaid, or sent by telex,
answerback received, or electronic facsimile transmission, receipt acknowledged, or

 

 

delivered to a telegraph company or overnight courier, in each case addressed to the Debtor at the
address shown below or such other address as the Debtor may advise the Secured Party in writing.
Any notice by the Debtor to the Secured Party shall be given as aforesaid, addressed to the Secured
Party at the address shown below or such other address as the Secured Party may advise the Debtor
in writing.

	 	 	 	 
	 	Secured Party:

	 	Platinum Montaur Life Sciences, LLC
	 	 

	 	152 West 57th Street, 54th Floor
	 	 

	 	New York, NY 10019
	 	 

	 	Fax:
	 
	 	 
	 	Debtor:

	 	Neoprobe Corporation
	 	 

	 	425 Metro Place North
	 	 

	 	Dublin, Ohio
	 	 

	 	Fax: (614) 793-7520

     17. Other Security. To the extent that the Obligations are now or hereafter secured by
property other than the Collateral or by the guarantee, endorsement or property of any other
person, firm, corporation or other entity, then the Secured Party shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Party’s rights and remedies
hereunder.

     18. Miscellaneous.

     (a) No course of dealing between the Debtor and the Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or
privilege hereunder or under the Notes shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or thereunder preclude
any other or further exercise thereof or the exercise of any other right, power or
privilege.

     (b) All of the rights and remedies of the Secured Party with respect to the Collateral,
whether established hereby or by the Notes or by any other agreements, instruments or
documents or by law shall be cumulative and may be exercised singly or concurrently.

     (c) This Agreement, together with the exhibits and schedules hereto, the Notes and the
related agreements contemplated hereby and thereby contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties acknowledge
have been merged into this Agreement and the exhibits and schedules hereto. No provision of
this Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Debtor and the Secured Party or, in
the case of a waiver, by the party against whom enforcement of any such waived provision is
sought.

 

 

     (d) If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.

     (e) No waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

     (f) This Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the Secured Party
(other than by merger). The Secured Party may assign any or all of its rights under this
Agreement to any Person to whom the Secured Party assigns or transfers any Securities,
provided such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of this Agreement that apply to the “Secured Party.”

     (g) Each party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the provisions and
purposes of this Agreement.

     (h) All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles
of conflicts of law thereof. The Debtor agrees that all proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by this Agreement,
the other Transaction Documents and the Notes (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members, employees or
agents) may be brought in the Courts of New York County, New York or of the United States of
America for the Southern District of New York and hereby expressly submits to the personal
jurisdiction and venue of such courts for the purposes thereof and expressly waives any
claim of improper venue and any claim that such courts are an inconvenient forum. Each of
the Debtor and the Secured Party hereby irrevocably consents to the service of process of
any of the aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, at the address in effect
for notices to it under the Purchase

 

 

Agreement, such service to become effective 10 days after such mailing. Nothing in this
Section 5.9 shall affect or limit any right to serve process in any other manner permitted
by law. Each of the Debtor and the Secured Party hereby agree that the prevailing party in
any suit, action or proceeding arising out of or relating to this Agreement shall be
entitled to reimbursement for reasonable legal fees from the non-prevailing party. The
Debtor and the Secured Party hereby waive all rights to trial by jury.

     (i) This Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute
one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same force and effect as
if such facsimile signature were the original thereof.

     (j) [Intentionally omitted].

     (k) The Debtor shall indemnify, reimburse and hold harmless the Secured Party and its
partners, members, shareholders, officers, directors, employees and agents (and any other
persons with other titles that have similar functions) (collectively, “Indemnitees”) from
and against any and all losses, claims, liabilities, damages, penalties, suits, costs and
expenses, of any kind or nature, (including fees relating to the cost of investigating and
defending any of the foregoing) imposed on, incurred by or asserted against such Indemnitee
in any way related to or arising from or alleged to arise from this Agreement or the
Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs
and expenses which result from the gross negligence or willful misconduct of the Indemnitee
as determined by a final, nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any other
indemnification provision in the Notes, the Transaction Documents or any other agreement,
instrument or other document executed or delivered in connection herewith or therewith.

     (l) Nothing in this Agreement shall be construed to subject the Secured Party to
liability as a partner in the Debtor or any of its direct or indirect subsidiaries that is a
partnership or as a member in any of its direct or indirect subsidiaries that is a limited
liability company, nor shall the Secured Party be deemed to have assumed any obligations
under any partnership agreement or limited liability company agreement, as applicable, of
the Debtor or any of its direct or indirect subsidiaries or otherwise, unless and until the
Secured Party exercises its right to be substituted for the Debtor as a partner or member,
as applicable, pursuant hereto.

     (m) To the extent that the grant of the security interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any partner or
member, as applicable, of the Debtor or any direct or indirect subsidiary of the Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtor hereby
grants such consent and approval and waives any such noncompliance with the terms of said
documents.

[SIGNATURE PAGES FOLLOW]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed
on the day and year first above written.

	 	 	 	 	 
	 	DEBTOR:

NEOPROBE CORPORATION

 	 
	 	By:  	/s/ David C. Bupp
 	 
	 	 	Name:  	David C. Bupp 	 
	 	 	Title:  	President & CEO 	 
	 
	 	PLATINUM MONTAUR LIFE SCIENCES, LLC

 	 
	 	By:  	/s/ Michael Goldberg
 	 
	 	 	Name:  	Michael Goldberg 	 
	 	 	Title:  	Portfolio Manager

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