Document:

Exhibit
10.1

    

    SECURITIES
EXCHANGE AGREEMENT

    

    This SECURITIES EXCHANGE AGREEMENT
dated as of June 22, 2010 (this “Agreement”) is made
by and between Neoprobe Corporation, a Delaware corporation (the “Company”), and
Platinum-Montaur Life Sciences, LLC, a Delaware limited liability company (the
“Investor”).

    

    Recitals

    

    A.           
Pursuant to the terms of a Securities Purchase Agreement dated as of December
26, 2007, as amended by the Securities Amendment and Exchange Agreement dated as
of July 24, 2009 (as amended, the “Purchase Agreement”),
Investor purchased (a) the Company’s Amended and Restated 10% Series A
Convertible Senior Secured Promissory Note in the principal amount of
$7,000,000, due December 26, 2011 (the “Series A Note”), (b)
the Company’s 10% Amended and Restated Series B Convertible Senior Secured
Promissory Note  in the principal amount of $3,000,000, due December
26, 2011 (the “Series
B Note”), and (c) 3,000 shares of the Company’s 8% Series A Convertible
Preferred Stock (the “Series A
Stock”).

     

    B.           Subject
to the terms and conditions set forth herein, the Company and the Investor
desire to cancel and retire the Series A Note, the Series B Note and the Series
A Stock (collectively, the, and all rights of the Investor and obligations of
the Company thereunder, in exchange for the issuance by the Company to the
investor of 10,000 shares of the Company’s Series B Convertible Preferred Stock
(the “Series B
Shares”). The Certificate of Designation of the Relative Rights and
Preferences of the Company’s Series B Convertible Preferred Stock is attached to
this Agreement as Exhibit
A.

     

    Statement
of Agreement

     

    In consideration of the foregoing, and
of their mutual agreements set forth herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:

     

    Section
1.              Definitions.  Capitalized
terms used in this Agreement and not otherwise defined shall have the respective
meanings defined in the Purchase Agreement.

     

    Section
2.              Exchange of
Securities.

     

    (a)           Subject
to the terms and conditions herein set forth, at the Closing (as defined below)
the Investor agrees to deliver to the Company the Series A Note, the Series B
Note, and the Series A Stock (the “Original Securities”)
in exchange for the Series B Shares.  In consideration of and in
express reliance upon the representations, warranties, covenants, terms and
conditions of this Agreement, the Company agrees to issue and deliver the Series
B Shares to the Investor in exchange for the Original Securities.

     

    (b)           The
closing of the transactions contemplated by this Agreement ( the “Closing”) shall occur
simultaneously with the execution and delivery of this Agreement or on such
later date and time as the Parties may agree (the “Closing Date”) at the
offices of Investor, 152 West 57th  Street, 54th Floor, New York, New
York.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)           At
the Closing, the Investor shall deliver to the Company for cancellation the
original Series A Note and Series B Note, and the certificates evidencing all
Series A Stock held by Investor.  At the Closing, the Company shall
issue to Investor certificates evidencing the Series B Shares for the Original
Securities being exchanged.

     

    (d)          For
the avoidance of doubt, it is understood and acknowledged that, notwithstanding
the transactions contemplated by this Agreement, the Warrants issued to the
Investor shall remain outstanding and in effect pursuant to their
terms.

     

    Section
3.             Representations and
Warranties of the Company.

     

    (a)           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to execute, deliver and perform its obligations under this
Agreement.

     

    (b)           The
execution, delivery and performance by the Company of this Agreement, the
issuance of the Series B Shares, and the consummation of the transactions
contemplated hereby and thereby (a) has been duly authorized by all necessary
corporate action; (b) do not and will not contravene the terms of the
Certificate of Incorporation or By-Laws of the Company or any amendment thereof
or any federal, state, local or foreign statute, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries are bound or affected; (c) do
not and will not (i) conflict with, contravene, result in any material violation
or breach of or material default under (with or without the giving of notice or
the lapse of time or both), (ii) create in any other Person a right or claim of
termination or amendment, or (iii) require any material modification or
acceleration or cancellation of, any Contractual Obligation of the Company or
any of its Subsidiaries; and (d) do not and will not result in the creation of
any Lien (or obligation to create a Lien) against any material property or asset
of the Company or any of its, except, in all cases, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse
Effect.

     

    (c)           This
Agreement has been duly executed and delivered by the Company, and this
Agreement constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application.

     

    (d)           Neither
the Company nor any of its Subsidiaries is required under federal, state,
foreign or local law, rule or regulation to obtain any consent, authorization or
order of, or make any filing or registration with, any court or Governmental
Authority in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Series B Shares in accordance with
the terms hereof (other than any filings, consents and approvals which may be
required to be made by the Company under applicable state and federal securities
laws, or rules).

     

    
      
         

      

      
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    (e)           The
Series B Shares to be issued at the Closing have been duly authorized by all
necessary corporate action and, when paid for or issued in accordance with the
terms hereof, they shall be validly issued and outstanding, free and clear of
all liens, encumbrances and rights of refusal of any kind, and shall be fully
paid and non-assessable.

     

    (f)           The
Company has authorized and reserved, and covenants to continue to reserve, free
of preemptive rights and other similar contractual rights of stockholders,
shares of Common Stock sufficient to effect the conversion of the Series B
Shares.

     

    (g)          The
shares of Common Stock to be issued upon conversion of the Series B Shares will,
upon issuance, be validly issued, fully paid and non-assessable, free and clear
of all liens, encumbrances and rights of first refusal or preemptive rights of
any kind imposed by or through the Company, and the holders thereof shall be
entitled to all rights accorded to a holder of Common Stock.

     

    (h)           The
Company covenants and agrees that promptly following the Closing Date, all
Series A Stock exchanged by Investor pursuant to this Agreement will be
cancelled and retired by the Company.

     

    Section
4.             Representations and
Warranties of Investor.

     

    (a)           The
Investor is a limited liability company duly organized, validly existing and in
good standing under the laws of Delaware.

     

    (b)           The
Investor has the requisite power and authority to enter into and perform this
Agreement and to purchase the Series B Shares being issued to it
hereunder.  The execution, delivery and performance of this Agreement
by the Investor and the consummation by it of the transactions contemplated
hereby (i) have been duly authorized by all necessary limited liability company
action, and (ii) do not contravene the terms of the organizational or governing
documents of the Investor.  No further consent or authorization of the
Investor, its board of directors or other governing body, or of its members, is
required for the execution, delivery or performance of this Agreement by the
Investor. When executed and delivered by the Investor, this Agreement shall
constitute the valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.

     

    (c)           The
Investor owns and holds, beneficially and of record, the entire right, title,
and interest in and to the Original Securities, free and clear of any claim,
restriction or Lien other than restrictions on transfer under the Securities Act
and applicable state securities laws.

    
      
         

      

      
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    (d)          The
Investor is acquiring the Series B Shares for its own account and not with a
view to or for sale in connection with a distribution thereof.  The
Investor does not have a present intention to sell any of the Series B Shares,
nor a present arrangement (whether or not legally binding) or intention to
effect any distribution of any of the Series B Shares to or through any person
or entity; provided, however, that by making the representations herein, the
Investor does not agree to hold the Series B Shares (or securities issued upon
conversion of the Series B Shares) for any minimum or other specific term and
reserves the right to dispose of such securities at any time in accordance with
federal and state securities laws applicable to such disposition.  The
Investor acknowledges and agrees that certificates representing the Series B
Shares shall bear a legend to the following effect:

     

    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.

     

    (e)          The
Investor is an “accredited investor” as defined in Rule 501(a) under the
Securities Act.  The Investor has such experience in business and
financial matters that it is capable of evaluating the merits and risks of an
investment in the Series B Shares. The Investor is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act and the Investor is not
a broker-dealer. Investor acknowledges that an investment in the Securities is
speculative and involves a high degree of risk.

     

    (f)           The
Investor acknowledges that it has carefully reviewed the SEC Reports, and other
publicly available information furnished by the Company, and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of this Agreement and the Series B Shares and the merits and risks of
investing in the Series B Shares; (ii) access to information about the Company
and Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the information that
has been furnished by the Company.

     

    (g)          The
Investor understands that the Series B Shares have not been registered under the
Securities Act and must be held indefinitely unless registered under the
Securities Act or an exemption from registration is available. The Investor
acknowledges that it is familiar with Rule 144, and that the Investor has been
advised that Rule 144 permits resales of unregistered securities only under
certain circumstances. The Investor understands that to the extent that Rule 144
is not available, the Investor will be unable to sell any Series B Shares
without either registration under the Securities Act or the existence of another
exemption from such registration requirement.

     

    (h)          The
Investor understands that the Series B Shares are being issued in reliance on a
transactional exemption from the registration requirements of federal and state
securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Investor set forth herein in order to determine the applicability of such
exemptions. The Investor understands that no Governmental Authority has passed
upon or made any recommendation or endorsement of the Series B
Shares.

     

    
      
         

      

      
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    (i)           The
Investor has not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’ structuring fees,
financial advisory fees or other similar fees in connection with the
transactions contemplated by this Agreement.

     

    Section
5.             
Conditions Precedent
to the Company’s Obligations. The obligation hereunder of the Company to
issue and deliver the Series B Shares to the Investor in exchange for the
Original Securities is subject to the satisfaction or waiver, at or before the
Closing Date, of each of the conditions set forth below. These conditions are
for the Company’s sole benefit and may be waived by the Company at any time in
its sole discretion.

     

    (a)           The
Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Investor at or prior to the Closing
Date.

     

    (b)          The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time, except for representations and warranties that are expressly
made as of a particular date, which shall be true and correct in all material
respects as of such date.

     

    (c)           The
Investor shall have delivered to the Company a Form UCC-3 Termination Statement
in form suitable for recording with the Delaware Secretary of State, terminating
the security interests granted pursuant to the Security Agreement.

     

    (d)          The
Investor shall have delivered to the Company a letter addressed to U.S. Bank
National Association, executed by an authorized officer of Investor, in
substantially the form attached hereto as Exhibit
B.

     

    (e)           The
Investor shall have delivered to the Company an agreement terminating the IP
Security Agreement, in substantially the form attached hereto as Exhibit
C.

     

    (f)           The
Investor shall have delivered to the Company the original stock certificates of
Cira Biosciences, Inc. and Cardiosonix, Ltd., along with the stock powers
executed in blank in connection therewith, that were pledged to Investor
pursuant to the Security Agreement.

     

    (g)          The
parties to the Intercreditor Agreement defined therein as the “Junior Lenders”
shall have exchanged the Junior Debt (as defined in the Intercreditor Agreement)
for 1,000 shares of the Company’s Series C Convertible Preferred Stock, and
shall have consented to the termination of the Intercreditor
Agreement.

     

    Section
6.              Conditions Precedent to the
Investor’s Obligations. The obligation hereunder of the Investor to
accept the Series B Shares in exchange for the Original Securities is subject to
the satisfaction or waiver, at or before the Closing Date, of each of the
conditions set forth below. These conditions are for the Investor’s sole benefit
and may be waived by the Investor at any time in its sole
discretion.

     

    
      
         

      

      
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    (a)           The
Company shall have filed the Certificate of Designation of the Company’s Series
B Convertible Preferred Stock with the Delaware Secretary of State, in
substantially the form attached hereto as Exhibit A.

     

    (b)           The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.

     

    (c)           Each
of the representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that speak
as of a particular date, which shall be true and correct in all material
respects as of such date.

     

    (d)           The
parties to the Intercreditor Agreement defined therein as the “Junior Lenders”
shall have exchanged the Junior Debt (as defined in the Intercreditor Agreement)
for 1,000 shares of the Company’s Series C Convertible Preferred Stock, and
shall have consented to the termination of the Intercreditor
Agreement.

     

    (e)           The
Investor shall have received an opinion of counsel to the Company, substantially
in the form of Exhibit
D, with such exceptions and limitations as shall be reasonably acceptable
to counsel to Investor.

     

    Section
7.              Termination of Other
Agreements.  Effective upon the Closing, the following
agreements referenced in the Purchase Agreement shall be terminated, and shall
no longer be of any force or effect:

     

    (a)           the
Account Control Agreement;

     

    (b)           the
Security Agreement;

     

    (c)           the
IP Security Agreement; and

     

    (d)           the
Registration Rights Agreement.

     

    Section
8.              Continuing Effectiveness of
Purchase Agreement. Except as expressly modified or amended hereby, the
terms and conditions of the Purchase Agreement shall remain unchanged and in
full force and effect, and each of the parties hereby ratifies and confirms the
same. References to Preferred Stock in the Purchase Agreement shall be deemed to
include the Series B Shares, references to Conversion Shares in the Purchase
Agreement shall be deemed to include the Common Shares issuable upon conversion
of the Series B Shares and references to Securities in the Purchase Agreement
shall be deemed to include the Series B Shares. Notwithstanding anything to the
contrary contained in this Section 8, it is understood and agreed that Sections
5.14 and 5.15 of the Purchase Agreement shall, upon and after Closing hereunder,
be of no further force and effect.

     

    
      
         

      

      
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    Section
9.              Fees and
Expenses.  Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement; provided, however, that
the Company shall pay the actual legal expenses incurred by the Investor in
connection with the negotiation and execution of this Agreement, up to an
aggregate of $5,000.

     

    Section
10.            Counterparts. 
This Agreement may be executed in counterparts, each of which shall be deemed to
be an original and all such counterparts together shall constitute one and the
same instrument.

     

    [Signature
Page Follows]

    
      
         

      

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

    

    
      
        	
                NEOPROBE
      CORPORATION

              
	 
      	 
      
	
                By:

              	
                /s/ Brent L. Larson

              
	 
      	
                Name:
      Brent L. Larson

              
	 
      	
                Title:
      VP Finance/CFO

              
	 
      	 
      
	
                PLATINUM-MONTAUR
      LIFE SCIENCES, LLC

              
	 
      	 
      
	
                By:

              	
                /s/ Michael Goldberg

              
	 
      	
                Name:
      Michael Goldberg

              
	 
      	
                Title:
      Portfolio Manager

              

      

    

    
      
         

      

      
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    Exhibit
A

    

    NEOPROBE
CORPORATION

    

    CERTIFICATE
OF DESIGNATIONS, VOTING POWERS,

    PREFERENCES,
LIMITATIONS, RESTRICTIONS, AND RELATIVE

    RIGHTS
OF SERIES B CONVERTIBLE PREFERRED STOCK

     

    It is
hereby certified that:

    

    I.           The
name of the corporation is Neoprobe Corporation (the “Corporation”), a
Delaware corporation.

    

    II.          Set
forth hereinafter is a statement of the voting powers, preferences, limitations,
restrictions, and relative rights of shares of Series B Convertible Preferred
Stock hereinafter designated as contained in a resolution of the Board of
Directors of the Corporation pursuant to a provision of the Certificate of
Incorporation of the Corporation permitting the issuance of said Series B
Preferred Stock by resolution of the Board of Directors:

    

    Section
11.          Designation and
Rank.

     

    (a)        Designation.  The
designation of such series of the Preferred Stock shall be the Series B
Convertible Preferred Stock, par value $.001 per share (the “Series B Preferred
Stock”).  The maximum number of shares of Series B Preferred
Stock shall be Ten Thousand (10,000) Shares.

     

    (b)        Rank.  The
Series B Preferred Stock shall rank prior to the common stock, par value $.001
per share (the “Common
Stock”), and to all other classes and series of equity securities of the
Company which by their terms do not rank on a parity with or senior to the
Series B Preferred Stock (“Junior
Stock”).   The Series C Convertible Preferred Stock shall
rank senior to the Series B Preferred Stock as to rights to cash dividends, and
on a parity with the Series B Preferred Stock as to distributions on
liquidation, dissolution or winding up. The Series B Preferred Stock shall be
subordinate to and rank junior to all indebtedness of the Company now or
hereafter outstanding.

     

    Section
12.          Dividends.
Whenever the Board of Directors declares a dividend on the Common Stock each
holder of record of a share of Series B Preferred Stock, or any fraction of a
share of Series B Preferred Stock, on the date set by the Board of Directors to
determine the owners of the Common Stock of record entitled to receive such
dividend (the “Record Date”) shall be entitled to receive, out of any assets at
the time legally available therefore, an amount equal to such dividend declared
on one share of Common Stock multiplied by the number of shares of Common Stock
into which such share, or such fraction of a share, of Series B Preferred Stock
could be converted on the Record Date, without regard to Section 7
hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
13.           Voting
Rights.

     

    (a)        Class Voting
Rights.  The Series B Preferred Stock shall have the following
class voting rights.  The Company shall not, without the affirmative
vote or consent of the holders of at least a majority of the shares of the
Series B Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting, in which the holders of the Series B
Preferred Stock vote separately as a class, amend, alter or repeal the
provisions of the Series B Preferred Stock so as to adversely affect any right,
preference, privilege or voting power of the Series B Preferred Stock. So long
as at least 25% of the shares of the Series B Preferred Stock remain
outstanding, the Company shall not, without the affirmative vote or consent of
the holders of at least a majority of the shares of the Series B Preferred Stock
outstanding at the time, given in person or by proxy, either in writing or at a
meeting, in which the holders of the Series B Preferred Stock vote separately as
a class: (i) repurchase, redeem or pay dividends on (whether in cash, in kind,
or otherwise), shares of the Company's Junior Stock; (ii) at any time prior to
December 31, 2011, issue or permit to exist any indebtedness for borrowed money,
except for (x) obligations under conditional sale or other title retention
agreements relating to capital assets acquired by the Company, (y) borrowings
from a bank or other financial institution under a working capital line or
revolving line of credit in an aggregate principal amount of less than
$2,000,000, or (z) indebtedness of the Subsidiaries (as such term is defined in
the Securities Purchase Agreement, dated as of December 26, 2007 between the
Company and Platinum-Montaur Life Sciences, LLC) of the Company in an aggregate
principal amount not to exceed $1,000,000; (iii) effect any distribution with
respect to any Junior Stock, or (iv) issue any Common Stock or
Common Stock equivalent for a per Common Stock share effective price less than
$1.35, other than (i) issuances of securities upon the exercise or exchange of
or conversion of any securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the Issuance Date,
provided that such securities have not been amended since the Issuance Date to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of any such securities; (ii) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors, but not including a transaction with an entity whose
primary business is investing in securities or a transaction, the primary
purpose of which is to raise capital; or (iii) issuances, pursuant to employee
stock option plans approved by the Company's shareholders, of options to
employees, officers or directors of the Company, approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of nonemployee directors established for such
purpose. For purposes of clause (iv) above, the “per Common Stock share
effective price” in the case of any Common Stock equivalent shall be determined
by dividing (X) the total amount received or receivable by the Company as
consideration for the issue or sale of such Common Stock equivalents, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exercise thereof, by (B) the total maximum number
of shares of Common Stock issuable upon the conversion or exercise of all such
Common Stock equivalents.

     

    (b)        General Voting
Rights.  Except with respect to transactions upon which the
Series B Preferred Stock shall be entitled to vote separately as a class
pursuant to Section 3(a) above, the Series B Preferred Stock shall have no
voting rights.  The Common Stock into which the Series B Preferred
Stock is convertible shall, upon issuance, have all of the same voting rights as
other issued and outstanding Common Stock of the Company.

     

    Section
14.           Liquidation
Preference.

     

    (a)        In
the event of the liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Company, the holders of shares
of the Series B Preferred Stock then outstanding shall be entitled to receive,
out of the assets of the Company, whether such assets are capital or surplus of
any nature, before any payment shall be made or any assets distributed to the
holders of the Common Stock or any other Junior Stock (but pari passu with any payment
to holders of Series C Convertible Preferred Stock), an amount per share of
Series B Preferred Stock calculated by taking the total amount available for
distribution to holders of all the Company’s outstanding Common Stock before
deduction of any preference payments for the Series B Preferred Stock or Series
C Convertible Preferred Stock, divided by the total of (x) all of the then
outstanding shares of the Company’s Common Stock, plus (y) all of the shares of
the Company’s Common Stock into which all of the outstanding shares of the
Series B Preferred Stock and Series C Convertible Preferred Stock can be
converted, and then (z) multiplying the sum so obtained by the number of shares
of Common Stock into which such share of Series B Preferred Stock could then be
converted (the “Liquidation Preference
Amount”).  The liquidation payment with respect to each
outstanding fractional share of Series B Preferred Stock shall be equal to a
ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series B Preferred Stock.  All payments for which
this Section 4(a) provides shall be in cash, property (valued at its fair market
value as determined by an independent appraiser reasonably acceptable to the
holders of a majority of the Series B Preferred Stock), or a combination
thereof; provided, however, that no cash shall be paid to holders of Junior
Stock unless each holder of the outstanding shares of Series B Preferred Stock
has been paid in cash the full Liquidation Preference Amount to which such
holder is entitled as provided herein.  After payment of the full
Liquidation Preference Amount to which each holder is entitled, such holders of
shares of Series B Preferred Stock will not be entitled to any further
participation as such in any distribution of the assets of the
Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b)        A
consolidation or merger of the Company with or into any other corporation or
corporations, or a sale of all or substantially all of the assets of the
Company, or the effectuation by the Company of a transaction or series of
transactions in which more than 50% of the voting shares of the Company is
disposed of or conveyed, shall be, at the election of the holders of a majority
of the Series B Preferred Stock, deemed to be a liquidation, dissolution, or
winding up within the meaning of this Section 4; provided, however, that any
such transaction shall not be deemed to be a liquidation, dissolution or winding
up unless such transaction is approved by the Board of Directors of the Company
and the holders of the Series B Preferred Stock do not control the Board of
Directors.  In the event of the merger or consolidation of the Company
with or into another corporation that is not treated as a liquidation pursuant
to this Section 4(b), the Series B Preferred Stock shall maintain its relative
powers, designations and preferences provided for herein (including any
adjustment required under Section 5(c)(v) hereof) and no merger shall result
inconsistent therewith.

     

    (c)        Written
notice of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, stating a payment date and the place where the
distributable amounts shall be payable, shall be given by mail, postage prepaid,
no less than forty-five (45) days prior to the payment date stated therein, to
the holders of record of the Series B Preferred Stock at their respective
addresses as the same shall appear on the books of the Company.

     

    Section
15.           Conversion.  The
holders of Series B Preferred Stock shall have the following conversion rights
(the “Conversion Rights”):

     

    (a)        Right to
Convert.  At any time on or after the date of issuance of the
Series B Preferred Stock (the “Issuance Date”), the
holder of any such shares of Series B Preferred Stock may, at such holder’s
option, subject to the limitations set forth in Section 7 herein, elect to
convert (a “Voluntary
Conversion”) all or any portion of the shares of Series B Preferred Stock
held by such person into a number of fully paid and nonassessable shares of
Common Stock at a
conversion rate of Three Thousand Two Hundred Seventy (3,270) shares of Common
Stock for each share of Preferred Stock (subject to adjustments set forth in
Section 5(c) herein, the “Conversion
Rate”).  The Company shall keep written records of the
conversion of the shares of Series B Preferred Stock converted by each
holder.  A holder shall be required to deliver the original
certificates representing the shares of Series B Preferred Stock upon any
conversion of the Series B Preferred Stock as provided in Section 5(b)
below.

     

    (b)        Mechanics of Voluntary
Conversion.  The Voluntary Conversion of Series B Preferred
Stock shall be conducted in the following manner:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)  Holder's Delivery
Requirements.  To convert Series B Preferred Stock into full
shares of Common Stock on any date (the “Voluntary Conversion
Date”), the holder thereof shall (A) transmit by facsimile (or otherwise
deliver), for receipt on or prior to 5:00 p.m., Eastern Time on such date, a
copy of a fully executed notice of conversion in the form attached hereto
as  Exhibit I  (the “Conversion Notice”),
to the Company, and (B) with respect to the final conversion of shares of Series
B Preferred Stock held by any holder, such holder shall surrender to a common
carrier for delivery to the Company as soon as practicable following such
Conversion Date but in no event later than six (6) business days after such date
the original certificates representing the shares of Series B Preferred Stock
being converted (or an indemnification undertaking with respect to such shares
in the case of their loss, theft or destruction) (the “Preferred Stock
Certificates”).

     

    (ii) 
Company's
Response.  Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a
confirmation of receipt of such Conversion Notice to such holder and the Company
or its designated transfer agent (the “Transfer Agent”), as
applicable, shall, within five (5) business days following the date of receipt
by the Company of the certificate representing the shares of Series B Preferred
Stock being converted, (x) issue and deliver to the Depository Trust Company
(“DTC”) account
on the holder’s behalf via the Deposit Withdrawal Agent Commission System
(“DWAC”) as
specified in the Conversion Notice, registered in the name of the holder or its
designee, for the number of shares of Common Stock to which the holder shall be
entitled, and (y) if the certificate so surrendered represents more shares of
Series B Preferred Stock than those being converted, issue and deliver to the
holder a new certificate for such number of shares of Series B Preferred Stock
represented by the surrendered certificate which were not
converted.

     

    (iii)  Record Holder.  The
person or persons entitled to receive the shares of Common Stock issuable upon a
conversion of the Series B Preferred Stock shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on the Conversion
Date.

     

    (iv)  Company's Failure to Timely
Convert.  If within five (5) business days of the Company's
receipt of the Conversion Notice (the “Share Delivery
Period”) the Company shall fail to issue and deliver to a holder the
number of shares of Common Stock to which such holder is entitled upon such
holder's conversion of the Series B Preferred Stock (a “Conversion Failure”),
in addition to all other available remedies which such holder may pursue
hereunder, the Company shall pay additional damages to such holder on each
business day after such fifth (5th) business day that such conversion is not
timely effected in an amount equal to 0.5% of the product of (A) the sum of the
number of shares of Common Stock not so issued to the holder on a timely basis
pursuant to Section 5(b)(ii) and to which such holder is entitled and (B) the
closing bid price of the Common Stock on the last possible date which the
Company could have issued such Common Stock to such holder without violating
Section 5(b)(ii).  If the Company fails to pay the additional damages
set forth in this Section 5(b)(iv) within five (5) business days of the date
incurred, then such payment shall bear interest at the rate of 2% per month (pro
rated for partial months) until such payments are made.

     

    (c)     Adjustments of Conversion
Rate.

     

    (i)  Adjustments for Stock Splits and
Combinations.  If the Company shall at any time or from time to
time after the Issuance Date, effect a stock split of the outstanding Common
Stock, the Conversion Rate shall be proportionately increased.  If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the Conversion Rate shall be
proportionately decreased.  Any adjustments under this Section 5(e)(i)
shall be effective at the close of business on the date the stock split or
combination occurs.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii) Adjustments for Certain Dividends
and Distributions.  If the Company shall at any time or from
time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in shares of Common Stock, then, and in each event, the
Conversion Rate shall be increased as of the time of such issuance or, in the
event such record date shall have been fixed, as of the close of business on
such record date, by multiplying, as applicable, the Conversion Rate then in
effect by a fraction:

     

    the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately following the time of such issuance or the close of
business on such record date; and

     

    the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance.

     

    (iii)  Adjustment for Other Dividends and
Distributions.  If the Company shall at any time or from time
to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in securities of the Company other than shares of Common
Stock, then, and in each event, an appropriate revision to the applicable
Conversion Rate shall be made and provision shall be made (by adjustments of the
Conversion Rate or otherwise) so that the holders of Series B Preferred Stock
shall receive upon conversions thereof, in addition to the number of shares of
Common Stock receivable thereon, the number of securities of the Company which
they would have received had their Series B Preferred Stock been converted into
Common Stock on the date of such event (without regard to Section 7 hereof) and
had thereafter, during the period from the date of such event to and including
the Conversion Date, retained such securities (together with any distributions
payable thereon during such period), giving application to all adjustments
called for during such period under this Section 5(c)(iii) with respect to the
rights of the holders of the Series B Preferred Stock.

     

    (iv)  Adjustments for Reclassification,
Exchange or Substitution.  If the Common Stock issuable upon
conversion of the Series B Preferred Stock at any time or from time to time
after the Issuance Date shall be changed to the same or different number of
shares of any class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or combination of
shares or stock dividends provided for in Sections 5(c)(i), (ii) and (iii), or a
reorganization, merger, consolidation, or sale of assets provided for in Section
5(c)(v)), then, and in each event, an appropriate revision to the Conversion
Rate shall be made and provisions shall be made so that the holder of each share
of Series B Preferred Stock shall have the right thereafter to convert such
share of Series B Preferred Stock into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
share of Series B Preferred Stock might have been converted immediately prior to
such reclassification, exchange, substitution or other change (without giving
effect to the limitations set forth in Section 7 hereof), all subject to further
adjustment as provided herein.

     

    (v)  Adjustments for Reorganization,
Merger, Consolidation or Sales of Assets.  If at any time or
from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in Section 5(c)(i),
(ii) and (iii), or a reclassification, exchange or substitution of shares
provided for in Section 5(c)(iv)), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person that is not deemed a
liquidation pursuant to Section 4(b) (an “Organic Change”),
then as a part of such Organic Change an appropriate revision to the Conversion
Rate  shall be made and provision shall be made so that the holder of
each share of Series B Preferred Stock shall have the right thereafter to
convert such share of Series B Preferred Stock into the kind and amount of
shares of stock and other securities or property of the Company or any successor
corporation resulting from the Organic Change as the holder would have received
as a result of the Organic Change and if the holder had converted its Series B
Preferred Stock (without regard to Section 7 hereof) into the Company’s Common
Stock prior to the Organic Change.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (vi)  Record Date.  In
case the Company shall take record of the holders of its Common Stock or any
other Preferred Stock for the purpose of entitling them to subscribe for or
purchase Common Stock or Convertible Securities, then the date of the issue or
sale of the shares of Common Stock shall be deemed to be such record
date.

     

    (d)           No
Impairment.  The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment. In the event a holder shall elect
to convert any shares of Series B Preferred Stock as provided herein, the
Company cannot refuse conversion based on any claim that such holder or anyone
associated or affiliated with such holder has been engaged in any violation of
law, unless an injunction from a court, on notice, restraining and/or adjoining
conversion of all or of said shares of Series B Preferred Stock shall have been
issued.

     

    (e)           Certificates as to
Adjustments.  Upon occurrence of each adjustment or
readjustment of the Conversion Rate or number of shares of Common Stock issuable
upon conversion of the Series B Preferred Stock pursuant to this Section 5, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each holder of such Series B
Preferred Stock a certificate setting forth such adjustment and readjustment,
showing in detail the facts upon which such adjustment or readjustment is
based.  The Company shall, upon written request of the holder of such
affected Series B Preferred Stock, at any time, furnish or cause to be furnished
to such holder a like certificate setting forth such adjustments and
readjustments, the Conversion Rate in effect at the time, and the number of
shares of Common Stock and the amount, if any, of other securities or property
which at the time would be received upon the conversion of a share of such
Series B Preferred Stock.  Notwithstanding the foregoing, the Company
shall not be obligated to deliver a certificate unless such certificate would
reflect an increase or decrease of at least one percent (1%) of such adjusted
amount.

     

    (f)           Issue
Taxes.  The Company shall pay any and all issue and other
taxes, excluding federal, state or local income taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of Series B Preferred Stock pursuant thereto;  provided,  however,
that the Company shall not be obligated to pay any transfer taxes resulting from
any transfer requested by any holder in connection with any such
conversion.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g)           Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (i) upon hand
delivery, telecopy or facsimile at the address or number designated in the
Exchange Agreement (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (ii) on the second business day
following the date of mailing by express overnight courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The Company will give written notice each holder of
Series B Preferred Stock at least ten (10) days prior to the date on which the
Company takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution, liquidation or winding-up and in no event shall such notice
be provided to such holder prior to such information being made known to the
public. Subject to Section 4(c), the Company will also give written notice to
each holder of Series B Preferred Stock at least ten (10) days prior to the date
on which any Organic Change will take place and in no event shall such notice be
provided to such holder  prior to such information being made known to
the public

     

    (h)           Fractional
Shares.  No fractional shares of Common Stock shall be issued
upon conversion of the Series B Preferred Stock.  In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall at its option either (i) pay cash equal to the product of such fraction
multiplied by the average of the closing bid prices of the Common Stock for the
five (5) consecutive trading days immediately preceding the Voluntary Conversion
Date, as applicable, or (ii) in lieu of issuing such fractional shares issue one
additional whole share to the holder.

     

    (i)           Reservation of Common
Stock.  The Company shall, so long as any shares of Series B
Preferred Stock are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Series B Preferred Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
of the Series B Preferred Stock then outstanding (without regard to the
limitations on conversion set forth in Section 7 hereof).

     

    (j)           Retirement of Series B
Preferred Stock.  Conversion of Series B Preferred Stock shall
be deemed to have been effected on the applicable Voluntary Conversion
Date.  The Company shall keep written records of the conversion of the
shares of Series B Preferred Stock converted by each holder.  A holder
shall be required to deliver the original certificates representing the shares
of Series B Preferred Stock upon complete conversion of the Series B Preferred
Stock represented by such certificates. A delivery of original certificates
pursuant to Section 5(b)(i) shall be deemed to comply with the requirements of
this Section 5(j).

     

    (k)           Regulatory
Compliance.  If any shares of Common Stock to be reserved for
the purpose of conversion of Series B Preferred Stock require registration or
listing with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be.

     

    Section
16.           No
Preemptive Rights.  Except as provided in Section 5 hereof, no holder
of the Series B Preferred Stock shall be entitled to rights to subscribe for,
purchase or receive any part of any new or additional shares of any class,
whether now or hereinafter authorized, or of bonds or debentures, or other
evidences of indebtedness convertible into or exchangeable for shares of any
class, but all such new or additional shares of any class, or any bond,
debentures or other evidences of indebtedness convertible into or exchangeable
for shares, may be issued and disposed of by the Board of Directors on such
terms and for such consideration (to the extent permitted by law), and to such
person or persons as the Board of Directors in their absolute discretion may
deem advisable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
17.           Conversion
Restriction.  Notwithstanding anything to the contrary set forth in
Section 5 of this Certificate of Designation, at no time may a holder of shares
of Series B Preferred Stock convert shares of the Series B Preferred Stock if
the number of shares of Common Stock to be issued pursuant to such conversion
would exceed, when aggregated with all other shares of Common Stock owned by
such holder at such time, the number of shares of Common Stock which would
result in such holder owning (as determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules thereunder) more
than 9.99% of all of the Common Stock outstanding at such time;  provided,  however,
that upon a holder of Series B Preferred Stock  providing the Company
with sixty-one (61) days notice (pursuant to Section 5(g) hereof) (the “Waiver
Notice”) that such holder would like to waive Section 7 of this Certificate of
Designation with regard to any or all shares of Common Stock issuable upon
conversion of Series B Preferred Stock, this Section 7 shall be of no force or
effect with regard to those shares of Series B Preferred Stock referenced in the
Waiver Notice.

     

    Section
18.            Inability
to Fully Convert.

     

    (a)        Holder's Option if Company
Cannot Fully Convert.  If, upon the Company's receipt of a
Conversion Notice, the Company cannot issue shares of Common Stock for any
reason, including, without limitation, because the Company (i) does not have a
sufficient number of shares of Common Stock authorized and available, or (ii) is
otherwise prohibited by applicable law or by the rules or regulations of any
stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or its securities from issuing
all of the Common Stock which is to be issued to a holder of Series B Preferred
Stock pursuant to a Conversion Notice, then the Company shall issue as many
shares of Common Stock as it is able to issue in accordance with such holder's
Conversion Notice, and with respect to the unconverted Series B Preferred Stock
(the “Unconverted
Preferred Stock”), the holder, solely at such holder's option, can elect
to, at any time after receipt of notice from the Company that there is
Unconverted Preferred Stock, to void the holder’s Conversion Notice as to the
number of shares of Common Stock the Company is unable to issue and retain or
have returned, as the case may be, the certificates for the shares of the
Unconverted Preferred Stock.

     

    (b)       Mechanics of Fulfilling
Holder's Election.  The Company shall immediately send via
facsimile to a holder of Series B Preferred Stock, upon receipt of a facsimile
copy of a Conversion Notice from such holder which cannot be fully satisfied as
described in Section 8(a) above, a notice of the Company's inability to fully
satisfy such holder's Conversion Notice (the “Inability to Fully Convert
Notice”).  Such Inability to Fully Convert Notice shall
indicate (i) the reason why the Company is unable to fully satisfy such holder's
Conversion Notice, and (ii) the number of shares of Series B Preferred Stock
which cannot be converted.

     

    Section
19.           Automatic
Conversion.

     

    (a)        Automatic Conversion
Events.  All outstanding shares of Series B Preferred Stock
shall be automatically converted into Common Stock at the Conversion Rate upon
the earlier to occur of (i) the closing of a firm commitment underwritten public
offering of Common Stock of the Company pursuant to an effective registration
statement under Section 5 of the Securities Act  in which the gross
cash proceeds to the Company (before underwriting discounts, commissions and
fees) from such public offering are at least $10,000,000, or (ii) December 31,
2012 (each, an “Automatic Conversion
Event”).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b)       Mechanics of Automatic
Conversion.  Upon the occurrence of an Automatic Conversion
Event, the outstanding Series B Preferred Stock shall be converted into Common
Stock automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Company or its transfer agent; provided, however, that the
Company shall not be obligated to issue certificates evidencing the Common Stock
issuable upon such conversion unless the certificates evidencing such Series B
Preferred Stock are either delivered to the Company or its transfer agent as
provided below, or the holder certifies to the Company or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Company to indemnify the Company from any loss
incurred by it in connection with such certificates. Upon surrender by any
holder of the certificates formerly representing shares of Series B Preferred
Stock to the Company or the transfer agent, there shall be issued and delivered
to such holder promptly in its name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which the shares of Series B Preferred Stock surrendered were
converted on the date on which such automatic conversion occurred, and the
Company shall promptly pay in cash (at the fair market value per share of Common
Stock determined by the Board of Directors as of the date of conversion) the
value of any fractional share of Common Stock otherwise issuable to any holder
of shares of Series B Preferred Stock being converted. Until surrendered as
provided above, each certificate formerly representing Series B Preferred Stock
shall be deemed for all corporate purposes to represent the number of shares of
Common Stock resulting from such automatic conversion.

     

    (c)        Inability
to Convert.  Notwithstanding the
provisions of Section 9(a) if, upon the occurrence of an Automatic Conversion
Event, the Company cannot issue shares of Common Stock to fully effect the
conversion for any reason, including, without limitation, because the Company
(i) does not have a sufficient number of shares of Common Stock authorized and
available, (ii) is otherwise prohibited by applicable law or by the rules or
regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or its
securities from issuing all of the Common Stock which is to be issued to a
holder of Series B Preferred Stock, or (iii) the conversion would be prohibited
by the provisions of Section 7 hereof and such prohibition has not been waived
by the holder, then the Company shall issue as many shares of Common Stock as it
is able to issue, and with respect to the unconverted Series B Preferred Stock
(the “Unconverted
Preferred Stock”), deliver
to the holder a certificate for the shares of the Unconverted Preferred
Stock.  In the event that the Company is thereafter able to convert
the Unconverted Preferred Stock, it shall so notify the holder in writing, and
such notice shall be deemed to be an Automatic Conversion Event for purposes of
this Section 9.

     

    Section
20.           Vote to
Change the Terms of Preferred Stock.  The affirmative vote at a
meeting duly called for such purpose, or the written consent without a meeting,
of the holders of not less than a majority of the then outstanding shares of
Series B Preferred Stock, shall be required for any change to this Certificate
of Designation or the Company’s Certificate of Incorporation that would amend,
alter, change or repeal any of the powers, designations, preferences and rights
of the Series B Preferred Stock.

     

    Section
21.           Lost or
Stolen Certificates.  Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificates representing the shares of Series B Preferred Stock, and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of such certificate(s), the Company shall execute and deliver new
preferred stock certificate(s) of like tenor and date.

     

    Section
22.           Remedies,
Characterizations, Other Obligations, Breaches and Injunctive
Relief.  The remedies provided in this Certificate of Designation
shall be cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation.  Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof).  The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the holders of the
Series B Preferred Stock and that the remedy at law for any such breach may be
inadequate.  The Company therefore agrees that, in the event of any
such breach or threatened breach, the holders of the Series B Preferred Stock
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
23.           Specific
Shall Not Limit General; Construction.  No specific provision
contained in this Certificate of Designation shall limit or modify any more
general provision contained herein.

     

    Section
24.           Failure or
Indulgence Not Waiver.  No failure or delay on the part of a holder of
Series B Preferred Stock in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

     

    IN
WITNESS WHEREOF, the undersigned has executed and subscribed this Certificate
and does affirm the foregoing as true this __  day of June,
2010.

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	 
      	 
      	 
      	 
	 
      	NEOPROBE
      CORPORATION	 
	 
      	 
      	 
      	
                                   
       

                                	 
	 
      	
                                  By:  

                                	 
      	 
       
	 
      	 
      	
                                  Name:

                                	   
      	 
       
	 
      	 
      	
                                  Title:

                                	 
        	 
       

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
I

    NEOPROBE
CORPORATION

    CONVERSION
NOTICE

    

    Reference is made to the Certificate of
Designation of the Relative Rights and Preferences of the Series B Preferred
Stock of Neoprobe Corporation (the “Certificate of
Designation”).  In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series B Preferred Stock, par value $.001 per share (the “Preferred Shares”),
of Neoprobe Corporation, a Delaware corporation (the “Company”), indicated
below into shares of Common Stock, par value $.001 per share (the “Common Stock”), of
the Company, by tendering the stock certificate(s) representing the share(s) of
Preferred Shares specified below as of the date specified below.

    

    Date of
Conversion:                                                                                     

    

    Number of
Preferred Shares to be converted:                                                                           

    

    Stock
certificate no(s). of Preferred Shares to be converted:                                             

    

    The
Common Stock has been sold:  YES ___   NO ___

    

    Please
confirm the following information:

    

    Conversion
Rate:                                 

    

    Number of
shares of Common Stock

    to be
issued:                                                                           

    

    Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the Date of Conversion determined in accordance with Section 16 of the
Securities Exchange Act of 1934, as amended:

                                                                               

     

    Please
issue the Common Stock into which the Preferred Shares are being converted and,
if applicable, any check drawn on an account of the Company in the following
name and to the following address:

    

                Issue
to:                                                                                                 

                Facsimile
Number:                                                                                

     

    Authorization:                                           

    By: ________________________________________

    Title: 
______________________________________

    

    Dated:  ______________________________________

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
B

     

    Via
Facsimile:  (614) 232-8098

     

    U.S. Bank
National Association

    10 West
Broad Street

    Columbus,
Ohio 43215

    Attn:  Matthew
Gerhardt

    

    Re:  Neoprobe Corporation –
Blocked Account Control Agreement

    

    Ladies
and Gentlemen:

    

    Pursuant
to Section 8 of the Blocked Account Control Agreement dated as of February 5,
2008 (the “Agreement”) relating to accounts of Neoprobe Corporation
(“Neoprobe”), this letter is to advise you that all outstanding obligations of
Neoprobe to Platinum Montaur Life Sciences, LLC (“Lender”) referenced by the
Agreement have been paid, and Lender hereby releases U.S. Bank National
Association (“Bank”) from any further obligation to comply with instructions
originated by Lender with respect to the Deposit Accounts referenced
therein.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
     	Very
      truly yours,	 
	  
    	 	 	 
	 Dated: June
      __, 2010   	Platinum
      Montaur Life Sciences, LLC	 
	 	 	 	 
	     
      	
                                            By:

                                          	 
          	 
       
	 
      	
                                            Name:

                                          	   
        	  
	 	      
                                            Title:

                                          	 	 
       

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Exhibit
C

     

    TERMINATION
OF PATENT, TRADEMARK

     

    AND
COPYRIGHT SECURITY AGREEMENT

     

    THIS TERMINATION OF PATENT, TRADEMARK
AND COPYRIGHT SECURITY AGREEMENT (this “Termination”) is entered into as of this
__ day of June 2010, by and among NEOPROBE CORPORATION, a Delaware corporation
(the “Company”), CARDIOSONIX LTD., a corporation organized under the laws of the
State of Israel (“Cardiosonix”), and CIRA BIOSCIENCES INC., a Delaware
corporation (“Cira” and jointly and severally with the Company and Cardiosonix,
the “Pledgor”), each with its principle address at 425 Metro Place North, Suite
300, Dublin, Ohio 43017-1367, and Platinum-Montaur Life Sciences, LLC
(the  “Lender”).

    

    WHEREAS,
the Pledgors and the Lender are parties to a certain Patent, Trademark and
Copyright Security Agreement, dated as of December 26, 2007 (the “IP Security
Agreement”) securing certain obligations of the Company; and

    

    WHEREAS,
all obligations of the Company secured by the IP Security Agreement have been
fully discharged;

    

    NOW
THEREFORE, in consideration of the foregoing, the Pledgors and the Lender agree
that (i) the IP Security Agreement is hereby terminated, (ii) the Pledgors shall
have no further obligations to Lender thereunder, (iii) the security interests
granted therein are hereby released, and (iv) the Company is hereby authorized
to file a copy of this Termination with the U. S. Patent and Trademark
Office.

    

    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	 
      	
                                        PLEDGOR:

                                      	 
	 
      	 
      	 
      	 
	
                                        In
      the Presence of:

                                      	 
      	
                                        NEOPROBE
      CORPORATION

                                      	 
	 
      	 
      	 
      	 
      	 
	 
      	 
      	
                                        By:

                                      	 
      	 
       
	
                                        Witness

                                      	 
      	 
      	
                                        Name:
      David C. Bupp

                                      	 
	 
      	 
      	 
      	
                                        Title:
      President & CEO

                                      	 
	 
      	 
      	 
      	 
      	 
	
                                        In
      the Presence of:

                                      	 
      	
                                        CARDIOSONIX
      LTD

                                      	 
	 
      	 
      	 
      	 
      	 
	  
        	 
      	
                                        By:

                                      	 
      	   
      
	
                                        Witness

                                      	 
      	 
      	
                                        Name:
      David C. Bupp

                                      	 
	 
      	 
      	 
      	
                                        Title:
      Chairman

                                      	 
	 
      	 
      	 
      	 
      	 
	
                                        In
      the Presence of:

                                      	 
      	
                                        CIRA
      BIOSCIENCES INC.

                                      	 
	 
      	 
      	 
      	 
      	 
	  
        	 
      	
                                        By:

                                      	 
      	 
       
	
                                        Witness

                                      	 
      	 
      	
                                        Name:
      David C. Bupp

                                      	 
	 
      	 
      	 
      	
                                        Title:
      Chairman

                                      	 

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                	 
      	 	
                        LENDER:

                      	 
	 
      	 	 
      	 
	
                        In
      the Presence of:

                      	 	
                        PLATINUM-MONTAUR
      LIFE SCIENCES, LLC

                      	 
	 
      	 	 
      	 
      	 
	
                         
      

                      	 	
                        By:

                      	   
        	 
	
                        Witness

                      	 	 
      	
                        Name:
      Michael Goldberg

                      	 
	 
      	 	 
      	
                        Title:
      Portfolio ManagerExhibit
10.2

      SECURITIES
EXCHANGE AGREEMENT

      

      This SECURITIES EXCHANGE AGREEMENT
dated as of June 22, 2010 (this “Agreement”) is made
by and between Neoprobe Corporation, a Delaware corporation (the “Company”), and David
C. Bupp and Cynthia B. Gochoco, both individually and as co-executors of the
Estate of Walter H. Bupp (collectively, the “Lenders”).

      

      Recitals

      

      A.           
Pursuant to the terms of a 10% Convertible Note Purchase Agreement dated as of
June 29, 2007 (the “Purchase Agreement”),
Lenders, as joint tenants with right of survivorship, purchased the Company’s
10% Convertible Note in the principal amount of $1,000,000, due July 8, 2008,
which was subsequently amended to extend the maturity date to December 27,
2011  (the “Bupp
Note”).

       

      B.           Subject
to the terms and conditions set forth herein, the Company and the Lenders desire
to cancel and retire the Bupp Note in exchange for the issuance by the Company
to the Lenders of 1,000 shares of the Company’s Series C Convertible Preferred
Stock (the “Series C
Shares”). The Certificate of Designation of the Relative Rights and
Preferences of the Company’s Series C Convertible Preferred Stock is attached to
this Agreement as Exhibit
A.

       

      Statement
of Agreement

       

      In consideration of the foregoing, and
of their mutual agreements set forth herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:

       

      Section
1.              Exchange of
Securities.

       

      (a)           Subject
to the terms and conditions herein set forth, at the Closing (as defined below)
the Lenders agree to deliver to the Company the Bupp Note in exchange for the
Series C Shares.  In consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Company agrees to issue and deliver the Series C Shares to the Lenders in
exchange for the Bupp Note.

       

      (b)           The
closing of the transactions contemplated by this Agreement ( the “Closing”) shall occur
simultaneously with the execution and delivery of this Agreement or on such
later date and time as the Parties may agree (the “Closing Date”) at the
offices of the Company, 425 Metro Place North, Suite 300, Dublin, Ohio
34017.

       

      (c)           At
the Closing, the Lenders shall deliver to the Company for cancellation the
original Bupp Note.  At the Closing, the Company shall issue to the
Lenders certificates evidencing the Series C Shares in exchange for the Bupp
Note.

       

      (d)           For
the avoidance of doubt, it is understood and acknowledged that, notwithstanding
the transactions contemplated by this Agreement, the Warrants issued to the
Lenders pursuant to the Purchase Agreement shall remain outstanding and in
effect pursuant to their terms.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Section
2.              Representations and
Warranties of the Company.

       

      (a)           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to execute, deliver and perform its obligations under this
Agreement.

       

      (b)           The
execution, delivery and performance by the Company of this Agreement, the
issuance of the Series C Shares, and the consummation of the transactions
contemplated hereby and thereby (a) has been duly authorized by all necessary
corporate action; (b) do not and will not contravene the terms of the
Certificate of Incorporation or By-Laws of the Company or any amendment thereof
or any federal, state, local or foreign statute, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries are bound or affected; (c) do
not and will not conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit, under any material mortgage, indenture, lease or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree statute, law, ordinance, rule or regulation applicable to the
Company, its properties or assets.

       

      (c)           This
Agreement has been duly executed and delivered by the Company, and this
Agreement constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application.

       

      (d)           Neither
the Company nor any of its Subsidiaries is required under federal, state,
foreign or local law, rule or regulation to obtain any consent, authorization or
order of, or make any filing or registration with, any court or Governmental
Authority in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Series C Shares in accordance with
the terms hereof (other than any filings, consents and approvals which may be
required to be made by the Company under applicable state and federal securities
laws, or rules).

       

      (e)           The
Series C Shares to be issued at the Closing have been duly authorized by all
necessary corporate action and, when paid for or issued in accordance with the
terms hereof, they shall be validly issued and outstanding, free and clear of
all liens, encumbrances and rights of refusal of any kind, and shall be fully
paid and non-assessable.

       

      (f)           The
Company has authorized and reserved, and covenants to continue to reserve, free
of preemptive rights and other similar contractual rights of stockholders,
shares of Common Stock sufficient to effect the conversion of the Series C
Shares.

       

      (g)           The
shares of the Company’s Common Stock, $.001 par value (“Common Stock”) to be
issued upon conversion of the Series C Shares will, upon issuance, be validly
issued, fully paid and non-assessable, free and clear of all liens, encumbrances
and rights of first refusal or preemptive rights of any kind imposed by or
through the Company, and the holders thereof shall be entitled to all rights
accorded to a holder of Common Stock.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Section
3.              Representations and
Warranties of Lenders. Each of the Lenders represent and warrant to the
Company as follows:

       

      (a)           The
Lender has the requisite right, power and authority to enter into and perform
this Agreement and to purchase the Series C Shares being issued to the Lender
hereunder.   No further consent or authorization of any person is
required for the execution, delivery or performance of this Agreement by the
Lender. When executed and delivered by the Lender, this Agreement shall
constitute the valid and binding obligation of the Lender enforceable against
the Lender in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation, conservatorship, receivership or similar laws relating to, or
affecting generally the enforcement of, creditor’s rights and remedies or by
other equitable principles of general application.

       

      (b)           The
Lender owns and holds with the other Lenders, beneficially and of record, the
entire right, title, and interest in and to the Bupp Note, free and clear of any
claim, restriction, security interest or lien other than restrictions on
transfer under the Securities Act and applicable state securities
laws.

       

      (c)           The
Lender is acquiring the Series C Shares for Lender’s own account and not with a
view to or for sale in connection with a distribution thereof.  The
Lender does not have a present intention to sell any of the Series C Shares, nor
a present arrangement (whether or not legally binding) or intention to effect
any distribution of any of the Series C Shares to or through any person or
entity; provided, however, that by making the representations herein, the Lender
does not agree to hold the Series C Shares (or securities issued upon conversion
of the Series C Shares) for any minimum or other specific term and reserves the
right to dispose of such securities at any time in accordance with federal and
state securities laws applicable to such disposition.  The Lender
acknowledges and agrees that certificates representing the Series C Shares shall
bear a legend to the following effect:

       

      THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
LAWS.

       

      (d)           The
Lender is an “accredited investor” as defined in Rule 501(a) under the
Securities Act.  The Lender has such experience in business and
financial matters that it is capable of evaluating the merits and risks of an
investment in the Series C Shares. The Lender is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act and the Lender is not a
broker-dealer. The Lender acknowledges that an investment in the Securities is
speculative and involves a high degree of risk.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      (e)           The
Lender acknowledges that he or she has carefully reviewed the reports filed by
the Company under Section 13 of the Securities Exchange Act in the twelve month
period prior to the Closing Date, and other publicly available information
furnished by the Company, and has been afforded (i) the opportunity to ask such
questions as Lender has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of this
Agreement and the Series C Shares and the merits and risks of investing in the
Series C Shares; (ii) access to information about the Company and Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to verify the information that has been furnished by the
Company.

       

      (f)           The
Lender understands that the Series C Shares have not been registered under the
Securities Act and must be held indefinitely unless registered under the
Securities Act or an exemption from registration is available. The Lender
acknowledges that he or she is familiar with Rule 144, and that the Lender has
been advised that Rule 144 permits resales of unregistered securities only under
certain circumstances. The Lender understands that to the extent that Rule 144
is not available, the Lender will be unable to sell any Series C Shares without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.

       

      (g)           The
Lender understands that the Series C Shares are being issued in reliance on a
transactional exemption from the registration requirements of federal and state
securities laws and the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
Investor set forth herein in order to determine the applicability of such
exemptions. The Investor understands that no governmental authority has passed
upon or made any recommendation or endorsement of the Series C
Shares.

       

      (h)           The
Lender has not employed any broker or finder or incurred any liability for any
brokerage or investment banking fees, commissions, finders’ structuring fees,
financial advisory fees or other similar fees in connection with the
transactions contemplated by this Agreement.

       

      Section
4.              Conditions Precedent to the
Company’s Obligations. The obligation hereunder of the Company to issue
and deliver the Series C Shares to the Lenders in exchange for the Bupp Note is
subject to the satisfaction or waiver, at or before the Closing Date, of each of
the conditions set forth below. These conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole
discretion.

       

      (a)           The
Lenders shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Lenders at or prior to the Closing
Date.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      (b)          The
representations and warranties of each Lender shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time, except for representations and warranties that are expressly
made as of a particular date, which shall be true and correct in all material
respects as of such date.

       

      (c)           The
transactions contemplated by the Securities Exchange Agreement between the
Company and Platinum-Montaur Life Sciences, LLC, dated as of June 22, 2010,
shall have been completed.

       

      Section
5.              Conditions Precedent to the
Lenders’ Obligations. The obligation hereunder of the Lenders to accept
the Series C Shares in exchange for the Bupp Note is subject to the satisfaction
or waiver, at or before the Closing Date, of each of the conditions set forth
below. These conditions are for the Lenders’ sole benefit and may be waived by
the Investor at any time in its sole discretion.

       

      (a)           The
Company shall have filed the Certificate of Designation of the Company’s Series
C Convertible Preferred Stock with the Delaware Secretary of State, in
substantially the form attached hereto as Exhibit A.

       

      (b)           The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.

       

      (c)           Each
of the representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that speak
as of a particular date, which shall be true and correct in all material
respects as of such date.

       

      (d)           The
transactions contemplated by the Securities Exchange Agreement between the
Company and Platinum-Montaur Life Sciences, LLC, dated as of June 22, 2010,
shall have been completed.

       

      Section
6.              Termination of
Agreements.  Effective upon the Closing, (a) the Registration
Rights Agreement referenced in the Purchase Agreement, and (b) the Intercreditor
Agreement among the Company, the Lenders and Platinum-Montaur Life Sciences,
LLC, dated December 26, 2007 each shall be terminated, and shall no longer be of
any force or effect.

       

      Section
7.              Notices.  All
notices and communications provided for hereunder shall be in writing and sent
(a) by fax if the sender on the same day sends a confirming copy of such notice
by a recognized overnight delivery service (charges prepaid), or (b) by
registered or certified mail with return receipt requested (postage prepaid), or
(c) by a recognized overnight delivery service (with charges
prepaid).  Any such notice must be sent:

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      (a)           if
to the Company, to

       

      Neoprobe
Corporation

      425 Metro
Place North, Suite 300

      Dublin,
Ohio  43017

      Attn:
Chief Financial Officer

       (fax)  (614)
793-9376

      

      copy
to:

      

      William
J. Kelly, Jr.

      Porter,
Wright, Morris & Arthur

      41 South
High Street, Suite 2800

      Columbus,
Ohio 43215

      

      or to
such other person at such other place as the Company shall designate to Lenders
in writing;

       

      (b)           if
to the Purchasers, to

      

      David C. Bupp

      9095 Moors Place North

      Dublin, Ohio 43017

      

      copy
to:

      

      Kenneth
J. Warren, Esq.

      5134
Blazer Parkway

      Dublin,
Ohio 43017

      

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

       

      (c)           if
to any transferee or transferees of Lenders, at such address or addresses as
shall have been furnished to the Company at the time of the transfer or
transfers, or at such other address or addresses as may have been furnished by
such transferee or transferees to the Company in writing.

       

      Section
8.              Miscellaneous.

       

      (a)           Entire
Agreement.  This Agreement, including all Exhibits hereto,
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior oral or written
agreements and understandings relating to the subject matter
hereof.  No statement, representation, warranty, covenant or agreement
of any kind not expressly set forth in this Agreement shall affect, or be used
to interpret, change or restrict, the express terms and provisions of this
Agreement.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

      (b)           Amendments.  This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and by each Lender.

       

      (c)           Headings.  The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.

       

      (d)           Severability.  In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.

       

      (e)           Governing
Law/Jurisdiction.  This Agreement will be construed and
enforced in accordance with and governed by the laws of the State of Ohio,
without reference to principles of conflicts of law, except to the extent that
the Delaware General Corporation Law shall govern.

       

      (f)           Counterparts/Facsimile.  This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other
party.  In lieu of the original, a facsimile transmission or copy of
the original shall be as effective and enforceable as the original.

       

      (g)           Publicity.  None
of the Lenders nor the Company shall issue any press releases or otherwise make
any public statement with respect to the transactions contemplated by this
Agreement without the prior written consent of the other, except as may be
required by applicable law or regulation.

       

      (h)           Survival.  The
representations and warranties in this Agreement shall survive
Closing.

       

      (i)           Expenses. Each party
shall pay the fees and expenses of its advisors, counsel, accountants and other
experts, if any, and all other expenses, incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement;
provided, however, that the Company shall pay the actual legal expenses incurred
by the Lenders in connection with the negotiation and execution of this
Agreement, up to an aggregate of $2,500.

       

      (j)           Counterparts.   This
Agreement may be executed in counterparts, each of which shall be deemed to be
an original and all such counterparts together shall constitute one and the same
instrument.

       

      [Signature
Page Follows]

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

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

       

      
        
          
            	 
      	
                    NEOPROBE
      CORPORATION

                  
	 
      	 
      	 
      
	 
      	
                    By:

                  	
                    /s/ Brent L. Larson

                  
	 
      	 
      	
                    Name:
      Brent L. Larson

                  
	 
      	 
      	
                    Title:
      VP Finance/CFO

                  

          

        

      

      

      
        
          	 
      	
                  LENDERS

                
	 
      	 
      
	 
      	
                   /s/ David C. Bupp

                
	 
      	
                  David
      C. Bupp, individually

                
	 
      	 
      
	 
      	
                   /s/ Cynthia B.
  Gochoco

                
	 
      	
                  Cynthia
      B. Gochoco, individually

                
	 
      	 
      
	 
      	
                   /s/ David C. Bupp

                
	 
      	
                  David
      C. Bupp, as Co-Executor of the Estate of Walter H. 

                  Bupp,
      deceased

                
	 
      	 
      
	 
      	
                   /s/ Cynthia B.
  Gochoco

                
	 
      	
                  Cynthia
      B. Gochoco, as Co-Executor of the Estate of 

                  Walter
      H. Bupp, deceased

                

        

      

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      Exhibit
A

      NEOPROBE
CORPORATION

      

      CERTIFICATE
OF DESIGNATIONS, VOTING POWERS,

      PREFERENCES,
LIMITATIONS, RESTRICTIONS, AND RELATIVE

      RIGHTS
OF SERIES C CONVERTIBLE PREFERRED STOCK

       

      It is
hereby certified that:

      

      I.           The
name of the corporation is Neoprobe Corporation (the “Corporation”), a
Delaware corporation.

      

      II.           Set
forth hereinafter is a statement of the voting powers, preferences, limitations,
restrictions, and relative rights of shares of Series C Convertible Preferred
Stock hereinafter designated as contained in a resolution of the Board of
Directors of the Corporation pursuant to a provision of the Certificate of
Incorporation of the Corporation permitting the issuance of said Series C
Preferred Stock by resolution of the Board of Directors:

      

      Section
9.             Designation
and Rank.

       

      (a)           Designation.  The
designation of such series of the Preferred Stock shall be the Series C
Convertible Preferred Stock, par value $.001 per share (the “Series C Preferred
Stock”).  The maximum number of shares of Series C Preferred
Stock shall be One Thousand (1,000) Shares.

       

      (b)           Rank.  The
Series C Preferred Stock shall rank prior to the common stock, par value $.001
per share (the “Common
Stock”), and to all other classes and series of equity securities of the
Company which by their terms do not rank on a parity with or senior to the
Series C Preferred Stock (“Junior
Stock”).  The Series C Preferred Stock shall rank senior to the
Series B Convertible Preferred Stock as to rights to cash dividends, and on a
parity with the Series B Convertible Preferred Stock as to distributions on
liquidation, dissolution or winding up.  The Series C Preferred Stock
shall be subordinate to and rank junior to all indebtedness of the Company now
or hereafter outstanding.

       

      Section
10.           Dividends.

       

      (a)           Quarterly
Dividends.  The holders of shares of the Series C Preferred
Stock shall be entitled to receive, out of funds legally available therefor,
dividends at an annual rate equal to 10% of the Liquidation Preference Amount
(as defined below), whether or not declared.  Accrued and unpaid
dividends shall compound on a quarterly basis, and shall be, except as set forth
in Section 2(b) below, payable in cash.  The Board of Directors may
fix a record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive payment of such dividends, which record date
shall not be more than sixty (60) days prior to the applicable dividend payment
date.  The first such dividend payment shall be due and payable on
September 30, 2010, with payments due and payable thereafter on June 30,
September 30, December 31 and March 31 of each year.   All
accrued and unpaid dividends, if any, shall be mandatorily paid immediately
prior to the earlier to occur of (i) a liquidation, dissolution or winding up
(or deemed liquidation, dissolution or winding up under Section 4(b) hereof) of
the Company (a “Liquidation”), or
(ii) a Voluntary Conversion pursuant to Section 5 hereof.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)           Payment of
Dividends.  At the option of the Company in compliance with
this Section 2(b), the Company may pay dividends on the Series C Preferred Stock
in registered shares of Common Stock, with each share of Common Stock being
valued for this purpose at 90% of the average VWAP for the five (5) trading days
immediately preceding the date on which such dividend is due and
payable.  Notwithstanding the above, no dividend shall be paid in
Common Stock (i) in connection with a Liquidation, or, (ii) unless the shares of
Common Stock received upon such payment shall be freely salable by the recipient
pursuant to a then effective registration statement under the Securities Act of
1933.  Certificates evidencing shares of Common Stock delivered as a
payment of dividends pursuant to this Section 2(b) shall be delivered to the
holders via no later than five (5) business days following the relevant dividend
payment date.  “VWAP” means, for any date, (i) the daily volume
weighted average price of the Common Stock for such date on the OTC Bulletin
Board (or national securities exchange, if applicable) as reported by Bloomberg
Financial L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:02 p.m.
Eastern Time); (ii) if the Common Stock is not then listed or quoted on the OTC
Bulletin Board (or national securities exchange, if applicable) and if prices
for the Common Stock are then reported in the “Pink Sheets” published by the
Pink Sheets, LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (iii) in all other cases, the fair market value of
a share of Common Stock as determined by an independent appraiser selected in
good faith by the holder and reasonably acceptable to the Company.

       

      (c)           Junior Stock
Dividends.  The Company shall not declare or pay any cash
dividends on, or make any other distributions with respect to or redeem,
purchase or otherwise acquire for consideration, any shares of Junior Stock
unless and until all accrued and unpaid dividends on the Series C Preferred
Stock have been paid in full; provided that the foregoing
prohibition shall not apply to the repurchase, redemption or payment of
dividends or distributions on or with respect to the Series B Convertible
Preferred Stock in conformity with the designation of the powers, preferences,
limitations, restrictions, and relative rights
thereof.    In all events, Junior Stock dividends shall be
subject to the restrictions set forth in Section 3(a) below

       

      Section
11.            Voting
Rights.

       

      (a)           Class Voting
Rights.  The Series C Preferred Stock shall have the following
class voting rights.  The Company shall not, without the affirmative
vote or consent of the holders of at least a majority of the shares of the
Series C Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting, in which the holders of the Series C
Preferred Stock vote separately as a class, amend, alter or repeal the
provisions of the Series C Preferred Stock so as to adversely affect any right,
preference, privilege or voting power of the Series C Preferred Stock. So long
as at least 25% of the shares of the Series C Preferred Stock remain
outstanding, the Company shall not, without the affirmative vote or consent of
the holders of at least a majority of the shares of the Series C Preferred Stock
outstanding at the time, given in person or by proxy, either in writing or at a
meeting, in which the holders of the Series C Preferred Stock vote separately as
a class: (i) repurchase, redeem or pay dividends on (whether in cash, in kind,
or otherwise), shares of the Company's Junior Stock; or (ii) effect any
distribution with respect to Junior Stock; provided that the foregoing
prohibition shall not apply to the repurchase, redemption or payment of
dividends or distributions on or with respect to the Series B Convertible
Preferred Stock in conformity with the designation of the powers, preferences,
limitations, restrictions, and relative rights thereof.

       

      (b)           General Voting
Rights.  Except with respect to transactions upon which the
Series C Preferred Stock shall be entitled to vote separately as a class
pursuant to Section 3(a) above, the Series C Preferred Stock shall have no
voting rights.  The Common Stock into which the Series C Preferred
Stock is convertible shall, upon issuance, have all of the same voting rights as
other issued and outstanding Common Stock of the Company.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Section
12.            Liquidation
Preference.

       

      (a)           In
the event of the liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Company, the holders of shares
of the Series C Preferred Stock then outstanding shall be entitled to receive,
out of the assets of the Company, whether such assets are capital or surplus of
any nature, before any payment shall be made or any assets distributed to the
holders of the Common Stock or any other Junior Stock (but pari passu with any payment
to holders of Series B Convertible Preferred Stock), an amount per share of
Series C Preferred Stock calculated by taking the total amount available for
distribution to holders of all the Company’s outstanding Common Stock before
deduction of any preference payments for the Series B Convertible Preferred
Stock or Series C Preferred Stock, divided by the total of (x) all of the then
outstanding shares of the Company’s Common Stock, plus (y) all of the shares of
the Company’s Common Stock into which all of the outstanding shares of the
Series B Convertible Preferred Stock and Series C Preferred Stock can be
converted, and then (z) multiplying the sum so obtained by the number of shares
of Common Stock into which such share of Series C Preferred Stock could then be
converted (the “Liquidation Preference
Amount”).  The liquidation payment with respect to each
outstanding fractional share of Series C Preferred Stock shall be equal to a
ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series C Preferred Stock.  All payments for which
this Section 4(a) provides shall be in cash, property (valued at its fair market
value as determined by an independent appraiser reasonably acceptable to the
holders of a majority of the Series C Preferred Stock), or a combination
thereof; provided, however, that no cash shall be paid to holders of Junior
Stock unless each holder of the outstanding shares of Series C Preferred Stock
has been paid in cash the full Liquidation Preference Amount to which such
holder is entitled as provided herein.  After payment of the full
Liquidation Preference Amount to which each holder is entitled, such holders of
shares of Series C Preferred Stock will not be entitled to any further
participation as such in any distribution of the assets of the
Company.

       

      (b)           A
consolidation or merger of the Company with or into any other corporation or
corporations, or a sale of all or substantially all of the assets of the
Company, or the effectuation by the Company of a transaction or series of
transactions in which more than 50% of the voting shares of the Company is
disposed of or conveyed, shall be, at the election of the holders of a majority
of the Series C Preferred Stock, deemed to be a liquidation, dissolution, or
winding up within the meaning of this Section 4; provided, however, that any
such transaction shall not be deemed to be a liquidation, dissolution or winding
up unless such transaction is approved by the Board of Directors of the Company
and the holders of the Series C Preferred Stock do not control the Board of
Directors.  In the event of the merger or consolidation of the Company
with or into another corporation that is not treated as a liquidation pursuant
to this Section 4(b), the Series C Preferred Stock shall maintain its relative
powers, designations and preferences provided for herein (including any
adjustment required under Section 5(c)(v) hereof) and no merger shall result
inconsistent therewith.

       

      (c)           Written
notice of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, stating a payment date and the place where the
distributable amounts shall be payable, shall be given by mail, postage prepaid,
no less than forty-five (45) days prior to the payment date stated therein, to
the holders of record of the Series C Preferred Stock at their respective
addresses as the same shall appear on the books of the Company.

       

      Section
13.           Conversion.  The
holders of Series C Preferred Stock shall have the following conversion rights
(the “Conversion Rights”):

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (a)           Right to
Convert.  At any time on or after the date of issuance of the
Series C Preferred Stock (the “Issuance Date”), the
holder of any such shares of Series C Preferred Stock may, at such holder’s
option, elect to convert (a “Voluntary
Conversion”) all or any portion of the shares of Series C Preferred Stock
held by such person into a number of fully paid and nonassessable shares of
Common Stock at a
conversion rate of 3,226 shares of Common Stock for each share of Preferred
Stock (subject to adjustments set forth in Section 5(c) herein, the “Conversion
Rate”).  The Company shall keep written records of the
conversion of the shares of Series C Preferred Stock converted by each
holder.  A holder shall be required to deliver the original
certificates representing the shares of Series C Preferred Stock upon any
conversion of the Series C Preferred Stock as provided in Section 5(b)
below.

       

      (b)           Mechanics of Voluntary
Conversion.  The Voluntary Conversion of Series C Preferred
Stock shall be conducted in the following manner:

       

      (i)  Holder's Delivery
Requirements.  To convert Series C Preferred Stock into full
shares of Common Stock on any date (the “Voluntary Conversion
Date”), the holder thereof shall (A) transmit by facsimile (or otherwise
deliver), for receipt on or prior to 5:00 p.m., Eastern Time on such date, a
copy of a fully executed notice of conversion in the form attached hereto
as  Exhibit I  (the “Conversion Notice”),
to the Company, and (B) with respect to the final conversion of shares of Series
C Preferred Stock held by any holder, such holder shall surrender to a common
carrier for delivery to the Company as soon as practicable following such
Conversion Date but in no event later than six (6) business days after such date
the original certificates representing the shares of Series C Preferred Stock
being converted (or an indemnification undertaking with respect to such shares
in the case of their loss, theft or destruction) (the “Preferred Stock
Certificates”).

       

      (ii)  Company's
Response.  Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a
confirmation of receipt of such Conversion Notice to such holder and the Company
or its designated transfer agent (the “Transfer Agent”), as
applicable, shall, within five (5) business days following the date of receipt
by the Company of the certificate representing the shares of Series C Preferred
Stock being converted, (x) issue and deliver to the Depository Trust Company
(“DTC”) account
on the holder’s behalf via the Deposit Withdrawal Agent Commission System
(“DWAC”) as
specified in the Conversion Notice, registered in the name of the holder or its
designee, for the number of shares of Common Stock to which the holder shall be
entitled, and (y) if the certificate so surrendered represents more shares of
Series C Preferred Stock than those being converted, issue and deliver to the
holder a new certificate for such number of shares of Series C Preferred Stock
represented by the surrendered certificate which were not converted.
Simultaneously, the Company will pay the holder any dividends that are accrued
and unpaid as of the Voluntary Conversion Date on the shares of Series C
Preferred Stock being converted, either in cash, or at the option of the Company
in shares of Common Stock as provided in Section 2(b) hereof.

       

      (iii) 
Record
Holder.  The person or persons entitled to receive the shares
of Common Stock issuable upon a conversion of the Series C Preferred Stock shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date.

       

      (iv)  Company's Failure to Timely
Convert.  If within five (5) business days of the Company's
receipt of the Conversion Notice (the “Share Delivery
Period”) the Company shall fail to issue and deliver to a holder the
number of shares of Common Stock to which such holder is entitled upon such
holder's conversion of the Series C Preferred Stock (a “Conversion Failure”),
in addition to all other available remedies which such holder may pursue
hereunder, the Company shall pay additional damages to such holder on each
business day after such fifth (5th) business day that such conversion is not
timely effected in an amount equal to 0.5% of the product of (A) the sum of the
number of shares of Common Stock not so issued to the holder on a timely basis
pursuant to Section 5(b)(ii) and to which such holder is entitled and (B) the
closing bid price of the Common Stock on the last possible date which the
Company could have issued such Common Stock to such holder without violating
Section 5(b)(ii).  If the Company fails to pay the additional damages
set forth in this Section 5(b)(iv) within five (5) business days of the date
incurred, then such payment shall bear interest at the rate of 2% per month (pro
rated for partial months) until such payments are made.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (c)        Adjustments of Conversion
Rate.

       

      (i) 
Adjustments for Stock Splits
and Combinations.  If the Company shall at any time or from
time to time after the Issuance Date, effect a stock split of the outstanding
Common Stock, the Conversion Rate shall be proportionately
increased.  If the Company shall at any time or from time to time
after the Issuance Date, combine the outstanding shares of Common Stock, the
Conversion Rate shall be proportionately decreased.  Any adjustments
under this Section 5(e)(i) shall be effective at the close of business on the
date the stock split or combination occurs.

       

      (ii)  Adjustments for Certain Dividends
and Distributions.  If the Company shall at any time or from
time to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in shares of Common Stock, then, and in each event, the
Conversion Rate shall be increased as of the time of such issuance or, in the
event such record date shall have been fixed, as of the close of business on
such record date, by multiplying, as applicable, the Conversion Rate then in
effect by a fraction:

       

      the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately following the time of such issuance or the close of
business on such record date; and

       

      the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance.

       

      (iii)  Adjustment for Other Dividends and
Distributions.  If the Company shall at any time or from time
to time after the Issuance Date, make or issue or set a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in securities of the Company other than shares of Common
Stock, then, and in each event, an appropriate revision to the applicable
Conversion Rate shall be made and provision shall be made (by adjustments of the
Conversion Rate or otherwise) so that the holders of Series C Preferred Stock
shall receive upon conversions thereof, in addition to the number of shares of
Common Stock receivable thereon, the number of securities of the Company which
they would have received had their Series C Preferred Stock been converted into
Common Stock on the date of such event and had thereafter, during the period
from the date of such event to and including the Conversion Date, retained such
securities (together with any distributions payable thereon during such period),
giving application to all adjustments called for during such period under this
Section 5(c)(iii) with respect to the rights of the holders of the Series C
Preferred Stock.

       

      (iv)  Adjustments for Reclassification,
Exchange or Substitution.  If the Common Stock issuable upon
conversion of the Series C Preferred Stock at any time or from time to time
after the Issuance Date shall be changed to the same or different number of
shares of any class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or combination of
shares or stock dividends provided for in Sections 5(c)(i), (ii) and (iii), or a
reorganization, merger, consolidation, or sale of assets provided for in Section
5(c)(v)), then, and in each event, an appropriate revision to the Conversion
Rate shall be made and provisions shall be made so that the holder of each share
of Series C Preferred Stock shall have the right thereafter to convert such
share of Series C Preferred Stock into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
share of Series C Preferred Stock might have been converted immediately prior to
such reclassification, exchange, substitution or other change, all subject to
further adjustment as provided herein.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (v)  Adjustments for Reorganization,
Merger, Consolidation or Sales of Assets.  If at any time or
from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in Section 5(c)(i),
(ii) and (iii), or a reclassification, exchange or substitution of shares
provided for in Section 5(c)(iv)), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person that is not deemed a
liquidation pursuant to Section 4(b) (an “Organic Change”),
then as a part of such Organic Change an appropriate revision to the Conversion
Rate  shall be made and provision shall be made so that the holder of
each share of Series C Preferred Stock shall have the right thereafter to
convert such share of Series C Preferred Stock into the kind and amount of
shares of stock and other securities or property of the Company or any successor
corporation resulting from the Organic Change as the holder would have received
as a result of the Organic Change and if the holder had converted its Series C
Preferred Stock into the Company’s Common Stock prior to the Organic
Change.

       

      (vi)  Record Date.  In
case the Company shall take record of the holders of its Common Stock or any
other Preferred Stock for the purpose of entitling them to subscribe for or
purchase Common Stock or Convertible Securities, then the date of the issue or
sale of the shares of Common Stock shall be deemed to be such record
date.

       

      (d)           No
Impairment.  The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series C Preferred Stock against impairment. In the event a holder shall elect
to convert any shares of Series C Preferred Stock as provided herein, the
Company cannot refuse conversion based on any claim that such holder or anyone
associated or affiliated with such holder has been engaged in any violation of
law, unless an injunction from a court, on notice, restraining and/or adjoining
conversion of all or of said shares of Series C Preferred Stock shall have been
issued.

       

      (e)           Certificates as to
Adjustments.  Upon occurrence of each adjustment or
readjustment of the Conversion Rate or number of shares of Common Stock issuable
upon conversion of the Series C Preferred Stock pursuant to this Section 5, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to each holder of such Series C
Preferred Stock a certificate setting forth such adjustment and readjustment,
showing in detail the facts upon which such adjustment or readjustment is
based.  The Company shall, upon written request of the holder of such
affected Series C Preferred Stock, at any time, furnish or cause to be furnished
to such holder a like certificate setting forth such adjustments and
readjustments, the Conversion Rate in effect at the time, and the number of
shares of Common Stock and the amount, if any, of other securities or property
which at the time would be received upon the conversion of a share of such
Series C Preferred Stock.  Notwithstanding the foregoing, the Company
shall not be obligated to deliver a certificate unless such certificate would
reflect an increase or decrease of at least one percent (1%) of such adjusted
amount.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (f)           Issue
Taxes.  The Company shall pay any and all issue and other
taxes, excluding federal, state or local income taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of Series C Preferred Stock pursuant thereto;  provided,  however,
that the Company shall not be obligated to pay any transfer taxes resulting from
any transfer requested by any holder in connection with any such
conversion.

       

      (g)          Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (i) upon hand
delivery, telecopy or facsimile at the address or number designated in the
Exchange Agreement (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (ii) on the second business day
following the date of mailing by express overnight courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The Company will give written notice each holder of
Series C Preferred Stock at least ten (10) days prior to the date on which the
Company takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any pro rata subscription offer to holders of
Common Stock or (C) for determining rights to vote with respect to any Organic
Change, dissolution, liquidation or winding-up and in no event shall such notice
be provided to such holder prior to such information being made known to the
public. Subject to Section 4(c), the Company will also give written notice to
each holder of Series C Preferred Stock at least ten (10) days prior to the date
on which any Organic Change will take place and in no event shall such notice be
provided to such holder  prior to such information being made known to
the public

       

      (h)          Fractional
Shares.  No fractional shares of Common Stock shall be issued
upon conversion of the Series C Preferred Stock.  In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall at its option either (i) pay cash equal to the product of such fraction
multiplied by the average of the closing bid prices of the Common Stock for the
five (5) consecutive trading days immediately preceding the Voluntary Conversion
Date, as applicable, or (ii) in lieu of issuing such fractional shares issue one
additional whole share to the holder.

       

      (i)           Reservation of Common
Stock.  The Company shall, so long as any shares of Series C
Preferred Stock are outstanding, reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of the Series C Preferred Stock, such number of shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
of the Series C Preferred Stock then outstanding.

       

      (j)           Retirement of Series C
Preferred Stock.  Conversion of Series C Preferred Stock shall
be deemed to have been effected on the applicable Voluntary Conversion
Date.  The Company shall keep written records of the conversion of the
shares of Series C Preferred Stock converted by each holder.  A holder
shall be required to deliver the original certificates representing the shares
of Series C Preferred Stock upon complete conversion of the Series C Preferred
Stock represented by such certificates. A delivery of original
certificates pursuant to Section 5(b)(i) shall be deemed to comply with the
requirements of this Section 5(j).

       

      (k)          Regulatory
Compliance.  If any shares of Common Stock to be reserved for
the purpose of conversion of Series C Preferred Stock require registration or
listing with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, in good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Section
14.          No Preemptive
Rights.  Except as provided in Section 5 hereof, no holder of the
Series C Preferred Stock shall be entitled to rights to subscribe for, purchase
or receive any part of any new or additional shares of any class, whether now or
hereinafter authorized, or of bonds or debentures, or other evidences of
indebtedness convertible into or exchangeable for shares of any class, but all
such new or additional shares of any class, or any bond, debentures or other
evidences of indebtedness convertible into or exchangeable for shares, may be
issued and disposed of by the Board of Directors on such terms and for such
consideration (to the extent permitted by law), and to such person or persons as
the Board of Directors in their absolute discretion may deem
advisable.

       

      Section
15.           Inability
to Fully Convert.

       

      (a)           Holder's Option if Company
Cannot Fully Convert.  If, upon the Company's receipt of a
Conversion Notice, the Company cannot issue shares of Common Stock for any
reason, including, without limitation, because the Company (i) does not have a
sufficient number of shares of Common Stock authorized and available, or (ii) is
otherwise prohibited by applicable law or by the rules or regulations of any
stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or its securities from issuing
all of the Common Stock which is to be issued to a holder of Series C Preferred
Stock pursuant to a Conversion Notice, then the Company shall issue as many
shares of Common Stock as it is able to issue in accordance with such holder's
Conversion Notice, and with respect to the unconverted Series C Preferred Stock
(the “Unconverted
Preferred Stock”), the holder, solely at such holder's option, can elect
to, at any time after receipt of notice from the Company that there is
Unconverted Preferred Stock, to void the holder’s Conversion Notice as to the
number of shares of Common Stock the Company is unable to issue and retain or
have returned, as the case may be, the certificates for the shares of the
Unconverted Preferred Stock.

       

      (b)           Mechanics of Fulfilling
Holder's Election.  The Company shall immediately send via
facsimile to a holder of Series C Preferred Stock, upon receipt of a facsimile
copy of a Conversion Notice from such holder which cannot be fully satisfied as
described in Section 7(a) above, a notice of the Company's inability to fully
satisfy such holder's Conversion Notice (the “Inability to Fully Convert
Notice”).  Such Inability to Fully Convert Notice shall
indicate (i) the reason why the Company is unable to fully satisfy such holder's
Conversion Notice, and (ii) the number of shares of Series C Preferred Stock
which cannot be converted.

       

      Section
16.           Automatic
Conversion.

       

      (a)           Automatic Conversion
Events.  All outstanding shares of Series C Preferred Stock
shall be automatically converted into Common Stock at the Conversion Rate upon
the earlier to occur of (i) the closing of a firm commitment underwritten public
offering of Common Stock of the Company pursuant to an effective registration
statement under Section 5 of the Securities Act  in which the gross
cash proceeds to the Company (before underwriting discounts, commissions and
fees) from such public offering are at least $10,000,000, or (ii) December 31,
2012 (each, an “Automatic Conversion
Event”).

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)           Mechanics of Automatic
Conversion.  Upon the occurrence of an Automatic Conversion
Event, the outstanding Series C Preferred Stock shall be converted into Common
Stock automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Company or its transfer agent; provided, however, that the Company shall not be
obligated to issue certificates evidencing the Common Stock issuable upon such
conversion unless the certificates evidencing such Series C Preferred Stock are
either delivered to the Company or its transfer agent as provided below, or the
holder certifies to the Company or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Company to indemnify the Company from any loss incurred by it in connection
with such certificates. Upon surrender by any holder of the certificates
formerly representing shares of Series C Preferred Stock to the Company or the
transfer agent, there shall be issued and delivered to such holder promptly in
its name as shown on such surrendered certificate or certificates, a certificate
or certificates for the number of shares of Common Stock into which the shares
of Series C Preferred Stock surrendered were converted on the date on which such
automatic conversion occurred, and the Company shall promptly pay in cash (at
the fair market value per share of Common Stock determined by the Board of
Directors as of the date of conversion) the value of any fractional share of
Common Stock otherwise issuable to any holder of shares of Series C Preferred
Stock being converted. Until surrendered as provided above, each certificate
formerly representing Series C Preferred Stock shall be deemed for all corporate
purposes to represent the number of shares of Common Stock resulting from such
automatic conversion.

       

      (c)           Inability to
Convert.  Notwithstanding the provisions of Section 8(a) if,
upon the occurrence of an Automatic Conversion Event, the Company cannot issue
shares of Common Stock to fully effect the conversion for any reason, including,
without limitation, because the Company (i) does not have a sufficient number of
shares of Common Stock authorized and available, or (ii) is otherwise prohibited
by applicable law or by the rules or regulations of any stock exchange,
interdealer quotation system or other self-regulatory organization with
jurisdiction over the Company or its securities from issuing all of the Common
Stock which is to be issued to a holder of Series C Preferred Stock, then the
Company shall issue as many shares of Common Stock as it is able to issue, and
with respect to the unconverted Series C Preferred Stock (the “Unconverted Preferred
Stock”), deliver to the holder a certificate for the shares of the
Unconverted Preferred Stock.  In the event that the Company is
thereafter able to convert the Unconverted Preferred Stock, it shall so notify
the holder in writing, and such notice shall be deemed to be an Automatic
Conversion Event for purposes of this Section 8.

       

      Section
17.           Vote to
Change the Terms of Preferred Stock.  The affirmative vote at a
meeting duly called for such purpose, or the written consent without a meeting,
of the holders of not less than a majority of the then outstanding shares of
Series C Preferred Stock, shall be required for any change to this Certificate
of Designation or the Company’s Certificate of Incorporation that would amend,
alter, change or repeal any of the powers, designations, preferences and rights
of the Series C Preferred Stock.

       

      Section
18.           Lost or
Stolen Certificates.  Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificates representing the shares of Series C Preferred Stock, and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of such certificate(s), the Company shall execute and deliver new
preferred stock certificate(s) of like tenor and date.

       

      Section
19.           Remedies,
Characterizations, Other Obligations, Breaches and Injunctive
Relief.  The remedies provided in this Certificate of Designation
shall be cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation.  Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof).  The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the holders of the
Series C Preferred Stock and that the remedy at law for any such breach may be
inadequate.  The Company therefore agrees that, in the event of any
such breach or threatened breach, the holders of the Series C Preferred Stock
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Section
20.           Specific
Shall Not Limit General; Construction.  No specific provision
contained in this Certificate of Designation shall limit or modify any more
general provision contained herein.

       

      Section
21.           Failure or
Indulgence Not Waiver.  No failure or delay on the part of a holder of
Series C Preferred Stock in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

       

      IN WITNESS WHEREOF, the undersigned has
executed and subscribed this Certificate and does affirm the foregoing as true
this __  day of June, 2010.

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 
      	
                                    NEOPROBE
      CORPORATION

                                  	 
	 
      	 
      	 
      	 
      	 
	 
      	
                                    By:  

                                  	 
        	 
       
	 
      	 
      	
                                    Name:

                                  	  
        	 
       
	 
      	 
      	
                                    Title:

                                  	  
        	 
       

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
I

      NEOPROBE
CORPORATION

      CONVERSION
NOTICE

      

      Reference is made to the Certificate of
Designation of the Relative Rights and Preferences of the Series C Preferred
Stock of Neoprobe Corporation (the “Certificate of
Designation”).  In accordance with and pursuant to the
Certificate of Designation, the undersigned hereby elects to convert the number
of shares of Series C Preferred Stock, par value $.001 per share (the “Preferred Shares”),
of Neoprobe Corporation, a Delaware corporation (the “Company”), indicated
below into shares of Common Stock, par value $.001 per share (the “Common Stock”), of
the Company, by tendering the stock certificate(s) representing the share(s) of
Preferred Shares specified below as of the date specified below.

      

      Date of
Conversion: _______________________________________

      

      Number of
Preferred Shares to be converted:                                                                    

      

      Stock
certificate no(s). of Preferred Shares to be converted:                                                              

      

      The
Common Stock has been sold:  YES ___   NO ___

      

      Please
confirm the following information:

      

      Conversion
Rate:                         

      

      Number of
shares of Common Stock

      to be
issued:                                                                           

      

      Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the Date of Conversion determined in accordance with Section 16 of the
Securities Exchange Act of 1934, as amended:
______________________________________

      

      Please
issue the Common Stock into which the Preferred Shares are being converted and,
if applicable, any check drawn on an account of the Company in the following
name and to the following address:

      

      Issue
to:                                                                           

      Facsimile
Number:                                                                                     

       

      Authorization:

      By:                                                                           

      Title: ______________________________

      

      Dated:

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