<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-QSB
(MARK ONE)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1996
or
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ______ to______
COMMISSION FILE NUMBER: 0-20676
NEOPROBE CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 31-1080091
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
425 METRO PLACE NORTH, SUITE 400, DUBLIN, OHIO 43017
(Address of principal executive offices)
614-793-7500
(Issuer's telephone number, including area code)
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES X NO
----- -----
19,649,397 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE
(Number of shares of issuer's common equity
outstanding as of the close of business
on May 13, 1996)
Transitional Small Business Disclosure Format (check one):
YES NO X
----- -----
-1-
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
NEOPROBE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $10,032,973 $ 9,944,949
Available-for-sale securities 7,279,659 4,947,670
Stock subscriptions receivable 1,262,513 0
Accounts receivable:
Trade 176,434 159,874
Related parties 7,896 340
Inventory 473,004 406,089
Prepaid expenses and other current assets 784,016 1,596,788
----------- -----------
Total current assets 20,016,495 17,055,710
----------- -----------
Long term investment 0 1,500,000
Property and equipment, at cost, net of accumulated
depreciation and amortization 3,565,272 3,974,228
Intangible assets, net of accumulated amortization 523,249 532,110
Other assets 40,314 147,820
----------- -----------
Total assets $24,145,330 $23,209,868
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements
-2-
<PAGE> 3
NEOPROBE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade $ 1,558,916 $ 1,157,321
Related parties 25,838 41,102
Accrued expenses 957,049 717,710
Notes payable to finance company 128,487 78,780
Capital lease obligation, current 244,348 229,111
------------ ------------
Total current liabilities 2,914,638 2,224,024
------------ ------------
Long term debt 1,100,000 550,000
Capital lease obligation 82,043 33,324
------------ ------------
Total liabilities 4,096,681 2,807,348
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred Stock; $.001 par value; 5,000,000 shares
authorized at December 31, 1995 and March 31, 1996; -- --
none outstanding (500,000 shares designated as Series A,
$.001 par value, at March 31, 1996; none outstanding)
Common stock; $.001 par value; 50,000,000 shares authorized;
17,534,800 and 17,952,055 shares issued; 17,334,800 and
17,852,055 shares outstanding at December 31, 1995
and March 31, 1996, respectively 17,335 17,852
Additional paid in capital 62,964,787 66,960,672
Deficit accumulated during development stage (43,146,860) (46,697,059)
Unrealized gain (loss) on available-for-sale securities 46,480 (42,886)
Cumulative foreign currency translation adjustment 166,907 163,941
------------ ------------
Total stockholders' equity 20,048,649 20,402,520
------------ ------------
Total liabilities and stockholders' equity $ 24,145,330 $ 23,209,868
============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
-3-
<PAGE> 4
NEOPROBE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
November 16,
1983
Three Months Ended (inception)
March 31, to March 31,
1995 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ 273,023 $ 196,397 $ 3,084,208
Cost of goods sold 157,393 150,741 1,602,265
------------ ------------ ------------
Gross profit 115,630 45,656 1,481,943
------------ ------------ ------------
Operating expenses:
Research and development expenses:
Wages and benefits 781,764 859,962 10,030,920
Contracted services 361,658 651,747 5,189,194
Clinical trials 689,091 805,901 13,639,093
Other 121,729 235,136 2,510,112
------------ ------------ ------------
Total research and development 1,954,242 2,552,746 31,369,319
------------ ------------ ------------
General and administrative expenses:
Wages and benefits 252,275 323,511 5,562,706
Contracted services 64,506 145,148 2,297,132
Professional services 119,325 165,149 2,878,240
Depreciation and amortization 136,547 137,466 1,678,068
Other 342,144 501,698 6,861,177
------------ ------------ ------------
Total general and administrative 914,797 1,272,972 19,277,323
------------ ------------ ------------
Loss from operations (2,753,409) (3,780,062) (49,164,699)
------------ ------------ ------------
Other income (expense):
Interest income 49,164 234,828 1,820,868
Interest expense (13,873) (10,212) (432,816)
Gain (loss) on foreign currency transactions 281 (9,497) (10,701)
Other 176,539 14,744 1,010,936
Minority interest 79,353
------------ ------------ ------------
Total other income 212,111 229,863 2,467,640
------------ ------------ ------------
Net loss $ (2,541,298) $ (3,550,199) $(46,697,059)
============ ============ ============
Net loss per share of common stock $ (0.21) $ (0.20)
============ ============
Shares used in computing net loss
per share 11,856,684 17,426,614
============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements
-4-
<PAGE> 5
NEOPROBE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
November 16,
1983
Three Months Ended (inception)
March 31, to March 31,
1995 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net cash used in operating activities $ (2,248,970) $ (3,871,959) $(43,992,671)
Cash flows from investing activities:
Purchases of available-for-sale securities (5,300,000) (1,533,927) (46,146,199)
Proceeds from sale of available-for-sale securities 1,147,428 813,532 19,195,689
Maturities of available-for-sale securities 5,791,407 3,000,000 21,982,742
Other (76,856) (551,232) (4,166,724)
------------ ------------ ------------
Net cash provided by (used in) investing activities 1,561,979 1,728,373 (9,134,492)
------------ ------------ ------------
Cash flows from financing activities:
Issuance of common stock, net 5,932,652 2,177,663 53,879,383
Other (101,568) (113,648) 9,200,107
------------ ------------ ------------
Net cash provided by financing activities 5,831,084 2,064,015 63,079,490
------------ ------------ ------------
Effect of exchange rate changes on cash 705 (8,453) (7,378)
------------ ------------ ------------
Net increase (decrease) in cash and cash 5,144,798 (88,024) 9,944,949
equivalents
Cash and cash equivalents at beginning of period 500,775 10,032,973 0
------------ ------------ ------------
Cash and cash equivalents at end of period $ 5,645,573 $ 9,944,949 $ 9,944,949
============ ============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
-5-
<PAGE> 6
NEOPROBE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
1. BASIS OF PRESENTATION
The information presented for March 31, 1995 and 1996, and for the periods
then ended is unaudited, but includes all adjustments (which consist only
of normal recurring adjustments) which the Company's management believes to
be necessary for the fair presentation of results for the periods
presented. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission. The results for
the interim period are not necessarily indicative of results to be expected
for the year. The financial statements should be read in conjunction with
the Company's audited financial statements for the year ended December 31,
1995, which were included as part of the Company's Annual Report on Form
10-KSB (file no. 0-20676).
The Company is a development stage enterprise engaged in the development
and commercialization of technologies for the diagnosis and treatment of
cancers. There can be no assurance that the Company will be able to
commercialize its proposed products. There can also be no assurance that
adequate financing will be available when needed or on terms attractive to
the Company.
2. INVENTORY
The components of inventory are as follows:
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1996
----------------- --------------
<S> <C> <C>
Materials and component parts $101,886 $109,242
Work-in-process 107,786 37,435
Finished goods 263,332 259,412
-------- --------
$473,004 $406,089
======== ========
</TABLE>
3. LONG-TERM DEBT
In 1995, Neoprobe (Israel) Ltd. ("Neoprobe (Israel)"), a subsidiary of the
Company, and the Company issued convertible debentures in the amount of
$1,100,000 due February 10, 1997. The debentures are convertible into
preferred shares of Neoprobe (Israel) or into shares of the Company's
common stock at a conversion price of $5.50 per share. The interest rate on
the debentures is at three percentage points above the 12-month LIBOR rate,
or approximately 9%. In March 1996, debentures in the amount of $550,000
were converted into 100,000 shares of the Company's common stock.
Certificates for an additional 100,000 shares of the Company's common stock
are being held in escrow.
4. STOCK OPTIONS
In January 1996, the Board granted options to certain directors, officers,
and employees of the Company under the Neoprobe Corporation Incentive Stock
Option and Restricted Stock Purchase Plan (the "Plan") for 295,200 shares
of common stock, exercisable at $15.75 per share, 50,000 vesting upon the
meeting of certain milestones. Currently, the Company has 1,970,237 options
outstanding under the Plan, and 992,293 options have vested as of March 31,
1996.
-6-
<PAGE> 7
NEOPROBE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements (continued)
5. AGREEMENTS
In February 1996, the Company and XTL Biopharmaceuticals Ltd. ("XTL")
executed a series of agreements, including an Investment Agreement and a
Research and Development Agreement whereby XTL will perform specific
research activities using XTL's proprietary technology for the development
of future products for the Company. The Company purchased $1.5 million of
convertible debentures of XTL, convertible into approximately a 15% equity
interest in XTL as of the date of purchase. The Company also acquired a
warrant affording Neoprobe the option to purchase approximately 171,000
additional shares of common stock of XTL. Neoprobe issued 125,000 shares of
common stock to XTL in exchange for the convertible debentures, warrant,
and product development activities.
In March 1996, the Company and Enzon, Inc. executed an Amendment to the
License Agreement and Development Agreement. Pursuant to the Amendment, a
Development Agreement executed between the parties on August 15, 1992 has
been terminated in all respects. Under the amended terms of the License
Agreement, the parties agreed to cancel a note issued to Enzon, and
Neoprobe agreed to issue to Enzon warrants to purchase 50,000 shares of
Common Stock at an exercise price of $6.30 per share, and an additional
warrant to purchase up to 100,000 shares of Common Stock at an exercise
price of $12.60 per share.
In March 1996, the Company executed a Subscription and Option Agreement
with Cira Technologies, Inc.("Cira"), under which the Company received a 10
percent equity interest in Cira and an option to increase its interest in
Cira to 25 percent at a price to be determined based on the future value of
Cira subject to a cap and a floor. Currently, the Company's Chairman and
CEO is a director of and a principal shareholder in Cira. Additionally, a
partner of a law firm, who is a director of the Company which provides
various legal services to the Company, is a principal shareholder of Cira.
The Company is finalizing agreements under which it will provide financial,
clinical, and technical support to Cira for Cira to conduct a clinical
study using Cira's technology and the Company will have an option to
acquire an exclusive global license for Cira's technology. The Company's
financial commitment for this clinical study will not exceed $500,000, and
the Company has the right to terminate the Agreement upon review of interim
results of the clinical study.
6. CONTINGENCIES
The Company has been named as an additional party defendant in the In re
Blech Securities litigation pending in the United States District Court for
the Southern District of New York. The plaintiffs in the litigation are
eight named individuals who are alleged to be representatives of a class of
securities purchasers. The defendants in the litigation include David
Blech, who was a principal shareholder of the Company until September 1994;
Mark Germain, who was a director of the Company until September 1994; D.
Blech & Co., a registered broker-dealer owned by Mr. Blech; trustees of
certain trusts established by Mr. Blech and other entities; as well as ten
other corporations of which Mr. Blech was a principal shareholder. The
amount of damages requested is not specified in the complaint. The Company
has rejected the allegations of the complaint that apply to it and intends
to vigorously defend itself against this action. In the opinion of
management, the outcome of this matter will not have a material effect on
the Company's financial position or results of operations.
-7-
<PAGE> 8
NEOPROBE CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements (continued)
7. SUBSEQUENT EVENTS
In April 1996, the Company completed the sale of 1,750,000 shares of common
stock in a public secondary offering at an offering price to the public of
$18.50. Proceeds to the Company from this offering, net of the
underwriters' discount, was approximately $30.5 million.
In May 1996, the Company executed two License Agreements with The Dow
Chemical Company ("Dow"), whereby the Company was granted exclusive
licenses to technology covered by patents owned by Dow. In exchange, the
Company will issue to Dow 124,805 shares of common stock, make an
additional lump sum payment upon first approval of any product covered by
the License Agreements, make additional lump sum payments to Dow upon
achieving certain sales milestones, and pay royalties on net sales of
products covered by the License Agreements.
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other parts of this Report contain forward-looking statements
that involve risks and uncertainties. The Company's actual results in 1996 and
future periods may differ significantly from the prospects discussed in the
forward-looking statements.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations primarily through
private and public offerings of its equity securities, from which it has raised
gross proceeds of approximately $64.0 million. The Company has devoted
substantially all of its efforts and resources to research and clinical
development of innovative systems for the intraoperative diagnosis and treatment
of cancers. The RIGS system integrates radiolabeled targeting agents and a
radiation-detection instrument. The Company is developing both the radiolabeled
targeting agents and radiation-detection instrument components of the RIGS
technology. Before commercial revenue can be generated, the Company must
complete clinical testing and obtain regulatory approval to market its products.
The Company has completed testing in a pivotal Phase III clinical trial for the
detection of metastatic colorectal cancer in both the U.S. and Europe. In
addition, the Company has completed testing in a separate Phase III clinical
trial for primary colorectal cancer in the U.S. Neoprobe is preparing to submit
a dossier (i.e. marketing application) to the European regulatory agencies and a
Biologic License Application ("BLA") to the FDA for its RIGS product for the
detection of metastatic colorectal cancer. In addition, the Company is studying
the safety and efficacy of RIGS products for detecting breast, ovarian, and
neuroendocrine cancers, and the safety and efficacy of certain cancer therapy
products (RIGS/ACT) for colorectal cancers. There can be no assurance that the
Company's RIGS products will be approved for marketing by the FDA or any foreign
government agency, or that any such products will be successfully introduced or
achieve market acceptance.
For the period from inception to March 31, 1996, the Company has incurred
cumulative net losses of approximately $46.7 million. The Company does not
currently have a RIGS product approved for commercial sale, and does not
anticipate commercial sales of sufficient volume to generate positive cash flow
until 1998, at the earliest. The Company has incurred, and will continue to
incur, substantial expenditures for research and development activities related
to bringing its products to the commercial market. The Company intends to devote
significant additional funds to clinical testing, manufacturing validation, and
other activities required for regulatory review of RIGS products. The amount
required to complete such testing will depend upon the outcome of regulatory
reviews. The regulatory bodies may require more testing than is currently
planned by the Company. There can be no assurance that the Company's RIGS
products will be approved for marketing by the FDA or any foreign government
agency, or that any such products will be successfully introduced or achieve
market acceptance.
As of March 31, 1996, the Company had cash, cash equivalents, and
available-for-sale securities of approximately $14.9 million. In April, 1996,
the Company completed the sale of 1,750,000 shares of Common Stock at a price of
$18.50 per share in a secondary offering. Gross proceeds from this offering were
$32,375,000 and proceeds net of underwriting discounts were $30,502,500.
The Company has completed testing in a pivotal Phase III clinical trial for the
detection of metastatic colorectal cancer in both the U.S. and Europe. In
addition, the Company has completed testing in a separate Phase III clinical
trial for primary colorectal cancer in the U.S. Neoprobe is preparing to submit
a dossier to the European regulatory agencies and a BLA to the FDA for its RIGS
product for the detection of metastatic colorectal cancer. In 1996, regulatory
activities related to the RIGScan CR49 product continued to increase as the
Company moved closer to submitting an application to begin marketing a
colorectal product in Europe and the United States. Consolidated research and
development expenses during the first quarter of 1996 were approximately $2.6
million, or 67 percent of total expenses for the year. Consolidated general and
administrative expenses were approximately $1.3 million, or 33 percent of total
expenses for the period.
-9-
<PAGE> 10
MonoCarb is a wholly-owned subsidiary of the Company, located in Lund, Sweden,
where it operates a biological manufacturing and purification facility. The
Company intends to use the production capability of MonoCarb to produce future
RIGScan products. MonoCarb purchased and installed vial filling equipment during
1995. This equipment will be used to prepare the CC49 monoclonal antibody
produced by Bio-Intermediair BV for final radiolabeling. The Company anticipates
that approximately $850,000 will be needed to cover operating expenses at
MonoCarb during 1996.
In 1994, the Company formed Neoprobe (Israel) Ltd. ("Neoprobe (Israel)") to
construct and operate a radiolabeling facility for the Company's targeting
agents. The Company owns 95 percent of Neoprobe (Israel), with Rotem Industries
Ltd., the private arm of the Israeli atomic energy authority ("Rotem") owning
the balance and managing the facility. In January 1995, the Company completed
negotiations with the Ministry of Finance and the Office of the Chief Scientist
in Israel to provide up to $2.5 million in the form of Israeli-government
guaranteed non-recourse loans and research grants to Neoprobe (Israel). On
August 10, 1995, the Company and Neoprobe (Israel) raised $1.1 million for
Neoprobe (Israel) through the issuance of convertible debentures. Costs
associated with construction of the facility and operations at Neoprobe (Israel)
during 1996 will be financed primarily with government grants and loans
guaranteed by the Israeli government, and by funds raised through the sale of
the convertible debentures.
During 1996, the Company expects to complete enrollment of patients in the Phase
III clinical study for primary colorectal cancer in Europe. The Company will
also continue to focus on validating its manufacturing processes for the
production of RIGS products and completing the compilation of the applications
for colorectal cancer for submission in the United States and in Europe.
Additionally, during 1996, the Company anticipates opening new clinical trials
for additional cancer types and developing an activated cell therapy application
of its RIGS technology (RIGS/ACT). The Company currently anticipates research
and development expenses and general and administrative expenses will increase
significantly during 1996. A significant portion of the increased general and
administrative expenses will be associated with marketing activities in
preparation for the commercial launch of the first RIGS product. The Company's
estimate of its allocation of cash resources is based on the current state of
its business operations and current business plan and current economic and
industry conditions, and is subject to revisions due to a variety of factors
including, without limitation, additional expenses related to regulatory
licensing and research and development, and to reallocation among categories and
to new categories. Neoprobe may need to supplement its funding sources from time
to time. The Company's expenses are subject to change due to a variety of
factors including, without limitation, compliance with United States and foreign
regulatory requirements.
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $39.2 million to offset future taxable income through 2010.
Additionally, the Company has tax credit carryforwards of approximately $1.6
million available to reduce future income tax liability through 2010. Under
Section 382 of the Internal Revenue Code of 1986, as amended, use of prior net
operating loss carryforwards is limited after an ownership change. As a result
of an ownership change which occurred in March 1989 and in September 1994, the
Company's net operating tax loss carryforwards and tax credit carryforwards are
subject to the limitations described by Section 382.
In November 1992 and December 1993, the Company issued a total of approximately
2.3 million Class E Redeemable Common Stock Purchase Warrants ("Class E
Warrants"). These warrants are exercisable over a three-year period beginning
November 10, 1993 and expire on November 12, 1996. The Class E Warrants entitle
the holder to purchase one share of Common Stock for $6.50 per share. To the
extent that theses warrants are exercised, the proceeds from the exercise of all
the Class E Warrants would be approximately $15 million. However, there can be
no assurance that these warrants will be exercised, due to a variety of factors,
including the possible volatility of the price of the Company's Common Stock.
-10-
<PAGE> 11
RESULTS OF OPERATIONS
From inception through 1993, the Company's revenue had been primarily from the
sale of radiation-detection instruments to clinical and collaborative sites and
interest earned on investments. MonoCarb generated sales of serology products of
approximately $850,000 and $803,000 during the years ended December 31, 1994 and
1995, respectively. All remaining sales during these periods were from the sale
of instruments. The Company does not anticipate having significant revenue from
the sale of its RIGS products for at least the next 24 months.
Three months ended March 31, 1995 and 1996. For the period ended March 31, 1995,
the Company had net sales of $273,023, consisting primarily of sales by MonoCarb
of blood serology products of approximately $225,000 and sales of
radiation-detection instruments of approximately $50,000. During this same
period in 1995, interest income and other income were $49,164 and $176,539
respectively. Interest income was from the investment of net proceeds from the
company's financing activities. Other income included the recovery of a $150,000
advance to a former underwriter and principal stockholder. For the period ended
March 31, 1996, the Company had net sales of $196,397, consisting primarily of
sales by MonoCarb of approximately $186,000. Interest income was $234,828 for
this period. There were no sales of radiation-detection instruments to
investigational sites nor under clinical trial agreements for either period.
Research and development expenses increased from $1,954,242 in 1995, to
$2,552,746 in 1996. These expenses reflect the activities associated with
conducting clinical trials, including patient enrollment, training, and
compliance with all regulatory concerns of the Food and Drug Administration
("FDA") and European regulatory authorities. Also included in these expenses are
other costs such as consulting services of experts, and product development
costs. The increase in research and development expenses from 1995 to 1996 is
primarily from an increase in contracted services and regulatory expenses
associated with preparation of the marketing applications for the US and Europe.
The Company expects these expenses to continue to increase during the second and
third quarters of 1996.
General and administrative expenses increased from $914,797 in 1995, to
$1,272,9712 in 1996. These expenses reflect the activities associated with
business development and corporate administration. The increase in general and
administrative expenses from 1995 to 1996 is primarily from wages and benefits,
contracted services, and other expenses. Wages and benefits increased as a
result of additional staff added during the first quarter. Contracted services
increased as a result of costs associated with the production of the Company's
annual report. The increase in other expenses primarily consists of increases in
recruiting, travel, and taxes.
-11-
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITY
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) LIST OF EXHIBITS AND FINANCIAL STATEMENTS INCORPORATED BY
REFERENCE
(4) INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS, INCLUDING
INDENTURES
4.1. See Articles FOUR, FIVE, SIX and SEVEN of the Restated
Certificate of Incorporation of the Registrant (incorporated
by reference to Exhibit 99.2 to the Registrant's Current
Report on Form 8-K, as amended, for July 18, 1995;
Commission File No. 0-20676).
4.2. See Articles II and VI and Section 2 of Article III and
Section 4 of Article VII of the Amended and Restated By-Laws
of the Registrant (incorporated by reference to Exhibit 99.4
to the Registrant's Current Report on Form 8-K for July 18,
1995; Commission File No. 0-20676).
4.3. Specimen of Class E Redeemable Common Stock Purchase Warrant
certificate (incorporated by reference to Exhibit 4.9 to the
registration statement on Form S-1, No. 33-51446).
4.4. Warrant Agreement dated November 10, 1992 between Registrant
and Continental Stock Transfer & Trust Company (incorporated
by reference to Exhibit 4.4 to the Registrant's Annual
Report on Form 10-KSB for the fiscal year ended December 31,
1992; Commission File No. 0- 20676 (the "1992 Form
10-KSB")).
4.5. Supplemental Warrant Agreement dated November 12, 1993
between the Registrant and Continental Stock Transfer &
Trust Company (incorporated by reference to Exhibit 4.5 of
registration statement on Form S-3, No. 33-72658).
4.6. Rights Agreement dated as of July 18, 1995 between the
Registrant and Continental Stock Transfer & Trust Company
(incorporated by reference to Exhibit 1 of the registration
statement on Form 8-A; Commission File No. 0-20676).
(10) MATERIAL CONTRACTS.
10.1.1. - 10.1.21. Reserved.
-12-
<PAGE> 13
10.2.1. - 10.3.32. Reserved.
10.3.33. Investment Agreement dated January 31, 1996 between the
Registrant and XTL Biopharmaceuticals, Ltd. ("XTL")
10.3.34. $1,500,000 5% Convertible Subordinated Debenture Due
February 13, 1998 of XTL issued to registrant on
February 13, 1996
10.3.35. Investors' Rights Agreement dated February 5, 1996
between registrant and XTL
10.3.36. Warrant to purchase Class A Common Shares of XTL issued
to registrant on February 13, 1996
10.3.37. Research and Development Agreement dated February 13, 1996
between registrant and XTL (filed pursuant to Rule 24b-2
under which the registrant has requested confidential
treatment of certain portions of this exhibit).
10.3.38. Sublicense Agreement dated February 13, 1996 between
registrant and XTL (filed pursuant to Rule 24b-2 under
which the registrant has requested confidential treatment
of certain portions of this exhibit).
10.3.39. Limited Liability Company Agreement dated February 22, 1996
between Registrant and Peptor Corp.
10.3.40 Subscription and Option Agreement dated March 14, 1996
between registrant and Cira Technologies Inc.
10.3.41. Amendment to License Agreement and Development Agreement
dated March 28, 1996 between Registrant and Enzon, Inc.
(incorporated by reference to Exhibit 4.11 of Post-Effective
Amendment No. 2 to registration statement on Form S-3,
No. 33-86000).
(11) STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS.
11.1. Computation of Net Loss Per Share.
(27) FINANCIAL DATA SCHEDULE.
27.1. Financial Data Schedule.
(B) REPORTS ON FORM 8-K.
A current report on Form 8-K dated March 22, 1996 was filed by the
Registrant reporting under Item 5 (Other Events) a press release issued by the
Registrant relating to initial results of multicenter trials presented at the
Society of Surgical Oncology Symposium.
-13-
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEOPROBE CORPORATION
(Registrant)
By: /s/ David C. Bupp
-------------------------------------
President and Chief Operating Officer
Dated: May 13, 1996
By: /s/ John Schroepfer
-------------------------------------
John Schroepfer, Vice President
Finance & Administration
(Principal Financial and Accounting
Officer)
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<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE IN MANUALLY
NUMBER DESCRIPTION SIGNED ORIGINAL
<S> <C> <C>
4.1. See Articles FOUR, FIVE, SIX and SEVEN of the Restated
Certificate of Incorporation of the Registrant (incorporated *
by reference to Exhibit 99.2 to the Registrant's Current
Report on Form 8-K, as amended, for July 18, 1995;
Commission File No. 0-20676).
4.2. See Articles II and VI and Section 2 of Article III and
Section 4 of Article VII of the Amended and Restated By-Laws
of the Registrant (incorporated by reference to Exhibit 99.4 *
to the Registrant's Current Report on Form 8-K for July 18,
1995; Commission File No. 0-20676).
4.3. Specimen of Class E Redeemable Common Stock Purchase Warrant
certificate (incorporated by reference to Exhibit 4.9 to the *
registration statement on Form S-1, No. 33-51446).
4.4. Warrant Agreement dated November 10, 1992 between Registrant
and Continental Stock Transfer & Trust Company (incorporated
by reference to Exhibit 4.4 to the Registrant's Annual *
Report on Form 10-KSB for the fiscal year ended December 31,
1992; Commission File No. 0- 20676 (the "1992 Form
10-KSB")).
4.5. Supplemental Warrant Agreement dated November 12, 1993
between the Registrant and Continental Stock Transfer &
Trust Company (incorporated by reference to Exhibit 4.5 of *
registration statement on Form S-3, No. 33-72658).
4.6. Rights Agreement dated as of July 18, 1995 between the
Registrant and Continental Stock Transfer & Trust Company
(incorporated by reference to Exhibit 1 of the registration *
statement on Form 8-A; Commission File No. 0-20676).
10.3.33. Investment Agreement dated January 31, 1996 between the
Registrant and XTL Biopharmaceuticals, Ltd. ("XTL") 16
10.3.34. $1,500,000 5% Convertible Subordinated Debenture Due
February 13, 1998 of XTL issued to registrant on 39
February 13, 1996
10.3.35. Investors' Rights Agreement dated February 5, 1996 52
between registrant and XTL
10.3.36. Warrant to purchase Class A Common Shares of XTL issued 71
to registrant on February 13, 1996
10.3.37. Research and Development Agreement dated February 13, 1996 82
between registrant and XTL (filed pursuant to Rule 24b-2
under which the registrant has requested confidential
treatment of certain portions of this exhibit).
10.3.38. Sublicense Agreement dated February 13, 1996 between registrant
and XTL (filed pursuant to Rule 24b-2 under which the registrant 96
has requested confidential treatment of certain portions of
this exhibit).
10.3.39. Limited Liability Company Agreement dated February 22, 1996 104
between Registrant and Peptor Corp.
10.3.40. Subscription and Option Agreement dated March 14, 1996 123
between registrant and Cira Technologies Inc.
10.3.41. Amendment to License Agreement and Development Agreement *
dated March 28, 1996 between Registrant and Enzon, Inc.
(incorporated by reference to Exhibit 4.11 of Post-Effective
Amendment No. 2 to registration statement on Form S-3,
No. 33-86000).
11.1. Computation of Net Loss Per Share 142
27.1. Financial Data Schedule (submitted electronically for
SEC information only).
</TABLE>
* Incorporated by reference
-15-
<PAGE> 1
Exhibit 10.3.33
INVESTMENT AGREEMENT
--------------
JANUARY 31, 1996
--------------
NEOPROBE CORPORATION, a Delaware corporation ("Neoprobe"), having its principal
place of business at 425 Metro Place North, Suite 400, Dublin, Ohio
43017-1367, telephone (614) 793-7500, facsimile (614) 793-7522, and
XTL BIOPHARMACEUTICALS, LTD., a public company organized under the laws of the
State of Israel ("XTL"), having its principal place of business at Kiryat
Weizmann Industrial Park, Rehovot, Israel, telephone 972-8-940-5134,
facsimile 972-8-940-5017
hereby agree as follows:
PREAMBLE:
1. XTL desires to issue to Neoprobe $1,500,000 of its 5% Convertible
Subordinated Debentures due February 5, 1998 in the form attached as Exhibit A
hereto (the "Debentures"), the Warrant (as hereinafter defined) and one Class E
Common Share of XTL (the "Class E Share").
2. The Debentures will be convertible under certain circumstances into
shares of Class A Common Shares of XTL (the "XTL Common Shares") in accordance
with the terms set forth in the Debentures. Neoprobe will be granted certain
registration rights with respect to such XTL Common Shares as set forth in the
Investor's Rights Agreement attached as Exhibit B hereto.
3. Neoprobe desires to issue to XTL in consideration for the issuance of
the Debentures, the Warrant and the Class E Share 125,000 shares of the common
stock, par value $.001 per share of Neoprobe (the "Neoprobe Common Shares").
4. Neoprobe will issue the Neoprobe Common Shares to XTL pursuant to an
exemption from registration provided by Rule 903 of Regulation S ("Regulation
S") promulgated under the Securities Act of 1933 (the "Securities Act") by the
United States Securities and Exchange Commission (the "Commission").
TERMS:
Article 1. Transaction.
Part 1.1. Issuance by XTL.
Section 1.1.1. Debentures. Subject to the terms and conditions of this
Agreement, Neoprobe hereby agrees to purchase, and XTL hereby agrees to issue
and sell, $1,500,000 of Debentures at the Closing (as defined below) free and
clear of all liens, encumbrances and adverse claims (other than the encumbrances
created by this Agreement).
Section 1.1.2. Purchase of Warrant. Subject to the terms and conditions
of this Agreement, Neoprobe hereby agrees to purchase, and XTL hereby agrees to
issue and sell, the Warrant to Neoprobe at the Closing free and clear of all
liens, encumbrances and adverse claims (other than encumbrances created by this
Agreement).
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<PAGE> 2
Section 1.1.3. Class E Share. Subject to the terms and conditions of
this Agreement, Neoprobe hereby agrees to purchase, and XTL hereby agrees to
issue and sell, one Class E Share at the Closing free and clear of all liens,
encumbrances and adverse claims (other than the encumbrances created by this
Agreement).
Part 1.2. Issuance by Neoprobe. Subject to the terms and conditions of this
Agreement, XTL hereby subscribes for and shall purchase 125,000 Neoprobe Common
Shares from Neoprobe at the Closing and Neoprobe shall issue and sell the
Neoprobe Common Shares to XTL at the Closing free and clear of all liens,
encumbrances and adverse claims (other than encumbrances created by this
Agreement).
Article 2. Closing.
Part 2.1. Closing. The Closing shall take place at 10:00 a.m., Eastern
Time, at the offices of Goldfarb, Levy, Eran & Co., on the Closing Date and all
of the events and transactions which occur thereat shall be deemed to be
simultaneous.
Part 2.2. Deliveries by XTL. At the Closing, XTL shall deliver to Neoprobe:
(i) Duly executed instruments representing the Debentures registered in
the name of Neoprobe;
(ii) The Warrant duly executed by XTL;
(iii) Duly executed certificate representing the Class E Share
registered in the name of Neoprobe;
(iv) A certificate of the principal executive and financial officers of
XTL, dated the Closing Date, certifying as to the satisfaction of the conditions
in Sections 5.1.1 and 5.1.2 hereof;
(v) A certificate, dated the Closing Date, of the Secretary of XTL
certifying (A) that complete and accurate copies of the resolutions of XTL's
board of directors and general meeting of shareholders, as appropriate, adopting
the XTL Recapitalization and approving the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
are attached thereto, (B) that such resolutions are in full force and effect and
have not been amended or repealed and (C) the names and titles of the officers
of XTL who have executed the documents, certificates and instruments delivered
at the Closing and their signatures;
(vi) An opinion of Goldfarb, Levy, Eran & Co., counsel to XTL, dated
the Closing Date, in the form attached hereto as Exhibit D;
(vii) A counterpart of this Agreement duly executed by XTL;
(viii) A counterpart of the Investor's Rights Agreement duly executed
by XTL; and
(ix) A counterpart of the Research Agreement in the form attached as
Exhibit E hereto (the "Research Agreement") duly executed by XTL.
Part 2.3. Deliveries by Neoprobe. At the Closing, Neoprobe shall deliver to
XTL:
(i) Duly executed certificates representing the Neoprobe Common Shares
registered in the name of XTL;
(ii) A certificate, dated the Closing Date, of the Secretary of
Neoprobe certifying (A) that complete and accurate copies of the resolutions of
Neoprobe's board of directors approving the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
are attached thereto, (B) that such resolutions are in full force and effect and
have not been amended or repealed and (C) the names and titles of the officers
of Neoprobe who have executed the documents, certificates and instruments
delivered at the Closing and their signatures;
(iii) An opinion of Schwartz, Warren & Ramirez, counsel to Neoprobe,
dated the Closing Date, in the form attached hereto as Exhibit F;
(iv) A counterpart of this Agreement duly executed by Neoprobe;
(v) A counterpart of the Investor's Rights Agreement duly executed by
Neoprobe; and
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<PAGE> 3
(vi) A counterpart of the Research Agreement duly executed by Neoprobe.
Article 3. Representations and Warranties.
Part 3.1. Representations and Warranties Concerning XTL. XTL hereby
represents and warrants to Neoprobe that:
Section 3.1.1. Disclosure Schedule, Deliveries.
(a) The Disclosure Schedule sets forth all of the information
concerning XTL and its subsidiaries required in this Part 3.1. To the extent any
statement in this Part 3.1 is untrue or omits to state a material fact necessary
to make such statement not misleading, the Disclosure Schedule sets forth the
statements necessary to make the statements in this Part 3.1 true and not
misleading. All information and statements set forth in the Disclosure Schedule
shall be deemed to supersede and correct the statements made in this Part 3.1
and to be additional representations and warranties of XTL. The Disclosure
Schedule sets forth all of the information and statements required in numbered
sections bearing the number of the Section of this Agreement calling for such
information and in the order of such numbers in this Agreement.
(b) XTL has delivered to Neoprobe complete and accurate copies of:
(i) any written contract or other document referred to in the Disclosure
Schedule, (ii) the articles of association of XTL, certified by its Secretary,
which are in full force and effect and have not been amended or repealed since
the date of such certificate, (iii) the resolutions of XTL's board of directors
and general meeting of shareholders, as appropriate, adopting the XTL
Recapitalization and approving the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, which
are certified by its Secretary and are in full force and effect and have not
been amended or repealed since the date of their adoption and (iv) the Financial
Statements.
(c) Neither the Disclosure Schedule nor any financial statement,
exhibit, certificate or other instrument or document referred to herein or
delivered by or on behalf of XTL in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact required to be stated or necessary to make the statements
herein or therein not misleading.
Section 3.1.2. Corporate Matters of XTL.
(a) XTL is a corporation duly organized and validly existing under
the laws of the State of Israel and has all requisite corporate power to own and
operate its properties, to carry on its business as currently conducted, to
execute, deliver and perform this Agreement, the Debentures and the Warrant and
consummate the transactions contemplated hereby and thereby. XTL is duly
qualified or authorized to do business as a foreign corporation in the
jurisdictions set forth on the Disclosure Schedule which are all of the
jurisdictions where it is required to be so qualified or authorized by law
unless the failure to be so qualified or authorized would not have a material
adverse effect on XTL.
(b) The Disclosure Schedule sets forth the authorized
capitalization of XTL, the number of issued and outstanding shares thereof and
the number of shares thereof held in treasury or reserved for issuance for any
purpose and the purpose for which such shares are reserved, all as of the date
hereof. The issued and outstanding XTL Common Shares, the Class E Share and
Preferred Shares are duly authorized, validly issued, fully paid and
non-assessable, with no personal liability attaching to the ownership thereof.
The XTL Common Shares, the Class D Common Shares, the Class E Share, and the
Preferred Shares are the only securities issued by XTL that confer any voting or
consensual rights upon the owners thereof.
(c) There are no options, warrants, subscriptions, preemptive,
conversion or other rights or contracts of any kind obligating XTL to issue or
sell any shares of XTL of any class or any securities convertible into or
exchangeable for any such shares other than this Agreement, the Debentures and
the Warrant. There are no contracts which provide for the merger, consolidation,
recapitalization or sale of a substantial part of the assets of XTL or any of
its subsidiaries other than this Agreement. XTL is not
-3-
<PAGE> 4
a party to nor does it know of any contract restricting the transfer of any XTL
Common Shares or other securities issued by XTL other than this Agreement. There
are no contracts requiring XTL to register any XTL Common Shares or other
securities issued by XTL under the securities laws other than this Agreement.
XTL is not a party to nor does it know of any proxy for the voting of any XTL
Common Shares which is not revocable at the option of the grantor thereof
without notice or penalty or any voting agreement, voting trust or other
contract relating to the voting of any XTL Common Shares other than this
Agreement. XTL has not issued any XTL Common Shares or other securities in
violation of the preemptive rights of its present or former shareholders or the
securities laws.
(d) The Disclosure Schedule sets forth the names and addresses of
the record and beneficial owners of the XTL Common Shares, the number of shares
owned by each of them and the nature of their ownership.
Section 3.1.3. Corporate Matters of the Subsidiaries.
(a) The Disclosure Schedule sets forth the name and jurisdiction
of incorporation of each of the subsidiaries of XTL and each jurisdiction where
each such subsidiary is qualified or authorized to do business as a foreign
corporation. Neither XTL nor any of its subsidiaries has any material investment
or interest in or holds any equity security issued by any person other than the
subsidiaries of XTL or is a partner of or joint venturer with any person.
(b) Each of the subsidiaries of XTL is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power to own
and operate its properties and to carry on its business as presently conducted
or proposed to be conducted. Each subsidiary of XTL is duly qualified or
authorized to do business as a foreign corporation in each jurisdiction where it
is required to be so qualified or authorized by law unless the failure to be so
qualified or authorized would not have a material adverse effect on such
subsidiary.
(c) The Disclosure Schedule sets forth the authorized
capitalization of each of the subsidiaries of XTL and the issued and outstanding
shares thereof and the record and beneficial ownership of such shares, which are
duly authorized, validly issued and outstanding, fully paid and non-assessable,
with no personal liability attaching to the ownership thereof. Such shares are
the only securities issued by such subsidiaries that confer any voting or
consensual rights upon the owners thereof.
(d) There are no options, warrants, subscriptions, preemptive,
conversion or other rights or contracts of any kind obligating any subsidiary of
XTL to issue or sell any shares of any subsidiary of any class or any securities
convertible into or exchangeable for any such shares. There are no contracts
restricting the transfer of or requiring the registration of any securities
issued by any of the subsidiaries of XTL. There are no voting agreements,
voting trusts or other contracts relating to the voting of any shares issued by
any of the subsidiaries of XTL. No subsidiary of XTL has issued any shares or
other securities in violation of the preemptive rights of its present or former
shareholders or the securities laws.
(e) XTL and its subsidiaries own the shares of the subsidiaries as
shown on the Disclosure Schedule free and clear of any encumbrances.
Section 3.1.4. Books and Records.
(a) XTL and its subsidiaries have made and kept books, records,
and accounts, which, in reasonable detail, accurately and fairly reflect their
transactions and dispositions of assets and those of their employee benefit
plans; and have devised and maintained a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions have been and
are executed in accordance with management's general or specific authorization;
(ii) transactions have been and are recorded as necessary (A) to permit
preparation of financial statements in conformity with GAAP, and (B) to maintain
accountability for assets; (iii) access to assets has been and is permitted only
in accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets has been and is compared with the existing
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<PAGE> 5
assets at reasonable intervals and appropriate action has been and is taken with
respect to any differences.
(b) The minute books of XTL and each of its subsidiaries contain
complete and accurate records of all meetings and consents of their respective
directors, committees and shareholders and accurately reflect all of the
corporate action taken by their respective directors, committees and
shareholders since their respective incorporation. The stock transfer books and
ledgers of XTL and each of its subsidiaries contain complete and accurate
records of all issuances and transfers of record of any XTL Common Shares and
any other securities issued by XTL or any of its subsidiaries.
Section 3.1.5. Financial Statements, Liabilities, Net Worth, Material
Adverse Changes.
(a) The Financial Statements present fairly the consolidated
financial position, results of operations, cash flows and changes in
shareholders' equity of XTL and its subsidiaries at the respective dates and for
the respective periods indicated therein in accordance with GAAP applied on a
consistent basis, subject, in the case of any such statement for a period of
less than a full fiscal year or as of a date other than a fiscal year end, to
normal year end adjustments which are not material in amount, individually or in
the aggregate. The assets and liabilities and items of income and expense on the
Financial Statements are bona fide and were not acquired, earned or incurred
pursuant to any contract or any other arrangement which was entered into,
amended or terminated in anticipation of any of the transactions contemplated by
this Agreement.
(b) Except to the extent reflected on or given effect to or
reserved against in the Financial Statements, neither XTL nor its subsidiaries
had any liabilities as of the date thereof, including, liabilities to guarantee
or assume any obligation of any third party except endorsements of items for
collection in the ordinary course of business.
(c) The shareholders' equity of XTL and its subsidiaries
determined as of the date hereof on the basis of GAAP applied on a consistent
basis is not less than $1,221,276.
(d) Since the Balance Sheet Date neither XTL nor any of its
subsidiaries has:
(i) paid or discharged any of its obligations or any liens
securing them other than those obligations that are due and payable in the
ordinary course of business pursuant to the contract that created them or any
law;
(ii) declared or paid any dividend, made any distributions to
its shareholders or purchased or redeemed any XTL Common Shares or other
securities issued by XTL or any of its subsidiaries;
(iii) waived, released, cancelled or compromised any account
or note receivable or other obligation to pay it money or any lien securing any
such receivable or obligation;
(iv) sold, encumbered (other than an immaterial encumbrance)
or otherwise transferred any of its assets or properties other than inventory
sold in the ordinary course of business and supplies consumed or abandoned in
the ordinary course of business;
(v) purchased or entered into a contract to purchase property
or assets other than inventory and supplies purchased in the ordinary course of
business;
(vi) incurred any obligations, other than trade obligations
entered into in the ordinary course of business and this Agreement;
(vii) defaulted on any contract or failed to pay any
obligation to any government for taxes or otherwise when the same was due and
payable;
(viii) issued or sold any XTL Common Shares or other
securities or entered into any option or other contract to issue or sell any XTL
Common Shares or other securities;
(ix) suffered any casualty loss or event which gave rise to
any claim for personal injury, property damage or errors and omissions (whether
or not covered by insurance);
-5-
<PAGE> 6
(x) entered into any contract that is not cancellable without
payment or advance notice with or for the benefit of or increased the
compensation payable or to become payable to any of its directors, officers or
employees or hired any employee or consultant at a rate of compensation
exceeding $60,000 per year;
(xi) adopted, amended, terminated or made any contribution to
(other than those which were regularly scheduled) any employee benefit plan;
(xii) made any loan to or entered into any other transaction
with any of its officers, directors, shareholders or their affiliates other than
current compensation payable for services rendered in the ordinary course of
business;
(xiii) entered into any transaction not in the ordinary course
of its business other than this Agreement;
(xiv) changed the nature of its business or any accounting
methods or principles; or
(xv) suffered any material adverse change in its properties,
business or financial condition.
(e) Since the end of the last fiscal year of XTL there have been
no terminations, cancellations or limitations of or modifications or change in
the business relationship of XTL or any of its subsidiaries with any customer or
group of customers who provided more than five percent of revenues during any
fiscal year reflected in the Financial Statements. Neither XTL nor any of its
subsidiaries has received any complaints from any of their customers alleging
defects in their products (or the design thereof) or deficiencies in their
services that, if true, would cause a material adverse change in their
businesses or properties.
Section 3.1.6. Taxes.
(a) XTL and each of its subsidiaries have (i) filed with the
appropriate governmental bodies or offices all tax returns that are required by
law, which returns were prepared in conformity with all applicable laws, (ii)
paid all taxes due and owing under any law or such tax returns or any
assessment, deficiency notice, 30-day letter, or other notice received by them,
(iii) made sufficient provision in the Financial Statements for all accrued but
unpaid taxes of XTL and its subsidiaries as of the dates thereof including those
items which (A) are disputed, (B) are the subject of an actual or proposed
assessment, or (C) are reasonably likely to be disallowed. No governmental body
or officer of any authority having jurisdiction over XTL or any of its
subsidiaries has audited or examined the tax returns of XTL or any of its
subsidiaries for any of their taxable years. No assessment, deficiency notice,
30-day letter, or similar notice has ever been issued to XTL or any of its
subsidiaries by any other governmental body or officer of any authority having
jurisdiction over XTL or any of its subsidiaries and XTL does not know of any
basis for the issuance to it or any of its subsidiaries of any such assessment
or notice. Neither XTL nor any of its subsidiaries has executed or filed with
any governmental body or officer of any authority having jurisdiction over XTL
or any of its subsidiaries any agreement extending the period for assessment or
collection of any income or other taxes. XTL and each of its subsidiaries have
withheld or collected from each payment made to any of their employees, the
amount of all taxes, including income taxes, social security taxes and
unemployment taxes required to be withheld or collected therefrom, and have paid
the same to the proper governmental bodies or officers or authorized
depositaries.
(b) Neither XTL nor its subsidiaries have filed any consolidated
income tax return with any "affiliated group" of corporations (as such term is
used in Section 1504 of the Code or any comparable provision of any other tax
code applicable to XTL or any of its subsidiaries), where the common parent of
such group was a corporation other than XTL, and neither XTL nor any of its
subsidiaries is, nor has been, a party to any contract relating to the
allocation of taxes pursuant to which XTL or any of its subsidiaries has any
liability to anyone other than XTL or any of its subsidiaries.
-6-
<PAGE> 7
Section 3.1.7. Properties.
(a) The Disclosure Schedule sets forth a list of the bank or
broker-dealer accounts in which XTL or its subsidiaries have deposited money or
securities showing the name of the persons holding such accounts, the type of
account and the balance therein as of a stated date not more than 10 days before
the date hereof. Such accounts are insured by the Federal Deposit Insurance
Corporation or the Securities Investor Protection Corporation. There are no
arrangements or contracts for compensating balances in, and there are no
encumbrances on such accounts or the money or securities therein other than
immaterial encumbrances. The Disclosure Schedule sets forth a list of the
securities that are owned, beneficially or of record, by XTL or any of its
subsidiaries (other than securities issued by XTL or its subsidiaries) that are
not held in such accounts. There are no encumbrances on such securities other
than immaterial encumbrances.
(b) The accounts and notes receivable reflected on the Financial
Statements as of the Balance Sheet Date or acquired thereafter by XTL arose in
the ordinary course of business from bona fide transactions and have been
collected in full or are current and will be collected in full (less any
reserves for doubtful accounts on the Balance Sheet) within the later of 180
days after the date a statement thereof is first delivered to the obligor
thereof or 30 days after the stated maturity of any note receivable having a
stated maturity date. None of such accounts or notes receivable reflects
work-in-progress or goods not yet delivered. Such accounts and notes receivable
are the enforceable obligations of the obligors thereof and are neither subject
to any offset or counter-claim by such obligors nor any encumbrance other than
immaterial encumbrances.
(c) As of the Balance Sheet Date and the date of this Agreement,
XTL has no inventory.
(d) The Disclosure Schedule sets forth a description of the
tangible personal property (other than inventory) owned or used by XTL or any of
its subsidiaries, by category, location and book value, whether it is owned or
leased, and the terms of any applicable lease. The tangible personal property
owned or leased by XTL or its subsidiaries is in good working condition and
suitable for its intended uses. There are no encumbrances, other than immaterial
encumbrances, on the tangible personal property owned by XTL or any of its
subsidiaries that are or should be described on the Disclosure Schedule or on
the leasehold interests in the tangible personal property leased by XTL or any
of its subsidiaries that are or should be described on the Disclosure Schedule.
Each lease of tangible personal property used by XTL or its subsidiaries is the
enforceable obligation of the parties thereto and neither XTL nor its
subsidiaries are in default of any such lease nor does XTL know of any default
by the lessor of such property.
(e) The Disclosure Schedule sets forth a list of all interests in
real property owned or used by XTL or any of its subsidiaries and the location,
book value and ownership thereof and a description of the structures and
improvements thereon. XTL or its subsidiaries have good and marketable title to
the interests in the real property described on the Disclosure Schedule free
and clear of encumbrances other than immaterial encumbrances. Each lease of real
property used by XTL or its subsidiaries is the enforceable obligation of the
parties thereto and neither XTL or its subsidiaries are in default of any such
lease nor does XTL know of any default by the lessor of such property. The
buildings and structures located on real property owned or used by XTL or its
subsidiaries are in good condition and suitable for the uses intended.
(f) The real and personal property which XTL or its subsidiaries
own or lease is all of the real and personal property necessary to operate their
businesses as they are currently conducted. All tangible personal property owned
or leased by XTL or its subsidiaries is located on property owned or leased by
XTL or its subsidiaries.
Section 3.1.8. Marks, Intellectual Property.
(a) The Disclosure Schedule sets forth a list of the marks and
intellectual property owned or used by XTL or any of its subsidiaries and a
description of any licenses thereof. The marks and intellectual property listed
on the Disclosure Schedule are all of the marks and intellectual property
necessary to operate the business of XTL and its
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<PAGE> 8
subsidiaries as they are currently conducted. XTL and its subsidiaries own their
interest in such marks and intellectual property free and clear of encumbrances
other than immaterial encumbrances and may use or transfer them without any
governmental permit or the consent or approval of any third party. To the
extent that the ownership of such intellectual property and marks by XTL or any
of its subsidiaries or the transfer thereof to XTL or any of its subsidiaries
may be recorded, registered or filed with any government, such ownership or
transfer has been so recorded, registered or filed and the Disclosure Schedule
sets forth a list of such recordings, registrations and filings. All licenses
of intellectual property by or to XTL or its subsidiaries are the enforceable
obligations of the parties thereto and neither XTL nor its subsidiaries are in
default thereof nor does XTL know of any default thereof by any other party to
such licenses.
(b) The present conduct by XTL and its subsidiaries of their
businesses does not infringe upon or conflict with the marks or intellectual
property of others. To XTL's knowledge, no material use of marks or
intellectual property owned by XTL or its subsidiaries has been or is being made
except pursuant to the licenses set forth on the Disclosure Schedule.
(c) All marks and intellectual property owned by XTL or its
subsidiaries are valid and enforceable. XTL has no knowledge of any claim or
reason to believe that any mark or intellectual property of which it or any of
its subsidiaries is the licensee is not the valid and enforceable property of
its purported owner and that the licensor is duly authorized to license such
mark or intellectual property.
(d) No intellectual property of XTL or any of its subsidiaries
that is a trade secret or confidential information has been disclosed to any
person under circumstances that would result in the loss of its secret or
confidential status. XTL and each of its subsidiaries have taken all reasonable
precautions to ensure that their trade secrets and confidential information
remain secret or confidential. Each employee of XTL or any of its subsidiaries
and any other person who has access to such trade secrets or confidential
information has executed a written contract to maintain the secret or
confidential status thereof, which is his enforceable obligation.
(d) None of the XTL intellectual property rights contemplated by
the Research Agreement were developed or obtained with financial support by the
Government of the State of Israel through the Office of the Chief Scientist.
Section 3.1.9. Insurance. The Disclosure Schedule sets forth a list of
all insurance policies maintained by XTL or any of its subsidiaries on their
properties or businesses or against liabilities showing the type of insurance,
the insurer, policy number, amounts or limits of coverage, premium and policy
terms. XTL and each of its subsidiaries have maintained and continue to
maintain insurance with respect to their properties and businesses against loss,
damage or liability of the kinds and in the amounts required by law or
customarily insured against by prudent business persons engaged in similar
businesses and similarly situated. All insurance policies maintained by XTL and
its subsidiaries are in full force and effect, all premiums due thereon have
been paid and XTL and its subsidiaries have complied with the provisions of such
policies. There are no notices of any pending or threatened terminations or
material premium increases with respect to any of such insurance policies.
Neither XTL nor any of its subsidiaries has at any time since the beginning of
the fifth full previous fiscal year of XTL had any insurance policy cancelled or
application for insurance denied. There are no outstanding requirements or
recommendations made by or on behalf of any insurance company that issued a
policy with respect to any of the properties, operations or liabilities of XTL
or any of its subsidiaries requiring or recommending any equipment or facilities
to be installed on or in connection with any of the proper ties, operations or
liabilities of XTL and its subsidiaries. The Disclosure Schedule sets forth a
list of all claims made under any insurance policy maintained by XTL or any of
its subsidiaries since the beginning of the fifth full previous fiscal year of
XTL. XTL and each of its subsidiaries have timely notified their insurers of any
matter as to which a claim could be made during such time period and no insurer
has denied any claim or disclaimed any coverage.
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Section 3.1.10. Litigation. No litigation involving XTL, any of its
subsidiaries, any of their officers, directors or employees based upon their
actions or omissions as officers, directors or employees of XTL or any of its
subsidiaries or any of their employee benefit plans was or is completed,
pending, overtly threatened or planned by XTL or any of its subsidiaries at any
time since the beginning of the fifth full previous fiscal year of XTL; nor does
XTL know of any basis for any such litigation. Neither XTL nor any of its
subsidiaries nor any of their officers, directors or employees (in their
capacity as officers, directors or employees) nor any of their employee benefit
plans are subject to any order of a tribunal. Neither XTL nor any of its
subsidiaries nor any of their officers, directors or employees (in their
capacity as officers, directors or employees) nor any of their employee benefit
plans have waived any statute of limitations or other affirmative defense with
respect to any pending, threatened or potential litigation.
Section 3.1.11. Employee Matters, Employee Benefit Plans.
(a) All of the employees of XTL are covered by severance pay and
disability insurance as required by the laws of the State of Israel. All
outstanding obligations of XTL relating to such insurance have been paid.
(b) The Disclosure Schedule sets forth a list of all contracts of
XTL or any of its subsidiaries relating to employment, consulting, severance,
compensation or collective bargaining and a description of the terms thereof.
Such list need not include (a) contracts involving total payments by or to XTL
or any of its subsidiaries of less than $60,000 or (b) contracts which are
terminable by XTL or any of its subsidiaries without liability to any of them
upon a notice of 91 days or less. Such contracts are the enforceable obligations
of the parties thereto and neither XTL nor any of its subsidiaries is in default
thereof nor does XTL know of any default thereof by any other person.
(c) The Disclosure Schedule sets forth a list showing the name,
title, duties and compensation of each employee, officer, director or consultant
of XTL or any of its subsidiaries whose annual rate of compensation exceeds
$60,000 or who received more than $60,000 in compensation during the last fiscal
year of XTL. None of such persons has terminated or overtly threatened to
terminate his employment since the beginning of the last fiscal year of XTL. The
Disclosure Schedule sets forth a list of automobiles, airplanes, real estate,
club memberships and other perquisites provided to such persons or their
affiliates and the names of the persons to whom they are provided. Neither XTL
nor any of its subsidiaries has any liability for payment of wages, vacation pay
(whether accrued or otherwise), salaries, bonuses, reimbursable employee
business expenses, pensions, contributions under any employee benefit plans or
any other compensation, current or deferred, under any labor or employment
contracts, based upon or accruing with respect to those services of their
employees performed before the date hereof except for any payment due for the
current payroll or contribution period.
(d) XTL and each of its subsidiaries are in compliance with all
laws respecting employment and employment practices, occupational safety and
health, terms and conditions of employment, and wages and hours and have not
engaged in any unfair labor practice. There is not now nor has there been since
the beginning of the fifth full previous fiscal year of XTL any labor strike,
threat of labor strike, organizational attempt, boycott, or informational or
direct picketing or leafletting with regard to labor matters directed against
XTL or any of its subsidiaries. No union representation question exists
respecting the employees of XTL or any of its subsidiaries.
(e) The Disclosure Schedule sets forth the ratings of XTL and each
of its subsidiaries, all claims against XTL or any of its subsidiaries and all
claims against XTL or any of its subsidiaries that alleged a violation of
specific safety requirements under any workers' compensation law since the
beginning of the fifth full previous fiscal year of XTL.
Section 3.1.12. Contracts.
(a) The Disclosure Schedule sets forth a list of the contracts of
XTL or any of its subsidiaries and a description of the terms thereof with the
termination date and conditions of assignment. Such
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list includes any contract which by its terms (i) restricts XTL or any of its
subsidiaries from doing any kind of business or from doing business in any place
or from competing with any person; (ii) creates a lien or encumbrance other than
an immaterial encumbrance on any of the properties or assets of XTL or any of
its subsidiaries; (iii) guarantees, indemnifies or otherwise makes XTL or any of
its subsidiaries liable for the obligations of any third party, including
contracts to take or pay or to maintain working capital; (iv) allows or requires
XTL or its subsidiaries to borrow money, sell receivables, issue securities or
defer any part of the purchase price of property; (v) grants any power of
attorney; (vi) provides for the transfer of assets or property to or from XTL or
its subsidiaries; (vii) relates to any interest rate or currency swap, futures
contract or put or call option on financial instruments, cash, commodities or
repurchases or reverse repurchases of financial instruments; or (viii) provides
for the payment of any brokerage, finder's fee, investment advisory fee or other
consideration to any broker, finder or investment banker or adviser. Such list
need not include (a) contracts involving total payments by or to XTL or any of
its subsidiaries of less than $30,000, (b) contracts which are terminable by XTL
or any of its subsidiaries without liability to any of them upon a notice of 91
days or less or (c) any contract listed in another section of the Disclosure
Schedule.
(b) The contracts listed on the Disclosure Schedule or which
should be listed thereon are enforceable obligations of the parties thereto,
neither XTL nor any of its subsidiaries is in default thereof, XTL does not know
of any default thereof by any other party to such contract, the interest of XTL
or its subsidiaries in such contracts is not subject to any encumbrance other
than an immaterial encumbrance, and such contracts are all of the contracts that
are necessary for XTL and its subsidiaries to operate their businesses. No
contract of XTL or any of its subsidiaries has a material adverse effect on
their businesses or properties.
Section 3.1.13. Regulation, Compliance With Laws.
(a) The Disclosure Schedule lists all of the governmental permits
held by XTL, any of its subsidiaries or any of their employees which are all of
the governmental permits that XTL, its subsidiaries or their employees need so
that XTL and its subsidiaries may own their assets or properties and carry on
their businesses as currently conducted, or proposed to be conducted, without
violating any law.
(b) The corporate proceedings, securities, operations, business,
management, properties, assets, contracts and financial affairs of XTL and its
subsidiaries have complied and presently are in compliance with all laws and
orders of a tribunal applicable to XTL or any of its subsidiaries and all
governmental permits held by any of them.
(c) Neither XTL nor any of its subsidiaries nor any of their
employees have received notice, nor do any of them have reason to believe, that
any governmental body or officer intends to cancel or terminate any governmental
permit or that valid grounds for such cancellation or termination currently
exist. Neither XTL nor any of its subsidiaries nor any of their employees are
subject to any order of a tribunal relating to any activities of any type in
connection with the business now engaged in by any of them, or had its or his
governmental permit to conduct, participate or be involved in any business
denied, revoked, restricted or suspended or been involved in any litigation to
deny, revoke, restrict or suspend any such governmental permit or to issue an
order of a tribunal relating to activities connected with such businesses.
(d) As used in this Section 3.1.13. the term "hazardous materials"
means any substances identified as "hazardous substances" or "hazardous waste"
or as requiring special handling in their collection, storage, treatment or
disposal, under any law relating to the environment, and includes refined
petroleum products, asbestos and polychlorinated biphenyls; and the term
"release of hazardous materials" means any spilling, leaking, pumping,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
discarding, burying, abandoning or disposing of any hazardous materials into the
environment by any person. The operations and properties of XTL comply with all
laws, orders of a tribunal and governmental permits relating to the environment
and neither XTL nor any of its subsidiaries is required to make any expenditure
or take any
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action to maintain such compliance that would have a material adverse effect on
any of them. Neither XTL nor any of its subsidiaries has released any hazardous
materials in quantities that must be reported to any governmental body or
officer nor does XTL know of any such release by any third parties on any
property owned or leased by XTL or any of its subsidiaries. There are no
above-ground storage tanks containing hazardous materials upon any property
owned or leased by XTL, and XTL does not know of any underground storage tanks
on such property.
Section 3.1.14. Certain Interests. No director or officer of XTL or any
of its subsidiaries, no person who owns beneficially or of record 5% or more of
the XTL Common Shares, and no affiliate of any of the foregoing, directly or
indirectly, (i) owns any interest in any assets or properties owned or used by
XTL or any of its subsidiaries; (ii) owns any interest in, controls, or is an
employee, officer, director, or agent of, or consultant to any other person
which is a competitor, supplier, customer, lessor, or lessee of XTL or any of
its subsidiaries; (iii) is indebted or liable to XTL or any of its subsidiaries;
(iv) owns any interest in XTL or any of its subsidiaries other than XTL Common
Shares, or (v) owns, holds, or has guaranteed any obligation or debt of XTL or
any of its subsidiaries. No director, officer, employee, consultant, accountant
or attorney of XTL or any of its subsidiaries is a relative, spouse or relative
of the spouse of any director or officer of XTL or any of its subsidiaries or
any beneficial or record owner of 5% or more of the XTL Common Shares.
Section 3.1.15. Due Authorization, Execution, Binding Effect, No
Conflicts or Consents.
(a) The execution, delivery and performance of this Agreement, the
Debentures, the Warrant and the Class E Share by XTL and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate proceedings of XTL.
(b) This Agreement has been duly executed and delivered by XTL and
is, together with the documents and agreements contemplated hereby, an
enforceable obligation of XTL.
(c) The execution, delivery and performance of this Agreement by
XTL and the consummation of the transactions contemplated hereby will not (i)
violate any law or order of a tribunal applicable to XTL or any of its
subsidiaries or any governmental permit held by any of them or provide the basis
for the revocation or nonrenewal of any such governmental permit; (ii) result in
a default under (A) any contract which is or should be listed on the Disclosure
Schedule, (B) any security issued by XTL or any of its subsidiaries or (C) the
certificates or articles of incorporation of XTL or any of its subsidiaries or
their regulations or bylaws; (iii) require any governmental permit or the
consent or approval of any other person; or (iv) require any severance or other
payment to any employee of XTL or its subsidiaries or any other person.
(d) The Warrant has been duly authorized and, when issued and paid for
in accordance with this Agreement, will be the enforceable obligation of XTL,
and will be free and clear of all liens, encumbrances and adverse claims other
than restrictions on transfer under this Agreement, applicable state and federal
securities laws or otherwise imposed by or through Neoprobe. The XTL Common
Shares issuable upon conversion of the Debenture purchased under this Agreement
or upon exercise of the Warrant have been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Debenture or the Warrant,
will be duly and validly issued, fully paid, and nonassessable and will be free
and clear of all liens, encumbrances and adverse claims other than restrictions
on transfer under this Agreement, applicable state and federal securities laws
or otherwise imposed by or through Neoprobe. The Class E Share has been duly and
validly issued, fully paid, and nonassessable and is free and clear of all
liens, encumbrances and adverse claims other than restrictions on transfer under
this Agreement or the XTL articles of association, applicable state and federal
securities laws or otherwise imposed by or through Neoprobe.
(e) Subject in part to the truth and accuracy of Neoprobe's
representations set forth in Part 3.3 of this Agreement, the offer, sale and
issuance of the Debenture, the Warrant and the Class E Share as contemplated by
this Agreement are exempt
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from the registration requirements of the Securities Act of 1933, and neither
XTL nor any person acting on its behalf will take any action hereafter that
would cause the loss of such exemption.
Part 3.2. Representations and Warranties of XTL Concerning Regulation S.
XTL represents and warrants to Neoprobe as follows:
Section 3.2.1. Exempt Offering. XTL understands that the Neoprobe
Common Shares have not been registered under the Securities Act on the ground
that the sale provided for in this Agreement and the issuance of Neoprobe Common
Shares hereunder is exempt from registration under the Securities Act pursuant
to Rule 903 of Regulation S promulgated thereunder, that Neoprobe's reliance on
such exemption is predicated on XTL's representations set forth herein and that
in order to obtain such exemption, the transfer of such Neoprobe Common Shares
is restricted by Section 3.2.2 of this Agreement.
Section 3.2.2. Transfer Restrictions. XTL will not offer for sale, sell
or otherwise transfer any Neoprobe Common Shares unless such shares have been
registered under the Securities Act or such offer, sale or transfer are exempt
from such registration. XTL will not transfer any Neoprobe Common Shares into
the United States, or to or for the account or benefit of a United States Person
(as such term is defined in Regulation S) for a period of 40 days after the
Closing Date unless such transfer is pursuant to a registration statement under
the Securities Act. XTL has not, directly or indirectly, established a short
position in Neoprobe Common Shares either through sales of Neoprobe Common
Shares borrowed from others or by means of transactions in calls, puts, options,
warrants or other rights to purchase or sell Neoprobe Common Shares. XTL will
not establish such a position in Neoprobe Common Shares before 40 days from the
Closing Date except to the extent it owns Neoprobe Common Shares which are
registered for resale under the Securities Act or which may be sold in the
United States without such registration and without compliance with Rule 144.
Section 3.2.3. Investment Intent. XTL is purchasing the Neoprobe Common
Shares for XTL's own account and not for other persons and for investment and
not with a view to the distribution of any of the Neoprobe Common Shares.
Section 3.2.4. Information. XTL has received copies of Neoprobe's
Annual Report on form 10-KSB for its fiscal year ended December 31, 1994, its
Prospectus dated May 25, 1995 as filed with the Commission, and its quarterly
report on Form 10-QSB for the quarter ended September 30, 1995 (collectively
referred to as the "Disclosure Documents"). Neoprobe has delivered no other
material, nor made any oral or written representations to XTL regarding Neoprobe
or its prospects other than those representations contained in the Disclosure
Documents or in this Agreement. XTL has had an opportunity to ask questions and
receive answers from Neoprobe regarding the terms and conditions of this
Agreement and the business, properties, financial condition and prospects of
Neoprobe and to obtain additional information (to the extent Neoprobe possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to XTL in the
Disclosure Documents or otherwise.
Section 3.2.5. Non-U.S. Person.
(a) XTL is a non-U.S. Person (as defined in Regulation S) and is
not purchasing the Neoprobe Common Shares for the account or benefit of a U.S.
Person.
Section 3.2.6. Investor Sophistication; Suitability. XTL has such
knowledge and experience in financial and business matters that XTL is capable
of evaluating the merits and risks of investment in the Neoprobe Common Shares.
XTL has determined that the Neoprobe Common Shares are a suitable investment for
XTL and that XTL could bear the complete loss of XTL's investment in the
Neoprobe Common Shares.
Section 3.2.7. Indemnification. XTL shall indemnify Neoprobe, each of
its directors and officers, each legal counsel and independent accountant of
Neoprobe and each person who controls Neoprobe (within the meaning of the
Securities Act), against any and all claims, losses and liabilities (and actions
and proceedings in respect thereof) arising out of or
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related to any breach of any warranty or agreement made by XTL in this Section
3.2 or any misrepresentation of XTL contained herein and will reimburse
Neoprobe, such directors, officers, persons or control persons for any legal or
any other expense reasonably incurred in connection with investigating or
defending any such claim, loss, liability, action or proceeding; provided
however that XTL's liability for indemnification pursuant to this Section 3.2.7
shall not exceed the market value (as of the date of this Agreement) of the
Neoprobe Common Shares issued to XTL pursuant to Part 1.2.
Part 3.3. Representations and Warranties of Neoprobe. Neoprobe represents
and warrants to XTL as follows:
Section 3.3.1. Due Authorization, Execution, Binding Effect, No
Conflicts or Consents.
(a) The execution, delivery and performance of this Agreement by
Neoprobe and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate proceedings of Neoprobe.
(b) This Agreement has been duly executed and delivered by
Neoprobe and is, together with the documents and agreements contemplated hereby,
an enforceable obligation of Neoprobe.
(c) The execution, delivery and performance of this Agreement by
Neoprobe and the consummation of the transactions contemplated hereby will not
(i) violate any law or order of a tribunal applicable to Neoprobe or any of its
subsidiaries or any governmental permit held by any of them or provide the basis
for the revocation or nonrenewal of any such governmental permit; (ii)
result in a default under (A) any material contract to which Neoprobe is a
party, (B) any security issued by Neoprobe or any of its subsidiaries or (C) the
certificates or articles of incorporation of Neoprobe or any of its subsidiaries
or their regulations or bylaws; or (iii) require any governmental permit or the
consent or approval of any other person.
Section 3.3.2. Corporate Matters of Neoprobe.
(a) Neoprobe is a corporation duly organized and validly existing
under the laws of the State of Delaware and has all requisite corporate power to
own and operate its properties, to carry on its business as currently conducted,
to execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby.
(b) The Neoprobe Common Shares to be issued to XTL pursuant to
Section 1.2 have been duly authorized and, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
Section 3.3.3. Registration Not Required. Subject to the truth and
accuracy of the representations of XTL set forth in Part 3.2 of this Agreement,
the offer, sale and issuance of the Neoprobe Common Shares to XTL as
contemplated by this Agreement are exempt from the registration and prospectus
delivery requirements of Section 5 of the Securities Act. The issuance and sale
of the Neoprobe Common Shares to XTL pursuant to this Agreement are exempt from
the registration requirements of the Ohio Securities Act, O.R.C.
Chapter 1707.
Section 3.3.4. Purchase Entirely for Own Account. The Debentures to be
purchased by Neoprobe, the Warrant, the Class E Share and the XTL Common Shares
issuable upon conversion of the Debentures or upon exercise of the Warrant will
be acquired for investment and not with a view to the sale or distribution of
any part thereof, and Neoprobe has no present intention of selling or otherwise
distributing the same.
Section 3.3.5. Reliance Upon Neoprobe's Representations. Neoprobe
understands that the Debentures, the Warrant and the Class E Share are not, and
any XTL Common Shares acquired on conversion thereof or upon exercise of the
Warrant at the time of issuance may not, be registered under the Securities Act
on the ground that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2)
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thereof, and that XTL's reliance on such exemption is predicated on Neoprobe's
representations set forth herein.
Section 3.3.6. Receipt of Information. Neoprobe has had an opportunity
to ask questions and receive answers from XTL regarding the terms and conditions
of the offering of the Debentures and the Warrant and the business, properties,
prospects, and financial condition of XTL and to obtain additional information
(to the extent XTL possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to it or to which it had access. The foregoing, however,
does not limit or modify the representations and warranties of XTL in Part 3.1
or Part 3.2 of this Agreement or the right of Neoprobe to rely thereon.
Section 3.3.7. Investment Experience. Neoprobe has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment in the Debentures, the Warrant and the
XTL Common Shares.
Section 3.3.8. Accredited Investor. Neoprobe is an Accredited Investor
as such term is defined in Rule 501 of Regulation D of the Commission.
Article 4. Covenants.
Part 4.1. Covenants of XTL.
Section 4.1.1. Conduct of Business Until Closing Date. Except as
Neoprobe may otherwise consent in writing, before the Closing Date, XTL will and
will cause each of its subsidiaries to:
(a) operate their businesses in the usual, regular, and ordinary
manner;
(b) maintain (i) all of the properties necessary for the conduct
of their businesses in good condition and repair, normal wear and tear and
damage due to fire or other unavoidable casualty excepted; (ii) their books,
records, and accounts in the usual, regular, and ordinary manner on a basis
consistent with prior years; (iii) insurance in full force and effect with
responsible companies, comparable in amount, scope, and coverage to that in
effect on the date of this Agreement; and (iv) their corporate existence,
rights, privileges and franchises; and
(c) (i) duly comply with all laws applicable to them and the
conduct of their businesses; (ii) prepare and file when due all tax returns and
pay when due all taxes shown thereon as being then due and owing or which are
assessed against them; and (iii) perform all of their contracts without default.
Section 4.1.2. Negative Covenants. Except as expressly contemplated by
this Agreement or as Neoprobe may otherwise consent in writing, before the
Closing Date, XTL will not and will not permit any of its subsidiaries to:
(a) (i) amend any of their certificates or articles of
incorporation, regulations, or bylaws; (ii) merge with, consolidate with, or
acquire all or substantially all of the stock or assets of any person; (iii)
engage in any recapitalization; (iv) transfer, sell, or otherwise convey any
significant part of their properties or assets; (v) dissolve; or (vi) discuss,
negotiate, or assent to any such transactions;
(b) except as otherwise contemplated by this Agreement (i) change
the number of XTL Common Shares or other securities issued and outstanding; (ii)
issue or sell any XTL Common Shares or other securities; (iii) grant or sell any
option, warrant, other right or contract to purchase, or right to convert any
obligation into XTL Common Shares, Debentures or other securities.
Section 4.1.3. No Solicitation. Before the Closing Date, XTL will
neither solicit nor enter into any contract or understanding with, nor furnish
any non-public information concerning XTL or any of its subsidiaries to, any
person other than Neoprobe with respect to the Debentures or any similar
security.
Section 4.1.4. Advice of Changes, Monthly Financials.
(a) Between the date of this Agreement and the Closing Date, XTL
will promptly advise Neoprobe in writing of any material adverse change in the
business or properties of XTL or any of its
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subsidiaries or of any fact which, if existing or known on the date of this
Agreement, would have been required to be set forth in the Disclosure Schedule.
(b) Between the date of this Agreement and the Closing Date, XTL
shall prepare and deliver to Neoprobe by the twentieth day following the end of
each month an unaudited consolidated balance sheet of XTL and its subsidiaries
as of the end of such month and the related consolidated unaudited statements of
operations and cash flows of XTL and its subsidiaries for such month on the
basis of GAAP used by XTL and its subsidiaries and applied consistently with
the Financial Statements. Such statements shall present fairly the consolidated
financial condition of XTL and its subsidiaries and the results of its
operations at the dates and for the periods indicated subject to normal year
end adjustments.
(c) No report, statement, document or information delivered to
Neoprobe or any governmental body or officer or other person by XTL or its
affiliates pursuant to this Agreement or to obtain the consent or approval of
such governmental body or officer or other person to the transactions
contemplated by this Agreement shall contain any untrue statement of a material
fact or omit to state a material fact required to be stated or necessary to make
the statements therein not misleading except to the extent that such untrue
statement or omission was provided to XTL by Neoprobe. Compliance by XTL with
any of the requirements of this Section 4.1.4 shall not, without the express
written consent of Neoprobe, modify, alter or amend the representations and
warranties made by XTL in this Agreement.
Section 4.1.5. Access. From the date of this Agreement until the
Closing Date, XTL will afford to Neoprobe and its authorized representatives
(including, but not limited to, Neoprobe's officers, counsel, accountants and
financial advisers) full access to the properties, personnel, officers,
directors, books, records and affairs of XTL and each of its subsidiaries upon
reasonable advance notice during regular business hours; and XTL will furnish
Neoprobe and such representatives with such additional documents (certified if
requested), financial and operating data and other information concerning the
assets, properties, business and affairs of XTL or any of its subsidiaries as
Neoprobe or such representatives may from time to time reasonably request.
Section 4.1.6. Conduct. From the date of this Agreement until the
Closing Date, except as provided by this Agreement or as Neoprobe may otherwise
consent in writing, XTL will not and will cause its subsidiaries to not enter
into any transaction, take any action, or permit any event to occur which would
result in any of the representations and warranties made by XTL in this
Agreement not being true and correct immediately after such transaction has
been entered into or consummated or such event has occurred or on the Closing
Date. XTL will and will cause its subsidiaries to use their best efforts to
obtain the approvals and consents of all governmental bodies or officers and
persons whose approval is required to satisfy the condition set forth in Section
5.1.4 hereof and to cause all of the conditions set forth in Part 5.1 hereof to
have been satisfied at or before the Closing.
Section 4.1.7. Further Assurances. On or after the Closing Date, XTL
shall execute and deliver to Neoprobe all such further assignments,
endorsements, and other documents as Neoprobe may reasonably request in order to
consummate the transactions contemplated by this Agreement.
Part 4.2. Covenants of Neoprobe.
Section 4.2.1. Compliance with the Securities Act. Neoprobe may not
offer for sale or sell any securities issued by XTL unless such securities have
been registered under the Securities Act and registered or qualified under
applicable state securities laws or such securities or their offer or sale
are exempt from such registration or qualification and XTL has received an
opinion of counsel, in form and substance reasonably satisfactory to XTL, to the
effect that such securities or their offer or sale are so exempt.
Article 5. Conditions Precedent.
Part 5.1. Conditions Precedent to the Obligations of Neoprobe. The
obligations of Neoprobe under this Agreement are subject to satisfaction, on or
before the Closing Date, of each of the following conditions:
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Section 5.1.1. Accuracy of Representations and Warranties. The
representations and warranties of XTL contained in this Agreement shall be true
on and as of the Closing Date with the same effect as if they were made on and
as of the Closing Date, except as affected by transactions contemplated hereby
and except that any such representation and warranty made as of a specified date
other than the date of this Agreement shall have been true as of such date.
Section 5.1.2. Performance of Agreements. XTL shall have performed all
obligations and agreements and complied with all covenants contained in this
Agreement which are to be performed and complied with by it on or before the
Closing Date, including without limitation the covenants set forth in Part 4.1.
Section 5.1.3. Litigation. No litigation shall be pending or overtly
threatened seeking an order of a tribunal against the transactions contemplated
by this Agreement. No order of a tribunal against the transactions contemplated
by this Agreement shall exist.
Section 5.1.4. Approvals. This Agreement and the transactions
contemplated hereby shall have received any governmental permit and been
approved by any person listed on the Disclosure Schedule pursuant to Section
3.l.15 hereof.
Section 5.1.5. Material Adverse Change. XTL and its subsidiaries shall
not have suffered any material adverse change in their businesses or properties.
Section 5.1.6. Actions, Proceedings, etc. All actions, proceedings,
instruments, and documents required to carry out the transactions contemplated
by this Agreement or incidental thereto and all other related legal matters
shall be reasonably satisfactory to and approved by Schwartz, Warren & Ramirez,
counsel to Neoprobe; and such counsel shall be furnished with such other
instruments and documents as they shall have reasonably requested.
Part 5.2. Conditions Precedent to the Obligations of XTL. The obligations
of XTL under this Agreement are subject to satisfaction, on or before the
Closing Date, of each of the following conditions:
Section 5.2.1. Accuracy of Representations and Warranties. The
representations and warranties of Neoprobe contained in this Agreement shall be
true on the Closing Date with the same effect as if they were made on the
Closing Date, except as affected by transactions contemplated hereby and except
that any such representation and warranty made as of a specified date other than
the date of this Agreement shall have been true on and as of such date.
Section 5.2.2. Performance of Agreements. Neoprobe shall have performed
all obligations and agreements and complied with all covenants contained in
this Agreement or in any document delivered in connection herewith to be
performed and complied with by it on or before the Closing Date.
Section 5.2.3. Litigation. No litigation shall be pending or overtly
threatened seeking an order of a tribunal against the transactions contemplated
by this Agreement. No order of a tribunal against the transactions contemplated
by this Agreement shall exist.
Section 5.2.4. Approvals. This Agreement and the transactions
contemplated hereby shall have received any governmental permit and been
approved by any person required pursuant to Section 3.3.1 hereof and by any
person listed on the Disclosure Schedule pursuant to Section 3.l.15 hereof
(including without limitation the execution and delivery by Neoprobe of the
letter requested by the Office of the Chief Scientist in substantially the form
attached as Exhibit H).
Section 5.2.5. Material Adverse Change. Neoprobe and its subsidiaries
shall not have suffered any material adverse change in their businesses or
properties.
Section 5.2.6. Actions, Proceedings, etc. All actions, proceedings,
instruments, and documents required to carry out the transactions con-
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<PAGE> 17
templated by this Agreement or incidental thereto and all other related legal
matters shall be reasonably satisfactory to and approved by Goldfarb, Levy,
Eran & Co., counsel to XTL; and such counsel shall be furnished with such other
instruments and documents as they shall have reasonably requested.
Article 6. Interpretation.
Part 6.1. Definitions.
Section 6.1.1. Defined Terms. Certain words and phrases used in this
Agreement shall have the meanings given to them below in this Section:
"Adverse claim" includes any claim that a transfer of any property or
assets was or would be wrongful or that a particular adverse person is the owner
of or has an interest in the property or asset transferred.
"Affiliate" means, with respect to a specified person, any other person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the specified person. A person
shall be deemed to be an affiliate of a specified person if: (a) he is an
employee, officer, director, partner, agent or attorney of such specified
person; (b) he is the beneficial owner of 20% or more of any class of the equity
securities of the specified person; (c) the specified person is the beneficial
owner of 20% or more of any class of the equity securities of the other person;
(d) he has a substantial beneficial interest in or serves as trustee or in a
similar fiduciary capacity for any specified person that is a trust, estate or
employee benefit plan; (e) it is an employee benefit plan for the benefit of the
employees of the specified person; or (f) such other person is his relative or
spouse or a relative of his spouse.
"Balance Sheet Date" means the date of the most recent audited balance
sheet contained in the Financial Statements.
"Class E Share" means the Class E Common Share of XTL.
"Closing" means the meeting of the parties hereto on the Closing Date for
the purposes of consummating the transactions contemplated by this Agreement.
"Closing Date" means February 5, 1996, or such other date as the parties
hereto may mutually agree upon.
"Code" means the Internal Revenue Code of 1986 and the rules and
regulations thereunder, as they may be amended from time to time.
"Companies Act" means the companies act or business corporation acts and
laws applicable to XTL as a public company formed and existing under the laws of
the State of Israel.
"Contract" means any contract or any agreement, promise or instrument,
whether written or oral, that creates or evidences a right or an obligation of
a person; organizes or constitutes a person that is a corporation, partnership,
trust, estate or other entity or association; transfers, creates or evidences
an interest in the property or assets of a person or sets forth the terms of an
encumbrance on the property or assets of a person. A contract is a contract of a
person if such person is a party to the contract, was organized or constituted
under the con tract, has assumed any liability under the contract, has been
delegated any duty under the contract, has been assigned any right under the
contract or if the contract sets forth the terms of an encumbrance on property
or assets owned by such person.
"Default" means with respect to any contract any event of default as
defined therein or by any law or any event which with the giving of notice or
the lapse of time would be such an event of default, any breach or violation of
the terms thereof, and any event which with or without the giving of notice or
the lapse of time gives any party to or holder of such contract the right to
impose a lien or other onerous term or condition on the defaulting party or its
properties or to terminate such contract. A default shall be deemed to exist if
a party gives or receives notice thereof, whether or not the factual basis of
such notice is disputed.
"Disclosure Schedule" means the schedule of information concerning XTL and
its subsidiaries as
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called for by this Agreement attached hereto as Exhibit G and made a part
hereof.
"Eastern Time" means Eastern Standard Time or Eastern Daylight Time as in
effect at Columbus, Ohio on a given day.
"Employee benefit plan" means, for any person, any employee benefit pension
plan or employee benefit welfare plan and any other plan, benefit or program of
benefits or perquisites provided to directors, officers or employees of any
person, including, but not limited to, vacation and sickness plans or policies
and severance pay and bonus plans or policies. The term "employee benefit plan"
includes any employee benefit plan which has been terminated but which still has
assets or obligations to which any such person is still liable.
"Encumbrance" means any right, title or interest in property other than the
right, title and interest of the owner thereof who has possession and control
over the property. The term encumbrance includes liens, contracts of sale,
restrictions on use or transfer, consignments, powers of attorney or
appointment, restrictions on use or transfer, adverse claims and claims of
infringement and defects in title.
"Enforceable obligation" means with respect to a contract of a person that
such contract is the valid, legally binding obligation of the person and is
enforceable against such person in accordance with its terms.
"Financial Statements" means the financial statements, footnotes, auditors'
reports and schedules of XTL and its subsidiaries as a consolidated group for
the fiscal year ended December 31, 1994 and for the first three quarters during
its most recent fiscal year.
"GAAP" means Israeli generally accepted accounting principles.
"Government" means the United States of America, any state thereof, any
foreign sovereign and any political subdivision of the foregoing including, but
not limited to, any province, district, municipality or county.
"Governmental body or officer" means any agency, department,
instrumentality, body or officer of any government, including courts and judges,
and any private organization, such as the National Association of Securities
Dealers, Inc., to the extent that it is granted governmental powers by any
government.
"Governmental permit" means any permit, license, registration, approval,
certificate of need or authority issued by any governmental body or officer that
is required by any law to be obtained by any person in order to own or use any
specified assets or properties or engage in any specified transaction, activity
or business, without violating a specified law; any exemption from such a
requirement that is not available without any filing with or other action by any
governmental body or officer and any consent or approval of any private party,
such as Underwriters Laboratories, required by any law to be obtained in order
to own or use any specified assets or properties or engage in any specified
transaction, activity or business without violating a specified law.
"Immaterial encumbrances" means (i) liens for current taxes not yet due and
payable, (ii) imperfections of title and easements which are immaterial in
character, amount or extent and do not detract from the value or interfere with
the use of the property subject thereto and (iii) statutory and common law liens
of landlords, carriers, warehousemen, mechanics, workmen and materialmen
incurred in the ordinary course of business for sums not yet due.
"Includes" means includes, but is not limited to.
"Intellectual property" means any works of authorship, whether or not
copyrighted, any invention, design, process or plant, whether or not patented,
any mask work whether or not registered under Title 17 of the United States Code
and any customer lists, trade secrets, confidential information, know how or
other intellectual property, including computer programs, databases, software
and systems as well as programs, methods, forms, systems, processes, products
and services which are not implemented on electronic data processing equipment.
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"Law" means any law (whether enacted by statute, constitution or
ordinance, declared by any court (whether at law or in equity) or established by
other means) of any government having jurisdiction over a person or its assets
or property and any rule or regulation of any governmental body or officer
having jurisdiction over a person or its assets or property.
"Lease" means any lease or other contract (however denominated) providing
for the use by one person of real or personal property owned by another person.
"Liability" has the same meaning as obligation.
"Lien" means a charge against or an interest in property to secure payment
of a debt or performance of an obligation, and includes a security interest
created by agreement, a judicial lien obtained by legal or equitable process or
litigation, a common law lien or a statutory lien.
"Litigation" means any civil, criminal or administrative actions, suits or
proceedings before any governmental body or officer or any arbitrator or private
tribunal and further includes any investigation, grand jury or discovery
preparatory to any threatened, contemplated or possible litigation.
"Mark" means any trademark, trade name, service mark, corporate name or
other proprietary designation or any application or filing with respect to any
of the foregoing.
"Material adverse change in a person's business or properties" means a
material decrease in the person's revenues, cash flow or income or the value of
its assets or properties or material increase in its expenses or obligations or
the occurrence of any event, including casualty, commencement of litigation,
strikes, war, civil disturbance, natural disaster, or changes in the law that
individually or in the aggregate have resulted in or are reasonably likely to
result in a current or future material decrease in the person's revenues, cash
flow or income or the value of its assets or properties or material increase in
its expenses or obligations.
"Material adverse effect" means that the occurrence or non-occurrence of a
specified action, event or transaction would cause a material adverse change in
the specified person's business or properties.
"Obligation" means any obligation that a specified person has to pay
money, transfer any asset or property, render services or to perform or refrain
from any act, whether it was created by law, order of a tribunal or contract and
whether or not it is legal or equitable, reduced to judgment, liquidated or
unliquidated, contingent or fixed, matured or unmatured, disputed or
undisputed, known or unknown or secured or unsecured. The term obligation does
not include the general obligation that persons have to obey the laws of
governments having jurisdiction over them, but it does include damages, fines
and penalties arising out of violations of such laws and obligations to pay
taxes.
"Or" is disjunctive but not exclusive.
"Order of a tribunal" means any order, writ, judgment or injunction issued
by any court or other governmental body or officer or any arbitrator or private
tribunal as the result of or ancillary to any litigation, which requires the
performance or refraining from performance of an act, transfers any interest in
property or declares any rights with respect to any property, contract or
transaction. The term order of a tribunal does not include money judgments which
are enforceable only by legal process. Such term for a given person also
includes any agreement, undertaking or understanding between such person and any
governmental body or officer acting as a regulatory authority.
"Person" means any individual, corporation, general or limited partnership,
estate, trust, or governmental body or officer and any other entity or
association that has the power to own property, enter into contracts or to sue
and be sued.
"Recapitalization" means, with respect to any security, any issuance of
securities with respect thereto as a dividend or any issuance, combination or
other change in such security pursuant to any amendment of the issuer's
certificate or articles of incorporation or a merger, consolidation, purchase or
sale of assets, dissolution, or plan of arrangement, compromise or
reorganization of the issuer.
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"Securities" means securities as such term is defined in the Securities Act
whether or not the securities in question are exempt from any of the provisions
of such act.
"Securities laws" means the Securities Act, the Securities Exchange Act of
1934, all regulations and rules thereunder, and all applicable state securities
or "blue sky" laws and the rules and regulations thereunder, each as they may be
amended from time to time.
"Subsidiary" means any corporation of which more than 50% of the
outstanding securities having ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether or not at the
time securities of any other classes of such corporation have or might have
voting power by reason of the happening of any contingency) is directly or
indirectly owned by a per son or its other subsidiaries.
"Tax returns" means all tax returns, information returns, tax reports,
declarations or similar documents required to be filed with any governmental
body or officer.
"Taxes" means all taxes including excise taxes, ad valorem taxes and
transfer taxes and fees and other governmental charges of any nature imposed
upon a person or any of the properties, tangible or intangible assets, income,
receipts, payrolls, transactions, stock transfers, capital, net worth or
franchises of a person; all sales, use, withholding or other taxes required to
be collected from customers, employees and other third parties and paid over to
any government; and all additions to tax, penalties or interest which relate in
any way to such taxes or any assessment or collection thereof.
"Transfer" means every mode, direct or indirect, absolute or conditional,
voluntary or involuntary, of disposing of or parting with an asset or property
or of an interest therein, and includes payment of money, release, lease,
abandonment and creation of a lien or other encumbrance.
"Warrant" means the Warrant to purchase XTL Common Shares in the form of
Exhibit C attached hereto.
"XTL Common Shares" means the Class A ordinary shares of XTL.
"XTL Recapitalization" means the recapitalization of the capital structure
of XTL as outlined in Section 3.1.2 of the Disclosure Schedule.
Section 6.1.2. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
Section 6.1.3. Effect of Definitions. The definitions set forth in
Section 6.1.1 above shall apply equally to the singular, plural, adjectival,
adverbial and other forms of any of the words and phrases defined regardless of
whether they are capitalized.
Part 6.2. Scope.
Section 6.2.1. This Agreement. This Agreement consists of the title,
date, names of parties, and preamble set forth above, these terms, the
signatures of the parties and the information set forth on the signature pages
below, the exhibits attached hereto and the certificates, documents and other
instruments required to be delivered hereunder; and any reference to this
Agreement refers to all of such constituents. The date first set forth above
shall be deemed to be the date hereof for all purposes. The statements set forth
in the preamble are made for the purpose of providing background information
that will assist persons who read this Agreement in interpreting it. Such
statements do not constitute representations, warranties or covenants of the
parties hereto and they may be contradicted by the parties.
Section 6.2.2. Case and Gender. In this Agreement, unless the context
otherwise requires, words in the singular number include the plural, and in the
plural include the singular; and words of the masculine gender include the
feminine and the neuter, and when the sense so indicates words of the neuter
gender may refer to any gender.
Article 7. General.
Section 7.1.1. Nature and Survival of Representations. The
representations, warranties and
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agreements made by the parties hereto in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby.
Section 7.1.2. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses; provided, however, that XTL shall
bear all costs and expenses of Sunrise Financial Group.
Section 7.1.3. Public Announcements. XTL and Neoprobe will consult with
each other before issuing any press release or otherwise making a public
statement or announcement concerning the transactions contemplated by this
Agreement.
Section 7.1.4. This Agreement. This Agreement sets forth the entire
agreement of the parties with respect to the subject matter hereof and it
supersedes and discharges all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter. There are no oral conditions precedent to the effectiveness of this
Agreement.
Section 7.1.5. Non-Waiver. Neither the failure of nor any delay by any
party to this Agreement to enforce any right hereunder or to demand compliance
with its terms is a waiver of any right hereunder. No action taken pursuant to
this Agreement on one or more occasions is a waiver of any right hereunder or
constitutes a course of dealing that modifies this Agreement.
Section 7.1.6. Waivers. No waiver of any right or remedy under this
Agreement shall be binding on either party unless it is in writing and is signed
by the party to be charged. No such waiver of any right or remedy under any term
of this Agreement shall in any event be deemed to apply to any subsequent
default under the same or any other term contained herein.
Section 7.1.7. Amendment. No amendment, modification or termination of
this Agreement shall be binding on either party hereto unless it is in writing
and is signed by the party to be charged.
Section 7.1.8. Severability. The terms of this Agreement are severable
and the invalidity of all or any part of any term of this Agreement shall not
render invalid the remainder of this Agreement or the remainder of such term. If
any term of this Agreement is so broad as to be unenforceable, such term shall
be interpreted to be only so broad as is enforceable.
Section 7.1.9. Successors. The terms of this Agreement shall be binding
upon and inure to the benefit of the parties, their respective heirs, personal
representatives or corporate or partnership successors.
Section 7.1.10. Third Parties. Nothing herein expressed or implied is
intended or shall be construed to give any person other than the parties hereto
any rights or remedies under this Agreement.
Section 7.1.11. Saturdays, Sundays and Holidays. Where this Agreement
authorizes or requires a payment or performance on a Saturday, Sunday or public
holiday, such payment or performance shall be deemed to be timely if made on
the next succeeding business day.
Section 7.1.12. Rules of Construction. In this Agreement, words in the
singular number include the plural, and in the plural include the singular; and
words of the masculine gender include the feminine and the neuter, and words of
the neuter gender may refer to any gender. The captions and section numbers
appearing in this Agreement are inserted only as a matter of convenience. They
do not define, limit or describe the scope or intent of the provisions of this
Agreement.
Section 7.1.13. Notices. Any notice, request or other communication
required or permitted to be given under this Agreement shall be duly given if it
is in writing and delivered in person or mailed by air-mail, postage prepaid,
or sent by facsimile transmission, and directed to the party at the address set
forth under such parties' signature hereto and with such copies delivered,
transmitted or mailed to such persons as are specified therein. Such notice
shall be effective upon delivery thereof if delivered in person, five (5) days
after mailing if air-mailed or upon electronic confirmation of receipt if sent
by
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facsimile transmission. Either party may change its address for notices in
the manner set forth above.
Section 7.1.14. Counterparts. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and either party hereto may execute this Agreement by signing one or
more counterparts.
Section 7.1.15. Governing Law. The validity, terms, performance and
enforcement of this Agreement shall be governed by those laws of the State of
Delaware and the United States of America that are applicable to agreements
negotiated, executed, delivered and performed solely in the State of Delaware
and the United States of America.
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SIGNATURES:
NEOPROBE CORPORATION
By: /s/ David C. Bupp
------------------------
Print Name: David C. Bupp
Print Title: President
Address for Notices: Copies to:
Neoprobe Corporation Robert S. Schwartz, Esq.
425 Metro Place North, Suite 400 Schwartz, Warren & Ramirez
Dublin, Ohio 43017-1367 41 South High Street
Attention: Suite 2300
Telecopy Number: (614) 793-7522 Columbus, Ohio 43215
Telecopy Number: (614) 224-0360
XTL BIOPHARMACEUTICALS, LTD.
By: /s/ Martin Becker
------------------------
Print Name: Martin Becker
Print Title: President and
Chief Executive Officer
Address for Notices: Copies to:
XTL Biopharmaceuticals, Ltd. Ashok J. Chandrasekhar, Adv.
Kiryat Weismann Goldfarb, Levy, Eran & Co.
P.O. Box 370 Eliahu House
Rehovot 76100 Israel 2 lbn Gvirol Street
Attention: Chief Executive Officer Tel Aviv 64077 Israel
Telecopy Number: 972-8-940-5017 Telecopy Number: 972-3-695-4344
<PAGE> 1
EXHIBIT 10.3.34
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS. THESE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS
THEY ARE REGISTERED UNDER THE SECURITIES LAWS OR THEY OR SUCH OFFER, SALE OR
TRANSFER ARE EXEMPT FROM SUCH REGISTRATION AND THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IN FORM AND SUBSTANCE,
TO THAT EFFECT.
5% CONVERTIBLE SUBORDINATED DEBENTURE DUE FEBRUARY 13, 1998
$1,500,000 Rehovot, Israel
CSN No. 1 February 13, 1996
FOR VALUE RECEIVED, XTL BIOPHARMACEUTICALS, LTD., a public company
organized under the laws of the State of Israel (the "Company"), hereby promises
to pay to Neoprobe Corporation, a Delaware corporation, or its registered
assigns (the "Holder"), on February 13, 1998 (the "Maturity Date"), the
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000), and
to pay interest on the principal amount hereof, in such amounts, at such times
and on such terms and conditions as are specified herein.
ARTICLE 1. Interest. The Company shall pay interest on the principal amount of
this Debenture at the rate of five percent (5%) per year in annual payments
commencing on the first anniversary of the original issuance hereof and on each
subsequent anniversary of such date until the principal hereof is paid in full
or has been converted. Interest on this Debenture shall accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance of this Debenture. The Company shall pay interest on
this Debenture to the Holder hereof at the opening of business on the interest
payment date; provided, however, that if the Company does not pay interest on
the interest payment date provided for in the previous sentence, it shall pay
such interest to the Holder hereof on the date such payment is made. Interest
shall be computed on the basis of the actual number of years and days elapsed.
ARTICLE 2. Method of Payment. This Debenture must be surrendered to the Company
in order for the Holder to receive payment of the principal amount hereof. The
Company shall pay the principal of and interest on this Debenture in money of
the United States that at the time of payment is legal tender for the payment of
public and private debts. The Company may pay interest by a check payable in
such money. The Company may draw a check for the payment of interest to the
order of the Holder of this Debenture and mail it to its address as shown on the
Register (as defined in Section 7.2 below). The Company may pay principal by a
certified or official bank check payable in such money. All payments on this
Debenture shall be applied first to the payment of accrued but previously unpaid
interest on this Debenture and then to the reduction of the principal balance of
this Debenture. The Company may not prepay any part of the outstanding principal
balance of this Debenture without the prior written consent of the Holder.
ARTICLE 3. Conversion
SECTION 3.1. Conversion Privilege.
(a) The Holder of this Debenture may convert it into Class A Common Shares,
nominal value NIS
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<PAGE> 2
0.20 per share, of the Company ("Common Shares") at any time until it is paid in
full. The number of Common Shares issuable upon the conversion of this Debenture
is determined by dividing the principal amount hereof to be converted plus all
accrued interest thereon by the conversion price (see Article 4 below) in effect
on the conversion date (as defined in Section 3.2 below) and rounding the result
to the nearest 1/100th of a share.
(b) Less than all of the principal amount of this Debenture may be
converted into Common Shares if the portion converted is $100,000 or a whole
multiple of $100,000 and the provisions of this Article 3 that apply to the
conversion of all of the Debenture also apply to the conversion of a portion of
it. All accrued interest on the Debenture shall be added to the amount converted
if less than all of the principal amount of this Debenture is converted and
shall be deemed to be paid and discharged thereby.
(c) If, at the time of the conversion of any portion of this Debenture
pursuant to paragraph (a) of this Section 3.1, any Class A Preferred Shares,
nominal value NIS 0.20 per share, of the Company (the "Preferred Shares") are
outstanding, the Holder will receive Preferred Shares upon such conversion in
lieu of receiving Common Shares. The number of Preferred Shares issuable in such
event shall be the number of Common Shares into which the portion of the
Debenture being converted would be converted but for the operation of this
paragraph (c) divided by the then applicable conversion ratio. The conversion
ratio is the number of Common Shares into which each Preferred Share is then
convertible.
SECTION 3.2. Conversion Procedure.
(a) Except as otherwise provided in paragraph (b) of this Section 3.2
below, to convert this Debenture into Common Shares, the Holder must (a)
complete and sign the Notice of Conversion attached hereto, (b) surrender the
Debenture to the Company, (c) furnish appropriate endorsements and transfer
documents if so requested by the Company and (d) subject to Section 3.4, pay any
transfer or similar tax if required by the Company. The date upon which all of
the foregoing requirements are satisfied is the conversion date.
(b) This Debenture shall be automatically converted into Common Shares upon
the earliest of (i) the Maturity Date, if and only if no Event of Default (as
such term is defined in Article 6 below) and no event which, with the giving of
notice or the passage of time, would be an Event of Default has occurred and is
continuing on the Maturity Date, (ii) the entry by the Holder and the Company
into a License Agreement or a Supply Agreement under Section 6.1 of the Research
Agreement between the Holder and the Company of even date with the original
issuance hereof or (iii) the successful closing of an initial public offering of
Common Shares pursuant to which at least one million (1,000,000) shares or
shares having a gross sale price of at least $6,000,000 are sold to persons not
affiliated with the Company, the Holder or any underwriter of such offering at a
price in excess of the then effective conversion price and after which Common
Shares are traded on a securities exchange in the United States or Israel. The
Holder may defer the automatic conversion of this Debenture on the Maturity Date
until the second anniversary thereof by means of a written notice delivered to
the Company before the Maturity Date. During such deferral, the Holder may
voluntarily convert this Debenture into Common Shares under the provisions of
paragraph (a) of this Section 3.2. above, the conversion price shall not be
adjusted pursuant to the provisions of Sections 4.1 or 4.3 below by reason of
any transaction that occurs after the Maturity Date, interest shall not accrue
on this Debenture unless an Event of Default has occurred and is continuing but
interest for periods before the Maturity Date shall be payable and upon the
occurrence of an event described in clauses (ii) and (iii) of the first sentence
of this paragraph (b), this Debenture shall be automatically converted into
Common Shares.
(c) Within five business days after the conversion date, the Company shall
deliver a certificate for the number of full Common Shares issuable upon the
conversion and a check for any fraction of a share. The Holder shall be treated
as a shareholder of record on and after the conversion date. If one person
converts more than one Debenture at the same time, the number of full shares
issuable upon the conversion shall be based on the total principal amount of
Debentures converted. Upon surrender of a Debenture that is to be converted in
part, the Company
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<PAGE> 3
shall issue to the Holder a new Debenture equal in principal amount to the
unconverted portion of the Debenture surrendered.
SECTION 3.3. Fractional Shares. The Company shall not issue a fractional
share of Common Shares upon the conversion of this Debenture. Instead, all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Common Shares or other securities, properties or rights
issuable upon the conversion of this Debenture.
SECTION 3.4. Taxes on Conversion. The Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of Common Shares upon
the conversion of this Debenture.
SECTION 3.5. Company to Reserve Stock. The Company shall reserve out of its
authorized but unissued Common Shares or Common Shares held in treasury enough
Common Shares to permit the conversion of this Debenture. All Common Shares
which may be issued upon the conversion hereof shall be fully paid and
nonassessable.
SECTION 3.6. Restrictions on Transfer. This Debenture and the Common Shares
issuable upon the conversion hereof have not been registered under the
Securities Act of 1933 and the regulations of the Securities and Exchange
Commission promulgated thereunder or state securities or blue sky laws or
similar laws of the State of Israel (the "Securities Laws") and this Debenture
and the Common Shares issuable upon the conversion of this Debenture may not be
offered for sale, sold or otherwise transferred unless such offer, sale or other
transfer is registered under the Act or such securities or such transfer is
exempt from such registration and the Company has received an opinion of
counsel, reasonably satisfactory to the Company in form and substance, stating
that such securities or such offer, sale or transfer is exempt from registration
under the Act.
ARTICLE 4. Conversion Price; Adjustments. The conversion price shall be Eight
and 79/100 Dollars ($8.79) on the date of the first issue of any of the
Debentures. Thereafter the conversion price will be adjusted from time to time
as follows:
SECTION 4.1. Computation of Adjusted Conversion Price. If the Company, at
any time after the date hereof and while this Debenture is outstanding, issues
or sells any Common Shares, including shares held in the Company's treasury and
Common Shares issued upon the exercise of any options, rights or warrants to
subscribe for Common Shares and Common Shares issued upon the direct or indirect
conversion or exchange of securities for Common Shares, for a consideration per
share that is less than either the conversion price (as hereinafter defined) or
the Market Price (as hereinafter defined) in effect immediately before the
issuance or sale of such shares, or without consideration, then upon such
issuance or sale, the conversion price shall (until another such issuance or
sale) be reduced to the price (calculated to the nearest full cent) equal to the
quotient of
(a) an amount equal to the sum of
(i) the number of Common Shares outstanding immediately before such
issuance or sale multiplied by the lesser of (A) the conversion price in
effect immediately before such issuance or sale or (B) the Market Price in
effect on the date immediately before such issuance or sale, plus
(ii) the aggregate of the amount of all consideration, if any, received by
the Company upon such issuance or sale,
divided by (b) the number of Common Shares outstanding immediately after such
issuance or sale;
provided, however, that the conversion price will not be adjusted pursuant to
this computation to be an amount in excess of the conversion price in effect
immediately before such issuance or sale. This Section 4.1 does not apply to a
split or combination of Common Shares or a dividend thereon payable in Common
Shares for which an adjustment is made under Section 4.4 below.
SECTION 4.2. General Rules for Computation of Adjustments. For the purposes
of any computation to be made in accordance with Section 4.1 or 4.3, the
following provisions shall be applicable:
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(a) Commissions and Discounts. The aggregate of the amount of all
consideration, if any, received by the Company upon any issuance or sale of
Common Shares shall be deemed to include the amount paid for such shares before
deducting any commissions or other compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection therewith.
(b) Other Than Cash Consideration. If Common Shares are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration therefor other than cash shall be deemed to be the value of
such consideration as determined in good faith by the Board of Directors of the
Company.
(c) Reclassification. The reclassification of securities of the Company
other than Common Shares into other securities of the Company shall be deemed to
involve the issuance of such Common Shares for a consideration other than cash
immediately before the close of business on the date fixed for the determination
of security holders entitled to receive such shares, and the value of the
consideration allocable to such Common Shares shall be determined as provided in
paragraph (b) of this Section 4.2.
(d) Outstanding Shares. The number of Common Shares outstanding at any
one time shall be deemed to include the aggregate number of shares issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
any and all outstanding options, rights, warrants to purchase Common Shares and
upon the conversion or exchange of any and all outstanding securities
convertible or exchangeable into Common Shares.
(e) Market Price. As used herein, the term "Market Price" at any date
shall be deemed to be (i) the last reported sale price for the current or most
recent trading days as officially reported by the securities exchange or market
on which the Common Shares are principally traded, (ii) if the Common Shares are
not principally traded on a securities exchange or market, the closing bid
quotation on such day as furnished by an inter-dealer quotation system or
(iii) if the Common Shares are not so quoted, as determined in good faith by a
resolution of the Board of Directors of the Company, based on the best
information available to it.
(f) Common Shares. As used herein, the term "Common Shares" means (i)
the class of stock designated as Class A Common Shares in the Articles of
Association of the Company as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassifications of such Common
Shares consisting solely of changes in nominal value, or from nominal value to
no nominal value, or from no nominal value to nominal value. If the Company
issues securities with greater or superior voting rights than the Common Shares
outstanding as of the date hereof, the Holder, at its option, may receive upon
conversion of this Debenture either Common Shares or a like number of such
securities with greater or superior voting rights.
SECTION 4.3. Options, Rights, Warrants and Convertible and Exchangeable
Securities. If the Company at any time after the date hereof and while this
Debenture is outstanding, issues options, rights or warrants to subscribe for
Common Shares, or issues any securities convertible into or exchangeable for
Common Shares, for a consideration per share less than either the conversion
price or the Market Price in effect immediately before the issuance of such
options, rights or warrants, or such convertible or exchangeable securities, or
without consideration, the conversion price in effect immediately before the
issuance of such options, rights or warrants, or such convertible or
exchangeable securities, as the case may be, shall be reduced to a price
determined by making a computation in accordance with the provisions of Section
4.1 hereof, provided that:
(a) The aggregate maximum number of Common Shares, as the case may be,
issuable under such options, rights or warrants shall be deemed to be issued and
outstanding at the time such options, rights or warrants were issued, and shall
be deemed to be issued for a consideration equal to the minimum purchase price
per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration, if any, received by the Company for the
issuance of such options, rights or warrants.
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<PAGE> 5
(b) The aggregate maximum number of Common Shares issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration received by the Company for
the issuance of such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof.
(c) If any change shall occur in the conversion price provided for in
any of the options, rights or warrants referred to in clause (a) of this Section
4.3, or in the price per share at which the securities referred to in clause (b)
of this Section 4.3 are convertible or exchangeable, such options, rights or
warrants or conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
(d) Except as provided in clause (c) of this Section 4.3, no further
adjustment of the conversion price shall be made upon the actual issuance of the
Common Shares upon the exercise of such options, rights or warrants, or the
conversion or exchange of such convertible or exchangeable securities.
SECTION 4.4. Split, Subdivision or Combination of Shares. If, at any time
while this Debenture remains outstanding, the Common Shares are split or if a
dividend of Common Shares is paid on the Common Shares, the conversion price
hereof shall be decreased automatically by the ratio between the number of
Common Shares outstanding immediately before such event and the number of Common
Shares outstanding immediately after such event (assuming that there is no
elimination of fractional shares as a result of such split or dividend). If the
Common Shares are combined into a lesser number of Common Shares, the conversion
price hereof shall be increased automatically by the ratio between the number of
Common Shares outstanding immediately before such event and the number of Common
Shares outstanding immediately after such event (assuming that there is no
elimination of fractional shares as a result of such combination).
SECTION 4.5. Merger, Sale of Assets, etc. If, at any time while this
Debenture or any portion thereof is outstanding, there shall be (a) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein) of the Company, (b) a
merger or consolidation of the Company with or into another corporation in which
the Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (c) a sale or transfer of the Company's properties and assets as,
or substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this Debenture shall thereafter be entitled to
receive upon conversion of this Debenture, during the period specified herein
and upon payment of the conversion price then in effect, the number of shares of
stock or other securities or property of the successor corporation resulting
from such reorganization, merger, consolidation, sale or transfer that a holder
of the shares deliverable upon conversion of this Debenture would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Debenture had been converted immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this Article 4. The foregoing provisions of this
Section 4.5 shall similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any other
corporation that are at the time receivable upon the exercise of this
Debenture. If the per share consideration payable to the Holder hereof for
shares in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors, which determination shall be
conclusive in the ab-
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<PAGE> 6
sence of manifest error. In all events, appropriate adjustment (as determined in
good faith by the Company's Board of Directors, which determination shall be
conclusive in the absence of manifest error) shall be made in the application of
the provisions of this Debenture with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Debenture
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Debenture.
SECTION 4.6. Reclassification, etc. If the Company, at any time while this
Debenture remains outstanding and unexpired, by reclassification of securities
or otherwise, shall change any of the securities as to which purchase rights
under this Debenture exist into the same or a different number of securities of
any other class or classes, this Debenture shall thereafter represent the right
to acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the Debenture immediately prior to such
reclassification or other change and the conversion price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Article 4.
SECTION 4.7. Dividends of Other Securities or Property. If, while this
Debenture or any portion hereof remains outstanding and unexpired, the holders
of the securities as to which conversion rights under this Debenture exist at
the time shall have received, or, on or after the record date fixed for the
determination of eligible shareholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other securities or
property (other than cash) of the Company by way of dividend, then, and in each
case, this Debenture shall represent the right to acquire, in addition to the
number of shares of the security receivable upon conversion of this Debenture,
and without payment of any additional consideration therefor, the amount of such
other or additional stock or other security or property (other than cash) of the
Company that such holder would hold on the date of such conversion had it been
the holder of record of the security receivable upon conversion of this
Debenture on the date hereof and had thereafter, during the period from the date
hereof to and including the date of such conversion, retained such shares and
all other additional stock available to it as aforesaid during such period,
giving effect to all adjustments called for during such period by the provisions
of this Article 4.
SECTION 4.8. Certificate as to Adjustments. Upon the occurrence of each
adjustment pursuant to this Article 4, the Company at its expense shall promptly
compute such adjustment in accordance with the terms hereof and furnish to the
Holder a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, and the conversion price before and
after the adjustment. The Company shall, at any time upon the written request of
any Holder, furnish to such Holder a certificate setting forth: (a) such
adjustments; (b) the conversion price then in effect; and (c) the number of
shares and the amount, if any, of other property that at the time would be
received upon the exercise of the Debenture.
SECTION 4.9. No Impairment. The Company will not, by any 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 Article 4 and in
the taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Holder of this Debenture against impairment.
SECTION 4.10. No Adjustment of Conversion Price in Certain Cases. No
adjustment of the conversion price shall be made:
(a) Upon the issuance or sale of the Common Shares issuable upon the
conversion of the Debentures or the exercise of the warrant issued to the Holder
on the date of the original issuance of the Debenture (the "Warrant") or any
convertible securities outstanding on the Debenture Issue Date and described in
writing to the Holder on or before the Debenture Issue Date; or
(b) Upon the issuance or sale of Common Shares upon the exercise of
options, rights or warrants, or upon the conversion or exchange of convertible
or exchangeable securities, in any case where the conversion price was adjusted
at the time of issuance of such options, rights or warrants, or
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<PAGE> 7
convertible or exchangeable securities, as contemplated by Section 4.3 hereof;
or
(c) If the amount of said adjustment shall be less than one cent ($.01)
per Common Share, provided, however, that in such case, any adjustment that
would otherwise be required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least one
cent ($.01) per Common Share; or
(d) Upon the issuance of options to directors, employees or consultants
of the Company or the exercise of such options if such options were issued under
a plan which was approved by the shareholders of the Company and the Holder or
which was existing on the date this Debenture was originally issued, the plan is
administered by a committee of independent directors, the number of Common
Shares issuable under the plan and all other similar plans is limited to twenty
per cent (20%) of the number of outstanding Common Shares at the time the plan
is approved by the shareholders, the term of the option does not exceed ten (10)
years from the date of grant and the exercise price of the option is not less
than the Market Price of the Common Shares on the date of grant.
ARTICLE 5. Subordination
SECTION 5.1. Agreement to Subordinate. The Company agrees, and the Holder
by accepting this Debenture agrees, that the indebtedness evidenced by this
Debenture is subordinate in right of payment, to the extent and in the manner
provided in this Article 5, to the prior payment in full of all Senior Debt (as
hereinafter defined), and that such subordination is for the benefit of the
holders of Senior Debt.
SECTION 5.2. Certain Definitions. As used in this Article 5, "Debt" means
any indebtedness for money borrowed from banks. "Senior Debt" means Debt of the
Company outstanding at any time except Debt which by its terms is not senior in
right of payment to the Debentures. A "distribution" may consist of cash,
securities or other property.
SECTION 5.3. Liquidations; Dissolutions; Bankruptcy. Upon any distribution
to creditors of the Company in a liquidation or dissolution of the Company or
any bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property (a) holders of Senior Debt shall be
entitled to receive payment in full in cash of the principal of and interest
(including interest accruing after the commencement of any such proceeding) to
the date of payment on the Senior Debt before the Holder hereof shall be
entitled to receive any payment of principal of or interest on this Debenture
and (b) until the Senior Debt is paid in full in cash, any distribution to which
the Holder hereof would be entitled but for this Article 5 shall be made to
holders of Senior Debt as their interests may appear, except that the Holder
hereof may receive securities that are subordinated to Senior Debt to at least
the same extent as this Debenture.
SECTION 5.4. Default on Senior Debt. The Company may not pay principal of
or interest on this Debenture and may not acquire this Debenture for cash or
property other than capital stock of the Company if (a) a default on Senior Debt
occurs and is continuing that permits the holders of such Senior Debt to
accelerate its maturity and (b) the default is the subject of judicial
proceedings or the Company receives a notice of the default from a person who
may validly give such notice. If the Company receives any such notice, a similar
notice received within nine months thereafter relating to the same default and
the same issue of Senior Debt shall not be effective for purposes of this
Section. The Company may resume payments on the Debenture and may acquire it
when (i) the default is cured or waived or (ii) 10 days pass after the notice is
given if the default is not the subject of judicial proceedings, if this Article
5 otherwise permits the payment or acquisition at that time.
SECTION 5.5. Acceleration. If payment of this Debenture is accelerated
because of an Event of Default (as such term is defined in Article 6 below), the
Company shall promptly notify holders of Senior Debt of such acceleration. The
Company may pay this Debenture when 10 days have passed after the acceleration
occurs if this Article 5 permits the payment at that time.
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<PAGE> 8
SECTION 5.6. Payments of Distributions to Senior Debt. If a distribution is
made to the Holder of this Debenture that, because of this Article 5, should not
have been made, such Holder shall hold it in trust for the holders of Senior
Debt and shall pay it over to them as their interests may appear.
SECTION 5.7. Notice by Company. The Company shall promptly notify the
Holder hereof of any facts known to the Company that would cause a payment of
principal of or interest on this Debenture to violate this Article 5.
SECTION 5.8. Subrogation. After all Senior Debt is paid in full and until
this Debenture is paid in full, the Holder hereof shall be subrogated to the
rights of the holders of Senior Debt to receive distributions applicable to
Senior Debt to the extent that distributions otherwise payable to the Holder of
this Debenture have been applied to the payment of Senior Debt. A distribution
made under this Article 5 to holders of Senior Debt which otherwise would have
been made to the holders of the Debentures is not as between the Company and the
holders of the Debentures a payment by the Company on Senior Debt.
SECTION 5.9. Relative Rights. This Article 5 defines the relative rights of
the Holder of this Debenture and the holders of Senior Debt. Nothing in this
Debenture shall (a) impair, as between the Company and the Holder hereof, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on this Debenture in accordance with its terms, (b) affect the
relative rights of the Holder of this Debenture and the creditors of the Company
other than the holders of Senior Debt or (c) prevent the Holder of this
Debenture from exercising its available remedies upon an Event of Default,
subject to the rights of the holders of Senior Debt to receive distributions
otherwise payable to the Holder of this Debenture. If the Company fails because
of this Article 5 to pay principal of or interest on this Debenture on the due
date, the failure will still be an Event of Default after the lapse of any
applicable grace period.
SECTION 5.10. Subordination May Not Be Impaired By Company. No right of any
holder of Senior Debt to enforce the subordination of indebtedness evidenced by
this Debenture shall be impaired by any act or failure to act by the Company or
by its failure to comply with this Article 5.
SECTION 5.11. Distribution or Notice to Trustee. Whenever a distribution is
made or a notice is given to holders of Senior Debt, the distribution may be
made and the notice given to an indenture trustee or other trustee, agent or
representative of such holders.
ARTICLE 6. Defaults and Remedies; Redemption
SECTION 6.1. Events of Default. An "Event of Default" occurs if (a) the
Company does not make the payment of the principal of this Debenture when the
same becomes due and payable at maturity, upon redemption or otherwise, (b) the
Company does not make a payment of interest on this Debenture when the same
becomes due and payable and fails to make such payment for a period of ten (10)
business days thereafter, (c) the Company fails to comply with any of its other
material agreements in this Debenture or in the Investor's Rights Agreement
between the Company and the Holder of even date with the original issuance
hereof and such failure continues for the period and after the notice specified
below, (d) the Company pursuant to or within the meaning of any Bankruptcy Law
(as hereinafter defined): (i) commences a voluntary case; (ii) consents to the
entry of an order for relief against it in an involuntary case; (iii) consents
to the appointment of a Custodian (as hereinafter defined) of it or for all or
substantially all of its property or (iv) makes a general assignment for the
benefit of its creditors or (v) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (A) is for relief against the
Company in an involuntary case; (B) appoints a Custodian of the Company or for
all or substantially all of its property or (C) orders the liquidation of the
Company, and the order or decree remains unstayed and in effect for 60 days. As
used in this Section 6.1, the term "Bankruptcy Law" means Title 11 of the United
States Code or any similar law of the United States, the State of Israel or any
state of the United States for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law. A default under clause (c) above is not an Event of Default
until the holders of at least 25% of the aggregate principal amount of the
Debentures notify the Company of such default and the
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<PAGE> 9
Company does not cure it within sixty (60) days after the receipt of such
notice.
SECTION 6.2. Acceleration. If an Event of Default occurs and is continuing,
the Holder hereof by notice to the Company, may declare the principal of and
accrued interest on this Debenture to be due and payable. Upon such declaration,
the principal and interest hereof shall be due and payable immediately.
SECTION 6.3. Redemption. If the Company or any of its subsidiaries (a)
sells or otherwise disposes of, whether by means of a direct sale of assets, a
merger or consolidation or otherwise, all or substantially all of their
consolidated assets, whether in a single transaction or as a result of a series
of related or unrelated transactions, (b) acquires another corporation or person
(other than one which does not have material assets or liabilities at the time
of acquisition), whether by means of an acquisition of the assets or a
controlling interest in the voting securities of such corporation or person, a
merger or consolidation with such corporation or person or otherwise, (i) which
is not engaged in a business that is reasonably related to the Company's
business, or (ii) whether or not engaged in a business that is related to the
Company's business, for a consideration (including any liabilities assumed) that
exceeds Five Million Dollars ($5,000,000) or (c) merges or consolidates with any
person (other than a merger or consolidation in which the Company is the
surviving corporation, its articles of association are the articles of
association of the surviving corporation without amendment, the bylaws of the
Company immediately before the merger continue to be the bylaws of the surviving
corporation without amendment, the officers and directors of the Company
immediately before the merger continue to be the officers and directors of the
surviving corporation without change in their titles or authorities, and the
holders of the Common Shares immediately before the merger continue to hold such
shares in the surviving corporation and their shares have eighty percent (80%)
of the voting power for all purposes of the surviving corporation); then the
Company will, upon the request of the Holder and the tender of this Debenture to
the Company by the Holder together with the tender of the unexercised portion of
the Warrant to the Company, redeem this Debenture by payment to the Holder of
the redemption price, which shall be the principal amount hereof together with
all accrued interest hereon as of the date on which this Debenture is tendered
to the Company for redemption, in money of the United States that at the time of
payment is legal tender for the payment of public and private debts. The Company
may pay the redemption price by a certified or official bank check payable in
such money. Upon the payment of the redemption price, the Warrant shall be
canceled and the Company shall have no further liability or obligations
thereunder.
ARTICLE 7. Registered Debentures
SECTION 7.1. Series. This Debenture is one of a numbered series of
Debentures having an aggregate principal amount of not more than $1,500,000
which are identical except as to the principal amount and date of issuance
thereof and as to any restriction on the transfer thereof in order to comply
with the Securities Act of 1933 and the regulations of the Securities and
Exchange Commission promulgated thereunder. Such Debentures are referred to
herein collectively as the "Debentures." The Debentures shall be issued in
denominations of $100,000 and whole multiples of $100,000.
SECTION 7.2. Record Ownership. The Company shall maintain a register of the
holders of the Debentures (the "Register") showing their names and addresses and
the serial numbers and principal amounts of Debentures issued to or transferred
of record by them from time to time. The Register may be maintained in
electronic, magnetic or other computerized form. The Company may treat the
person named as the Holder of this Debenture in the Register as the sole owner
of this Debenture. The Holder of this Debenture is the person exclusively
entitled to receive payments of interest on this Debenture, receive
notifications with respect to this Debenture, convert it into Common Shares and
otherwise exercise all of the rights and powers as the absolute owner hereof.
SECTION 7.3. Registration of Transfer. Transfers of this Debenture may be
registered on the books of the Company maintained for such purpose pursuant to
Section 7.2 above (i.e., the Register). Transfers shall be registered when this
Debenture is presented to the Company with a request to register the trans-
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fer hereof and the Debenture is duly endorsed by the appropriate person,
reasonable assurances are given that the endorsements are genuine and effective,
and the Company has received evidence satisfactory to it that such transfer is
rightful and in compliance with all applicable laws, including tax laws and
state and federal securities laws. When this Debenture is presented for transfer
and duly transferred hereunder, it shall be canceled and a new Debenture showing
the name of the transferee as the recordholder thereof shall be issued in lieu
hereof. When this Debenture is presented to the Company with a reasonable
request to exchange it for an equal principal amount of Debentures of other
denominations, the Company shall make such exchange and shall cancel this
Debenture and issue in lieu thereof Debentures having a total principal amount
equal to this Debenture in the denominations requested by the Holder. The
Company may charge a reasonable fee for any registration of transfer or exchange
other than one occasioned by a notice of redemption or the conversion hereof.
SECTION 7.4. Worn and Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, the Company shall issue a new Debenture in
place of the original Debenture if the Holder so requests by written notice to
the Company actually received by the Company before it is notified that the
Debenture has been acquired by a bona fide purchaser and the Holder has
delivered to the Company an indemnity bond in such amount and issued by such
surety as the Company deems satisfactory together with an affidavit of the
Holder setting forth the facts concerning such loss, destruction or wrongful
taking and such other information in such form with such proof or verification
as the Company may request.
ARTICLE 8. Notices
Any notice which is required or convenient under the terms of this
Debenture shall be duly given if it is in writing and delivered in person,
mailed by air-mail, postage prepaid or sent by facsimile transmission and
directed to the Holder of the Debenture at its address as it appears on the
Register or if to the Company to its principal executive offices. Such notice
shall be effective upon delivery thereof if delivered in person, five (5) days
after mailing if air-mailed or upon electronic confirmation of receipt if sent
by facsimile transmission.
ARTICLE 9. Time
Where this Debenture authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain day, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. Where time is extended
by virtue of the provisions of this Article 9, such extended time shall not be
included in the computation of interest.
ARTICLE 10. Waivers
The holders of a majority in principal amount of the Debentures may waive a
default or rescind the declaration of an Event of Default and its consequences
except for a default in the payment of principal of or interest on any
Debenture.
ARTICLE 11. Rules of Construction
In this Debenture, unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in this Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company is required or allowed,
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<PAGE> 11
such determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder.
ARTICLE 12. Governing Law
The validity, terms, performance and enforcement of this Debenture shall be
governed and construed by the provisions hereof and in accordance with the laws
of the State of Delaware applicable to agreements that are negotiated, executed,
delivered and performed solely in the State of Delaware.
IN WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date first written above.
XTL BIOPHARMACEUTICALS, LTD.
By:
-------------------------------------------------
Name: Martin Becker
Title: President and Chief Executive Officer
Customary abbreviations may be used in the registered name of a Holder of
Debentures or an assignee, such as: TEN COM (= as tenants in common), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
-11-
<PAGE> 12
NOTICE OF CONVERSION
[TO BE COMPLETED AND SIGNED ONLY UPON CONVERSION OF DEBENTURE]
The undersigned, the Holder of this Debenture, hereby irrevocably elects to
exercise the right to convert it into Class A Common Shares, nominal value NIS
0.20 per share, of XTL Biopharmaceuticals, Ltd. as follows:
Dollars ($ )*
[Complete if less than ----------------------------------------------------
all of principal ($100,000 or integral multiples of $100,000)
amount is to be
converted]
*If the principal amount of the Debenture to be converted is less than
the entire principal amount thereof, a new Debenture for the balance
of the principal amount shall be returned to the Holder of the
Debenture.
Date: Sign:
-------------- ---------------------------------------------------
(Signature must conform in all respects to name of
Holder shown on face of this Debenture)
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<PAGE> 13
ASSIGNMENT OF DEBENTURE
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
--------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(name, address and SSN or EIN of assignee)
Dollars ($ )
- --------------------------------------------------------------------------------
(principal amount of Debenture, $100,000 or integral multiples of $100,000)
of principal amount of this Debenture together with all accrued interest hereon.
Date: Sign:
------------ ----------------------------------------------------
(Signature must conform in all respects to name of Holder
shown on face of Debenture)
Signature Guaranteed:
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<PAGE> 1
EXHIBIT 10.3.35
INVESTOR'S RIGHTS AGREEMENT
----------------
FEBRUARY 5, 1996
----------------
PARTIES:
NEOPROBE CORPORATION, a Delaware corporation ("Neoprobe"), having its principal
place of business at 425 Metro Place North, Suite 400, Dublin, Ohio
43017-1367, telephone (614) 793-7500, facsimile (614) 793-7522, and
XTL BIOPHARMACEUTICALS, LTD., a public company organized under the laws of the
State of Israel ("XTL"), having its principal place of business at Kiryat
Weizmann Industrial Park, Rehovot, Israel, telephone 972-8-940-5134,
facsimile 972-8-940-5017
hereby agree as follows:
PREAMBLE:
1. Neoprobe and XTL have entered into the Investment Agreement (this
and certain other terms used herein are defined in Article 5) pursuant to which
Neoprobe is to receive Debentures, a Warrant and a Class E Share of XTL upon the
terms and conditions as described therein.
2. It is a condition precedent to the obligation of Neoprobe to
consummate the purchase of the Debentures, Warrant and Class E Share under the
Investment Agreement that the parties hereto execute and deliver to each other
this Agreement.
TERMS:
Article 1. Registration Rights.
Section 1.1. Certain Definitions. The following words and phrases used
in this Article 1 shall have the meanings given to them below in this section.
"Registrable Securities" means the XTL Common Shares that are or could
be issued pursuant to the conversion of the Debentures or the exercise of the
Warrant and any XTL Common Shares issued in respect thereof in any
recapitalization, provided, however, that Registrable Securities shall not
include (i) any XTL Common Shares which have previously been registered and sold
or which have been sold to the public under Rule 144, or (ii) any XTL Common
Shares which could be sold within six months without registration.
"Registration" means a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and the ordering of
the effectiveness of such registration statement.
"Registration Expenses" means all expenses incurred in effecting any
registration pursuant to this Agreement, including all registration,
qualification, filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for XTL, blue sky fees and expenses, and expenses of
any regular or special audits incident to or required by any such registration,
but shall not include Selling Expenses and fees and disbursements of counsel for
Neoprobe (but excluding the compensation of regular employees of XTL, which
shall be paid in any event by XTL).
<PAGE> 2
"Selling Expenses" means all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Neoprobe (other than the fees and disbursements of
counsel included in Registration Expenses).
Section 1.2. Demand Registration.
(a) If Neoprobe makes at any time a written request to XTL
that it register all or a part of the Registrable Securities, XTL shall (subject
to limitations set forth in this Section 1.2), as soon as practicable, use its
best efforts to effect such registration (including filing post-effective
amendments, appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act) as would
permit or facilitate the sale and distribution of such portion of such
Registrable Securities as is specified in such request. XTL shall not be
obligated to effect, or to take any action to effect, any such registration
pursuant to this Section 1.2:
(i) In any particular jurisdiction in which XTL would
be required to execute a general consent to service of process in effecting such
registration, qualification, or compliance, unless XTL is already subject to
service in such jurisdiction and except as may be required by the Securities
Act; or
(ii) After XTL has initiated one such registration
pursuant to this Section 1.2(a) (counting for these purposes only a registration
which has been declared or ordered effective and pursuant to which securities
have been sold and any registration which has been withdrawn by Neoprobe as to
which Neoprobe has not elected to bear the Registration Expenses pursuant to
Section 1.4 hereof and would, absent such election, have been required to bear
such expenses); or
(iii) Prior to the closing of the initial registered
public offering of XTL Common Shares.
(b) Subject to the foregoing clauses (i), (ii) and (iii) of
paragraph (a) above, XTL shall use its best efforts to file a registration
statement covering the Registrable Securities so requested to be registered as
soon as practicable after receipt of the request of Neoprobe; provided, however,
that if:
(i) In the good faith judgment of the board of
directors of XTL, such registration would be seriously detrimental to XTL and
the board of directors of XTL concludes as a result, that it is essential to
defer the filing of such registration statement at such time, and XTL has
delivered a copy (certified by the Secretary of XTL) of a resolution of the
board of directors to such effect to Neoprobe, XTL shall have the right to defer
such filing for the period during which such disclosure would be seriously
detrimental but not for more than one hundred eighty (180) days after receipt of
the request of Neoprobe under Section 1.2(a) above, and, provided further, that
XTL shall not defer its obligation in this manner more than once in any twelve
(12) month period; and
(ii) In the good faith judgment of XTL's independent
public accountants, such registration statement would be required to include
financial statements that are audited and such financial statements were not at
the time of their preparation required to be audited by Section 4.2 below, by
any contract between XTL and any bank or other financial institution or by any
form of registration statement or report XTL is required to file under the
Exchange Act and XTL has delivered a letter to Neoprobe to such effect from such
accountants, XTL may defer such filing until such time as it has prepared and
such accountants have audited financial statements required by this Agreement or
such contracts or forms.
(c) If XTL shall request inclusion in any
registration pursuant to this Section 1.2 of securities being sold for its own
account, or if other persons having contractual registration rights shall
request inclusion in any registration pursuant to this Section 1.2, Neoprobe
shall offer to include such securities in the underwriting and may condition
such offer on their acceptance of the further applicable provisions of this
Article 1. XTL shall (together with Neoprobe and other persons proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriters selected for such underwriting by Neoprobe, which underwriters must
be reasonably acceptable to XTL. Notwithstanding any other provision of this
Section 1.2, if the representative of the underwriters advises Neoprobe in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the number of shares to be included in the underwriting or
registration shall
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<PAGE> 3
be allocated as set forth in Section 1.12 hereof. If a person who has requested
inclusion in such registration as provided above does not agree to the terms of
any such underwriting, such person shall be excluded therefrom by written notice
from XTL, the underwriter or Neoprobe. Any Registrable Securities or other
securities so excluded shall also be withdrawn from such registration. If shares
are so withdrawn from the registration and if the number of shares to be
included in such registration was previously reduced as a result of marketing
factors pursuant to this Section 1.2(c), then XTL shall offer (subject to the
availability of a reasonable amount of time to make such offer before the
commencement of a distribution) to all holders who have retained rights to
include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares so withdrawn, with such shares to be allocated among such holders
requesting additional inclusion in accordance with Section 1.12.
Section 1.3. Piggy-Back Registration.
(a) If XTL determines to register any of its securities either
for its own account or the account of security holders exercising their
respective contractual registration rights (other than pursuant to Section 1.2
above), other than a registration relating solely to employee benefit plans, a
Rule 145 transaction or an exchange offer, or a registration on any registration
form that does not permit secondary sales, XTL shall promptly give written
notice thereof to Neoprobe, and use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 1.3(b) below, and in any
underwriting involved therein, all the Registrable Securities specified in a
written request made by Neoprobe within twenty (20) days after the written
notice from XTL is given. Such written request may specify all or a part of
Neoprobe's Registrable Securities. XTL shall not be obligated to effect, or to
take any action to effect, any such registration pursuant to this Section 1.3
after XTL has initiated two such registrations pursuant to this Section 1.3(a)
(counting for these purposes only registrations which have been declared or
ordered effective and pursuant to which securities have been sold and
registrations which have been withdrawn by Neoprobe as to which Neoprobe has not
elected to bear the Registration Expenses pursuant to Section 1.4 hereof and
would, absent such election, have been required to bear such expenses).
(b) If the registration of which XTL gives notice is for a
registered public offering involving an underwriting, XTL shall so advise
Neoprobe as a part of the written notice given pursuant to Section 1.3(a) above.
In such event, the right of Neoprobe to participate in such registration
pursuant to this Section 1.3 shall be conditioned upon Neoprobe's participation
in such underwriting and the inclusion of Neoprobe's Registrable Securities in
the underwriting to the extent provided herein. Neoprobe shall (together with
XTL and the other holders of securities of XTL with contractual registration
rights to participate therein distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriters selected by XTL.
(c) Notwithstanding any other provision of this Section 1.3,
if the representative of the underwriters advises XTL in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Registrable Securities from, or limit the number of Registrable Securities to be
included in, the registration and underwriting. XTL shall so advise all holders
of securities requesting registration, and the number of shares of securities
that are entitled to be included in the registration and underwriting shall be
allocated first to XTL for securities being sold for its own account and
thereafter as set forth in Section 1.12. If any person does not agree to the
terms of any such underwriting, he shall be excluded therefrom by written notice
from XTL or the underwriter. If shares are so withdrawn from the registration
and if the number of shares of Registrable Securities to be included in such
registration was previously reduced as a result of marketing factors, XTL shall
then offer (subject to the availability of a reasonable amount of time to make
such offer before the commencement of a distribution) to all persons who have
retained the right to include securities in the registration the right to
include additional securities in the registration in an aggregate amount equal
to the number of shares so withdrawn, with such shares to be allocated among the
persons requesting additional inclusion in accordance with Section 1.12 hereof.
Section 1.4. Expenses of Registration. All Registration
Expenses incurred in connection with any registration, qualification or
compliance pursuant to Section 1.2 hereof or Section 1.3 hereof shall be borne
by XTL; provided, however, that if Neo-
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<PAGE> 4
probe bears the Registration Expenses for any registration proceeding begun
pursuant to Section 1.2 or Section 1.3 and subsequently withdrawn by Neoprobe,
such registration proceeding shall not be counted as a requested registration
pursuant to Section 1.2 or Section 1.3 hereof; further provided, however, that
if such withdrawal is based upon material adverse information relating to XTL
that is different from the information known to Neoprobe at the time of its
request for registration under Section 1.2 or Section 1.3, such registration
shall not be counted as a registration for purposes of Section 1.2 or Section
1.3 hereof, even though Neoprobe does not bear the Registration Expenses for
such registration. All Selling Expenses relating to securities so registered
shall be borne by the holders of such securities pro rata on the basis of the
number of shares of securities so registered on their behalf.
Section 1.5. Registration Procedures. In the case of any registration
by XTL pursuant to this Article 1 in which Neoprobe participates, XTL shall keep
Neoprobe advised in writing as to the initiation of each such registration and
the completion thereof. At its expense, XTL shall use its best efforts to:
(a) Keep such registration effective for a period of one
hundred twenty (120) days or until Neoprobe has completed the distribution
described in the registration statement relating thereto, whichever first
occurs; provided, however, that (i) such one hundred twenty (120)-day period
shall be extended for a period of time equal to the period Neoprobe refrains
from selling any securities included in such registration at the request of an
underwriter of XTL Common Shares (or other securities) of XTL; and (ii) in the
case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such one hundred twenty
(120)-day period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities by such registration statement;
(c) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
Neoprobe from time to time may reasonably request;
(d) Notify each seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant
thereunder to be listed on each securities exchange on which securities issued
by XTL and of the same class are then listed;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration;
(g) Comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve (12)
months, but not more than eighteen (18) months, beginning with the first month
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act; and
(h) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2.2 hereof, enter into an
underwriting agreement in customary form in order to effect the offer and sale
of XTL Common Shares.
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<PAGE> 5
Section 1.6. Indemnification.
(a) XTL shall indemnify Neoprobe, each of the officers,
directors and partners, legal counsel, and accountants of Neoprobe and each
person controlling Neoprobe within the meaning of Section 15 of the Securities
Act, and each underwriter, if any, and each person who controls, within the
meaning of Section 15 of the Securities Act, any underwriter, against all
expenses, claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular, or other document (including any related registration
statement, notification, or the like) incident to any registration,
qualification, or compliance effected pursuant to this Article 1, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
any violation by XTL of the provisions of the Securities Act that are applicable
to XTL and relating to any action or inaction required of XTL in connection with
any such registration, qualification, or compliance, and will reimburse
Neoprobe, each of its officers, directors, partners, legal counsel, and
accountants and each person controlling Neoprobe, each such underwriter, and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability, or action, provided that XTL
will not be liable in any such case to the extent that any such claim, loss,
damage, liability, or expense arises out of or is based on any untrue statement
or omission made in reliance upon and in conformity with written information
furnished to XTL by Neoprobe or underwriter and stated to be specifically for
use therein. The indemnity agreement contained in this Section 1.6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of XTL (which
consent has not been unreasonably withheld).
(b) Neoprobe shall, if Registrable Securities held by it are
included in the securities as to which such registration, qualification, or
compliance is being effected, indemnify XTL, each of the directors, officers,
partners, legal counsel, and accountants of XTL, and each underwriter, if any,
of XTL's securities covered by such a registration statement, and each person
who controls XTL or such underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions, proceedings, or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other document (including any
related registration statement, notification, or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
Neoprobe of the provisions of the Securities Act that are applicable to Neoprobe
and relating to any action or inaction required of Neoprobe in connection with
any such registration, qualification, or compliance, and will reimburse XTL,
each of its officers, directors, partners, legal counsel, and accountants, and
each person controlling XTL, each such underwriter, and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating and defending or settling any such claim, loss,
damage, liability, or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in reliance upon and in conformity with written
information furnished to XTL by Neoprobe and stated to be specifically for use
therein, provided, however, that the obligations of Neoprobe hereunder shall not
apply to amounts paid in settlement of any such claims, losses, damages, or
liabilities (or actions in respect thereof) if such settlement is effected
without the consent of Neoprobe (which consent shall not be unreasonably
withheld).
(c) Each party entitled to indemnification under this Section
1.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article 1, to the extent such
failure is not prejudicial. No Indemnifying
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<PAGE> 6
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. Each Indemnified Party
shall furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this
Section 1.6 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
Section 1.7. Information by Neoprobe. If Registrable Securities are
being registered pursuant to Section 1.2 or 1.3 above, Neoprobe shall furnish to
XTL such information regarding Neoprobe and the distribution proposed by it as
XTL may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification, or compliance referred to in
this Article 1.
Section 1.8. Limitations on Registration of Issues of Securities. From
and after the date of this Agreement, XTL shall not, without the prior written
consent of Neoprobe, enter into any agreement with any holder or prospective
holder of any securities of XTL giving such holder or prospective holder any
registration rights, the terms of which are more favorable than the registration
rights granted to Neoprobe hereunder.
Section 1.9. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission that may permit the
sale of Registrable Securities to the public without registration, XTL shall use
its best efforts to:
(a) Make and keep public information regarding XTL available
as provided in paragraph (c) of Rule 144, at all times from and after ninety
(90) days following the effective date of the first registration filed by XTL
for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports
and other documents required of XTL under the Securities Act and the Exchange
Act at any time after it has become subject to such reporting requirements;
(c) So long as Neoprobe owns any Debentures, Warrants, or
Registrable Securities, furnish to Neoprobe forthwith upon written request a
written statement by XTL as to its compliance with the provisions of paragraph
(c) of Rule 144 (at any time from and after ninety (90) days following the
effective date of the first registration filed by XTL for an offering of its
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of XTL and such other reports
and documents so filed as Neoprobe may reasonably request in order to avail
itself of any rule or regulation of the Commission allowing Neoprobe to sell any
such securities without registration.
Section 1.10. Transfer of Registration Rights. If Neoprobe transfers
any of the Debentures, any portion of the Warrant or any Registrable Secu-
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<PAGE> 7
rities in a transfer that is not prohibited by Article 2 below, it may also
transfer to the transferee of such securities its rights under this Article 1,
subject to its obligations under and the conditions and limitations set forth in
Article 1. A transfer of rights under this Article 1 may only be made in a
written instrument that refers to this Agreement, states the name and address of
the transferee, that Neoprobe's rights under this Article 1 are being
transferred, the transferee assumes Neoprobe's obligations and is subject to the
conditions and limitations set forth herein, identifies the securities
transferred therewith, is signed by Neoprobe and the transferee and a copy of
which is delivered to XTL. Upon the delivery of such copy to XTL, the transferee
named therein shall be deemed to be Neoprobe for the purposes of this Article 1;
provided, however, that if there is more than one holder of Registrable
Securities the following rules shall apply:
(a) If an effective request for registration is made under
Section 1.2 above, XTL shall notify each such transferee promptly after
receiving the request that it has been made and shall include in such
registration any Registrable Securities that such transferee requests to be
included within twenty (20) days after receipt of such notice from XTL;
(b) Wherever the provisions of this Article 1 require the
consent of Neoprobe such consent shall be had by the consent of the majority in
interest of the holders of Registrable Securities; and
(c) The right of any transferee to registration under Section
1.2 above shall be conditioned upon such transferee's participation in such
underwriting and the inclusion of such transferee's Registrable Securities in
the underwriting to the extent provided herein.
Section 1.11. "Market Stand-Off" Agreement. If requested by
XTL and an underwriter of XTL Common Shares (or other securities) of XTL,
Neoprobe shall not sell or otherwise transfer or dispose of any XTL Common
Shares (or other securities) of XTL held by Neoprobe (other than those included
in the registration) during a period of up to one hundred eighty (180) days
following the effective date of a registration statement of XTL filed under the
Securities Act, provided that (a) such agreement shall only apply to the first
registration statement of XTL including securities to be sold on its behalf to
the public in an underwritten offering; and (b) all persons having contractual
registration rights and all officers and directors of XTL enter into similar
agreements. The obligations described in this Section 1.11 shall not apply to a
registration relating solely to employee benefit plans, Rule 145 transactions or
exchange offers. XTL may impose stop-transfer instructions with respect to the
securities subject to the foregoing restriction until the end of the applicable
period.
Section 1.12. Allocation of Registration Opportunities. In any
circumstance in which all of the Registrable Securities and all of the XTL
Common Shares of XTL the holders of which have contractual registration rights
(the "Other Stock") requested to be included in a registration cannot be so
included as a result of limitations on the aggregate number of shares held by
selling shareholders that may be so included, the number of shares of
Registrable Securities and Other Stock that may be so included shall be
allocated among Neoprobe and the holders of Other Stock requesting inclusion of
shares, pro rata on the basis of the number of shares of Registrable Securities
and Other Stock that would be held by such selling shareholders, assuming
conversion of the Debentures and exercise of the Warrant; provided, however,
that the allocation procedure described in this sentence shall not be applied to
reduce the number of shares that a selling shareholder may sell in such
registration if he has requested the inclusion of shares having a reasonably
expected gross selling price of Seventy-Five Thousand Dollars ($75,000) or less.
The allocation procedure described in the first sentence of this paragraph shall
not operate to reduce the aggregate number of Registrable Securities and Other
Stock to be included in such registration. If any holder of Registrable
Securities or Other Stock does not request inclusion of the maximum number of
shares of Registrable Securities or Other Stock allocated to him pursuant to the
above-described procedure, the remaining portion of his allocation shall be
reallocated among those holders requesting inclusion of Registrable Securities
or Other Stock whose allocations did not satisfy their original requests, and
this procedure shall be repeated until all of the shares of Registrable
Securities and Other Stock which may be included in the registration have been
so allocated. XTL shall not limit the number of Registrable Securities to be
included in a registration pursuant to this Agreement in order to include shares
held by persons who do not have contractual registration rights or, with respect
to registrations under Section 1.2 hereof, in order to include in such
registration securities registered for XTL's own account.
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Section 1.13. Termination of Registration Rights. The right of Neoprobe
to request registration under Section 1.2 above or inclusion in any registration
pursuant to Section 1.3 above, shall terminate when (a) Neoprobe does not hold
any Debentures or any portion of the Warrant, (b) all Registrable Securities
held by Neoprobe may be sold by it without registration, (c) the XTL Common
Shares (including all Registrable Securities) are listed on the New York or
American Stock Exchange, the Nasdaq National Market or the Tel Aviv Stock
Exchange, provided that Neoprobe shall be permitted under the laws of the State
of Israel in effect at the time of any such listing on the Tel Aviv Stock
Exchange to repatriate the proceeds of any XTL Common Shares sold on the Tel
Aviv Stock Exchange to the United States in U.S. Dollars, and (d) all transfer
restrictions on the Registrable Securities held by Neoprobe and any legends
concerning such restrictions on certificates representing such stock have been
removed.
Section 1.14. Amendment to Registration Rights. If at any time
following the date of this Agreement XTL grants to any investor registration
rights which are materially more favorable to such investor in any respect than
the registration rights set forth in this Article 1, then XTL shall notify
Neoprobe of the grant of such more favorable registration rights and shall enter
into an amendment to this Agreement in form and substance reasonably
satisfactory to Neoprobe and granting to Neoprobe registration rights which are
comparable in all respects to the most favorable registration rights then
granted by XTL to any investor.
Article 2. Neoprobe Securities Ownership.
Section 2.1. New Securities. (a) XTL hereby grants to Neoprobe the
right of first refusal to purchase a pro rata share of New Securities (as
defined in this Section 2.1) which XTL may, from time to time, propose to offer
and sell. The right of first refusal granted pursuant to this Section 2.1 shall
terminate upon the first to occur of: (i) Neoprobe no longer holding Debentures,
the Warrant or any XTL Common Shares, or (ii) the effective date of the first
registration filed by XTL for an offering of its securities to the general
public. For purposes of this right of first refusal, Neoprobe's pro rata share
is the ratio of the number of XTL Common Shares owned by Neoprobe immediately
prior to the issuance of New Securities, assuming full conversion of the
Debentures and the complete exercise of the Warrant, to the total number of
fully diluted XTL Common Shares outstanding immediately before the issuance of
New Securities. For the purpose of determining the total number of fully diluted
XTL Common Shares outstanding immediately before the issuance of New Securities,
all securities that are convertible into or exchangeable for XTL Common Shares
(including the Debentures) shall be deemed to have been fully converted into or
exchanged for XTL Common Shares, all options, warrants (including the Warrant)
and rights to purchase XTL Common Shares or securities that are convertible into
or exchangeable for XTL Common Shares shall be deemed to have been fully
exercised and all agreements or contracts to issue or sell XTL Common Shares
shall be deemed to have been fully completed.
(b) If XTL proposes to offer and sell New Securities, it shall
notify Neoprobe of the terms of such offering and shall provide Neoprobe with
copies of all documents concerning such offering. If Neoprobe determines to
participate in the offering, it shall indicate such acceptance within ten (10)
business days following the notice described in the immediately preceding
sentence, and shall do so on the same terms and subject to the same conditions
as all other participants in the offering and XTL shall accept Neoprobe's
subscription for New Securities and allocate a sufficient number thereof to
Neoprobe in accordance with paragraph (a) of this Section 2.1. As long as
Neoprobe is capable of making representations of the type found in Sections
2.3.5 and 2.3.6 of the Investment Agreement, XTL shall not impose any condition
on any offering of New Securities that would exclude Neoprobe from
participation.
(c) "New Securities" means any capital stock (including XTL
Common Shares) of XTL whether now authorized or not, and rights, options or
warrants to purchase such capital stock, and securities of any type that are, or
may become, convertible into capital stock; provided that the term "New
Securities" does not include (i) securities issued upon conversion of the
Debentures or exercise of the Warrant; (ii) securities issued as consideration
for the acquisition of another business entity or business division of any such
entity by XTL by merger, purchase of substantially all the assets or other
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ganization whereby XTL will own more than fifty percent (50%) of the voting
power of such business entity or business segment of any such entity; (iii) any
borrowings, direct or indirect, from financial institutions or other persons by
XTL, whether or not presently authorized, including any type of loan or payment
evidenced by any type of debt instrument, provided such borrowings do not have
any equity features including warrants, options or other rights to purchase
capital stock and are not convertible into capital stock of XTL; (iv) securities
issued to employees, officers or directors of XTL pursuant to any stock option,
stock purchase or stock bonus plan, agreement or arrangement approved by the
board of directors; (v) securities issued in connection with any
recapitalization of XTL; nor (vi) any right, option or warrant to acquire any
security convertible into the securities excluded from the definition of New
Securities pursuant to clauses (i) through (v) above.
(d) XTL will use all reasonable efforts to issue and sell New
Securities within ninety (90) days following the date of this Agreement
resulting in net proceeds to XTL of between $3 million and $5 million.
Section 2.2. Compliance with the Securities Act. Neoprobe may not offer
for sale or sell any securities issued by XTL unless such securities have been
registered under the Securities Act and registered or qualified under applicable
state securities laws or such securities or their offer or sale are exempt from
such registration or qualification and XTL has received an opinion of counsel,
in form and substance reasonably satisfactory to XTL, to the effect that such
securities or their offer or sale are so exempt.
Section 2.3. Opportunities. Nothing contained in this Agreement or
Neoprobe's ownership of Debentures, the Warrant, or XTL Common Shares or its
right to nominate directors or election of any affiliate of Neoprobe as a
director or officer of XTL shall require Neoprobe to offer any business
opportunity to XTL or provide any funds to XTL not specifically mentioned in the
Investment Agreement.
Article 3. Board of Directors.
Section 3.1. Size of the Board. The parties hereto shall use their best
efforts to ensure that the Articles of Incorporation and bylaws of XTL provide
that the board of directors of XTL shall be not less than five (5) nor more than
seven (7) directors.
Section 3.2. Nominations. Neoprobe shall have the right to nominate one
director. XTL shall use its best efforts to cause such person nominated by
Neoprobe to serve as a director of XTL to be duly elected by the shareholders of
XTL. If a director nominated by Neoprobe dies, resigns or is removed, only
Neoprobe may nominate his successor. The director nominated by Neoprobe shall
serve as a member of each committee of the board of directors (other than any
committee whose authority extends solely to scientific matters).
Section 3.3. Board of Directors' Meetings. The board of directors of
XTL shall meet within thirty (30) days after the date hereof and thereafter as
often as necessary but not less frequently than quarterly.
Section 3.4. Termination. The provisions of this Article 3 shall
terminate if Neoprobe no longer owns XTL Common Shares, Debentures or Warrants
which on a fully diluted basis constitute at least 5% of the XTL Common Shares.
For the purpose of determining the total number of fully diluted XTL Common
Shares outstanding, all securities that are convertible into or exchangeable for
XTL Common Shares (including the Debentures) shall be deemed to have been fully
converted into or exchanged for XTL Common Shares, all options, warrants
(including the Warrant) and rights to purchase XTL Common Shares or securities
that are convertible into or exchangeable for XTL Common Shares shall be deemed
to have been fully exercised and all agreements or contracts to issue or sell
XTL Common Shares shall be deemed to have been fully completed. Notwithstanding
the foregoing, the provisions of this Article 3 shall terminate effective upon
the closing of the initial registered public offering of XTL Common Shares.
Article 4. Covenants.
Part 4.1. Covenants of XTL. From the date hereof until such time as
Neoprobe no longer owns XTL Common Shares, Debentures or Warrants which on a
fully diluted basis constitute at least 5% of the XTL Common Shares, and unless
Neoprobe otherwise consents, XTL will perform and observe the covenants set
forth in this Part 4.1. For the purpose of determining the total number of fully
diluted XTL Common Shares outstanding, all securities that
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are convertible into or exchangeable for XTL Common Shares (including the
Debentures) shall be deemed to have been fully converted into or exchanged for
XTL Common Shares, all options, warrants (including the Warrant) and rights to
purchase XTL Common Shares or securities that are convertible into or
exchangeable for XTL Common Shares shall be deemed to have been fully exercised
and all agreements or contracts to issue or sell XTL Common Shares shall be
deemed to have been fully completed.
Section 4.1.1. Basic Financial Information. XTL will furnish the
following reports to Neoprobe:
(a) As soon as practicable after the end of each fiscal year
of XTL, and in any event within ninety (90) days thereafter, a consolidated
balance sheet of XTL and its subsidiaries, if any, as at the end of such fiscal
year, and consolidated statements of operations, cash flow and changes in equity
of XTL and its subsidiaries, if any, for such year, prepared in accordance with
GAAP consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and audited and
reported on by independent public accountants of recognized national standing
selected by XTL, accompanied by an XTL prepared comparison to XTL's financial
plan and budget for such year adopted under Section 4.1.1(b) below.
(b) As soon as practicable after the end of the first, second,
and third quarterly accounting periods in each fiscal year of XTL, and in any
event within forty-five (45) days thereafter, a consolidated balance sheet of
XTL and its subsidiaries, if any, as of the end of each such quarterly period,
and consolidated statements of operations and cash flow of XTL and its
subsidiaries for such period and for the current fiscal year to date, prepared
in accordance with GAAP consistently applied and setting forth in comparative
form the figures for the corresponding periods of the previous fiscal year and
to XTL's operating plan then in effect and approved by its board of directors,
subject to changes resulting from normal year-end audit adjustments, all in
reasonable detail and certified by the principal financial or accounting officer
of XTL, accompanied by a comparison of such statements to XTL's financial plan
and budget for such period except that such financial statements need not
contain the notes required by generally accepted accounting principles.
(c) From the date XTL becomes subject to the reporting
requirements of the Exchange Act, and in lieu of the financial information
required pursuant to Sections 4.1.1(a) and (b), copies of its annual reports on
Form 10-K and all exhibits thereto and its quarterly reports on Form 10-Q,
respectively.
(d) As soon as practicable after the end of each month and in
any event within twenty (20) days thereafter a consolidated balance sheet of XTL
and its subsidiaries, if any, as of the end of such month and consolidated
statements of operations and cash flow of XTL and its subsidiaries, for each
month and for the current fiscal year of XTL to date, all subject to normal
year-end audit adjustments, prepared in accordance with GAAP consistently
applied, together with a comparison of such statements to the corresponding
periods of the prior fiscal year and to XTL's then effective financial plan and
budget.
(e) As soon as practicable after transmission or occurrence
and in any event within ten (10) days thereof, copies of any reports or
communications delivered to any class of XTL's security holders or broadly to
the financial community, including any filings by XTL with any securities
exchange, the Commission or the National Association of Securities Dealers.
(f) As soon as practicable after the end of each fiscal year
of XTL, and in any event within forty-five (45) days thereafter, a statement of
the principal financial or accounting officer of XTL as to the absence of any
material adverse change in the financial condition of XTL as compared to the
financial condition as set forth in the most recent financial information
provided by XTL pursuant to this Section 4.1.1, or, in the event such a material
adverse change exists, a statement to such effect together with a description of
the events or conditions giving rise to such material adverse change.
Section 4.1.2. Additional Information and Rights.
(a) XTL will permit Neoprobe (or a representative of Neoprobe)
to visit and inspect any of the properties of XTL, including its books of
account and other records (and make copies thereof and take extracts therefrom),
and to discuss its affairs, finances and accounts with XTL's officers and its
independent public accountants, all upon reasonable notice at such reasonable
times and as often as
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any such person may reasonably request. XTL shall provide to Neoprobe such other
information and data with respect to XTL and its subsidiaries as Neoprobe may
from time to time reasonably request.
(b) Annually and at least thirty (30) days before the
beginning of each fiscal year of XTL, XTL shall prepare a financial plan and
budget, which shall be approved by the board of directors of XTL, which
financial plan and budget shall include a projection of operations and cash
flows for such fiscal year, a projected balance sheet as of the end of such
fiscal year and a detailed list of proposed capital expenditures during such
fiscal year. Any material changes in such business plan and budget shall be
approved by the board of directors of XTL, which approval shall be required
before such changes take effect unless they are not under the control of XTL.
XTL shall provide copies of the annual financial plan and budget and any changes
thereto to Neoprobe promptly after they are approved by the board of directors.
(c) XTL shall upon the request of Neoprobe provide Neoprobe
with (i) a report from XTL on its compliance with the terms and conditions of
this Agreement and any other agreement pursuant to which XTL has borrowed money
or sold its securities within ninety (90) days after the end of each fiscal year
and (ii) a copy of the annual management review letter of XTL's independent
public accountants, as soon as practicable after the end of each fiscal year and
in any event within one hundred twenty (120) days thereafter.
(d) The provisions of Section 4.1.1 and this Section 4.1.2
shall not limit any rights which Neoprobe may have to inspect and copy the books
and records of XTL and its subsidiaries, to inspect their properties or discuss
their affairs and finances, under the laws of the jurisdictions in which they
are incorporated.
(e) Neoprobe hereby agrees to hold in confidence and not trade
on or disclose any confidential information provided pursuant to Section 4.1.1
or this Section 4.1.2. Information that is provided to all shareholders of XTL
or any news media or that is otherwise publicly available shall not be deemed to
be confidential.
Section 4.1.3. Independent Accountants. XTL has retained Somekh Chaikin
as its independent public accountants who shall audit and report on XTL's
financial statements at the end of each fiscal year. If the services of the
independent public accountants so selected, or any firm of independent public
accountants hereafter employed by XTL, are terminated, XTL will promptly notify
Neoprobe and will request the firm of independent public accountants whose
services are terminated to deliver to Neoprobe a letter from such firm setting
forth the reasons for the termination of their services. In its notice to
Neoprobe, XTL shall state whether the change of accountants was recommended or
approved by the board of directors of XTL or any committee thereof. In the event
of such termination, XTL will promptly thereafter engage another firm of
independent public accountants of recognized national standing reasonably
acceptable to Neoprobe.
Section 4.1.4. Accounts and Records. XTL shall make and keep books,
records, and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of assets of XTL, its subsidiaries and
their employee benefit plans; and shall devise and maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or specific
authorization; (b) transactions have been and are recorded as necessary (i) to
permit preparation of financial statements in conformity with GAAP, and (ii) to
maintain accountability for assets; (c) access to assets is permitted only in
accordance with management's general or specific authorization; and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action has been and is taken with respect
to any differences.
Section 4.1.5. Corporate Existence. XTL shall maintain in full force
and effect its corporate existence, rights and franchises. XTL shall hold its
annual meeting of shareholders as provided in its Articles of Association.
Section 4.1.6. Insurance. XTL shall maintain insurance with respect to
the properties and businesses of XTL and its subsidiaries against loss, damage
or liability of the kinds and in the amounts required by law or customarily
insured against by prudent business persons engaged in similar businesses and
similarly situated.
Section 4.1.7. Payment of Taxes, etc. XTL shall promptly pay and
discharge (a) all taxes imposed upon it or upon any of its properties, (b) all
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lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and
other similar persons for labor, materials, supplies and rentals, which if
unpaid, might become a lien upon its properties, and (c) any debt incurred by it
before or after the date of this Agreement when due; provided, however, that XTL
and its subsidiaries shall not be required to pay any of the foregoing if (i)
the amount or validity thereof is being contested in good faith by appropriate
proceedings, (ii) XTL has provided for on its books, in accordance with GAAP,
adequate reserves or provisions with respect thereto and (iii) such non-payment
does not have a material adverse effect on XTL or its subsidiaries.
Section 4.1.8. Compliance with Laws. XTL shall comply with each
material provision of all laws, orders of a tribunal or governmental permits
relating to the conduct of its business or to its properties or assets if
noncompliance with such law, order or permit would have a material adverse
effect on XTL.
Section 4.1.9. Performance of Contracts. XTL shall comply with each
material provision of all of their respective contracts if the breach of such
provision would have a material adverse effect on XTL.
Section 4.1.10. Nature of the Business. XTL shall not change the
general character of the business conducted by it as a biopharmaceutical company
on the date hereof, nor engage in any type of business not reasonably related to
such business.
Section 4.1.11. Issuance of Stock. XTL shall not sell or issue any XTL
Common Shares or any other debt or equity securities except upon a determination
by the board of directors that the proceeds to be received by XTL (in cash,
property or other appropriate consideration) in connection with such sale shall
be not less than the then fair value of the securities to be issued.
Section 4.1.12. Dividends on Securities. XTL shall not declare or pay
any dividend or make any other distribution with respect to any of its capital
shares, unless at the time of such declaration and payment all payments required
to be made with respect to the Debentures have been paid in full. XTL shall not
declare or pay any dividend or make any other distribution with respect to the
XTL Common Shares, unless at the time of such declaration and payment all
payments required to be made with respect to the Debentures have been paid in
full and XTL has paid all dividends required to be paid to holders of XTL
Preferred Shares.
Section 4.1.13. Debt. XTL shall not incur any debt in excess of One
Million Dollars ($1,000,000) over the amount of debt projected under XTL's then
current financial plan and budget approved under Section 4.1.2(b) above, other
than trade credit incurred in the ordinary course of business. Compliance with
the covenant set forth in this Section 4.1.13 shall be determined as of the end
of each month.
Section 4.1.14. Loans, Advances and Investments.
(a) XTL shall not and shall cause its subsidiaries to not (i)
acquire, hold or purchase any stock, bond, note or other security of high risk
of any person in the nature of an investment, (ii) make any loan, advance or
capital contribution to any person other than employees of XTL, (iii) become a
general partner in any partnership or a member in any joint venture, (iv)
assume, guarantee, endorse or otherwise become liable for the debts or
obligations of any other person (except for the endorsements of negotiable
instruments for deposit or collection in the regular course of business or
guaranties by XTL of obligations of XTL's wholly-owned subsidiaries, and
guaranties by a subsidiary of obligations of XTL), nor (v) enter into contracts
relating to commodity futures, financial futures, or similar investments.
(b) Notwithstanding the provisions of Section 4.1.14(a) above,
XTL may purchase without limitation (i) certificates of deposit of the banks
that are insured by the Bank of Israel, (ii) securities issued by the State of
Israel or any agency or instrumentality thereof, (iii) commercial paper that has
an investment grade rating from a recognized rating agency, or (iv) publicly
traded equity securities of current or potential customers, suppliers or other
persons having commercial relationships with XTL having an acquisition cost of
no more than Ten Thousand Dollars ($10,000) per issue. Furthermore and
notwithstanding the provisions of Section 4.1.14(a) above, XTL and its
subsidiaries may advance trade credit to their respective customers in the
ordinary course of business and may continue to hold loans and investments made
before the date hereof that are disclosed on the Disclosure Schedule to the
Investment Agreement.
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Section 4.1.15. Transactions with Affiliates. XTL shall not and shall
cause its subsidiaries to not, without the approval of the disinterested members
of XTL's board of directors, lend money or property to, lease property to or
from or enter into contracts or other transactions with any director, officer or
person who owns beneficially or of record five percent (5%) of the XTL Common
Shares of XTL, or any of their affiliates. This Section 4.1.18 shall not affect
any transaction listed on the Disclosure Schedule to the Investment Agreement.
Part 4.2. Termination of XTL Covenants.
Section 4.2.1. Termination Date. The obligation of XTL to comply with
the covenants set forth in Part 4.1 of this Agreement shall terminate effective
upon the closing of the initial registered public offering of XTL Common Shares.
Part 4.3. Covenants of Neoprobe.
Section 4.3.1. Transfers of Shares. Neoprobe will not sell or otherwise
transfer any XTL Common Shares other than in compliance with the terms of the
XTL articles of association applicable to the transfer of such shares. XTL shall
provide all reasonable assistance to Neoprobe in effecting such compliance.
Article 5. Definitions.
Section 5.1. General. Certain words and phrases used in this Agreement
shall have the meanings given to them below in this Section. Capitalized terms
used but not defined in this Agreement shall have the meanings given to them in
the Investment Agreement.
"Adverse claims" includes any claim that a transfer of any property or
assets was or would be wrongful or that a particular person is the owner of or
has an interest in the property or asset. Such term does not include
restrictions on transfer imposed by this Agreement.
"Affiliate" means, with respect to a specified person, any other person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the specified person. A person
shall be deemed to be an affiliate of a specified person if: (a) he is an
employee, officer, director, partner, agent or attorney of such specified
person; (b) he is the beneficial owner of twenty percent (20%) or more of any
class of the equity securities of the specified person; (c) the specified person
is the beneficial owner of twenty percent (20%) or more of any class of the
equity securities of the other person; (d) he has a substantial beneficial
interest in or serves as trustee or in a similar fiduciary capacity for any
trust, estate or employee benefit plan; (e) it is an employee benefit plan for
the benefit of the employees of the specified person; or (f) such other person
is his relative or spouse or a relative of his spouse.
"Class E Share" means the Class E Common Share of XTL.
"Closing Date" means the date of the sale of Debentures and Warrant
pursuant to the terms of the Investment Agreement.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Companies Act" means the companies act or business corporation acts and
laws applicable to XTL as a public company formed and existing under the laws of
the State of Israel.
"Contract" means any contract or any agreement, promise or instrument,
whether written or oral, that creates or evidences a right or an obligation of a
person; organizes or constitutes a person that is a corporation, partnership,
trust, estate or other association; transfers, creates or evidences an interest
in the property or assets of a person or sets forth the terms of an encumbrance
on the property or assets of a person. A contract is a contract of a person if
such person is a party to the contract, was organized or constituted under the
contract, has assumed any liability under the contract, has been delegated any
duty under the contract, has been assigned any right under the contract or if
the contract sets forth the terms of an encumbrance on property or assets owned
by such person.
"Debentures" means the 5% Convertible Subordinated Debentures due February
1, 1998 issued by XTL.
"Debt" means any obligation to repay borrowed money, to pay any promissory
note, bond, debenture or similar instrument or security, to pay the deferred
purchase price of property or services or to pay a
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judgment and includes the amount required to be shown on a balance sheet under
GAAP as the liability with respect to a capitalized lease.
"Default" means with respect to any contract any event of default as
defined therein or by any law or any event which with the giving of notice or
the lapse of time would be such an event of default, any breach or violation of
the terms thereof, and any event which with or without the giving of notice or
the lapse of time gives any party to or holder of such contract the right to
impose a lien or other onerous term or condition on the defaulting party or its
properties or to terminate such contract. A default shall be deemed to exist if
a party gives or receives notice thereof, whether or not the factual basis of
such notice is disputed.
"Eastern Time" means Eastern Standard Time or Eastern Daylight Time as in
effect at Columbus, Ohio on a given day.
"Employee benefit plan" means, for any person, any employee benefit pension
plan or employee benefit welfare plan and any other plan, benefit or program of
benefits or perquisites provided to directors, officers or employees of any
person, including, but not limited to, vacation and sickness plans or policies
and severance pay and bonus plans or policies. The term "employee benefit plan"
includes any employee benefit plan which has been terminated but which still has
assets or obligations to which any such person is still liable.
"Encumbrance" means any right, title or interest in property other than the
right, title and interest of the owner thereof who has possession and control
over the property. The term encumbrance includes liens, contracts of sale,
restrictions on use or transfer, consignments, powers of attorney or
appointment, restrictions on use or transfer, adverse claims and claims of
infringement and defects in title.
"Enforceable obligation" means with respect to a contract of a person that
such contract is the valid, legally binding obligation of the person and is
enforceable against such person in accordance with its terms.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
"GAAP" means Israeli generally accepted accounting principles.
"Government" means the United States of America, any state thereof, any
foreign sovereign and any political subdivision of the foregoing including, but
not limited to, any province, district, municipality or county.
"Governmental body or officer" means any agency, department,
instrumentality, body or officer of any government, including courts and judges,
and any private organization, such as the National Association of Securities
Dealers, Inc., to the extent that it is granted governmental powers by any
government.
"Governmental permit" means any permit, license, registration, approval,
certificate of need or authority issued by any governmental body or officer that
is required by any law to be obtained by any person in order to own or use any
specified assets or properties or engage in any specified transaction, activity
or business, without violating a specified law; any exemption from such a
requirement that is not available without any filing with or other action by any
governmental body or officer and any consent or approval of any private party,
such as Underwriters Laboratories, required by any law to be obtained in order
to own or use any specified assets or properties or engage in any specified
transaction, activity or business without violating a specified law.
"Immaterial encumbrances" means (a) liens for current taxes not yet due and
payable, (b) imperfections of title and easements which are immaterial in
character, amount or extent and do not detract from the value or interfere with
the use of the property subject thereto and (c) statutory and common law liens
of landlords, carriers, warehousemen, mechanics, workmen and materialmen
incurred in the ordinary course of business for sums not yet due.
"Includes" means includes, but is not limited to.
"Investment Agreement" means the Investment Agreement dated January 31,
1996 among the parties hereto pursuant to which the form of this Agreement is
Exhibit B thereto.
"Law" means any law (whether enacted by statute, constitution or ordinance,
declared by any court
-14-
<PAGE> 15
(whether at law or in equity) or established by other means) of any government
having jurisdiction over a person or its assets or property and any rule or
regulation of any governmental body or officer having jurisdiction over a person
or its assets or property.
"Lease" means any lease or other contract (however denominated) providing
for the use by one person of real or personal property owned by another person.
"Liability" has the same meaning as obligation.
"Lien" means a charge against or an interest in property to secure payment
of a debt or performance of an obligation, and includes a security interest
created by agreement, a judicial lien obtained by legal or equitable process or
litigation, a common law lien or a statutory lien.
"Litigation" means any civil, criminal or administrative action, suit or
proceeding before any governmental body or officer or any arbitrator or private
tribunal and further includes any investigation, grand jury or discovery
preparatory to any threatened, contemplated or possible litigation.
"Mark" means any trademark, trade name, service mark, corporate name or
other proprietary designation or any application or filing with respect to any
of the foregoing.
"Material adverse change in a person's business or properties" means a
material decrease in the person's revenues, cash flow or income or the value of
its assets or properties or material increase in its expenses or obligations or
the occurrence of any event, including casualty, commencement of litigation,
strikes, war, civil disturbance, natural disaster, or changes in the law that
individually or in the aggregate have resulted in or are reasonably likely to
result in a current or future material decrease in the person's revenues, cash
flow or income or the value of its assets or properties or material increase in
its expenses or obligations.
"Material adverse effect" means that the occurrence or non-occurrence of a
specified action, event or transaction would cause a material adverse change in
the specified person's business or properties.
"Obligation" means any obligation that a specified person has to pay money,
transfer any asset or property, render services or to perform or refrain from
any act, whether it was created by law, order of a tribunal or contract and
whether or not it is legal or equitable, reduced to judgment, liquidated or
unliquidated, contingent or fixed, matured or unmatured, disputed or undisputed,
known or unknown or secured or unsecured. The term obligation does not include
the general obligation that persons have to obey the laws of governments having
jurisdiction over them, but it does include damages, fines and penalties arising
out of violations of such laws and obligations to pay taxes.
"Or" is disjunctive but not exclusive.
"Order of a tribunal" means any order, writ, judgment or injunction issued
by any court or other governmental body or officer or any arbitrator or private
tribunal as the result of or ancillary to any litigation, which requires the
performance or refraining from performance of an act, transfers any interest in
property or declares any rights with respect to any property, contract or
transaction. The term order of a tribunal does not include money judgments which
are enforceable only by legal process. Such term for a given person also
includes any agreement, undertaking or understanding between such person and any
governmental body or officer acting as a regulatory authority.
"Person" means any individual, corporation, general or limited partnership,
estate, trust, or governmental body or officer and any other entity or
association that has the power to own property, enter into contracts or to sue
and be sued.
"Recapitalization" means, with respect to any security, any issuance of
securities with respect thereto as a dividend or any issuance, combination or
other change in such security pursuant to any amendment of the issuer's
certificate or articles of incorporation or a merger, consolidation, purchase or
sale of assets, dissolution, or plan of arrangement, compromise or
reorganization of the issuer.
"Rule 144" means Rule 144 as promulgated by the Commission under the
Securities Act, as such rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
"Rule 145" means Rule 145 as promulgated by the Commission under the
Securities Act, as such rule may be amended from time to time, or
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<PAGE> 16
any similar successor rule that may be promulgated by the Commission.
"Securities" means securities as such term is defined in the Securities Act
whether or not the securities in question are exempt from any of the provisions
of such act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar successor federal statute and the rules and regulations thereunder, all
as the same shall be in effect from time to time.
"Securities laws" means the Securities Act, the Exchange Act, all
regulations and rules thereunder, and all applicable state securities or "blue
sky" laws and the rules and regulations thereunder, each as they may be amended
from time to time.
"Subsidiary" means any corporation of which more than 50% of the
outstanding securities having ordinary voting power to elect a majority of the
board of directors of such corporation (whether or not at the time securities of
any other classes of such corporation have or might have voting power by reason
of the happening of any contingency) is directly or indirectly owned by a person
or its other subsidiaries.
"Tax returns" means all tax returns, information returns, tax reports,
declarations or similar documents required to be filed with any governmental
body or officer.
"Taxes" means all taxes including excise taxes, ad valorem taxes and
transfer taxes and fees and other governmental charges of any nature imposed
upon a person or any of the properties, tangible or intangible assets, income,
receipts, payrolls, transactions, stock transfers, capital, net worth or
franchises of a person; all sales, use, withholding or other taxes required to
be collected from customers, employees and other third parties and paid over to
any government; and all additions to tax, penalties or interest which relate in
any way to such taxes or any assessment or collection thereof.
"Transfer" means every mode, direct or indirect, absolute or conditional,
voluntary or involuntary, of disposing of or parting with an asset or property
or of an interest therein, and includes payment of money, release, lease,
abandonment and creation of a lien or other encumbrance.
"Warrant" means the Warrant to purchase XTL Common Shares in the form of
Exhibit C attached to the Investment Agreement.
"XTL Common Shares" means the Class A Common Shares of XTL.
Section 5.2. Other. The following defined terms shall have the
definitions set forth in the sections indicated:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Agreement 5.5
Indemnified Party 1.6
Indemnifying Party 1.6
Neoprobe Parties
New Securities 2.1
Other Stock 1.12
Registrable Securities 1.1
Registration 1.1
Registration Expenses 1.1
Selling Expenses 1.1
XTL Parties
</TABLE>
Section 5.3. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
Section 5.4. Effect of Definitions. The definitions set forth in
Section 5.1 above or referenced in Section 5.2 above shall apply equally to the
singular, plural, adjectival, adverbial and other forms of any of the words and
phrases defined regardless of whether they are capitalized.
Section 5.5. This Agreement. This Agreement consists of the title,
date, names of parties, and preamble set forth above, these terms, the
signatures of the parties and the information set forth on the signature pages
below, the exhibits attached hereto and the certificates, documents and other
instruments required to be delivered hereunder; and any reference to this
Agreement refers to all of such constituents. The date first set forth above
shall be deemed to be the date hereof for all purposes. The statements set forth
in the preamble are made for the purpose of providing background information
that will assist persons who read this Agreement in interpreting it. Such
statements do not constitute representations, warranties or covenants of the
parties hereto and they may be contradicted by the parties.
Section 5.6. Case and Gender. In this Agreement words in the singular
number include the
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<PAGE> 17
plural, and in the plural include the singular; and words of the masculine
gender include the feminine and the neuter, and when the sense so indicates
words of the neuter gender may refer to any gender.
Article 6. Miscellaneous.
Section 6.1. This Agreement. This Agreement sets forth the entire
agreement of the parties with respect to the subject matter hereof and it
supersedes and discharges all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter. There are no oral conditions precedent to the effectiveness of this
Agreement.
Section 6.2. Successors and Assigns. Except as otherwise provided
herein, the terms of this Agreement shall inure to the benefit of and be binding
upon the respective heirs, legal representatives and corporate or partnership
successors of the parties.
Section 6.3. Non-Waiver. Neither the failure of nor any delay by any
party to this Agreement to enforce any right hereunder or to demand compliance
with its terms is a waiver of any right hereunder. No action taken pursuant to
this Agreement on one or more occasions is a waiver of any right hereunder or
constitutes a course of dealing that modifies this Agreement.
Section 6.4. Waivers. No waiver of any right or remedy under this
Agreement shall be binding on any party unless it is in writing and is signed by
the party to be charged. No such waiver of any right or remedy under any term of
this Agreement shall in any event be deemed to apply to any subsequent default
under the same or any other term contained herein.
Section 6.5. Amendments. No amendment, modification or termination of
this Agreement shall be binding on any party hereto unless it is in writing and
is signed by the party to be charged.
Section 6.6. Severability. The terms of this Agreement are severable
and the invalidity of all or any part of any term of this Agreement shall not
render invalid the remainder of this Agreement or the remainder of such term. If
any term of this Agreement is so broad as to be unenforceable, such term shall
be interpreted to be only so broad as is enforceable.
Section 6.7. Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and disbursements
in addition to any other relief to which such party may be entitled.
Section 6.8. Third Parties. Nothing herein expressed or implied is
intended or shall be construed to give any person other than the parties hereto
any rights or remedies under this Agreement.
Section 6.9. Saturdays, Sundays and Holidays. Where this Agreement
authorizes or requires a payment or performance on a Saturday, Sunday or public
holiday, such payment or performance shall be deemed to be timely if made on the
next succeeding business day.
Section 6.10. Captions. The captions and section numbers appearing in
this Agreement are inserted only as a matter of convenience. They do not define,
limit or describe the scope or intent of the provisions of this Agreement.
Section 6.11. Notices. Any notice, request or other communication
required or permitted to be given under this Agreement shall be duly given if it
is in writing and delivered in person, or mailed by air-mail, postage prepaid,
or sent by facsimile transmission, and directed to the party at the address set
forth under such parties' signature hereto and with such copies delivered,
transmitted or mailed to such persons as are specified therein. Such notice
shall be effective upon delivery thereof if delivered in person, five (5) days
after mailing if air-mailed or upon electronic confirmation of receipt if sent
by facsimile transmission. Either party may change its address for notices in
the manner set forth above.
Section 6.13. Counterparts. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and either party hereto may execute this Agreement by signing one or
more counterparts.
Section 6.14. Governing Law. The validity, terms, performance and
enforcement of this Agreement shall be governed by those laws of the State of
Delaware and the United States of America that are applicable to agreements
negotiated, executed, delivered and performed solely in the State of Delaware
and the United States of America.
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<PAGE> 18
SIGNATURE PAGE
FOR
INVESTOR'S RIGHTS AGREEMENT
- ----------------
FEBRUARY 5, 1996
- ----------------
XTL BIOPHARMACEUTICALS, LTD.
By:
-------------------------------
Print Name: Martin Becker
Print Title: President and Chief
Executive Officer
Address for Notices: Copies to:
XTL Biopharmaceuticals, Ltd. Ashok J. Chandrasekhar, Adv.
Kiryat Weismann Goldfarb, Levy, Eran & Co.
P.O. Box 370 Eliahu House
Rehovot 76100 Israel 2 lbn Gvirol Street
Attention: Chief Executive Officer Tel Aviv 64077 Israel
Telecopy Number: 972-8-940-5017 Telecopy Number: 972-3-695-4344
<PAGE> 19
SIGNATURE PAGE
FOR
INVESTOR'S RIGHTS AGREEMENT
- ----------------
FEBRUARY 5, 1996
- ----------------
NEOPROBE CORPORATION
By:
-------------------------------
Print Name: David C. Bupp
Print Title: President
Address for Notices: Copies to:
Neoprobe Corporation Robert S. Schwartz, Esq.
425 Metro Place North, Suite 400 Schwartz, Warren & Ramirez
Dublin, Ohio 43017-1367 41 South High Street
Attention: Suite 2300
Telecopy Number: (614) 793-7522 Columbus, Ohio 43215
Telecopy Number: (614) 224-0360
<PAGE> 1
EXHIBIT 10.3.36
WARRANT
TO
PURCHASE CLASS A COMMON SHARES
OF
XTL BIOPHARMACEUTICALS, LTD.
THIS WARRANT MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
UNLESS IT IS REGISTERED UNDER THE APPROPRIATE SECURITIES LAWS OR IT OR SUCH
OFFER, SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION AND THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY IN FORM
AND SUBSTANCE, TO THAT EFFECT.
NO. WA01 WARRANT TO PURCHASE 170,700 CLASS A
COMMON SHARES, NOMINAL VALUE NIS 0.20
PER SHARE (SUBJECT TO ADJUSTMENT)
VOID AFTER FEBRUARY 13, 1999
For value received, XTL BIOPHARMACEUTICALS, LTD., a public company
organized under the laws of the State of Israel (the "Company"), hereby
certifies that Neoprobe Corporation, a Delaware corporation, or its registered
assigns (the "Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company One Hundred Seventy Thousand Seven Hundred (170,700)
Class A Common Shares, nominal value NIS 0.20 per share, of the Company ("Common
Shares"), as constituted on February 13, 1996 (the "Warrant Issue Date"), upon
surrender hereof at the principal office of the Company referred to below, with
the Notice of Exercise attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States as hereinafter provided at the per
share exercise price which shall be one hundred twenty five percent (125%) of
the base price of Eight and 79/100 Dollars ($8.79) (the "Base Price") if this
Warrant is exercised on or before the first anniversary of the Warrant Issue
Date and one hundred fifty percent (150%) of the Base Price if this Warrant is
exercised thereafter (the "Exercise Price"). The number, character and Exercise
Price of such Common Shares are subject to adjustment as provided below. The
term "Warrant" as used herein shall include this Warrant and any warrants
delivered in substitution or exchange therefor as provided herein. This Warrant
is registered and its transfer may be registered upon the books maintained for
that purpose by the Company by delivery of this Warrant duly endorsed.
ARTICLE 1. Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable during the term commencing on the
Warrant Issue Date and ending at 5:00 p.m., Eastern time, on the third
anniversary of the Warrant Issue Date, and shall be void thereafter.
ARTICLE 2. Exercise of Warrant.
SECTION 2.1. Method. The purchase rights represented by this Warrant are
exercisable by the Holder, in whole or in part, at any time or from time to
time, during the term hereof by the surrender of this Warrant and the Notice of
Exercise annexed hereto duly completed and executed by the Holder at the
principal executive office of the Company at Kiryat Weiz-
<PAGE> 2
mann Industrial Park, Rehovot, Israel (or such other office or agency of the
Company as it may designate by notice in writing to the Holder), together with
the consideration constituting the Exercise Price of the Common Shares to be
purchased in cash or by wire transfer to a bank account designated by the
Company or by a certified check; provided, however, that if less than all of the
purchase rights represented by this Warrant are exercised, such exercise shall
involve the purchase of at least One Hundred (100) Common Shares.
SECTION 2.2. Effect. This Warrant shall be deemed to have been exercised at
the time of its surrender for exercise together with full payment as provided
above, and the person entitled to receive the Common Shares issuable upon such
exercise shall be treated for all purposes as the holder of record of such
shares at and after such time. As promptly as practicable on or after such date
the Company at its expense shall issue to the person entitled to receive the
same a certificate for the number of Common Shares issuable upon such exercise.
If this Warrant is exercised in part, the Company at its expense will execute
and deliver a new Warrant exercisable for the number of shares for which this
Warrant may then be exercised.
SECTION 2.3. Holder Not a Shareholder. The Holder shall neither be entitled
to vote nor receive dividends nor be deemed the holder of Common Shares or any
other securities of the Company that may at any time be issuable on the exercise
hereof for any purpose until the Warrant has been exercised as provided in this
Article 2.
SECTION 2.4. No Fractional Shares. No fractional Common Shares shall be
issued upon the exercise of this Warrant. All fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of Common
Shares or other securities, properties or rights issuable upon the exercise of
this Warrant.
SECTION 2.5. Preferred Shares. If, at the time of the exercise of any
portion of this Warrant, any Class A Preferred Shares, nominal value NIS 0.20
per share, of the Company (the "Preferred Shares") are outstanding, the Holder
will receive Preferred Shares upon such exercise in lieu of receiving Common
Shares. The number of Preferred Shares issuable in such event shall be the
number of Common Shares for which the portion of this Warrant being exercised
would be exercised but for the operation of this Section 2.5 divided by the then
applicable conversion ratio. The conversion ratio is the number of Common Shares
into which each Preferred Share is then convertible.
SECTION 2.6. Redemption of Debenture. The tender of this Warrant to the
Company by the Holder is a condition to the exercise of its right to redeem the
Company's 5% Convertible Subordinated Debenture issued on the Warrant Issue Date
(the "Debenture") pursuant to Section 6.3 thereof. If this Warrant is tendered
to the Company in connection with such a redemption it may not be exercised from
the time of such tender until 90 days have elapsed. If during such 90 day period
the redemption price is paid in full, the Warrant shall be canceled and the
Company shall have no further liability or obligation hereunder. If the
redemption price is not paid in full during such 90 day period, the Company
shall return this Warrant to the Holder at the end of the 90 day period and and
it shall be exercisable in accordance with its terms thereafter.
ARTICLE 3. Registered Warrants.
SECTION 3.1. Series. This Warrant is one of a numbered series of Warrants
which are identical except as to the number of Common Shares purchasable and as
to any restriction on the transfer thereof in order to comply with the
Securities Act of 1933 and the regulations of the Securities and Exchange
Commission promulgated thereunder or state securities or blue sky laws or
similar laws of the State of Israel (the "Securities Laws"). Such Warrants are
referred to herein collectively as the "Warrants."
SECTION 3.2. Record Ownership. The Company shall maintain a register of the
Holders of the Warrants (the "Register") showing their names and addresses and
the serial numbers and number of Common Shares purchasable issued to or
transferred of record by them from time to time. The Register may be maintained
in electronic, magnetic or other computerized form. The Company may treat the
person named as the Holder of this Warrant in the Register as the sole owner of
this Warrant. The Holder of this
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<PAGE> 3
Warrant is the person exclusively entitled to receive notifications with respect
to this Warrant, exercise it to purchase Common Shares and otherwise exercise
all of the rights and powers as the absolute owner hereof.
SECTION 3.3. Registration of Transfer. Transfers of this Warrant may be
registered on the Register. Transfers shall be registered when this Warrant is
presented to the Company duly endorsed with a request to register the transfer
hereof. When this Warrant is presented for transfer and duly transferred
hereunder, it shall be canceled and a new Warrant showing the name of the
transferee as the Holder thereof shall be issued in lieu hereof, provided,
however, that no transfer of less than all of this Warrant shall be made if the
portion to be transferred is less than One Hundred (100) Common Shares. When
this Warrant is presented to the Company with a reasonable request to exchange
it for Warrants of other denominations of at least One Hundred (100) Common
Shares, the Company shall make such exchange and shall cancel this Warrant and
issue in lieu thereof Warrants exercisable for an equal number of Common Shares
in the denominations requested by the Holder. Such Warrants shall bear the
legend set forth on the face hereof, unless the Company receives an opinion of
counsel, reasonably satisfactory to the Company in form and substance, stating
that any Warrants to be issued upon any transfer or exchange pursuant to this
Section 3.3 are no longer required to bear such legend.
SECTION 3.4. Worn and Lost Warrants. If this Warrant becomes worn, defaced
or mutilated but is still substantially intact and recognizable, the Company or
its agent may issue a new Warrant in lieu hereof upon its surrender. If this
Warrant is lost, destroyed or wrongfully taken, the Company shall issue a new
Warrant in place of the original Warrant if the Holder so requests by written
notice to the Company and the Holder has delivered to the Company an indemnity
agreement reasonably satisfactory to the Company with an affidavit of the Holder
that this Warrant has been lost, destroyed or wrongfully taken. Such Warrants
shall bear the legend set forth on the face hereof, unless the Company receives
an opinion of counsel, reasonably satisfactory to the Company in form and
substance, stating that any Warrants to be issued in place of any Warrants
pursuant to this Section 3.4 are not required to bear such legend under the
Securities Laws.
SECTION 3.5. Restrictions on Transfer and Exercise. This Warrant and the
Common Shares issuable upon the exercise of this Warrant may not be offered for
sale, sold or otherwise transferred unless such offer, sale or other transfer is
registered under the Securities Laws or such securities or such transfer is
exempt from such registration and the Company has received an opinion of
counsel, reasonably satisfactory to the Company in form and substance, stating
that such securities or such offer, sale or transfer is exempt from registration
under the Securities Laws. This Warrant may not be exercised unless the exercise
hereof is registered under the Securities Laws or the securities issuable
hereunder are exempt from registration or such exercise is exempt from
registration under the Securities Laws and the Company has received an opinion
of counsel or other evidence of such exemption, reasonably satisfactory to the
Company in form and substance, stating that such securities or such exercise is
exempt from registration under the Securities Laws.
SECTION 3.6. Legend. Upon any exercise of this Warrant, the certificates
representing the securities purchased thereby shall bear the following legend in
larger or other contrasting type or color, unless (a) such securities shall have
been registered under the Securities Laws or (b) the purchaser shall have
provided to the Company an opinion of counsel, reasonably satisfactory to the
Company in form and substance, stating that such is not required by the
Securities Laws:
These securities may not be offered for sale, sold or otherwise transferred
unless they are registered under the appropriate securities laws or they or
such offer, sale or other transfer is exempt from such registration and the
issuer has received an opinion of counsel, reasonably satisfactory to the
issuer in form and substance, to that effect.
SECTION 3.7. Warrant Agent. The Company may, by written notice to the
Holder, appoint an agent for the purpose of maintaining the Register, issuing
Common Shares or other securities then issuable upon the exercise of this
Warrant, exchanging or
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<PAGE> 4
transferring this Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange, or transfer, as the case may be, shall be made
at the office of such agent.
ARTICLE 4. Reservation of Stock. The Company covenants that, during the term
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Shares or Common Shares held in treasury a sufficient number of
shares to provide for the issuance of Common Shares upon the exercise of this
Warrant. The Company further covenants that all shares that may be issued upon
the exercise of rights represented by this Warrant, upon exercise of this
Warrant and payment of the Exercise Price, all as set forth herein, will be duly
authorized, validly issued, fully paid, non-assessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously or otherwise specified herein). The
Company agrees that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for Common Shares upon the exercise
of this Warrant.
ARTICLE 5. Adjustments. The Base Price, the Exercise Price and the number of
shares purchasable hereunder are subject to adjustment from time to time as
follows:
SECTION 5.1. Computation of Adjusted Base Price. If the Company, at any
time after the date hereof and while this Warrant is exercisable, issues or
sells any Common Shares, including shares held in the Company's treasury and
Common Shares issued upon the exercise of any options, rights or warrants to
subscribe for Common Shares and Common Shares issued upon the direct or indirect
conversion or exchange of securities for Common Shares, for a consideration per
share that is less than either the Base Price or the Market Price (as
hereinafter defined) in effect immediately before the issuance or sale of such
shares, or without consideration, then upon such issuance or sale, the Base
Price shall (until another such issuance or sale) be reduced to the price
(calculated to the nearest full cent) equal to the quotient of
(a) an amount equal to the sum of
(i) the number of Common Shares outstanding immediately before such
issuance or sale multiplied by the lesser of (A) the Base Price in effect
immediately before such issuance or sale or (B) the Market Price in effect
on the date immediately before such issuance or sale, plus
(ii) the aggregate of the amount of all consideration, if any, received by
the Company upon such issuance or sale, divided by (b) the number of Common
Shares outstanding immediately after such issuance or sale;
provided, however, that the Base Price will not be adjusted pursuant to this
computation to be an amount in excess of the Base Price in effect immediately
before such issuance or sale. This Section 5.1 does not apply to a split or
combination of Common Shares or a dividend thereon payable in Common Shares for
which an adjustment is made under Section 5.4 below.
SECTION 5.2. General Rules for Computation of Adjustments. For the purposes
of any computation to be made in accordance with Section 5.1 or 5.3, the
following provisions shall be applicable:
(a) Commissions and Discounts. The aggregate of the amount of all
consideration, if any, received by the Company upon any issuance or sale of
Common Shares shall be deemed to include the amount paid for such shares before
deducting any commissions or other compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection therewith.
(b) Other Than Cash Consideration. If Common Shares are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration therefor other than cash shall be deemed to be the value of
such consideration as determined in good faith by the Board of Directors of the
Company.
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<PAGE> 5
(c) Reclassification. The reclassification of securities of the Company
other than Common Shares into other securities of the Company shall be deemed to
involve the issuance of such Common Shares for a consideration other than cash
immediately before the close of business on the date fixed for the determination
of security holders entitled to receive such shares, and the value of the
consideration allocable to such Common Shares shall be determined as provided in
paragraph (b) of this Section 5.2.
(d) Outstanding Shares. The number of Common Shares outstanding at any
one time shall be deemed to include the aggregate number of shares issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
any and all outstanding options, rights, warrants to purchase Common Shares and
upon the conversion or exchange of any and all outstanding securities
convertible or exchangeable into Common Shares.
(e) Market Price. As used herein, the term 'Market Price" at any date
shall be deemed to be (i) the last reported sale price for the current or most
recent trading days as officially reported by the securities exchange or market
on which the Common Shares are principally traded, (ii) if the Common Shares are
not principally traded on a securities exchange or market, the closing bid
quotation on such day as furnished by an inter-dealer quotation system or
(iii) if the Common Shares are not so quoted, as determined in good faith by a
resolution of the Board of Directors of the Company, based on the best
information available to it.
(f) Exercise Price Per Share. As used herein, the term "Exercise Price
Per Share," means at a given time the total amount payable by the Holder upon
the complete exercise of this Warrant at that time divided by the total number
of Common Shares issuable upon such exercise.
(g) Common Shares. As used herein, the term "Common Shares" means (i)
the class of stock designated as Class A Common Shares in the Articles of
Association of the Company as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassifications of such Common
Shares consisting solely of changes in nominal value, or from nominal value to
no nominal value, or from no nominal value to nominal value. If the Company
issues securities with greater or superior voting rights than the Common Shares
outstanding as of the date hereof, the Holder, at its option, may receive upon
exercise of this Warrant either Common Shares or a like number of such
securities with greater or superior voting rights.
SECTION 5.3. Options, Rights, Warrants and Convertible and Exchangeable
Securities. If the Company at any time after the date hereof and while this
Warrant is exercisable, issues options, rights or warrants to subscribe for
Common Shares, or issues any securities convertible into or exchangeable for
Common Shares, for a consideration per share less than either the Base Price or
the Market Price in effect immediately before the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or without
consideration, the Base Price in effect immediately before the issuance of such
options, rights or warrants, or such convertible or exchangeable securities, as
the case may be, shall be reduced to a price determined by making a computation
in accordance with the provisions of Section 5.1 hereof, provided that:
(a) The aggregate maximum number of Common Shares, as the case may be,
issuable under such options, rights or warrants shall be deemed to be issued and
outstanding at the time such options, rights or warrants were issued, and shall
be deemed to be issued for a consideration equal to the minimum purchase price
per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration, if any, received by the Company for the
issuance of such options, rights or warrants.
(b) The aggregate maximum number of Common Shares issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration received by the Company for
the issuance of such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof.
-5-
<PAGE> 6
(c) If any change shall occur in the exercise price per share provided
for in any of the options, rights or warrants referred to in clause (a) of this
Section 5.3, or in the price per share at which the securities referred to in
clause (b) of this Section 5.3 are convertible or exchangeable, such options,
rights or warrants or conversion or exchange rights, as the case may be, shall
be deemed to have expired or terminated on the date when such price change
became effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be deemed to
have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
(d) Except as provided in clause (c) of this Section 5.3, no further
adjustment of the Base Price shall be made upon the actual issuance of the
Common Shares upon the exercise of such options, rights or warrants, or the
conversion or exchange of such convertible or exchangeable securities.
SECTION 5.4. Split, Subdivision or Combination of Shares. If, at any time
while this Warrant remains outstanding and unexpired, the Common Shares are
split or if a dividend of Common Shares is paid on the Common Shares, the number
of Common Shares for which this Warrant is exercisable shall be increased
automatically by the ratio between the number of Common Shares outstanding
immediately after such event (assuming that there is no elimination of
fractional shares as a result of such split or dividend) and the number of
Common Shares outstanding immediately before such event and the Base Price
hereof shall be decreased automatically by the same ratio. If the Common Shares
are combined into a lesser number of Common Shares, the number of Common Shares
for which this Warrant is exercisable shall be decreased automatically by the
ratio between the number of Common Shares outstanding immediately after such
event (assuming that there is no elimination of fractional shares as a result of
such combination) and the number of Common Shares outstanding immediately before
such event and the Base Price hereof shall be increased automatically by the
same ratio.
SECTION 5.5. Adjustment in Number of Common Shares. Upon each adjustment of
the Base Price pursuant to the provisions of this Article 5 other than an
adjustment under Section 5.4 above, the number of Common Shares issuable upon
the exercise of this Warrant shall be adjusted to the nearest full number of
Common Shares by multiplying the Base Price in effect immediately before such
adjustment by the number of Common Shares issuable upon exercise of this Warrant
immediately before such adjustment and dividing the product so obtained by the
adjusted Base Price.
SECTION 5.6. Merger, Sale of Assets, etc. If, at any time while this
Warrant or any portion thereof is outstanding and unexpired, there shall be (a)
a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein) of the Company, (b) a
merger or consolidation of the Company with or into another corporation in which
the Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (c) a sale or transfer of the Company's properties and assets as,
or substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Article 5. The foregoing provisions of this Section 5.6 shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time
-6-
<PAGE> 7
receivable upon the exercise of this Warrant. If the per share consideration
payable to the Holder hereof for shares in connection with any such transaction
is in a form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's Board of
Directors, which determination shall be conclusive in the absence of manifest
error. In all events, appropriate adjustment (as determined in good faith by the
Company's Board of Directors, which determination shall be conclusive in the
absence of manifest error) shall be made in the application of the provisions of
this Warrant with respect to the rights and interests of the Holder after the
transaction, to the end that the provisions of this Warrant shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant.
SECTION 5.7. Reclassification, etc. If the Company, at any time while this
Warrant remains outstanding and unexpired, by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the Warrant immediately prior to such
reclassification or other change and the Base Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Article 5.
SECTION 5.8. Dividends of Other Securities or Property. If, while this
Warrant or any portion hereof remains outstanding and unexpired, the holders of
the securities as to which purchase rights under this Warrant exist at the time
shall have received, or, on or after the record date fixed for the determination
of eligible shareholders, shall have become entitled to receive, without payment
therefor, other or additional stock or other securities or property (other than
cash) of the Company by way of dividend, then, and in each case, this Warrant
shall represent the right to acquire, in addition to the number of shares of the
security receivable upon exercise of this Warrant, and without payment of any
additional consideration therefor, the amount of such other or additional stock
or other security or property (other than cash) of the Company that such holder
would hold on the date of such exercise had it been the holder of record of the
security receivable upon exercise of this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and all other additional stock available by
it as aforesaid during such period, giving effect to all adjustments called for
during such period by the provisions of this Article 5.
SECTION 5.9. Certificate as to Adjustments. Upon the occurrence of each
adjustment pursuant to this Article 5, the Company at its expense shall promptly
compute such adjustment in accordance with the terms hereof and furnish to the
Holder a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based, and the Base Price before and after
the adjustment. The Company shall, at any time upon the written request of any
Holder, furnish to such Holder a certificate setting forth: (a) such
adjustments; (b) the Base Price and the Exercise Price then in effect; and (c)
the number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant.
SECTION 5.10. No Impairment. The Company will not, by any 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 Article 5 and in
the taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
SECTION 5.11. No Adjustment of Base Price in Certain Cases. No adjustment
of the Base Price shall be made:
(a) Upon the issuance or sale of the Common Shares issuable upon the
exercise of the Warrants or the conversion of the Debenture or any convertible
securities outstanding on the Warrant Issue Date and described in writing to the
Holder on or before the Warrant Issue Date; or
(b) Upon the issuance or sale of Common Shares upon the exercise of
options, rights or war-
-7-
<PAGE> 8
rants, or upon the conversion or exchange of convertible or exchangeable
securities, in any case where the Base Price was adjusted at the time of
issuance of such options, rights or warrants, or convertible or exchangeable
securities, as contemplated by Section 5.3 hereof; or
(c) If the amount of said adjustment shall be less than one cent ($.01)
per Common Share, provided, however, that in such case, any adjustment that
would otherwise be required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least one
cent ($.01) per Common Share; or
(d) Upon the issuance of options to directors, employees or consultants
of the Company or the exercise of such options if such options were issued under
a plan which was approved by the shareholders of the Company and the Holder or
which was existing on the date this Warrant was originally issued, the plan is
administered by a committee of independent directors, the number of Common
Shares issuable under the plan and all other similar plans is limited to twenty
per cent (20%) of the number of outstanding Common Shares at the time the plan
is approved by the shareholders, the term of the option does not exceed ten (10)
years from the date of grant and the exercise price of the option is not less
than the Market Price of the Common Shares on the date of grant.
ARTICLE 6. Distributions. If: (a) the Company sets a record date for the holders
of its Common Shares (or other stock or securities at the time receivable upon
the exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution other than cash dividends out of retained
earnings, or any right to subscribe for or purchase any shares of stock of any
class or any other securities, or to receive any other right, or (b) there is
any capital reorganization of the Company, any reclassification of the capital
stock of the Company, any consolidation or merger of the Company with or into
another entity, or any conveyance of all or substantially all of the assets of
the Company, or (c) there is any voluntary dissolution, liquidation or
winding-up of the Company, the Company will mail to the Holder a notice
specifying, as the case may be, (i) the record date for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any, that is to be fixed, as of
which the holders of record of Common Shares (or such stock or securities at the
time receivable upon the exercise of this Warrant) shall be entitled to exchange
their Common Shares (or such other stock or securities) for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be
mailed at least fourteen (14) days prior to the date therein specified.
ARTICLE 7. Amendments. This Warrant may not be amended without the prior written
consent of the Holder.
ARTICLE 8. Notices. Any notice, certificate or other communication which is
required or convenient under the terms of this Warrant shall be duly given if it
is in writing and delivered in person, mailed by air-mail, postage prepaid, or
sent by facsimile transmission and directed to the Holder of the Warrant at its
address as it appears on the Register or if to the Company to its principal
executive offices. Such notice shall be effective upon delivery thereof if
delivered in person, five (5) days after mailing if air-mailed or upon
electronic confirmation of receipt if sent by facsimile transmission.
ARTICLE 9. Time. Where this Warrant provides for a payment or performance on a
Saturday or Sunday or a public holiday in the State of Israel or the State of
Ohio, such payment or performance may be made on the next succeeding business
day.
ARTICLE 10. Rules of Construction. In this Warrant, unless the context otherwise
requires, words in the singular number include the plural, and in the plural
include the singular, and words of the masculine gender include the feminine and
the neuter, and when the sense so indicates, words of the neuter gender may
refer to any gender. The numbers and titles of sections contained in this
Warrant are inserted for convenience of reference only, and they
-8-
<PAGE> 9
neither form a part of this Warrant nor are to be used in the construction or
interpretation hereof.
ARTICLE 11. Governing Law. The validity, terms, performance and enforcement of
this Warrant shall be governed by those laws of the State of Delaware that are
applicable to agreements that are negotiated, executed, delivered and performed
solely in the State of Delaware.
IN WITNESS WHEREOF, XTL BIOPHARMACEUTICALS, LTD. has caused this
Warrant to be executed by its officer thereto duly authorized.
XTL BIOPHARMACEUTICALS, LTD.
By
---------------------------------------------------
Print Name: Martin Becker
Print Title: President and Chief Executive Officer
-9-
<PAGE> 10
ASSIGNMENT OF WARRANT
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
----------
- --------------------------------------------------------------------------------
(name, address and SSN or EIN of assignee)
of this Warrant.
- ------------------------------------------------------
(portion of Warrant)
Date: Sign:
------------------------------------ --------------------------------
(Signature must conform in all
respects to name of Holder shown on
face of Warrant)
Signature Guaranteed:
-10-
<PAGE> 11
NOTICE OF EXERCISE
[TO BE COMPLETED AND SIGNED ONLY UPON EXERCISE OF WARRANT]
The undersigned, the Holder of this Warrant, hereby irrevocably elects to
exercise the right to purchase Common Shares, nominal value NIS 0.20 per share,
of XTL Biopharmaceuticals, Ltd.
---------------------------------------------
(whole number of Warrants exercised)
Date: Sign:
---------------------------- ------------------------------------
(Signature must conform in all respects
to name of Holder shown on face of
Warrant)
-11-
<PAGE> 1
Exhibit 10.3.37
RESEARCH AND DEVELOPMENT AGREEMENT
This Agreement is made and entered into as of this 13th day of
February, 1996, by and between XTL Biopharmaceuticals, Ltd., a company of Israel
having a principal place of business at Rehovot, Israel (hereinafter referred to
as "XTL"), and Neoprobe Corporation, a Delaware Corporation, having a principal
place of business at Dublin, Ohio USA (hereinafter referred to as "Neoprobe").
RECITALS:
WHEREAS, Neoprobe desires to engage the services of XTL to engage in
research activities as requested by Neoprobe using certain disease modeling and
targeting agent technology and for Neoprobe to have the exclusive right to use
the results of such research in the Field (as below defined);
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I - DEFINITIONS
1.1 "Technology" shall mean the disease modeling and targeting agent
technology owned by Yeda Research and Development Company, Ltd. of the
Weizmann Institute of Science ("Yeda") and licensed to XTL, as
represented by, European patent application publications 0438053A1
(application no. 91100047.0, filed January 2, 1991, entitled "Durable
Engraftment And Development of Human Hematopoietic Lineages in Normal
Mammals") and 0517199A1 (application no. 92109402.5, filed June 3,
1992, entitled "Durable Engraftment of Human Tissue and Cells in Normal
Mammals"); European patent no. 0485471 (grant published April 27, 1994
Bulletin 94/17); United States application nos. 08/061,706, filed May
17, 1993 (entitled "Engraftment and Development of Xenogeneic Cells in
Normal Mammals Having Reconstituted Hematopoietic Deficient Immune
Systems") and 08/337,925, filed November 10, 1994 (continuation-in-part
of serial no. Israeli application no. 93067, filed January 15, 1990,
entitled "A Novel Chimeric Non-Human Mammal"), and data, know-how,
processes, cell lines, animals and animal models, and procedures
connected therewith. XTL warrants that any and all technology in the
Field that it develops and/or acquires after the date hereof and during
the Research Term that could be used in performing a Project shall be
automatically added to Technology.
1.2 "Field" shall mean the detection and differentiation of neoplastic
(cancerous) tissue using radiolabelled targeting agents; and
application of Neoprobe's adoptive cellular therapy techniques (ACT)
for treating cancer patients and patients afflicted with ****
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 2
R & D Agreement Page 2 Neoprobe and XTL
it being understood that ACT is defined as activating patients
autogenous immunocytes ex vivo with cytokines.
1.3 "Affiliate" shall mean a Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. "Control" (and, with correlative
meanings, the terms "controlled by" and "under common control with")
shall mean the possession of the power to direct or cause the direction
of the management and policies of such Person, whether through the
ownership of voting stock, by contract or otherwise. In the case of a
corporation "control" shall mean, among other things, the direct or
indirect ownership of more than fifty percent (50%) of such
corporation's outstanding voting stock.
1.4 "Project" shall mean a research and development activity, including
products and by-products of the research and development activity,
under this Agreement as agreed to by the parties in accordance with a
Workplan and Budget as detailed below.
1.5 "Research Term" shall mean the time period commencing with the date
hereof and terminating on December 31, 2001, unless mutually extended
in writing by the parties hereto.
ARTICLE II - Research and Development.
2.1 Research and Development Services - Neoprobe hereby engages XTL to
undertake, and XTL hereby agrees to undertake, the research,
development, and related activities based on the Technology in the
Field during the Research Term with the objective of enabling Neoprobe
to develop and commercialize products or services within the Field (the
"Research and Development"). The costs of the Research and Development
paid by Neoprobe to XTL shall be the "Development Costs". Such services
shall be provided as follows:
2.1.1 Workplan and Budget - Attached hereto as Exhibit A is the
initial workplan and budget as agreed to by Neoprobe and XTL
for the Research and Development of the Projects set forth in
Exhibit A, covering the Research Term in accordance with the
Workplan and Budget. On each September 30 during the Research
Term of this Agreement, XTL and Neoprobe shall review the
Workplan and Budget then in effect to determine whether any
changes in the objectives and projected costs of Research and
Development to be performed with respect to each Project are
required. Each revision to the Workplan and Budget shall be
subject to the approval of the Boards of Directors of Neoprobe
and XTL, which approval shall not be unreasonably withheld.
Further workplans and budgets can be added to Exhibit A during
the Research Term hereof by mutual written agreement of
Neoprobe and XTL.
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 3
R & D Agreement Page 3 Neoprobe and XTL
2.1.2 - Commercially Reasonable Efforts. During the Research Term of
this Agreement, XTL shall use its commercially reasonable
efforts to (a) conduct the Research and Development on behalf
of Neoprobe with respect to each Project in a prudent and
skillful manner in accordance in all material respects with
the Workplan and Budget then in effect for each Project and
applicable laws, ordinances, rules, regulations, orders,
licenses, and other requirements now or hereafter in effect,
and (b) diligently execute the Workplan and Budget. XTL shall
report to Neoprobe deviations of more than 10% from the
Workplan and Budget promptly upon becoming aware of the same.
XTL shall in accordance with each Workplan and Budget furnish
all labor, supervision, services, supplies, and materials
necessary to perform the Research and Development in
accordance with the Workplan and Budget then in effect.
2.1.3 Reports and Recording - On each January 15 and July 15 during
the Research Term of this Agreement, XTL shall provide to
Neoprobe a reasonably detailed report (each a "Periodic
Report") with respect to the previous April through September,
or October through March, as the case may be, setting forth
(a) the total Development Costs incurred during such period;
(b) a summary of the work performed hereunder by XTL and its
employees and agents during such period; and (c) a description
of any material developments with respect to the Workplan and
Budget. Thirty (30) days prior to the end of each year during
the Research Term of this Agreement, XTL shall report to
Neoprobe with respect to the progress of the Research and
Development, which report shall include the most recent
Periodic Report and any proposed revisions to the Workplan and
Budget, as provided in Article 2.1.1 hereof. XTL shall prepare
a final report, within ninety (90) days after the expiration
or termination of this Agreement, setting forth (a) the total
Development Costs incurred during the Research Term of the
Agreement for each Project; (b) a summary of all work
performed hereunder by XTL and its employees and agents during
the Research Term of the Agreement; (c) the cost overruns
contributed by XTL, if any, during the Research Term of the
Agreement; and (d) a description of any material developments
with respect to the Technology in the Field. XTL shall keep
and maintain, in accordance with generally accepted accounting
principles, proper and complete records and books of account
documenting all of its expenses related to the Research and
Development, including those allocated to and paid by or
debited to Neoprobe hereunder. At Neoprobe's request and
expense, XTL shall permit an independent public accountant
selected by Neoprobe and reasonably acceptable to XTL to have
access, no more frequently than once in each year during the
Research Term of this Agreement and the period which is three
(3) calendar years following the termination thereof, during
regular business hours and upon reasonable notice to XTL, to
such records and books for the purpose of determining the
appropriateness of Development Costs invoiced hereunder or of
any Workplan and Budget or for any other reasonable purpose;
provided, however, that if such
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 4
R & D Agreement Page 4 Neoprobe and XTL
independent public accountants reasonably determine that such
Development Costs have been, for any year, after adjustments
herein provided for, overstated by XTL by an amount equal to
or greater than ten percent (10%), then XTL shall pay all
reasonable fees and disbursements of such independent public
accountants incurred in the course of making such
determination.
2.1.4 Abandoned Project - At any time, Neoprobe may determine in its
reasonable business judgment, based on the reports provided by
XTL pursuant to Article 2.1.3 hereof and after discussions
with the management of XTL, or XTL may determine with
Neoprobe's consent, which shall not be withheld unreasonably,
that the Research and Development with respect to one or more
Projects is rendered or is likely to be rendered unfeasible or
uneconomic, and should be discontinued. If it is so determined
that the Research and Development with respect to one or more
Projects should be discontinued, then (a) the Research and
Development shall be discontinued with respect to such
Project(s) (an "Abandoned Project"), and (b) Neoprobe shall
either (i) reallocate, to one or more other Projects that are
under development, the funds that were, in the Workplan and
Budget then in effect, to be expended for Research and
Development activities with respect to such Abandoned Project
(but had not yet been expended or irrevocably committed by XTL
in connection with the research, experimentation, and
development of such Abandoned Project) or (ii) with the
consent of XTL, such consent not to be unreasonably withheld,
pursue, the development of new products in the Field or new
indications of Projects not abandoned. The rights granted to
Neoprobe pursuant to Article VI below shall not extend to the
results of an Abandoned Project.
2.1.5 Development Costs Overruns - In the event the Development
Costs for any Project exceed the Available Funds allocated to
such Project under the Workplan and Budget then in effect, XTL
may, in its sole discretion, provide the funds necessary to
complete the Research and Development for such Project (the
"Cost Overruns"). In the event XTL elects to fund such Cost
Overruns, it shall do so at its own cost and expense without
Neoprobe having the obligation or duty to reimburse XTL for
such Cost Overruns; and without prejudice to any rights or
options acquired by Neoprobe in this Agreement.
2.2 Disclaimer of Warranties - XTL cannot and does not guarantee that the
Research and Development will be successful in whole or in part. To the
extent that XTL has complied with Article 2.1.2 hereof, the failure of
XTL to develop any Project successfully will not in and of itself
constitute a breach by XTL of any representation, warranty, covenant,
or other obligation under this Agreement. Neoprobe shall bear all risks
of loss attributable to the research and development activities
performed on its behalf by XTL. XTL shall be entitled to retain the
entire amount of payments made to it by Neoprobe hereunder
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 5
R & D Agreement Page 5 Neoprobe and XTL
whether or not the Research and Development work is successful and
accomplishes the results contemplated by the Workplan and Budget.
ARTICLE III.-Payment for Services; Timing of Payments
3.1 Budgeted Payments - In consideration of the activities to be carried
out by XTL hereunder, Neoprobe shall pay XTL for the Research and
Development provided during the Research Term of this Agreement in
accordance with the Workplan and Budget. The parties agree that
Neoprobe shall reimburse XTL the actual costs of XTL as set forth in
the Workplan and Budget plus a fee equal to twenty-five percent (25%)
of such actual costs.
3.3 Timing of Budgeted Payments - Neoprobe shall pay to XTL quarterly, in
advance, not later than the first day of each calendar month, beginning
in accordance with the Workplan and Budget, one-third of all
Development Costs budgeted for the calendar quarter in which such
calendar month occurs. Within forty-five (45) days after the end of
each calendar quarter, XTL shall deliver a statement to Neoprobe of the
Development Costs actually incurred in such calendar quarter, and
Neoprobe shall pay to XTL any additional Development Costs in excess of
Neoprobe's actual payments to XTL hereunder during such calendar
quarter. If the amount reflected in the quarterly statement of
Development Costs is less than the Development Costs actually paid by
Neoprobe to XTL in such calendar quarter, XTL shall apply such excess
against the amounts next due from Neoprobe on the first day of the
first month in the next succeeding calendar quarter or, if no such
amounts are due, XTL shall promptly refund any such excess to Neoprobe.
ARTICLE IV - Representations, Warranties and Covenants.
4.1 Representations, Warranties and Covenants of XTL - XTL represents,
warrants and covenants to Neoprobe as follows:
(a) XTL is a corporation duly organized and validly existing under
the laws of Israel with corporate powers adequate for
executing and delivering, and performing its obligations
under, this Agreement;
(b) the execution, delivery, and performance of this Agreement
have been duly authorized by all necessary corporate action on
the part of XTL;
(c) this Agreement has been duly executed and delivered by XTL and
is a legal, valid, and binding obligation of XTL, enforceable
against XTL in accordance with its terms;
(d) the execution, delivery, and performance of this Agreement do
not and will not conflict with or contravene any provision of
the charter documents or by-laws of
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 6
R & D Agreement Page 6 Neoprobe and XTL
XTL or any agreement, document, instrument, indenture or other
obligation of XTL;
(e) XTL shall in the future propose any amendments or
modifications to the Workplan and Budget hereunder in good
faith; and
(f) except as otherwise provided herein, XTL shall not initiate or
undertake any research and development for the purpose of
commercializing the Projects in the Field during the Research
Term of this Agreement.
4.2 Representations, Warranties and Covenants of Neoprobe - Neoprobe
represents, warrants and covenants to XTL as follows:
(a) Neoprobe is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware
with corporate powers adequate for executing and delivering,
and performing its obligations under, this Agreement;
(b) the execution, delivery, and performance of this Agreement
have been duly authorized by all necessary corporate action on
the part of Neoprobe;
(c) this Agreement has been duly executed and delivered by
Neoprobe and is a legal, valid, and binding obligation of
Neoprobe, enforceable against Neoprobe in accordance with its
terms;
(d) the execution, delivery, and performance of this Agreement do
not and will not conflict with or contravene any provision of
the charter documents or by-laws of Neoprobe or any agreement,
document, instrument, indenture or other obligation of
Neoprobe;
(e) Neoprobe shall propose, approve, or object to any amendments
or modifications to the Workplan and Budget hereunder in good
faith; and
(f) Neoprobe shall not, during the term of this Agreement, without
the prior written consent of XTL, solicit the employment of,
or employ any person, in any capacity, who, at any time during
the term of this Agreement, shall have been an officer,
director, employee, or agent of XTL.
ARTICLE V - Confidentiality
5.1 XTL and Neoprobe each agree to maintain the terms of this Agreement in
confidence, unless this Agreement permits its disclosure or a
governmental regulation or law requires its disclosure; however, each
party may disclose the existence of this Agreement. Notice of any
disclosure made by any party to a non-party shall promptly be given to
the other
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 7
R & D Agreement Page 7 Neoprobe and XTL
parties hereto. Both parties to this Agreement agree to maintain any
information received from the other party under this Agreement
("Confidential Information") in confidence and not disclose the
Confidential Information to any person or entity that is not a party to
this Agreement. Confidential Information exchanged under this Agreement
may be in any form including written or oral. Upon termination of the
Agreement, if requested by the disclosing party, the receiving party
will return any Confidential Information received in tangible form
together with any copies receiving party may have made. The foregoing
obligations shall not apply to Confidential Information which Neoprobe
or XTL can demonstrate falls within one of the following exceptions:
(a) becomes generally available to the public other than as a
result of a disclosure by the receiving party; or
(b) was known to the receiving party on a non-confidential basis
prior to receipt from the disclosing party; or
(c) was received on a non-confidential basis from a third party
having the right to make such disclosure.
5.2 If Neoprobe or XTL breach their confidentiality obligations and the
Confidential Information thereby becomes available to the public, the
non-breaching party (either Neoprobe or XTL) is not thereby released
from their confidentiality obligations under this Agreement.
Confidential Information disclosed to a receiving party under this
Article which is specific shall not be deemed to be within any of the
above exceptions merely because it is embraced by more general
information coming within one of the exceptions. Any combination of
features disclosed to a receiving party shall not be deemed to be
within any exception merely because individual features thereof fall
within one of the exceptions. A receiving party shall notify the
disclosing party promptly in writing, after receipt thereof, with
supporting evidence when any Confidential Information received is
considered by a receiving party to fall within any of the exceptions of
under this Article. The confidentiality provisions of the Agreement
will remain in effect for ten (10) years from the last date of
signature below.
5.3 Neoprobe's obligations under this Article extend to Yeda.
ARTICLE VI - XTL's Grant
Grant of Right by Sublicense - XTL agrees to grant and does hereby
grant to Neoprobe an exclusive world-wide right as provided in the
Sublicense Agreement attached as Exhibit B hereto (the "Sublicense
Agreement") to use in the Field the Project results obtained by XTL
under the Research and Development in which XTL engages under this
Agreement and with XTL's prior written consent, which consent shall not
be unreasonably withheld, to sublicense others to do so, subject to (i)
a reservation of rights for XTL to use the
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 8
R & D Agreement Page 8 Neoprobe and XTL
Project results in its own research activities and to use or allow the
use of the Project results outside the Field for any purpose. It
specifically is understood that no item of Technology outside of
Project results is granted hereunder.
ARTICLE VII - Indemnification and Insurance
7.1 Neoprobe Right to Indemnification - XTL shall indemnify Neoprobe, its
successors and assigns, and the directors, officers, employees, agents,
and counsel thereof (the "Neoprobe Indemnitees"), pay on demand and
protect, defend, save and hold each Neoprobe Indemnitee harmless up to
a maximum amount equal to the amount of all payments received by XTL
from Neoprobe under this Agreement from and against any and all
liabilities, damages, losses, settlements, claims, actions, suits,
penalties, fines, costs, or expenses (including, without limitation,
reasonable attorneys' fees) (any of the foregoing, a "Claim") incurred
by or asserted against any Neoprobe Indemnitee of whatever kind or
nature, including, without limitation, any Claim based upon negligence,
warranty, strict liability, or violation of government regulation.
XTL's indemnification liability hereunder shall be limited to Claims
arising from or occurring as a result of (a) any use of the Technology
by XTL, (b) any of the activities or services to be performed by XTL
hereunder, or (c) any breach by XTL of this Agreement; except in all
cases, Claims based upon the willful misconduct or gross negligence of
Neoprobe or infringement of patent or other proprietary rights, and
claims for which Neoprobe accepts responsibility under Article 7.2
below. Neoprobe shall promptly notify XTL of any Claim, upon becoming
aware thereof, and permit XTL at XTL's cost to defend against such
Claim and shall cooperate in the defense thereof. Neither Neoprobe nor
XTL shall enter into, or permit, any settlement of any such Claim
without the express written consent, which consent shall not be
unreasonably withheld, of the other party. Neoprobe may, at its option
and expense, have its own counsel participate in any proceeding which
is under the direction of XTL and will cooperate with XTL and its
insurer in the disposition of any such matter.
7.2 XTL Right to Indemnification - Neoprobe shall indemnify XTL, Yeda, the
Weizmann Institute, their successors and assigns, and the directors,
officers, employees, agents, and counsel thereof (the "XTL
Indemnitees"), pay on demand and protect, defend, save and hold each
XTL Indemnitee harmless from and against any and all liabilities,
damages, losses, settlements, claims, actions, suits, penalties, fines,
costs, or expenses (including, without limitation, reasonable
attorneys' fees) (any of the foregoing, a "Claim") incurred by or
asserted against any XTL Indemnitee of whatever kind or nature,
including, without limitation, any Claim based upon negligence,
warranty, strict liability, or violation of government regulation.
Neoprobe's indemnification liability hereunder shall be limited to
Claims arising from or occurring as a result of clinical trials using a
product developed by XTL under a Project or other use of such product
or Project results; except in all cases, Claims based upon the willful
misconduct or gross negligence of XTL. XTL shall promptly notify
Neoprobe of any Claim, upon becoming aware thereof, and permit Neoprobe
at Neoprobe's cost to defend against such Claim and shall cooperate in
the
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 9
R & D Agreement Page 9 Neoprobe and XTL
defense thereof. Neither Neoprobe nor XTL shall enter into, or permit,
any settlement of any such Claim without the express written consent,
which consent shall not be unreasonably withheld, of the other party.
XTL may, at its option and expense, have its own counsel participate in
any proceeding which is under the direction of Neoprobe and will
cooperate with Neoprobe and its insurer in the disposition of any such
matter.
7.3 Insurance - XTL shall, at XTL's sole cost and expense and to the extent
available at commercially reasonable rates, maintain, with insurers or
underwriters of good repute, such insurance relating to the Research
and Development as is customary for comparable businesses undertaking
research programs of a similar nature, to maintain against such risks
and pursuant to such terms (including deductible limits or self-insured
retentions) as are customary and reasonable for such businesses.
ARTICLE VIII - Term and Termination.
8.1 Term - This Agreement shall be effective as of the date first above
written and shall expire upon the expiration of the Research Term,
subject to Articles 8.2, 8.3, and 8.4, below.
8.2 Termination by XTL - XTL shall have the right to terminate this
Agreement, effective upon written notice of termination to Neoprobe in
the event that:
(a) Neoprobe fails to perform or observe or otherwise breaches any
of its material obligations under this Agreement or the
attached Sublicense Agreement, and such failure or breach
continues for a period of sixty (60) days after written notice
thereof to Neoprobe from XTL;
(b) Neoprobe shall (i) seek the liquidation, reorganization,
dissolution, or winding-up of itself or the composition or
readjustment of its debts, (ii) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of all or a
substantial part of its property, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a
voluntary case under the Bankruptcy Code, (v) file a petition
seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition, or readjustment of debts, or (vi) take any
corporate action for the purpose of effecting any of the
foregoing; or
(c) a proceeding or case shall be commenced without the
application or consent of Neoprobe, and such proceeding or
case shall continue undismissed, or an order, judgment, or
decree approving or ordering any of the following shall be
entered and continue unstayed and in effect, for a period of
forty-five (45) days from and after the date service of
process is effected upon Neoprobe, seeking (i) Neoprobe's
liquidation, reorganization, dissolution, or winding-up, or
the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian,
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 10
R & D Agreement Page 10 Neoprobe and XTL
liquidator, or the like of XTL or Neoprobe or of all or any
substantial part of their assets, or (iii) similar relief in
respect of Neoprobe under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or the composition or
readjustment of debts.
8.3 Termination by Neoprobe - Neoprobe shall have the right to terminate
this Agreement, effective upon written notice of termination to XTL in
the event that:
(a) XTL fails to perform or observe or otherwise breaches any of
its material obligations under this Agreement or the attached
Sublicense Agreement, and such failure or breach continues for
a period of sixty (60) days after written notice thereof from
Neoprobe;
(b) XTL shall (i) seek the liquidation, reorganization,
dissolution, or winding-up of itself or the composition or
readjustment of its debts, (ii) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of all or a
substantial part of its property, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a
voluntary case under the Bankruptcy Code or corresponding law
applicable to XTL, (v) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of
debts, or (vi) take any corporate action for the purposes of
effecting any of the foregoing; or
(c) a proceeding or case shall be commenced without the
application or consent of XTL and such proceeding or case
shall continue undismissed, or an order, judgment, or decree
approving or ordering any of the following shall be entered
and continue unstayed and in effect, for a period of
forty-five (45) days from and after the date service of
process is effected upon XTL, seeking (i) XTL's liquidation,
reorganization, dissolution, or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator, or the like of XTL
or of all or any substantial part of its assets, or (iii)
similar relief in respect of XTL under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or the
composition or readjustment of debts; or
(d) for any reason without cause upon ninety (90) days prior
written notice to XTL.
8.4 Effect of Termination or Expiration. Articles 2.1.3, 3, 4.1 (a) - (e)
and (f) (provided that the grant under Article 6.1 still is in effect)
and 4.2, 5, 6 (except in the case of termination other than termination
by Neoprobe pursuant to Article 8.3 (b) or (c)), 7, and 11 of this
Agreement, and all obligations to pay any amounts due hereunder on or
prior to the date of termination or expiration, shall survive, and
shall not be affected by expiration or, except as specified above, any
termination of this Agreement pursuant to this Article 8.
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 11
R & D Agreement Page 11 Neoprobe and XTL
ARTICLE IX- No Implied Waivers; Rights Cumulative
No failure on the part of XTL or Neoprobe to exercise and no delay in exercising
any right, power, remedy, or privilege under this Agreement, or provided by
statute or at law or in equity or otherwise, including, without limitation, the
right or power to terminate this Agreement, shall impair, prejudice, or
constitute a waiver of any such right, power, remedy, or privilege or be
construed as a waiver of any breach of this Agreement or as an acquiescence
therein, nor shall any single or partial exercise of any such right, power,
remedy, or privilege preclude any other or further exercise thereof or the
exercise of any other right, power, remedy, or privilege.
ARTICLE X - Force Majeure
Neither party shall incur any liability, consequential or otherwise, for any
delay in performance or failure to perform its obligations under this Agreement,
due to acts of God or public enemies, acts of other parties, requests or
regulations of civil or military authority, labor disputes, accidents at the
factory, lockouts, fire, riots, war or other outbreaks or hostilities,
embargoes, inability to obtain shipping or raw material, delays of carriers or
suppliers, machinery breakdowns, epidemics, floods, unusually severe weather,
shortage of power or fuel, or any causes whatsoever beyond the reasonable
control of the party in question; provided, however, that this Article shall not
relieve either party from the obligation to pay or make payment of any amount of
money due hereunder.
ARTICLE XI - Relationship of the Parties
Nothing contained in this Agreement is intended, or is to be construed,
to constitute XTL and Neoprobe as partners or joint venturers, or any employee
of XTL or XTL as an employee of Neoprobe or any other relationship other than
XTL's relationship to Neoprobe as independent contractor in respect of XTL's
performance hereunder. Neither party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of the other party or to bind the other party to any contract, agreement,
or undertaking with any third party.
ARTICLE XII - Notices
Any notice, request or payment which may or must be given under this Agreement
shall be in writing shall be given by telecopier or, if not available, by
certified or registered mail sent to the other party at its telecopier number or
address indicated below, or to such other address as the addressee shall have
theretofore furnished in writing to the addressor. Notice sent by telecopier
shall be confirmed by certified or registered mail within two (2) business days
of transmission and shall be deemed given 24 hours after transmission. Notices
sent by certified or registered mail shall be deemed given ten (10) days after
the mailing thereof.
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 12
R & D Agreement Page 12 Neoprobe and XTL
IF TO XTL BIOPHARMACEUTICALS, LTD.:
Martin Becker, Ph.D., President
XTL BIOPHARMACEUTICALS, LTD.
Kiryat Weizmann Industrial Park
Rehovot, Israel
Telecopier: 011-972-8-405017
IF TO NEOPROBE CORPORATION: WITH A COPY TO:
David C. Bupp, President J. K. Mueller, Jr.., Esq.
NEOPROBE CORPORATION MUELLER AND SMITH, L.P.A.
425 Metro Place North MUELLER-SMITH BUILDING
Suite 400 7700 Rivers Edge Drive
Dublin, Ohio 43017 Columbus, Ohio 43235-1355
Telecopier: 011-1-614-793-7522 Telecopier: 011-1-614--436-0057
ARTICLE XIII - Further Assurances
Each of XTL and Neoprobe agrees to duly execute and deliver, or cause
to be duly executed and delivered, such further instruments and do and cause to
be done such further acts and things, including, without limitation, the filing
of such additional assignments, agreements, documents, and instruments, that may
be necessary or as the other party hereto may at any time and from time to time
reasonably request in connection with this Agreement or to carry out more
effectually the provisions and purposes of, or to better assure and confirm unto
such other party its rights and remedies under, this Agreement.
ARTICLE XIV- Successors and Assigns
The terms and provisions of this Agreement shall inure to the benefit
of, and be binding upon XTL, Neoprobe, and their respective successors and
assigns; provided, however, that, except as provided in Article VI hereof or in
the attached Sublicense Agreement, neither XTL nor Neoprobe may assign or
otherwise transfer any of its rights and interests, nor delegate any of its
respective obligations, hereunder, including, without limitation, pursuant to a
merger or consolidation, without the prior written consent of the other party
hereto; provided further, however, that XTL may assign its rights and interests,
and delegate its obligations, hereunder, effective upon written notice thereof
without the consent of Neoprobe, (a) to an Affiliate of XTL if such Affiliate
assumes all of the obligations of XTL hereunder, or (b) to any Person which
acquires all or substantially all of the assets of XTL or which is the surviving
Person in a merger or consolidation with XTL, if (i) such Person assumes all of
the obligations of XTL hereunder and (ii) if such Person is a solvent
corporation or other entity organized and existing under the laws of the U.S. or
any state thereof or Israel, and such Person shall have, immediately after
giving effect to such assignment or transfer, a tangible net worth (determined
in accordance with generally
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 13
R & D Agreement Page 13 Neoprobe and XTL
accepted accounting principles then in effect) at least equal to the tangible
net worth (as so determined) of XTL immediately prior thereto. Any attempt to
assign or delegate any portion of this Agreement in violation of this Article 14
shall be null and void. Nothing in this Article 14 shall prevent XTL from
engaging other Persons to assist XTL in carrying out the Research and
Development as provided for in Article 2 hereof. Subject to the foregoing, any
reference to XTL or Neoprobe hereunder shall be deemed to include the successors
thereto and assigns thereof.
ARTICLE XV - Amendments
No amendment, modification, waiver, termination, or discharge of any
provision of this Agreement, nor consent to any departure by XTL or Neoprobe
therefrom, shall in any event be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by XTL and
Neoprobe, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by XTL and Neoprobe.
ARTICLE XVI - Governing Law
This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the State of Ohio applicable to
contracts entered into in that state without reference to any rules governing
conflicts of laws.
ARTICLE XVII - Severability
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may be possible and (b)
such invalidity, illegality, or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, XTL and Neoprobe hereby waive any provision
of law that would render any provision hereof prohibited or unenforceable in any
respect.
ARTICLE XVIII - Headings
Headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
ARTICLE XIX - Execution in Counterparts
Omitted portions of this exhibit 10.3.37 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 14
R & D Agreement Page 14 Neoprobe and XTL
This Agreement may be executed in any number of counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, taken together, shall constitute one
and the same instrument.
ARTICLE XX - Entire Agreement
This Agreement, on and as of the date hereof, Is the entire agreement
of Neoprobe and XTL with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
XTL and Neoprobe with respect to such subject matter are hereby superseded in
their entireties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective duly authorized officers on the date
first above written.
NEOPROBE CORPORATION XTL BIOPHARMACEUTICALS, LTD.
By: ________________________________ By: _______________________________
Typed Name: David C. Bupp Typed Name: Martin Becker
Title: President Title: President
Date: ______________________________ Date: _____________________________
Omitted portions of this exhibit 10.3.37 have been filed separately
with the Commission and are subject to a request for confidential treatment
under rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 1
Exhibit 10.3.38
SUBLICENSE AGREEMENT
This Agreement is made and entered into as of this 13th day of
February, 1996, by and between XTL Biopharmaceuticals, Ltd., a company of Israel
having a principal place of business at Rehovot, Israel (hereinafter referred to
as "XTL"), and Neoprobe Corporation, a Delaware Corporation, having a principal
place of business at Dublin, Ohio USA (hereinafter referred to as "Neoprobe").
RECITALS:
WHEREAS, Neoprobe has, pursuant to a Research and Development Agreement
of even date herewith (the "Research and Development Agreement"), engaged the
services of XTL to engage in research activities as requested by Neoprobe using
certain disease modeling and targeting agent technology;
WHEREAS, XTL agreed in the Research and Development Agreement to grant,
on the terms and conditions set forth in this Agreement, to Neoprobe an
exclusive world-wide right to use the Project results, on the terms and
conditions described herein, obtained by XTL under the Research and Development
in which XTL engages under the Research and Development Agreement;
WHEREAS, this Sublicense Agreement is an attachment to and
implementation of the grant by XTL to Neoprobe in the Research and Development
Agreement;
NOW, THEREFORE, the parties hereto, in consideration of the promises,
terms and conditions set forth herein, mutually agree as follows:
ARTICLE I - DEFINITIONS
The following terms shall have the meanings set forth below:
1.1 "Technology" shall mean the disease modeling and targeting agent
technology owned by Yeda Research and Development Company, Ltd. of the
Weizmann Institute of Science ("Yeda") and licensed to XTL, as
represented by, European patent application publications 0438053A1
(application no. 91100047.0, filed January 2, 1991, entitled "Durable
Engraftment And Development of Human Hematopoietic Lineages in Normal
Mammals") and 0517199A1 (application no. 92109402.5, filed June 3,
1992, entitled "Durable Engraftment of Human Tissue and Cells in Normal
Mammals"); European patent no. 0485471 (grant published April 27, 1994
Bulletin 94/17); United States application nos. 08/061,706, filed May
17, 1993 (entitled "Engraftment and Development of Xenogeneic Cells in
Normal Mammals Having Reconstituted Hematopoietic Deficient Immune
Systems") and 08/337,925, filed November 10, 1994 (continuation-in-part
of serial no. Israeli application no. 93067, filed January 15, 1990,
entitled "A Novel Chimeric Non-Human Mammal"), and data, know-how,
processes, cell lines, animals and animal models, and procedures
connected therewith. XTL warrants that any and all technology
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
<PAGE> 2
Sublicense Agreement Page 2 XTL and Neoprobe
in the Field that it develops and/or acquires after the date hereof and during
the Research Term that could be used in performing a Project shall be
automatically added to Technology.
1.2 "Field" shall mean the detection and differentiation of neoplastic
(cancerous) tissue using radiolabelled targeting agents; and
application of Neoprobe's adoptive cellular therapy techniques (ACT)
for treating cancer patients and patients afflicted with ****
it being understood that ACT is defined as activating patients
autogenous immunocytes ex vivo with cytokines.
1.3 "Licensed Service" shall mean
(a) (i) a cell processing method wherein lymph nodes excised from ****
patients are mitogenically stimulated for preparation of a therapeutic
agent; (ii) a service that involves use of a method in the Field, or
(iii) service that involves use of a Licensed Product; or
(b) (i) a cell processing method wherein lymph nodes excised from
cancer patients are mitogenically stimulated for preparation of a
therapeutic agent; (ii) a service that involves use of a method in the
Field; or (iii) service that involves use of a Licensed Product.
1.4 "Licensed Product(s)" shall mean (i) a therapeutic preparation
manufactured with the method of Article 1.3 (a)(i) and (b)(i) for use
in treating **** cancer patients; or (ii) a radiolabeled locator
preparation adapted to selectively concentrate in neoplastic or
cancerous tissue.
1.5 "Net Sales" shall mean the gross amounts received for sale or lease of
Licensed Products or Licensed Service, excluding any insurance, tax,
duty and transportation costs separately invoiced to customers, and
less any broker's commissions actually paid and any trade, cash and
quantity discounts, returns, allowances and adjustments actually
granted to customers out of such gross amounts.
1.6 "Affiliate" shall mean a person, whether an individual or a legal
entity, that controls, is controlled by or is under common control with
the antecedent person, where control of a legal entity means the
ability to elect at least one-half of the directors of such entity.
1.7 "Project" shall mean a research and development activity, including
products and by-products of the research and development activity,
under the Research and Development Agreement as agreed to by the
parties in accordance with a Workplan and Budget as detailed in the
Research and Development Agreement.
ARTICLE II - SUBLICENSE GRANT, WARRANTY,
ACCEPTANCE AND PERFORMANCE
2.1 Grant of Sublicense by XTL
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 3
Sublicense Agreement Page 3 XTL and Neoprobe
2.1.1 - XTL agrees to grant and does hereby grant to Neoprobe an
exclusive world-wide right use the Project results obtained by XTL
under the Research and Development in which XTL engages under this
Agreement and the Research and Development Agreement in order for
Neoprobe to make, have made, sell, have sold, lease, and have leased a
Licensed Product or Licensed Service, and with XTL's prior written
consent, which consent shall not be unreasonably withheld, to
sublicense others to do so, subject to (i) a reservation of rights for
XTL to use the Project results in its own research activities and to
use or allow the use of the Project results outside the Field for any
purpose; and (ii) the other terms and conditions of this Agreement and
the Research and Development Agreement. It specifically is understood
that no item of Technology outside of Project results is granted
hereunder.
2.1.2 - Any invention in the Field made by Neoprobe based on the
Project results also shall be automatically added to this Agreement and
a royalty paid on Licensed Products and Licensed Services thereunder;
provided, however, that only one royalty shall be due for any Licensed
Product or Licensed Service hereunder.
2.2 Warranties - XTL hereby warrants that it is an exclusive licensee in
and to the Technology, and that it has the right, subject to the terms
of the Research and License Agreement dated as of April 7, 1993 between
Yeda and XTL (as amended), to grant the above exclusive sublicense,
under patent rights as provided herein. HOWEVER, XTL EXCLUDES ALL
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR
PARTICULAR PURPOSE AND FREEDOM FROM INFRINGEMENT OF RIGHTS OF OTHERS,
AS TO THE TECHNOLOGY, THE PROJECT RESULTS, OR ANY LICENSED PRODUCT OR
ANY LICENSED SERVICE; AND ANY WARRANTY THAT ANY PATENT UNDER THE
TECHNOLOGY IS VALID OR THAT ANY PATENT APPLICATION UNDER THE TECHNOLOGY
WILL MATURE INTO AN ISSUED PATENT. XTL agrees to hold Neoprobe harmless
and defend it against all claims and suits relating to the warranty
given to Neoprobe under this subparagraph.
2.3 Acceptance of Sublicense - Neoprobe accepts the above sublicense, and
will diligently exert its good faith efforts to develop and promote the
most extensive provision of sales of Licensed Products and Licensed
Services under the sublicense that is both commercially practicable and
compatible with good practice in the pharmaceutical industry. Should
Neoprobe fail to exert such efforts, XTL may then convert the exclusive
sublicense granted hereunder to a non-exclusive sublicense upon giving
notice thereof to Neoprobe pursuant to this Agreement.
2.4 Forbearance to file Suit - XTL agrees that it will not file suit
against Neoprobe, its affiliates, or sublicensees, if any, for
activities within the scope of such entities license or sublicense
under this Agreement based on any of its or Yeda's pre-existing patents
or patent applications that may dominate the Technology, so long as
this Agreement and such license or sublicense remains in effect.
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 4
Sublicense Agreement Page 4 XTL and Neoprobe
ARTICLE III - ROYALTIES, REPORTS, AND RECORDS
3.1 Royalties
3.1.1 - Subject to the provisions of Article 6.1 below, Neoprobe shall
pay XTL a royalty on Net Sales by Neoprobe and its Affiliates to
non-Affiliates at the following rates:
(a) on Licensed Products or Licensed Services based on Neoprobe
proprietary targeting agents, **** percent (****%);
(b) on ACT Licensed Products or Licensed Services using the
Project results, **** percent (****%);
(c) on Licensed Products or Licensed Services based on XTL
non-proprietary targeting agents, **** percent (****%);
(d) on Licensed Products or Licensed Services based on XTL
proprietary targeting agents, **** percent (****%).
3.2 Minimum Performance by Neoprobe -
3.3 Reports - A report shall accompany each royalty payment from Neoprobe
to XTL for each calendar quarter showing the basis upon which the
amount of royalties owed was determined. Such report and royalty
payment shall be made within thirty (30) days after each calendar
quarter, commencing with the quarter in which the first commercial sale
by Neoprobe under this Agreement is made.
3.4 Records - Neoprobe shall keep accurate records in sufficient detail to
enable the royalties accrued and payable under this Agreement to be
determined. Such records shall be retained for at least three (3) years
after the report required pursuant to Article 3.2 above, for the period
to which such records pertain, has been submitted to XTL, or for such
longer time as may be required to finally resolve any question or
discrepancy raised by XTL. Upon the request, with reasonable notice, of
XTL, but not more frequently than once a calendar year, Neoprobe shall
permit an independent public accountant selected and paid by XTL and
reasonably acceptable to Neoprobe to have access during regular
business hours to such records as may be necessary to verify the
accuracy of royalty payments made or payable hereunder. Said accountant
shall disclose information so acquired to XTL only to the extent that
it should properly have been contained in the royalty reports required
under this Agreement or constitutes evidence of fraud upon XTL.
ARTICLE IV-PATENTS, COSTS, AND ENFORCEMENT
4.1 Patents - XTL shall, at XTL's expense, prosecute and maintain patent
applications and patents covering the Technology.
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 5
Sublicense Agreement Page 5 XTL and Neoprobe
4.2 Patent Enforcement - XTL shall enforce any patent under the Technology
against an infringer that is making a product and performing a service
sublicensed to Neoprobe by XTL hereunder.
ARTICLE V - FORCE MAJEURE
No party shall incur any liability, consequential or otherwise, for any
delay in performance or failure to perform its obligations under this Agreement,
due to acts of God or public enemies, acts of other parties, requests or
regulations of civil or military authority, labor disputes, accidents at the
factory, lockouts, fire, riots, war or other outbreaks or hostilities,
embargoes, inability to obtain shipping or raw material, delays of carriers or
suppliers, machinery breakdowns, epidemics, floods, unusually severe weather,
shortage of power or fuel, or any causes whatsoever beyond the reasonable
control of the party in question.
ARTICLE VI - DURATION AND TERMINATION
6.1 Sublicense Term - This Agreement shall become effective as of the date
first written above and shall expire upon the later of (a) the
expiration, cancellation, or final and unappealable determination of
invalidity or unenforceability of all patents, if any, sublicensed
hereunder to Neoprobe by XTL, or (b) twelve (12) years from the date of
first commercial sale by Neoprobe of a product sublicensed hereunder to
Neoprobe by XTL.
6.2 Termination by Either Party - Either party may terminate this Agreement
should the other party fail to comply with or to perform any of their
duties or other material obligations under this Agreement or under the
Research and Development Agreement when due and should such failure not
be remedied within sixty (60) days of written notice of such default
having been given to the defaulting party. Any termination pursuant to
this Article 6.2 shall be in addition to, and not in place of, other
rights or remedies to which a party may be entitled. This Agreement
shall automatically terminate also on termination of the Research and
Development Agreement, except in the case where Article VI of that
Research and Development Agreement survives such termination as
provided therein. Any notices must be given to all other parties in
accordance with Article 7.4.
6.3 Termination by XTL - XTL shall have the right to terminate this
Agreement, effective upon written notice of termination to Neoprobe in
the event that:
(a) Neoprobe shall (i) seek the liquidation, reorganization,
dissolution, or winding-up of itself or the composition or
readjustment of its debts, (ii) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of all or a
substantial part of its property, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a
voluntary case under the Bankruptcy Code, (v) file a petition
seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 6
Sublicense Agreement Page 6 XTL and Neoprobe
composition, or readjustment of debts, or (vi) take any
corporate action for the purpose of effecting any of the
foregoing; or
(b) a proceeding or case shall be commenced without the
application or consent of Neoprobe, and such proceeding or
case shall continue undismissed, or an order, judgment, or
decree approving or ordering any of the following shall be
entered and continue unstayed and in effect, for a period of
forty-five (45) days from and after the date service of
process is effected upon Neoprobe, seeking (i) Neoprobe's
liquidation, reorganization, dissolution, or winding-up, or
the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator, or
the like of XTL or Neoprobe or of all or any substantial part
of their assets, or (iii) similar relief in respect of
Neoprobe under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or the composition or readjustment
of debts.
6.4 Termination by Neoprobe - Neoprobe shall have the right to terminate
this Agreement, effective upon written notice of termination to XTL in
the event that:
(a) XTL shall (i) seek the liquidation, reorganization,
dissolution, or winding-up of itself or the composition or
readjustment of its debts, (ii) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, or liquidator of itself or of all or a
substantial part of its property, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a
voluntary case under the Bankruptcy Code or corresponding law
applicable to XTL, (v) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of
debts, or (vi) take any corporate action for the purposes of
effecting any of the foregoing; or
(b) a proceeding or case shall be commenced without the
application or consent of XTL and such proceeding or case
shall continue undismissed, or an order, judgment, or decree
approving or ordering any of the following shall be entered
and continue unstayed and in effect, for a period of
forty-five (45) days from and after the date service of
process is effected upon XTL, seeking (i) XTL's liquidation,
reorganization, dissolution, or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator, or the like of XTL
or of all or any substantial part of its assets, or (iii)
similar relief in respect of XTL under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or the
composition or readjustment of debts.
6.5 Existing Rights - The rights of each party against the other which may
have accrued up to the date of termination or expiration shall remain
unaffected by expiration or termination as provided herein.
ARTICLE VII - MISCELLANEOUS
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 7
Sublicense Agreement Page 7 XTL and Neoprobe
7.1 Non-Waiver - The waiver by either party of a breach of any provision of
this Agreement shall not be deemed to effect or imply a waiver of any
other breach of such provision or a waiver of the provision itself.
7.2 Governing Law - This Agreement shall be governed by and construed in
accordance with the law of the State of Ohio, USA.
7.3 Assignment - This Agreement shall be assignable by Neoprobe only to an
entity created by Neoprobe to fund research and development of the
Project results and of which entity Neoprobe guarantees the performance
under this Agreement, provided that Neoprobe retains an option from
such entity to commercialize any product or service developed by such
entity; provided that XTL shall have the right in writing to approve of
such assignment by Neoprobe, which approval shall not be unreasonably
withheld.
7.4 Notices - Any notice, request or payment which may or must be given
under this Agreement shall be in writing and sent to the other party at
its address indicated below or to such other address as the addressee
shall have theretofore furnished in writing to the addressor.
IF TO XTL BIOPHARMACEUTICALS, LTD.:
Martin Becker, Ph.D., President
XTL BIOPHARMACEUTICALS, LTD.
Kiryat Weizmann Industrial Park
Rehovot, Israel
Telecopier: 011-972-8-405017
IF TO NEOPROBE CORPORATION: WITH A COPY TO:
David C. Bupp, President J. K. Mueller, Jr.., Esq.
NEOPROBE CORPORATION MUELLER AND SMITH, L.P.A.
425 Metro Place North MUELLER-SMITH BUILDING
Suite 400 7700 Rivers Edge Drive
Dublin, Ohio 43017 Columbus, Ohio 43235-1355
Telecopier: 011-1-614-793-7522 Telecopier: 011-1-614-436-0057
7.5 Entire Agreement - The terms and provisions contained in this Agreement
constitute the entire Agreement between the parties and shall supersede
all previous communications, representations, agreements or
understandings, either oral or written, between the parties hereto with
respect to the subject matter hereof, and no agreement or understanding
varying or extending this Agreement will be binding upon either party
hereto, unless in writing which specifically refers to this Agreement,
signed by duly authorized officers or
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 8
Sublicense Agreement Page 8 XTL and Neoprobe
representatives of the respective parties, and the provisions of this
Agreement not specifically amended thereby shall remain in full force
and effect according to their terms.
7.6 Severability - The invalidity or illegality of any term, clause or
provision of this Agreement shall not invalidate or lessen the effect
of any other term, clause or provision of this Agreement or of this
Agreement itself, unless a party would thereby be substantially
deprived of its benefit from the Agreement, in which event the parties
will attempt in good faith to revise the Agreement on a fair and
equitable basis, but if such attempt fails, then the Agreement may be
terminated by either party upon thirty (30) days' written notice to the
other.
7.7 Indemnification - Neoprobe agrees to indemnify, hold harmless and
defend XTL, Yeda, and the Weizmann Institute of Science, their
successors and assigns, their officers, employees, and agents, against
any and all claims, suits, losses, damage, costs, fees, and expenses
resulting from or arising out of Neoprobe's use of Project results in
connection with this sublicense.
7.8 Confidence - XTL and Neoprobe each agree to maintain the terms of this
Agreement in confidence, unless this Agreement permits its disclosure
or a governmental regulation or law requires its disclosure; however,
each party may disclose the existence of this Agreement. Notice of any
disclosure made by any party to a non-party shall promptly be given to
the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective duly authorized officers on the date
first above written.
NEOPROBE CORPORATION XTL BIOPHARMACEUTICALS, LTD.
By: _______________________________ By: ________________________________
Typed Name: David C. Bupp Typed Name: Martin Becker
Title: President Title: President
Date: _____________________________ Date: ______________________________
Omitted portions of this exhibit 10.3.38 have been filed separately with
the Commission and are subject to a request for confidential treatment under
rule 24b-2
**** Omitted and filed separately under Rule 24b-2 pursuant to which Neoprobe
Corporation has requested Confidential Treatment of this information
<PAGE> 1
Exhibit 10.3.39
LIMITED LIABILITY COMPANY AGREEMENT
-----------------------------------
FEBRUARY 22, 1996
-----------------------------------
NEOPROBE CORPORATION, a Delaware corporation ("Neoprobe"), and
PEPTOR CORP., a Delaware corporation ("Peptor").
PREAMBLE
1. Neoprobe owns or has rights to technology relating to the use
of radiolabeled locators (antibodies, peptides and the like) in the detection
and differentiation of neoplastic (cancerous) tissue (the "Neoprobe
Technology").
2. Peptor or its affiliates own or have rights to technology
relating to peptides and other proteins (including somatostatin analogs) (the
"Peptor Proprietary Proteins").
3. Neoprobe and Peptor desire to organize an entity to facilitate
Neoprobe's radiolabeling of Peptor Proprietary Proteins which will be evaluated
for use in the detection and differentiation of cancerous tissue using the
Neoprobe Technology (the "Business").
TERMS
ARTICLE 1. THE COMPANY.
SECTION 1.1. FORMATION. Effective as of the date first set forth
above, the parties to this Agreement (who are sometimes referred to as the
"Members" and individually as a "Member" herein) hereby form a Limited
Liability Company under Title 6, Chapter 18 of the Delaware Code ("DC") for the
purposes set forth in Section 1.3 below (the "Company").
SECTION 1.2. NAME. The name of the Company shall be "Neoprobe -
Peptor JV L.L.C."
SECTION 1.3. PURPOSE OF THE COMPANY.
(a) The Company will engage primarily in the Business. The
Company may invest in short-term highly liquid investments providing for
appropriate safety of principal (such as government obligations, certificates of
deposit, money market fund investments, short-term debt obligations and
interest-bearing accounts) pending investment of its funds, to provide liquid
investments from which to meet expenses of the Company and contingencies and to
hold funds pending distribution. Nothing in this Agreement shall be construed to
establish any other purpose for the Company, or to constitute the parties as
partners, joint venturers or limited liability company members for any other
purpose.
(b) Each Member (acting on its own behalf) may,
notwithstanding this Agreement, engage in whatever activities it chooses,
whether the same are competitive with the Company or otherwise, without having
or incurring any obligation to offer any interest in such activities to the
Company or any other Member and neither this Agreement nor any activity
undertaken pursuant hereto shall prevent any member or its affiliates from
engaging in such activities, or require any Member to permit the Company or
<PAGE> 2
any other Member to participate in any such activities and, as a material part
of the consideration for the execution of this Agreement by each Member, each
Member hereby waives, relinquishes and renounces any such right or claim of
participation. Notwithstanding the foregoing, Peptor shall have no right to
utilize, directly or indirectly, the Peptor Proprietary Proteins for use with
the Neoprobe Technology or any similar derivative technology except pursuant to
the provisions hereof.
SECTION 1.4. OFFICE; AGENT.
(a) The registered office of the Company in the State of Delaware shall
be Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle.
(b) The principal office of the Company shall be maintained at 425
Metro Place North, Suite 400, Dublin, Ohio 43017-1367, or at such other place as
may be selected by the Members from time to time. The Company may also have such
other offices as may be determined by the Members from time to time.
(c) The Corporation Trust Company shall be the registered agent of the
Company for service of process in the State of Delaware. Concurrently with the
filing of the certificate of formation of the Company, a written appointment of
an agent for service of process on the Company was filed. The Members may, from
time to time, appoint one or more persons, each of whom is eligible to serve as
an agent of a limited liability company for service of process under Delaware
law, as the Company's agent for service of process in the State of Delaware to
replace the existing agent or if the existing agent dies, resigns or removes
himself from Delaware.
(d) The Members may designate the Company's agent for service of
process in jurisdictions other than the State of Delaware. The Members will use
their best efforts to designate the Corporation Trust Company or an affiliate
thereof as its agent for service of process in all jurisdictions where such
designation of an agent for service of process is made.
SECTION 1.5. TERM. The Company shall commence its business as of the
effective date hereof and shall continue perpetually thereafter until it is
dissolved pursuant to Article 12 below. However, no dissolution of the Company
shall terminate this Agreement, which shall remain in full force and effect,
subject to Section 12.1 below, until such time as the business of the Company
has been wound-up, the assets of the Company have been liquidated, the
liabilities of the Company have been fully paid, the rights and duties of the
Members have been fully settled and all relevant statutes of limitation have
expired.
SECTION 1.6. FURTHER DOCUMENTS. The parties hereto shall, from time to
time, execute or cause to be executed all such certificates or other documents
and do or cause to be done all such filing, recording, publishing or other acts
as may be appropriate or necessary to comply with the requirements for the
formation and operation of limited liability companies under the laws of the
State of Delaware.
ARTICLE 2. CONDUCT OF THE BUSINESS.
SECTION 2.1. GENERAL. The Members hereby agree that the Business shall
include taking such steps as are reasonably necessary to (a) conduct pre-
clinical, pilot and Phase I clinical research regarding the diagnosis, therapy
and intraoperative detection of cancerous tissue in accordance with the Neoprobe
Technology using the Peptor Proprietary Proteins, (b) contract with Neoprobe to
conduct Phase II or Phase III clinical trials in Israel or other locations, as
the Members may mutually agree, and (c) establish manufacturing, packaging,
distribution and marketing capabilities for any resulting technology or products
through licensing or otherwise.
SECTION 2.2. OUTSIDE FUNDING. The Company shall develop, submit and pursue
funding proposals with the Bird Foundation to support a portion of the Business.
The Company may develop, submit and pursue additional funding proposals with
other funding sources as the Members may mutually agree.
SECTION 2.3. AGREEMENTS. Promptly after the execution hereof, (a) Peptor
shall cause Peptor Ltd., a company organized under the laws of Israel and the
parent company of Peptor ("Peptor Parent"), to
-2-
<PAGE> 3
enter into an exclusive, long-term supply agreement with the Company on terms no
less favorable to the Company than the most favorable terms granted from time to
time by Peptor Parent to its other customers (which such terms shall include the
remuneration of Peptor Parent on a cost plus basis or some other basis
acceptable to the parties) requiring the Company to purchase its requirements of
Peptor Proprietary Proteins exclusively from Peptor Parent and requiring Peptor
Parent to use its best efforts to supply such quantities of Peptor Proprietary
Proteins to the Company, (b) the Company shall enter into a long-term output
agreement with Neoprobe requiring Neoprobe to purchase all of the Peptor
Proprietary Proteins purchased by the Company from Peptor Parent at the
Company's cost therefor, and (c) Neoprobe shall enter into a long-term output
agreement with the Company on terms no less favorable to the Company than the
most favorable terms granted from time to time by Neoprobe to its other
customers requiring the Company to purchase and Neoprobe to sell all of the
Peptor Proprietary Proteins radiolabeled by Neoprobe. Such agreements will
provide for use of the Peptor Proprietary Proteins with respect to both research
and commercial applications. Each such agreement shall contain customary
provisions regarding the rights of the parties to enter into the agreement,
confidentiality, indemnity and other matters.
SECTION 2.4. DEVELOPED TECHNOLOGY. Any invention (whether patentable or
not), discovery, trade secret, proprietary information, or other intellectual
property developed by or for the benefit of the Company (collectively, the
"Developed Technology") shall be the exclusive property of the Company and not
of any of the Members or any other person. The Company shall have the sole and
exclusive right to commercially exploit the Developed Technology. Each Member
shall take any and all action necessary or reasonably requested in order to vest
in the Company all right, title and interest in, to and under the Developed
Technology everywhere in the world and to waive any rights which such Member or
any of its employees, agents or affiliates may have or claim therein.
Specifically, but without limitation, each Member shall take any and all action
necessary to cause any patents issuable with respect to any Developed Technology
to be held in the name of the Company.
SECTION 2.5. OPERATING PLAN. The Members shall cause the Company to
prepare, for the approval by the Members not later than 30 days prior to the end
of each fiscal year, an annual business plan for the next fiscal year. Each
annual business plan shall consist of (a) a budget showing in reasonable detail
the projected revenues of the Company for the next fiscal year, all proposed
expenses and capital expenditures to be made by the Company during the next
fiscal year and the proposed level of and changes in the Company's capital, and
(b) a strategic plan setting forth the Company's goals and objectives regarding
the operation and growth of the Company's Business and a description of the
methods for accomplishment of those goals and objectives. Any such business plan
may also include such other information or matters necessary in order to inform
the Members of the Company's affairs and to enable the Members to make an
informed decision with respect to their approval of such business plan.
ARTICLE 3. DUTIES OF MEMBERS.
SECTION 3.1. DUTIES. Each Member shall:
(a) participate in the conduct of the affairs of the Company and devote
reasonable time, energy, resources and ability thereto, but shall be required to
devote only such time to the affairs of the Company as such Member determines,
in its sole discretion, may be necessary to manage and operate the Company, and
shall otherwise be free to serve any other person or enterprise in any capacity
that it may deem appropriate in its discretion;
(b) render to the Company, on demand, true and full information of all
things affecting the Company;
(c) forthwith deliver all money and other property received on account
of the Business of the Company to the Company, and account to the Company for
any benefit, and hold as trustee for it any profits derived by it from any
transaction connected with the conduct of the Business of the Company or from
any use by it of the Company's property, assets, employees or credit;
-3-
<PAGE> 4
The obligations of the Members set forth in this Section 3.1 shall not be deemed
to be obligations to make contributions to the Company.
SECTION 3.2. RESTRICTIONS. No Member may, directly or indirectly:
(a) use or suffer any other person to use anywhere in the world the
Confidential Information, or any other properties, assets, employees or credit
of the Company for any purpose other than the Business of the Company; nor
(b) commit or suffer any act to be done which would cause the Company
to be subject to dissolution by any third party or by the operation of law.
ARTICLE 4. MANAGEMENT OF THE COMPANY.
SECTION 4.1. MANAGEMENT BY THE MEMBERS.
(a) Subject to Section 4.2 below, the Members shall have the power and
authority to manage the business of the Company, including, but not limited to,
the authority to cause the Company to:
- acquire and dispose of property;
- hire and discharge employees;
- enter into contracts;
- borrow money and give security therefor;
- confess a judgment;
- submit a Company claim or liability to arbitration or reference;
- prosecute or defend legal actions and proceedings to which the Company
is a party; and
- delegate their authority to employees of the Company.
(b) Except as otherwise expressly provided in this Agreement, any
difference arising as to ordinary matters connected with the Company business
shall be decided by a majority in interest of the Members; but no act in
contravention of this Agreement may be done rightfully without the consent of
all of the Members. No such approval shall constitute a waiver of any right or
remedy of the Company or any Member under this Agreement unless it complies with
Section 13.3 below.
SECTION 4.2. LIMITATION. The authority granted to the Members under Section
4.1 above is subject to the limitation that unanimous consent of all of the
Members is required in order to cause the Company to:
- merge or consolidate with any other limited liability company,
partnership, corporation or other entity or person;
- assign the Company property in trust for creditors or on the assignee's
promise to pay the debts of the Company;
- enter into a composition or arrangement with the creditors of the
Company;
- file a pleading seeking relief as to the Company under the bankruptcy
or insolvency laws or the dissolution or winding-up of the Company or
admitting the material allegations of a pleading seeking such relief
filed by another;
- give any guaranty, act as a surety for or assume the liabilities of any
person;
- dispose of the goodwill of the business of the Company or of all or
substantially all of the property or goodwill of the Company other than
in the ordinary course of its business or by way of distributions to
the Members; or
- do any other act, other than making distributions to the Members, which
would make it impossible to carry on the ordinary business of the
Company.
SECTION 4.3. CONSENT OF THE MEMBERS. Whenever this Agreement requires the
approval, consent or vote of the Members for the taking of any action,
-4-
<PAGE> 5
such approval, consent or vote shall be given in a writing, setting forth the
approval to be granted or action to be taken, which shall be signed by the
Members. Such writing may be executed in any number of counterparts, all of
which shall constitute one and the same instrument, and any Member may execute
such writing by signing one or more counterparts thereof. In giving approvals or
consents or voting, each Member may act in its own interest and shall have
complete discretion as to such approvals, consents and votes. No approval,
consent or vote given or made by any Member shall be invalid or wrongful by
reason of any relationship among the Members.
SECTION 4.4. MEMBER REPRESENTATIVES.
(a) Wherever this Agreement requires or permits any action to be taken
by the Members, the Members may act through individual representatives ("Member
Representatives"). Each Member shall appoint, from time to time, up to three
individuals to be its Member Representatives with respect to the operation and
administration of the Company. If a Member appoints more than one Member
Representative, it shall designate each such Member Representative as having
authority for (i) managerial and administrative matters or (ii) operational and
scientific matters. In addition, if a Member appoints more than one Member
Representative, it shall designate one such Member Representative as its "Senior
Representative" but if a Member has only one Member Representative, he shall be
deemed to be the "Senior Representative".
(b) Each Member Representative so appointed shall serve until notice of
his resignation or replacement is given by the appointing Member to all other
Members. Any Member may rely conclusively on the actions or statements of a
Member Representative as binding the appointing Member and shall have no
obligation to inquire into the actual authority of the Member Representative to
do so. The Member Representatives originally appointed by each Member are set
forth on Schedule A hereof.
ARTICLE 5. ADMINISTRATION; RECORDS.
SECTION 5.1. RECORDS. The Company shall keep at its principal office
determined under Section 1.4 above the following:
- a current list of the full names in alphabetical order and last known
business or residence address of each Member;
- a copy of the Company's certificate of formation, all amendments
thereto, and executed copies of any powers of attorney pursuant to
which the certificate or the amendments have been executed;
- copies of this Agreement, all other written agreements among the
Members as to the affairs of the Company and the conduct of its
business, any amendment to any of the foregoing and executed copies of
any powers of attorney pursuant to which such agreements or amendments
have been executed;
- copies of the federal, state, and local income tax returns and reports
of the Company, if any, for the three most recent years; and
- copies of the financial statements of the Company, if any, for the
three most recent years.
SECTION 5.2. INFORMATION.
(a) Each Member has the right to obtain from the Company, from time to
time and upon reasonable demand, for any purpose reasonably related to the
Member's interest in the Company, all of the following:
- true and full information regarding the status of the business and
financial condition of the Company;
- promptly after becoming available, a copy of the federal, state and
local income tax returns of the Company, if any, for each year;
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<PAGE> 6
- a current list of the name and last known business, residence or
mailing address of each Member;
- a copy of the certificate of formation, all amendments thereto, and any
written powers of attorney pursuant to which the certificate and the
amendments have been executed;
- copies of this Agreement, all other written agreements among the
Members as to the affairs of the Company and the conduct of its
business, any amendment to any of the foregoing and the powers of
attorney pursuant to which such agreements or amendments have been
executed;
- true and full information regarding the date on which each Member
became a Member and amount of cash, and a description and statement of
the agreed value of any other property or services, contributed by each
Member and which each Member has agreed to contribute in the future;
and
- other information regarding the affairs of the Company as is just and
reasonable.
(b) The Company may maintain its records in a form other than a written
form if the form used is capable of conversion into written form within a
reasonable time.
SECTION 5.3. CONFIDENTIALITY.
(a) The terms of this Agreement, all schedules referred to herein, and
all of the financial and business records of the Company including all trade
secrets, confidential knowledge, data or other proprietary information of the
Company, which by way of illustration and not limitation, include scientific,
technical and business information relating to products, processes, know-how,
designs, formulas, methods, developmental or experimental work, firmware,
software (whether executable or source code), improvements, discoveries, plans
for research, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers, and information regarding the skills and compensation of other
employees of the Company ("Confidential Information"), are sensitive,
proprietary information, the disclosure of which could irreparably damage the
Company. All Confidential Information shall be held in strictest confidence by
the Members and by their agents.
(b) If any Member is confronted with a discovery request, or with a
trial or deposition subpoena seeking Confidential Information, it shall promptly
notify the Members thereof so that the need for a protective order or other
appropriate remedy may be considered by the Company. The Member subject to the
request or subpoena is also obligated to take all reasonable steps to protect
the confidentiality of Confidential Information, including, if necessary,
seeking a protective order explicitly limiting the persons who have access to
such Information, and the manner under which it will be maintained, and seeking
agreement that only that portion of the Confidential Information which is
legally required will be disclosed.
SECTION 5.4. SECRETARY. The Members shall appoint a person, who need not be
a Member, to be the secretary of the Company. The Secretary shall maintain the
records required by Section 5.1 above and shall record and keep the minutes of
all meetings of the Members or any committee thereof. The Secretary shall be the
custodian of, and shall make or cause to be made the proper entries in, the
minute book of the Company and such other books and records as the Members may
direct. The Secretary shall have the power and authority to issue written
certifications as to the identity and incumbency in any office under this
Agreement or the certificate of formation of the Secretary, any Member or other
manager or officer of the Company and as to the existence, authenticity and
continued effect of the certificate of formation, any amendment thereto, the
limited liability company agreement, any amendment thereto, any resolutions or
actions of the Members or any committee thereof and any other document that he
is required to maintain custody of under the certificate of formation, the
limited liability company agreement or law. Any third party to whom such
certification is delivered by the Secretary may rely on the statements therein
conclusively, in the absence of
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<PAGE> 7
manifest error, and shall have no obligation to inquire beyond the contents
thereof.
SECTION 5.5. ACCOUNTING MATTERS.
(a) The Members shall cause the Company to make and keep books,
records, and accounts, which, in reasonable detail, accurately and fairly
reflect transactions and dispositions of assets of the Company and shall devise
and maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions have been and are executed in
accordance with the general or specific authorization of the Members; (ii)
transactions have been and are recorded as necessary (A) to permit preparation
of financial statements in conformity with this Agreement, and (B) to maintain
accountability for assets; (iii) access to assets has been and is permitted only
in accordance with the general or specific authorization of the Members; and
(iv) the recorded accountability for assets has been and is compared with the
existing assets at reasonable intervals and appropriate action has been and is
taken with respect to any difference.
(b) The Company shall use the accrual method of accounting. The
financial statements of the Company shall be prepared in accordance with
generally accepted accounting principals consistently applied ("GAAP") and the
requirements of Regulation S-X promulgated by the Securities and Exchange
Commission ("Regulation S-X"). If the requirements of Section 704 of the
Internal Revenue Code of 1986 (the "Code") and the Treasury Regulations
thereunder require application of accounting principals which are different than
GAAP, the requirements of Section 704 of the Code and the accompanying Treasury
Regulations shall be followed to the extent required therein. If GAAP requires
that the financial statements of the Company be consolidated with the financial
statements of any portfolio company or other entity, then, in addition to
consolidated financial statements, the Company shall also prepare and deliver to
the Members, at the same time consolidated financial statements are delivered to
the Members, financial statements showing the assets and transactions of the
Company as an entity separate from any entity with which it is otherwise
consolidated.
(c) The Members shall cause the Company to prepare and deliver the
following financial statements and reports to the Members at the following
times:
(i) As soon as practicable after the end of each fiscal year and
in any event within 60 days after such fiscal year end, a balance sheet of the
Company as of the end of such fiscal year and the end of the previous fiscal
year and statements of operations, cash flows and changes in Company equity for
such fiscal year and the two most recent previous fiscal years and a schedule
showing the capital accounts at the beginning and the end of such fiscal year at
the changes therein during such fiscal year, which statements shall be audited
and reported on by an independent public accountant of recognized national
standing in the United States selected by the Members. Coopers & Lybrand shall
serve as the Company's independent public accountants unless and until the
Members otherwise agree.
(ii) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company, and in
any event within 45 days after the end of each such quarter, a balance sheet of
the Company as of the end of each such quarterly period and statements of
operations and cash flow for such period and for the current fiscal year to
date, prepared in accordance with GAAP and the requirements of Regulation S-X
and setting forth in comparative form the figures for the corresponding periods
of the previous fiscal year but such financial statements need not be audited
nor contain the notes required by GAAP.
(d) In addition to the financial statements referred to in paragraph
(c) of this Section 5.5 above, the Members shall cause the Company to supply all
information necessary to enable each Member to prepare its federal income tax
returns and such other information as each Member may reasonably request for the
purpose of enabling it to comply with any reporting requirements imposed by any
governmental body or officer.
(e) The fiscal year of the Company shall end on December 31 in each
year or on such other date as may be determined by the Members which is
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<PAGE> 8
permissible under the Code and the Treasury Regulations.
(f) Neoprobe shall be primarily responsible for the accounting matters
discussed in this Section unless and until the Members otherwise agree. The
Company shall reimburse Neoprobe, promptly upon Neoprobe's request, for its
out-of-pocket expenses incurred in connection with such matters.
SECTION 5.6. FEDERAL TAX MATTERS. Neoprobe is hereby designated as the Tax
Matters Partner for the Company as such term is defined in Section 6231 of the
Code. The Tax Matters Partner shall keep the other Members informed of all tax
issues relating to the Company and all actions taken by the Tax Matters Partner
and, whenever feasible, shall consult with the other Members about such issues
in advance of taking such actions. In dealing with tax issues on behalf of the
Company, the Tax Matters Partner shall give consideration to the best interest
of all Members to the extent these are known to the Tax Matters Partner. The Tax
Matters Partner may in its sole discretion make or revoke the elections referred
to in Section 754 of the Code or any corresponding provisions of state tax laws.
All other options or elections under the Code relating to the Company shall be
exercised or made by the Tax Matters Partner. Each of the Members will supply
the information necessary to properly give effect to such elections upon request
of the Tax Matters Partner.
ARTICLE 6. FINANCIAL MATTERS.
SECTION 6.1. INITIAL CAPITAL CONTRIBUTION. The Members have contributed to
the capital of the Company the money or property listed on Schedule A. If
property has been contributed, its fair market value is listed on Schedule A.
All capital contributions of the Members shall be credited to the Member's
capital accounts maintained by the Company in accordance with this Article 6.
SECTION 6.2. ADDITIONAL CAPITAL CONTRIBUTIONS. Members shall make
additional capital contributions from time to time in such amounts as are
required by the then-current budget prepared and approved in accordance with
Section 2.5 hereof.
SECTION 6.3. PRIORITY AND RETURN OF CAPITAL. Except as expressly set forth
in this Agreement, no Member shall have priority over any other Member, either
as to the return of capital contributions or as to profits, losses or
distributions; provided, however, that this Section shall not apply to advances
or loans that a Member has made to the Company. No Member shall demand or
receive a return of, nor any interest, salary or other return with respect to,
its capital contributions, capital account or for services rendered on behalf of
the Company or otherwise in its capacity as a Member, except as specifically set
forth in this Agreement or except with respect to loans made to the Company. If
a return is required of or with respect to any capital contributions, capital
account, services rendered or otherwise, no Member shall have the right to
receive property other than cash except as may be specifically provided herein.
SECTION 6.4. MAINTENANCE OF CAPITAL ACCOUNTS. A capital account shall be
maintained by the Company for each Member in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv).
SECTION 6.5. ALLOCATION OF PROFITS AND LOSSES.
(a) For purposes of this Agreement, "Profits" and "Losses" mean amounts
equal to the Company's taxable income or loss, respectively, for any period from
all sources, determined in accordance with Code Section 703(a), adjusted as
follows: (i) the income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits and Losses pursuant to
this definition shall be added to such taxable income or loss; and (ii) any
expenditures of the Company described in Code Section 705(a)(2)(B) or treated as
described in such section pursuant to Regulation Section 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Profits or Losses pursuant to
this definition shall be subtracted from such taxable income or loss.
(b) Profits shall be allocated to the Members as follows:
(i) first, to those Members who have deficit balances in their
capital accounts, pro rata in proportion to such deficit balances, until such
deficit
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<PAGE> 9
balances have been eliminated and the balances in their capital accounts have
been restored to zero; and
(ii) thereafter, in proportion to the capital account balances of
all Members immediately preceding such allocation.
(c) All Losses shall be allocated to the Members in proportion to the
capital account balances of all Members immediately preceding such allocation.
(d) If any Member's capital account would have a deficit balance as a
result of an allocation of Losses pursuant to Section 6.5(c), such Losses shall
instead be reallocated to Members who have positive capital account balances (in
proportion to such balances) and any Losses remaining after the capital accounts
of all Members have been reduced to zero shall be allocated to the Members in
equal portions.
(e) The allocation of Profits and Losses to any Members shall be deemed
to be an allocation to the Member of the same proportionate part of each
separate item of taxable income, gain, loss, deduction or credit which comprises
such Profits and Losses.
(f) Notwithstanding any provision of this Agreement to the contrary,
each Member's capital account shall be maintained and adjusted in accordance
with the Code, including (i) the adjustments permitted or required by Code
Section 704(b) and, to the extent applicable, the principles expressed in Code
Section 704(c) and the regulations promulgated thereunder, and (ii) adjustments
required to maintain capital accounts in accordance with the "substantial
economic effect test" set forth in the regulations promulgated under Code
Section 704(b).
SECTION 6.6. DISTRIBUTIONS. Distributions shall be made (a) only upon
unanimous consent of the Members and (b) to each Member first in an amount
necessary to equalize the capital account balances of all Members and then in
proportion to that Member's positive capital account balance to all such
positive balances.
SECTION 6.7. INTERIM CLOSING OF THE BOOKS. If (a) a new Member is admitted
into the Company, (b) a Member transfers its interest in the Company, or (c) a
Member's interest in the Company is redeemed, there will be an interim closing
of the books of the Company as of the end of the month next preceding the date
of the applicable event, and the income and loss of the Company shall then be
allocated among the Members as of the end of the month next preceding the date
of the applicable event, and for the period commencing after such date and
ending on the last day of the Company's fiscal year, as these respective
interests shall exist.
ARTICLE 7. LIABILITY; INDEMNIFICATION.
SECTION 7.1. LIABILITY. The debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, are solely the debts,
obligations and liabilities of the Company, and no Member will be obligated
personally for any such debt, obligation or liability of the Company nor will
any Member be personally liable to pay or satisfy any judgment, decree or order
of a court against the Company solely by reason of being a member of the
Company. Except as otherwise expressly provided in this Agreement, no Member
shall have any obligation to make any capital contribution to the Company and no
Member shall be obligated to repay to the Company or any other Member any
deficit in his capital account arising at any time during the existence of the
Company. No Member shall be obligated to repay to the Company, or to any other
Member, any deficit in his capital account arising upon the dissolution and
liquidation of the Company.
SECTION 7.2. INDEMNIFICATION. The Company shall indemnify any Member,
former Member, or agent, employee or affiliate of any of them who was or is a
party or is threatened to be made a party, to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, other than an action by or in the right of the Company, by
reason of the fact that he is or was a Member, or is or was serving at the
request of the Company as a manager, member, director, trustee, officer,
employee, or agent of another limited liability company, corporation,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such
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action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
and, with respect to any criminal action or proceeding, he had reasonable cause
to believe that his conduct was unlawful.
SECTION 7.3. EXPENSES. To the extent that an indemnified person has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to in Section 7.2 above, or in defense of any claim, issue,
or matter therein, he shall be indemnified against expenses, including
attorney's fees, actually and reasonably incurred by him in connection with the
action, suit, or proceeding.
SECTION 7.4. METHOD. Any indemnification under Section 7.2 hereof, shall be
made by the Company only as authorized in the specific case upon a determination
that indemnification of the indemnified person is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 7.2
hereof. Such determination may be by a majority in interest vote of a quorum
consisting of Members who were not and are not parties to or threatened with any
such action, suit, or proceedings; or by the court of common pleas or the court
in which such action, suit, or proceeding was brought.
SECTION 7.5. NOT EXCLUSIVE. The indemnification authorized by this Article
7 shall not be exclusive of, and shall be in addition to, any other rights
granted to those seeking indemnification under this Agreement or any other
agreement, vote of the Members, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
SECTION 7.6. DEFINITIONS.
(a) As used in this Article 7, references to the "Company" includes
Neoprobe-Peptor JV L.L.C. and all constituent limited liability companies in a
consolidation or merger and the new or surviving limited liability company, so
that any person who is or was a member, manager, director, officer, employee, or
agent of such a constituent limited liability company, or is or was serving at
the request of such constituent limited liability company as a member, manager,
director, trustee, officer, employee, or agent of another limited liability
company, corporation, partnership, joint venture, trust, or other enterprise,
shall stand in the same position under this Article with respect to the new or
surviving limited liability company as he would if he had served the new or
surviving limited liability company in the same capacity.
(b) For the purposes of this Article 7 and to assure indemnification
under this provision of all such persons who are or were "fiduciaries" of an
employee benefit plan governed by the Employee Retirement Income Security Act of
1974, as amended from time to time ("ERISA"), an "other enterprise" shall be
deemed to include an employee benefit plan; the Company shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person or his duties to the Company also imposes duties on, or otherwise
involves services by, such person to the plan or participants or beneficiaries
of the plan; excise taxes assessed on a person with respect to an employee
benefit plan pursuant to ERISA shall be deemed "fines"; and action taken or
omitted by a person with respect to an employee benefit plan in the performance
of such person's duties for a purpose reasonably believed by such person to be
in the interest of the participants and beneficiaries of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
Company.
SECTION 7.7. INSURANCE. The Company may purchase and maintain insurance for
its benefit, the benefit of any individual who is entitled to indemnification
under this Article 7, or both, against any liability asserted against or
incurred by such individual in any capacity or arising out of such individual's
service with the Company, whether or not the Com-
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pany would have the power to indemnify such individual against such liability.
ARTICLE 8. MEMBER ADMISSION AND WITHDRAWAL.
SECTION 8.1. ADMISSION. Upon the unanimous consent of the Members, a person
may be admitted as a new Member provided that it executes and delivers to the
Company a written instrument acknowledging that it has received and read a copy
of this Agreement and that it agrees to be bound by the terms hereof; whereupon
such person shall be deemed to be a Member for all of the purposes of this
Agreement.
SECTION 8.2. WITHDRAWAL. If a Member:
(a) gives written notice to the other Members of its resignation from
the Company; provided that such notice may be given only:
(i) at any time after the date that is five years after the date
hereof,
(ii) during the continuance of an Event of Deadlock,
(iii) at any time within 90 days after the Bird Foundation
notifies the Company that it will not supply the funding anticipated by Section
2.2 hereof,
(iv) at any time within 90 days after the termination of either
of the Neoprobe output agreements anticipated by Section 2.3(b) or (c) hereof
with respect to a notice given by Peptor, or
(v) the failure of the issuance of or the revocation of any
patents for the Peptor Proprietary Proteins or the breach of the terms, or
termination, of the license agreement between Peptor Parent and the Company
referenced in Section 2.3(a) with respect to a notice given by Neoprobe;
(b) assigns its interest in the Company pursuant to Article 9 below or
attempts to assign such interest in violation of such provisions;
(c) or, with respect to Peptor, if the Peptor Parent (i) makes an
assignment for the benefit of creditors; (ii) files a voluntary petition in
bankruptcy; (iii) is adjudicated a bankrupt or insolvent or has entered against
it an order for relief in any bankruptcy or insolvency proceeding; (iv) files a
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law, or regulation; (v) files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against it in
any proceeding of this nature; or (vi) seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator of the Member or of all or any
substantial part of its properties;
(d) or, with respect to Peptor, if the Peptor Parent is subject to any
proceeding seeking its reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any statute, law, or
regulation, which proceeding has not been dismissed within 120 days after its
commencement, or a trustee, receiver, or liquidator of the Member or of all or
any substantial part of its properties, is appointed without its consent or
acquiescence and the appointment is not vacated or stayed within 90 days, or
within 90 days after the expiration of any such stay, the appointment is not
vacated;
(e) who is an individual, (i) dies, or (ii) is adjudicated incompetent
to manage his person or his estate by a court of competent jurisdiction;
(f) who is acting as a Member by virtue of being a trustee of a trust,
suffers the termination of the trust (but not merely the substitution of a new
trustee);
(g) that is a separate limited liability company, suffers the
dissolution and commencement of winding up of the separate company;
(h) that is a corporation or, with respect to Peptor, if the Peptor
Parent, (i) files a certificate of dissolution, or its equivalent, or (ii)
suffers the revocation of its charter and 90 days pass after the date of notice
to the corporation or revocation without a reinstatement of its charter;
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(i) that is an estate, suffers the distribution by the fiduciary of the
estate's entire interest in the Company; or
(j)(i) fails to make a required capital contribution under Section 6.2
within 90 days after a notice of demand is made therefor by a Member who has
previously made such required capital contribution and (ii) thereafter is
notified by the contributing Member of the contributing Member's decision to
exercise its rights to remove the non-contributing Member under this Section;
it shall cease to be a Member ( and may be referred to thereafter as a
"Withdrawing Member") and may not thereafter participate or interfere in the
management or control of the Company; its interest in the Company shall be
immediately converted into an economic interest; it shall thereafter have only
an economic interest in the Company as set forth herein, and it shall not be
entitled to receive any payment or distribution from the Company other than
those that are due in respect of its economic interest. The events described in
clauses (a) through (j) of this Section 8.2 may be referred to herein as "Events
of Withdrawal".
SECTION 8.3. OPTION ON EVENT OF WITHDRAWAL.
(a) Notwithstanding the provisions of Section 8.2, upon an Event of
Withdrawal, any Member not subject to such Event of Withdrawal shall have the
option to purchase or cause its designee to purchase the interest in the Company
of the Withdrawing Member. Such option shall be exercisable by notice to the
Withdrawing Member given within 90 days after the date of the Event of
Withdrawal which notice shall specify a date for the closing of such purchase.
The closing will be held at 10:00 a.m. local time at the main offices of the
Company on the date specified in the election notice.
(b) At the closing, the purchaser shall deliver to the Withdrawing
Member a wire transfer or certified or bank check drawn on a reputable bank in
an amount equal to the capital account balance of the Withdrawing Member as of
the last day of the month first preceding the Withdrawal Event and the
Withdrawing Member shall deliver or cause to be delivered evidence of the
assignment of its interest in the Company to the purchaser, free and clear of
all liens or other adverse claims.
(c) Upon the closing, the Withdrawing Member shall be released from all
obligations arising under this Agreement which relate to periods or
circumstances occurring after the date of the closing other than obligations
arising under Sections 2.4, 3.1 (b) and (c), 3.2, 5.3 and 13 hereof.
ARTICLE 9. ASSIGNMENT OF COMPANY INTERESTS.
SECTION 9.1. ASSIGNMENT. The term "assign" and all grammatical versions
thereof (e.g. assignment, assigned, etc.) include, but are not limited to, every
mode, direct or indirect, absolute or conditional, voluntary or involuntary, by
action of law or otherwise, of conveying, transferring or encumbering an
interest in the Company; such as sale, gift, grant of a security interest or
entry of a charging order or the foreclosure thereof. Any merger or
consolidation of or sale or other transfer of the voting securities of a
corporate Member shall be deemed to be an assignment of such corporate Member's
interest in the Company, if the effect thereof is to cause a change in control
of such corporate Member. For this purpose, change in control of any corporate
Member means (a) the acquisition by any person (defined for the purposes of this
definition to mean any person within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), other than such Member or
an employee benefit plan created by the Board of Directors of such Member for
the benefit of its employees, either directly or indirectly, of the beneficial
ownership (determined under Rule 13d-3 of the regulations promulgated by the
Securities and Exchange Commission under Section 13(d) of the Exchange Act) of
securities issued by such Member having 20% or more of the voting power of all
the voting securities issued by such Member in the election of directors at the
next meeting of the holders of voting securities to be held for such purpose;
(b) the election of a majority of the directors elected at any meeting of the
holders of voting securities of such Member who are persons who were not
nominated for such election by the Board of Directors of such Member or a duly
constituted committee of such Board of Directors having authority in such
matters; (c) the approval by the stockholders of such Member of a merger or
consoli-
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dation with another person, other than a merger or consoli dation in which the
holders of such Member's voting securities issued and outstanding immediately
before such merger or consolidation continue to hold voting securities in the
surviving or resulting corporation (in the same relative proportions to each
other as existed before such event) comprising 80% or more of the voting power
for all purposes of the surviving or resulting corporation; or (d) the approval
by the stockholders of such Member of a transfer of substantially all of the
assets of such Member to another person other than a transfer to a transferee,
80% or more of the voting power of which is owned or controlled by such Member
or by the holders of such Member's voting securities issued and outstanding
immediately before such transfer in the same relative proportions to each other
as existed before such event.
SECTION 9.2. PROHIBITION. A Member's interest in the Company may not be
assigned in whole or in part without the prior written consent of each of the
Members. Such consent may be withheld by any of the Members, in their discretion
which shall not be limited by any concept of fiduciary duty, for any reason or
no reason at all. No consent to an assignment of a Member's interest is a
consent to any subsequent assignment thereof. Any purported assignment of an
interest in the Company not permitted by this Section 9.2 is null and void and
of no effect whatsoever.
SECTION 9.3. EFFECT OF ASSIGNMENT. An assignment of an interest in the
Company that is permitted under Section 9.2 above does not dissolve the Company
or entitle the assignee to become or exercise any rights of a Member. An
assignment of an interest in the Company that is permitted under Section 9.2
above merely entitles the assignee to receive, to the extent assigned, those
distributions to which the assignor would be entitled under this Agreement at
the times and in the amounts determined under this Agreement and subject to any
conditions, defenses or setoffs that would have applied to the assignor had such
assignment not been made. A Member ceases to be a Member upon assignment of all
of its interest in the Company. Even though an assignment of an interest in the
Company has been consented to under Section 9.2, above, such consent is not
sufficient to admit the assignee as a Member and no assignee shall be admitted
as a Member unless and until it is so admitted under the provisions of Section
8.1, above. In such event, such newly admitted Member shall succeed to the
capital account of its predecessor in interest (or a proportionate share of such
interest if its assignor assigned less than all of its interest in the Company).
SECTION 9.4. CONTINUING OBLIGATIONS OF ASSIGNOR. Even though an assignment
is permitted under Section 9.2 above, the assignor shall not be discharged or
relieved from any liability or obligation that it may have to the Company
hereunder or under applicable law, including, but not limited to, the liability
to return unlawful distributions to the Company, by reason of such assignment
whether or not the assignee has agreed to assume any such liabilities or
obligations or is admitted to the Company as a Member, unless and until they are
duly paid or performed or the Company has delivered a writing to the assignor
expressly releasing it from such obligations and liabilities.
ARTICLE 10. CROSS-PURCHASE OPTION.
SECTION 10.1. GENERAL. Upon the occurrence of an Event of Deadlock (as
defined in Section 10.2), any Member (the "Initiator") shall have the right to
compel a sale or purchase of all, but not less than all, of the interests in the
Company then held by the other Member (the "Recipient"), on the following terms
and conditions:
(a) The Initiator shall give notice (the "First Notice") to the
Recipient of the Initiator's intention to trigger this Section 10.1, which
notice shall also set forth a price per dollar of capital account balance as of
the last day of the month first preceding the date of the First Notice (the
"Specified Price") at which the Initiator is willing to sell its Company
interest to the Recipient or buy the Recipient's Company interest.
(b) Within 30 days after delivery of the First Notice, the Recipient
shall deliver a notice (the "Second Notice") to the Initiator of its decision to
either purchase the Initiator's Company interest or sell its own Company
interests to the Initiator at the Specified Price and specifying a date for the
closing of such transaction (which must be a regular business day not later than
60 days from the date of the
-13-
<PAGE> 14
Second Notice). Failure of the Recipient to timely deliver the Second Notice
shall give the Initiator the right to determine whether to sell its Company
interest or to purchase the Recipient's Company interests at the Specified
Price.
(c) The closing will be held at 10:00 a.m. local time at the main
offices of the Company on the date specified in the Second Notice (or, if no
Second Notice is timely given, the date specified by the Initiator by notice to
the Recipient). At the closing, the purchasing party shall deliver to the
selling party a wire transfer or certified or bank check drawn on a reputable
bank in an amount equal to the Specified Price and the selling party shall
deliver or cause to be delivered evidence of the assignment of its Company
interest to the purchasing party, free and clear of all liens or other adverse
claims.
(d) Upon the closing, the selling party shall be released from all
obligations arising under this Agreement which relate to periods or
circumstances occurring after the date of the closing other than obligations
arising under Sections 2.4, 3.1(b) and (c), 3.2, 5.3 and 13 hereof.
SECTION 10.2. EVENT OF DEADLOCK. For the purposes of this Agreement, an
"Event of Deadlock" shall be deemed to have occurred if:
(a) any party to this Agreement files any pleading in any action or
proceeding which requests the dissolution, liquidation or reorganization of the
Company or the appointment of a custodian or a receiver for its business or
properties or which alleges that the Members are deadlocked; or
(b) the business of the Company is suffering or is threatened with
irreparable injury because the Members are so divided respecting the management
of the affairs of the Company that the required vote for action by the Members
cannot be obtained after mediation has been resorted to in compliance with
Section 10.3.
SECTION 10.3. MEDIATION. If any dispute arises out of or relates to the
operation, dissolution or winding up of the Company and such dispute cannot be
settled through negotiations, the parties agree first to try in good faith to
settle the matter by (a) face to face discussions between their respective
Senior Representatives and, if such discussions are not successful, by (b)
mediation under the Commercial Mediation Rules of the American Arbitration
Association before resorting to the exercise of the cross-purchase option set
forth in this Article 10. The mediator shall be experienced in the bio-
technology industry. Any mediation shall be conducted in the English language in
the City, County and State of New York. All proceedings before, or information
or documents submitted to, any mediator hereunder shall be Confidential
Information subject to Section 5.3 above, and shall be held in the strictest
confidence by the parties, the mediator and any attorneys participating in the
mediation.
ARTICLE 11. MEMBERS' REPRESENTATIONS. Each Member, by its execution of a
counterpart of this Agreement, hereby represents and warrants to the Company and
each other Member as follows:
SECTION 11.1. TRANSFER RESTRICTIONS. The Member will not offer for sale,
sell or otherwise transfer any interest in the Company unless such interest has
been registered under the Securities Act of 1933 (the "Act") and under
applicable state securities laws or such interest or its offer, sale or transfer
is exempt from such registration and the Company has received an opinion of
counsel, in form and substance reasonably satisfactory to the Members, to the
effect that such interest in the Company or its offer, sale or transfer is so
exempt. Any certificate representing any interest in the Company that may be
issued shall bear the following legend in larger or other contrasting type or
color:
These securities have not been registered under the Securities Act of
1933. These securities may not be offered for sale, sold or otherwise
transferred unless they are registered under the Securities Act of 1933 or
they or such offer, sale or transfer are exempt from such registration and
the Company has received an opinion of counsel reasonably satisfactory to
the Company in form and substance, to that effect.
The provisions of this Section 11.1 are entirely subordinate to the provisions
of Article 9 above concerning assignments and they do not create any right to
sell or transfer any interest in the Company nor do
-14-
<PAGE> 15
they create any right to receive, nor any obligation of the Company to issue,
any certificate representing any interest in the Company. Neither the Company
nor any Member may issue any certificate purporting to represent, evidence or
transfer any interest in the Company.
SECTION 11.2. CONSENTS, ETC. No consent, license, approval or authorization
of any governmental body, authority, bureau or agency is required on the part of
such Member or any of its affiliates in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated herein.
SECTION 11.3. INVESTMENT INTENT, INFORMATION. The Member is acquiring its
interest for investment and does not have the present intention of reselling or
distributing any of its interest. The Member has no contract, undertaking,
agreement or arrangement with any person to sell or transfer any of said
interest, and the Member has no present plan to enter into any such contract,
undertaking, agreement or arrangement. The Member presently does not anticipate
any future sale or other disposition of any of its interest, upon the occurrence
or non-occurrence of any pre-determined event or circumstance. The Member is
aware of the kind of information that would be available in a registration
statement under the Act. The Member has had access to the same kind of
information about the Company that would be available in such a registration
statement and to additional information necessary to verify the accuracy of such
information. The Member has such knowledge and experience in financial and
business matters as to be able to evaluate the merits and risks of this
investment and to bear the economic risks of this investment. The Member
understands and acknowledges that (a) no market may exist for the resale of the
interests, (b) it is purchasing for investment and not for the distribution of
the interests, and (c) it is aware of all restrictions imposed by the Company on
the further distribution of the interests. The Member understands that the
issuance of the interests has not been registered under the Act in reliance upon
the exemption contained in Section 4(2) thereof, and that, therefore, the
Company is relying to a material extent upon the representations, warranties and
agreements set forth in this Agreement.
SECTION 11.4. DUE ORGANIZATION. If the Member is not a natural person, that
such Member is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Such Member has full power and
authority to own its property and to carry on its business as now conducted.
Such Member is duly licensed or qualified to do business and is in good standing
in each of the jurisdictions in which the failure to be so licensed or qualified
would have a material adverse effect on its financial condition or its ability
to perform its obligations hereunder.
SECTION 11.5. AUTHORITY. Such Member has full competence, power and
authority to execute and deliver this Agreement and to carry out its obligations
hereunder in accordance with the terms and provisions hereof. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate or other action on the part of each Member not a natural person. This
Agreement constitutes the valid and legally binding obligation of such Member,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization and other similar laws
now or hereafter in effect relating to creditors' rights generally.
SECTION 11.6. NO CONFLICTS. The execution, delivery and performance by such
Member of this Agreement and the transactions contemplated hereby will not
constitute a breach of any term or provision of, or a default under (a) any
outstanding indenture, mortgage, loan agreement or other contract or agreement
to which such Member or any of its affiliates is a party or by which it or any
of its affiliates or its or their property is bound, (b) its certificate or
articles of incorporation or bylaws or other constituent documents, to the
extent applicable, (c) any law, rule or regulation having applicability to it or
any of its affiliates or (d) any order, writ, judgment or decree having
applicability to it or any of its affiliates.
SECTION 11.7. INTELLECTUAL PROPERTY. Each Member has the valid and
enforceable right to utilize the intellectual property subject to this Agreement
(i.e. the Peptor Proprietary Proteins with respect to
-15-
<PAGE> 16
Peptor and the Neoprobe Technology with respect to Neoprobe) as anticipated
hereby, free and clear of any and all claims of any third parties other than
claims arising under valid, written licenses for the benefit of the applicable
Member, true and correct copies of which have been furnished to the other Member
and to the Company.
ARTICLE 12. AMENDMENT; DISSOLUTION; LIQUIDATION.
SECTION 12.1. AMENDMENT. The certificate of formation of the Company may be
amended only by a resolution approved unanimously by the Members. This Agreement
may be amended or terminated only by a resolution approved unanimously by the
Members that is reduced to writing and signed by each of the Members. No
purported oral amendment or termination of this Agreement or the certificate of
formation shall be effective. No amendment of this Agreement or the certificate
of formation shall reduce any Member's capital account other than by payment to
the Member or losses incurred by the Company unless it is agreed to in a writing
signed by the Member.
SECTION 12.2. DISSOLUTION. The Company shall be dissolved only upon the
occurrence of any of the following events:
(a) the written consent of all Members adopting a resolution that the
Company is dissolved; or
(b) an Event of Withdrawal occurs with respect to a Member unless the
remaining Members holding a majority of the capital accounts and rights to
receive allocations of Profit hereunder consent to the continuation of the
Company within 90 days following the Event of Withdrawal; or
(c) the entry of a decree of judicial dissolution under applicable law.
SECTION 12.3. WINDING-UP. After the dissolution of the Company, the
remaining Members who have not suffered an Event of Withdrawal may wind up the
affairs of the Company or select a liquidating trustee to wind up the affairs of
the Company and may, in the name of and on behalf of the Company which shall
continue in existence until the winding up of its affairs is completed, do any
of the following:
- continue the business of the Company in order to maximize its value as
a going concern for eventual sale;
- collect the assets of the Company and gradually settle and close its
business;
- dispose of and convey the property of the Company that will not be
distributed in kind to its Members;
- discharge or make reasonable provision for the liabilities of the
Company;
- prepare and file any tax returns or other governmental reports required
in connection with such winding up;
- distribute to the Members any remaining assets of the Company;
- prosecute and defend suits, whether civil, criminal or administrative,
and
- do every other act necessary to wind up and liquidate the business and
affairs of the Company.
SECTION 12.4. DISTRIBUTION OF ASSETS. If the Company is winding up its
affairs and liquidating its assets, it shall pay or make reasonable provision to
pay all claims and obligations (other than claims of and obligations to Members
or former Members for distributions of their capital accounts), including all
contingent, conditional, or unmatured claims and obligations that are known to
the Company and all claims and obligations that are known to the Company but
with respect to which the claimant or obligee is unknown. If there are
sufficient assets, the claims and obligations (other than claims of and
obligations to Members or former Members for distributions or their capital
accounts) shall be paid in full or any provision to pay them shall be made in
full. If there are insufficient assets, the claims and obligations shall be paid
or provided for according to their priority, and claims and obligations of equal
priority shall be paid ratably to the extent of the as-
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<PAGE> 17
sets available for their payment. Any remaining assets shall be used to
distribute to the Members, the remaining balances of their capital accounts on a
pro-rata basis.
SECTION 12.5. TREATMENT OF DEVELOPED TECHNOLOGY. Upon dissolution of the
Company all Developed Technology shall, automatically and without further action
by any person, be deemed to be assigned to the Members to be held jointly by
them. Thereafter, each Member shall have the right to commercially exploit the
Developed Technology. Each Member shall take, or shall cause the Company to
take, any and all action necessary or reasonably requested in order to vest
jointly in each Member all right, title and interest in, to and under the
Developed Technology everywhere in the world and to waive any rights which the
Company or any of its employees, agents or affiliates may have or claim therein.
Specifically, but without limitation, each Member shall take any and all action
necessary to cause any patents issued or issuable with respect to any Developed
Technology to be held jointly in the names of the Members.
ARTICLE 13. MISCELLANEOUS.
SECTION 13.1. THIS AGREEMENT. This Agreement, the schedules and exhibits
hereto and the agreements and instruments required to be executed and delivered
hereunder set forth the entire agreement of the parties with respect to the
subject matter hereof and supersede and discharge all prior agreements (written
or oral) and negotiations and all contemporaneous oral agreements concerning
such subject matter and negotiations. There are no oral conditions precedent to
the effectiveness of this Agreement.
SECTION 13.2. NON-WAIVER. Neither the failure of nor any delay by any party
to this Agreement to enforce any right hereunder or to demand compliance with
its terms is a waiver of any right hereunder. No action taken pursuant to this
Agreement on one or more occasions is a waiver of any right hereunder or
constitutes a course of dealing that modifies this Agreement.
SECTION 13.3. WAIVERS. No waiver of any right or remedy under this
Agreement shall be binding on any Member unless it is in writing and is signed
by the Member to be charged or on the Company unless it is approved by
two-thirds in interest of the Members, is in writing and is signed by an
authorized representative of the Company. No such waiver of any right or remedy
under any term of this Agreement shall in any event be deemed to apply to any
subsequent default under the same or any other term contained herein.
SECTION 13.4. SEVERABILITY. The terms of this Agreement are severable and
the invalidity of all or any part of any term of this Agreement shall not render
invalid the remainder of this Agreement or the remainder of such term. If any
term of this Agreement is so broad as to be unenforceable, such term shall be
interpreted to be only so broad as is enforceable.
SECTION 13.5. SUCCESSORS. The terms of this Agreement shall be binding upon
and inure to the benefit of the Members, their respective successors and assigns
and the Company and its successors and assigns.
SECTION 13.6. THIRD PARTIES. Nothing herein expressed or implied is
intended or shall be construed to give any person other than the parties hereto
and their successors, assigns, heirs or personal representatives, any rights or
remedies under this Agreement.
SECTION 13.7. SATURDAYS, SUNDAYS AND HOLIDAYS. Where this Agreement
authorizes or requires a payment or performance on a Saturday, Sunday or public
holiday, such payment or performance shall be deemed to be timely if made on the
next succeeding business day.
SECTION 13.8. RULES OF CONSTRUCTION. In this Agreement, unless the context
otherwise requires, words in the singular number include the plural, and in the
plural include the singular; and words of the masculine gender include the
feminine and the neuter, and when the sense so indicates words of the neuter
gender may refer to any gender. The names of the parties, the date and the
preamble first above written are part of this Agreement. In this
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<PAGE> 18
Agreement, the word "or" is disjunctive but not exclusive. The captions and
section numbers appearing in this Agreement are inserted only as a matter of
convenience. They do not define, limit or describe the scope or intent of the
provisions of this Agreement.
SECTION 13.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing one or more counterparts.
SECTION 13.10. GOVERNING LAW. The validity, terms, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Delaware that are applicable to agreements negotiated, executed, delivered and
performed solely in the State of Delaware.
SECTION 13.11. ARBITRATION. Any disputes, controversies or claims arising
out of or relating to the formation, operation, dissolution or winding up of the
Company (including, without limitation, matters related to employee benefit
plans sponsored by the Company) or the negotiation, execution, delivery,
performance or breach of this Agreement shall be settled by arbitration
conducted in the English language in the City, County and State of New York in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. If the amount claimed or
disputed in such arbitration is equal to or more than $100,000, it shall be
conducted before a panel of three arbitrators. The arbitrators shall award to
the prevailing party, if any, as determined by the arbitrators, all of such
prevailing party's costs and fees. Such costs and fees shall include all
reasonable pre-award expenses related to the arbitration, including arbitrator's
fees, administrative fees, mediation expenses, travel expenses, out-of-pocket
expenses such as copying and telephone, court costs, witness fees and attorneys'
fees. All proceedings before, or evidence or documents submitted to, any
arbitrator hereunder shall be Confidential Information subject to Section 5.3
above, and shall be held in the strictest confidence by the parties, the
arbitrators and any attorneys participating therein. Mediation as anticipated by
Section 10.3 hereof shall not be a condition precedent to the submission of a
dispute to arbitration hereunder.
SECTION 13.12. NOTICES. Any notice required or desired to be given to any
Member or to the Company shall be in writing and shall be personally delivered
or sent by (a) United States first-class certified mail, postage pre-paid,
return receipt requested; (b) private courier service utilizing a return receipt
or similar written proof of delivery; (c) electronic mail, telecopier, facsimile
transmission, telex or telegraph, provided that any notice sent by any method
described in this clause (c) shall be confirmed by either of the methods
described in clauses (a) and (b). All notices to the Company shall be addressed
to the Company at its address set forth in Section 1.4(b) hereof and all notices
to a Member addressed to the Member at the address set forth in the Company's
records or to such other address as the Company or the Member may previously
have specified at least 10 days in advance by like notice. All notices shall be
deemed given upon receipt, except that notice sent by the method described in
clause (a) shall be deemed given upon the date delivery is made or refused, as
evidenced by the return receipt.
S I G N A T U R E S:
NEOPROBE CORPORATION PEPTOR CORP.
BY: /s/ David C. Bupp BY: Yoram Karmon
------------------------------- ---------------------------
David C. Bupp, President Its: President
---------------------------
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<PAGE> 19
SCHEDULE A
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
MEMBER NAME MEMBER ADDRESS MEMBER REPRESENTATIVES INITIAL CAPITAL
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Neoprobe Corporation 425 Metro Place North David C. Bupp, $1,000
Suite 400 representative for
Dublin, Ohio 43017 managerial and
administrative matters
and Senior Representative
William A. Eisenhardt,
representative for
operational and scientific
matters
- ---------------------------------------------------------------------------------------------------------------
Peptor Corp. Kiryat Weizmann Dr. Yoram Karmon $1,000
Rehovot 76326
ISRAEL
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
-19-
<PAGE> 1
Exhibit 10.3.40
SUBSCRIPTION AND OPTION AGREEMENT
-------------------
March 14, 1996
-------------------
NEOPROBE CORPORATION, a Delaware corporation ("Neoprobe"),
CIRA TECHNOLOGIES INC., a Delaware corporation ("Cira") and
Each of the individual stockholders of Cira who has signed this Agreement (the
"Stockholders")
hereby agree as follows:
PREAMBLE:
1. Cira has developed data, discoveries, inventions, and other new
technology for the treatment of chronic infectious and/or autoimmune
disease in humans which involves the mitogenic stimulation of
cytokine-secreting cells derived from lymph nodes excised from
chronically-infected and/or autoimmune disease-affected human patients
and the preparation of a therapeutic agent which then is administered
to the infected patients, and data, know-how, processes, and procedures
connected therewith (the "Technology") and Neoprobe wants to evaluate
the Technology to enable Neoprobe to develop and market products
involving employment of the Technology.
2. Neoprobe and Cira have entered into a Technology Option Agreement of
even date herewith (the "Technology Agreement") under which Neoprobe
will provide financial, clinical and technical support to Cira and The
Ohio State University Research Foundation to allow them to conduct a
Phase I clinical evaluation of the Technology.
TERMS:
ARTICLE 1. SUBSCRIPTION.
SECTION 1.1. PURCHASED SHARES. Subject to the terms and conditions of
this Agreement, Neoprobe hereby subscribes for and agrees to purchase 78 shares
of Common Stock ("Purchased Shares") for and in consideration of the purchase
price of One Dollar ($1.00) per share and Cira hereby issues and sells such
shares to Neoprobe free and clear of all liens, encumbrances and adverse claims
(other than restrictions on transfer under this Agreement and applicable
federal and state securities laws or those that are imposed by or through
Neoprobe) and acknowledges receipt of payment therefor. Simultaneously with the
execution and delivery of this Agreement, Cira has delivered a valid and
genuine stock certificate representing the Purchased Shares to Neoprobe.
ARTICLE 2. OPTION.
SECTION 2.1. THE OPTION. On the terms and subject to the conditions
set forth in this Article 2, Neoprobe shall have the right, exercisable at its
sole option, but shall not be obligated, to purchase shares of Common Stock
from Cira. This right may be referred to herein as the "Option." The time during
which the Option may be exercised by Neoprobe (the "Option Term") is determined
under Section 2.2 below and the method of exercising the Option is set forth in
Section 2.3 below. The number of shares of Common Stock that Cira must issue to
Neoprobe upon its exercise of the Option (the "Option Shares") is determined
under Section 2.4 below. The amount of money that Neoprobe must pay to Cira as
consideration for the issuance of the Option Shares (the "Exercise Price"),
which will be based on the
<PAGE> 2
value of Cira before the exercise of the Option (the "Pre - Money Value"), is
determined under Section 2.5 below.
SECTION 2.2. OPTION TERM. The Option may be exercised by Neoprobe at any
time during a ninety (90) day period, the first day of which will be the day
after the day on which the final report of the investment banker that
establishes the Pre-Money Value is delivered to Neoprobe or if the matter is
submitted to arbitration the day when the order confirming the award of the
arbitrators is entered. At the earlier of the close of business on (a) the
ninetieth day of the Option Term or (b) the twenty-first anniversary of the
date hereof, the Option will expire. If the Option Term has not begun before the
twenty-first anniversary of the date hereof, the provisions of this Article 2
shall terminate and be of no further force or effect.
SECTION 2.3. METHOD.
(a) Neoprobe may exercise the Option by delivering a notice of exercise
to Cira together with the consideration constituting the Exercise Price in the
form of a certified or cashiers' check for the amount thereof payable to the
order of Cira or by wire transfer to a bank account designated by Cira. The
delivery of the notice of exercise shall be deemed to be a reaffirmation by
Neoprobe, as of the date thereof, of the representations, warranties and
covenants set forth in Article 4 of this Agreement.
(b) The Option shall be deemed to have been exercised at the time the
notice of exercise is delivered to Cira together with full payment as provided
above, and Neoprobe shall be treated for all purposes as the holder of record of
the Option Shares at and after such time. As promptly as practicable on or after
such date, Cira, at its expense, shall issue a certificate representing the
Option Shares to Neoprobe. Neoprobe shall neither be entitled to vote nor
receive dividends nor be deemed to be a holder of the Option Shares until the
Option has been exercised as provided in this Article 2.
(c) No fractional shares of Common Stock shall be issued upon the
exercise of the Option.
SECTION 2.4. NUMBER. The number of shares of Common Stock that will
constitute the Option Shares will be that number of shares of Common Stock which
when added to the Purchased Shares will give Neoprobe ownership of twenty five
percent (25%) of the total number of fully diluted shares of Common Stock
outstanding on the date that the Option is exercised as provided in Section 2.3
above, rounded up to the next highest integral number, if such number is not
itself an integer. Such number shall be reduced by the number of shares of
Common Stock which have been offered to Neoprobe pursuant to Section 5.1 that
Neoprobe has declined to purchase, but such number shall not be reduced to less
than fifteen percent (15%) of the total number of fully diluted shares of Common
Stock outstanding on the date that the Option is exercised rounded up to the
next highest integral number, if such number is not itself an integer. For the
purpose of determining the total number of fully diluted shares of Common Stock
outstanding on the date that the Option is exercised, all securities that are
convertible into or exchangeable for Common Stock shall be deemed to have been
fully converted into or exchanged for Common Stock, all options (other than the
Option), warrants and rights to purchase Common Stock or securities that are
convertible into or exchangeable for Common Stock shall be deemed to have been
fully exercised and all agreements or contracts to issue or sell Common Stock
shall be deemed to have been fully completed.
SECTION 2.5. EXERCISE PRICE.
(a) The Exercise Price for the Option shall be fifteen percent (15%) of the
Pre-Money Value. Subject to the qualification that if the Pre-Money Value is
less than Thirteen Million Dollars ($13,000,000), the Exercise Price will be One
Million Nine Hundred Fifty Thousand Dollars ($1,950,000) and if the Pre-Money
Value is more than Thirty Million Dollars ($30,000,000), the Exercise Price will
be Four Million Five Hundred Thousand Dollars ($4,500,000).
(b) The Pre-Money Value is the fair market value of all of the Common
Stock and all securities convertible into or exchangeable for Common Stock and
all options, warrants and rights to purchase Common Stock or securities that are
convertible into
-2-
<PAGE> 3
or exchangeable for Common Stock, assuming that all such securities were
purchased by a single buyer in a single transaction on the earlier of (i) the
third anniversary of the execution of a license of technology by Cira to
Neoprobe under the Technology Agreement or (ii) the commencement of a pivotal
clinical trial study with the approval of the United States Food and Drug
Administration for the Technology. The earlier of such dates may be referred to
herein as the "Valuation Date."
(c) Whenever the Valuation Date occurs, Cira shall give Neoprobe prompt
written notice thereof. Promptly after the receipt of such notice, Neoprobe
shall appoint an investment banker of recognized national standing who has
experience in the valuation of biotechnology companies to determine the
Pre-Money Value and provide its written report thereof to Neoprobe and Cira.
Such appointment shall be subject to the reasonable approval of Cira. The
investment banker may not be a beneficial owner of five percent (5%) or more of
any class of the equity securities of Cira or Neoprobe, nor may any partner or
member in, nor officer, director or employee of such investment banker be a
director or officer of Cira or Neoprobe. The investment banker must agree to
accept the appointment subject to the terms of this Section 2.5 in writing.
Neoprobe and Cira shall each pay a moiety of the investment banker's fee for
making such determination and be responsible for its indemnification in equal
shares. Cira shall cooperate fully with such investment banker and provide it
with all material documents and full and true information concerning Cira, its
business and properties.
(d) The investment banker shall provide draft copies of its written report
of its determination of the Pre-Money Value to both Cira and Neoprobe at the
same time. If the investment banker is able to resolve the comments of both Cira
and Neoprobe to such report, it shall deliver a final report to Neoprobe and to
Cira and the Option Term shall commence. If the investment banker is unable to
resolve such comments within a reasonable time after it submitted the draft
report, it shall promptly notify Neoprobe and Cira of its inability and Neoprobe
or Cira may submit the determination of the Pre-Money Value to arbitration
pursuant to Section 10.16 below.
SECTION 2.6. RESERVATION OF STOCK. Cira covenants that, from the date
hereof until the end of the Option Term, Cira will reserve from its authorized
and unissued Common Stock or Common Stock held in treasury a sufficient number
of shares to provide for the issuance of Common Stock upon the exercise of the
Option. Cira further covenants that all shares that may be issued upon the
exercise of the Option, upon the exercise of the Option and payment of the
Exercise Price, all as set forth herein, will be duly authorized, validly
issued, fully paid, non-assessable, free and clear of all liens, encumbrances
and adverse claims (other than restrictions on transfer under this Agreement and
applicable federal and state securities laws or those that are imposed by or
through Neoprobe) and free from all taxes in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously or
otherwise specified herein). Cira agrees that its execution and delivery of this
Agreement shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the exercise of the Option.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF CIRA. Cira hereby represents and
warrants to Neoprobe as follows:
SECTION 3.1. ORGANIZATION AND STANDING. Cira is a corporation that was duly
organized, and is validly existing and in good standing under the laws of the
State of Delaware. Cira has all requisite corporate power to own and operate its
properties and assets, to carry on its business as presently conducted, to
execute and deliver this Agreement, to sell and issue the Purchased Shares and
the Option Shares hereunder and to carry out and perform its obligations under
the terms of this Agreement.
SECTION 3.2. AUTHORIZATION. All corporate action on the part of Cira, its
directors and stockholders necessary to authorize the execution and delivery of
this Agreement, the performance of Cira's obligations hereunder and the sale and
issuance of the Purchased Shares and the Option Shares has been duly taken. This
Agreement has been duly executed and delivered by Cira and is a valid and
legally binding obligation of Cira, which is enforceable against Cira in
accordance with its
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terms. The execution and delivery of this Agreement by Cira, the performance of
its obligations hereunder and the sale and issuance of the Purchased Shares and
the Option Shares will not violate any law applicable to Cira or its Certificate
of Incorporation or By-laws or breach or be a default under (with or without the
giving of notice or the lapse of time) any material contract, agreement or
instrument to which Cira is a party. The Option Shares and the Purchased Shares
have been duly authorized and, when issued and paid for in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable
and free and clear of all liens, encumbrances and adverse claims other than
restrictions on transfer under this Agreement and applicable federal and state
securities laws or those that are imposed by or through Neoprobe.
SECTION 3.3. NO REGISTRATION REQUIREMENT. Subject to the truth and accuracy
of the representations of Neoprobe set forth in Article 4 of this Agreement, the
offer, sale and issuance of the Purchased Shares and the Option Shares as
contemplated by this Agreement are exempt from the registration and prospectus
delivery requirements of Section 5 of the Securities Act, and neither Cira nor
any person acting on its behalf will take any action hereafter that would cause
the loss of such exemption.
SECTION 3.4. DISCLOSURE. No representation or warranty by Cira contained in
this Agreement, nor any other statement or certificate furnished or to be
furnished to Neoprobe pursuant hereto or in connection with the transactions
contemplated hereby by Cira contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained therein or herein not misleading in light of the
circumstances under which they were made.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF NEOPROBE. Neoprobe hereby
represents and warrants to Cira as follows:
SECTION 4.1. PRIVATE OFFERING. Neoprobe understands that the Purchased
Shares have not been, and the Option Shares will not be, registered under the
Securities Act on the ground that the sale provided for in this Agreement and
the issuance of the Purchased Shares hereunder is, and the issuance of the
Option Shares will be, exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, that Cira's reliance on such exemption is
predicated on Neoprobe's representations set forth herein and that in order to
obtain such exemption, the transfer of such Option Shares and the Purchased
Shares is restricted by Section 4.2 of this Agreement and the legend required by
Section 4.2 of this Agreement.
SECTION 4.2. TRANSFER RESTRICTIONS. Neoprobe will not offer for sale, sell
or otherwise transfer any of the Purchased Shares nor any of the Option Shares,
unless such shares have been registered under the Securities Act and under
applicable state securities laws or such shares or their offer, sale or transfer
are exempt from such registration and Cira has received an opinion of counsel,
in form and substance reasonably satisfactory to Cira, to the effect that such
shares or their offer, sale or transfer are so exempt. Any certificate
representing the Purchased Shares or any of the Option Shares shall bear the
following legend in larger or other contrasting type or color:
These securities have not been registered under the Securities Act of
1933. These securities may not be offered for sale, sold or otherwise
transferred unless they are registered under the Securities Act of 1933 or
they or such offer, sale or transfer are exempt from such registration and
the Issuer has received an opinion of counsel reasonably satisfactory to
the Issuer in form and substance, to that effect.
The transfer of these shares is restricted by the terms of a
Subscription and Option Agreement among the Corporation and its
Stockholders dated March 14, 1996. Except as provided in such Agreement,
these Shares may not be given, sold, pledged or otherwise transferred. The
Corporation will mail to the Stockholder a copy of such Agreement without
charge within five days after receipt of written request therefor.
SECTION 4.3. INVESTMENT INTENT. Neoprobe is purchasing the Purchased Shares
and will purchase the Option Shares for Neoprobe's own account and
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not for other persons and for investment and not with a view to the distribution
of any of the Purchased Shares or any of the Option Shares.
SECTION 4.4. INFORMATION. Neoprobe has had an opportunity to ask questions
and receive answers from Cira regarding the terms and conditions of the offering
of Common Stock hereunder and the business, properties, financial condition and
prospects of Cira and to obtain additional information (to the extent Cira
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to
Neoprobe.
SECTION 4.5. ADVERTISING. Neoprobe is neither purchasing the Purchased
Shares nor the Option Shares as a result of or subsequent to (a) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
(b) any seminar or meeting whose attendees, including Neoprobe, had been invited
by any general advertising or general solicitation.
SECTION 4.6. INVESTOR SOPHISTICATION; SUITABILITY. Neoprobe has such
knowledge and experience in financial and business matters that Neoprobe is
capable of evaluating the merits and risks of investment in the Purchased Shares
or the Option Shares. Neoprobe has determined that the Purchased Shares are, and
the Option Shares will be a suitable investment for Neoprobe and that Neoprobe
could bear the complete loss of Neoprobe's investment in the Purchased Shares or
the Option Shares.
SECTION 4.7. ACCREDITED INVESTOR. Neoprobe is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D as promulgated under the
Securities Act.
SECTION 4.8. CAPACITY; ENFORCEABILITY. Neoprobe is a corporation that was
duly organized, and is validly existing and in good standing under the laws of
the State of Delaware. Neoprobe has all requisite corporate power to execute and
deliver this Agreement, to purchase the Purchased Shares and the Option Shares
hereunder and to carry out and perform its obligations under the terms of this
Agreement. All corporate action on the part of Neoprobe, its directors and
stockholders necessary to authorize the execution and delivery of this Agreement
and the performance of Neoprobe's obligations hereunder has been duly taken.
This Agreement has been duly executed and delivered by Neoprobe and is a valid
and legally binding obligation of Neoprobe, which is enforceable against
Neoprobe in accordance with its terms.
SECTION 4.9. INDEMNIFICATION. Neoprobe shall indemnify Cira, each of its
directors and officers, each legal counsel and independent accountant of Cira
and each person who controls Cira (within the meaning of the Securities Act),
against any and all claims, losses and liabilities (and actions and proceedings
in respect thereof) arising out of or related to any breach of any warranty or
agreement made by Neoprobe in this Article 4 or any misrepresentation of
Neoprobe contained herein and will reimburse Cira, such directors, officers,
persons or control persons for any legal or any other expense reasonably
incurred in connection with investigating or defending any such claim, loss,
liability, action or proceeding.
ARTICLE 5. CERTAIN RIGHTS OF NEOPROBE.
SECTION 5.1. NEW SECURITIES.
(a) Cira hereby grants to Neoprobe the right of first refusal to
purchase a pro rata share of New Securities (as defined in this Section 5.1)
which Cira may, from time to time, propose to offer and sell. For purposes of
this right of first refusal, Neoprobe's pro rata share is the ratio of the
number of shares of Common Stock owned by Neoprobe immediately prior to the
issuance of New Securities to the total number of fully diluted Common Stock
outstanding immediately before the issuance of New Securities. For the purpose
of determining the total number of fully diluted Common Stock outstanding
immediately before the issuance of New Securities, all securities that are
convertible into or exchangeable for Common Stock shall be deemed to have been
fully converted into or exchanged for Common Stock, all options (other than the
Option), warrants and rights to purchase Common Stock or securities that are
convertible into or exchangeable
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for Common Stock shall be deemed to have been fully exercised and all agreements
or contracts to issue or sell Common Stock shall be deemed to have been fully
completed.
(b) If Cira proposes to offer and sell New Securities, it shall notify
Neoprobe of the terms of such offering and shall provide Neoprobe with copies of
all documents concerning such offering. If Neoprobe determines to participate in
the offering, it may do so on the same terms and subject to the same conditions
as all other participants in the offering and Cira shall accept Neoprobe's
subscription for New Securities and allocate a sufficient number thereof to
Neoprobe in accordance with paragraph (a) of this Section 5.1. As long as
Neoprobe is capable of making representations of the type found in Sections 4.6
and 4.7 above, Cira shall not impose any condition on any offering of New
Securities that would exclude Neoprobe from participation.
(c) "New Securities" means any capital stock (including Common Stock)
of Cira whether now authorized or not, and rights, options or warrants to
purchase such capital stock, and securities of any type that are, or may become,
convertible into capital stock; provided that the term "New Securities" does not
include (i) securities issued upon exercise of the Option; (ii) securities
issued as consideration for the acquisition of another business entity or
business division of any such entity by Cira by merger, purchase of
substantially all the assets or other reorganization whereby Cira will own more
than fifty percent (50%) of the voting power of such business entity or business
segment of any such entity; (iii) any borrowings, direct or indirect, from
financial institutions or other persons by Cira, whether or not presently
authorized, including any type of loan or payment evidenced by any type of debt
instrument, provided such borrowings do not have any equity features including
warrants, options or other rights to purchase capital stock and are not
convertible into capital stock of Cira; (iv) securities issued to employees,
officers or directors of Cira pursuant to any stock option, stock purchase or
stock bonus plan, agreement or arrangement approved by the board of directors;
(v) securities issued in connection with any recapitalization of Cira; nor (vi)
any right, option or warrant to acquire any security convertible into the
securities excluded from the definition of New Securities pursuant to clauses
(i) through (v) above.
SECTION 5.2. SIZE OF THE BOARD. The parties hereto shall use their best
efforts to ensure that the Certificate of Incorporation and By-laws of Cira
provide that the board of directors of Cira shall be not less than three (3) nor
more than seven (7) directors. Immediately after the date hereof, the parties
shall use their best effort to ensure the board of directors of Cira shall
consist of three (3) directors.
SECTION 5.3. NOMINATIONS. From the date hereof until such time, if ever, as
Neoprobe may have exercised the Option, it shall have the right to nominate one
(1) director. From such time, if ever, as Neoprobe may have exercised the
Option, it shall have the right to nominate two (2) directors. The parties
hereto shall vote any shares of Common Stock or other voting securities of Cira
that they have the power to vote for the election of the persons so nominated
and shall not vote such securities for the election of any person whose election
would prevent the election of the persons nominated by Neoprobe. No party to
this Agreement may vote any shares of Common Stock or other voting securities of
Cira owned by any of them for the removal of a director nominated by Neoprobe
without the prior written consent of Neoprobe. If a director nominated by
Neoprobe dies, resigns or is removed, only Neoprobe may nominate his successor.
Each committee of the board of directors that has three (3) or fewer members
shall include at least one (1) director who was nominated by Neoprobe and each
committee that has more than three (3) members shall include all directors
nominated by Neoprobe.
SECTION 5.4. TERMINATION. The provisions of this Article 5 shall terminate
when (a) the Common Stock of Cira has been registered and sold in a
firm-commitment underwriting after the date hereof or (b) the Option has either
been exercised or expired and the Common Stock owned by Neoprobe constitute less
than five percent (5%) of the then outstanding Common Stock; whichever is later.
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ARTICLE 6. REGISTRATION RIGHTS.
SECTION 6.1. CERTAIN DEFINITIONS.
(a) "Registrable Securities" means the Purchased Shares and the Option
Shares and any shares of Common Stock issued in respect thereof in any
recapitalization, provided, however, that Registrable Securities shall not
include any shares of Common Stock which have previously been registered and
sold or which have been sold to the public under Rule 144.
(b) "Registration" means a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and the ordering of
the effectiveness of such registration statement.
SECTION 6.2. PIGGY-BACK REGISTRATION.
(a) If Cira determines to register any of its securities either for its
own account or the account of securityholders exercising their respective
contractual registration rights, other than a registration relating solely to
employee benefit plans, a Rule 145 transaction or an exchange offer, or a
registration on any registration form that does not permit secondary sales, Cira
shall promptly give written notice thereof to Neoprobe, and use its best efforts
to include in such registration (and any related qualification under blue sky
laws or other compliance), except as set forth in paragraph (b) of this Section
6.2, and in any underwriting involved therein, all the Registrable Securities
specified in a written request, made by Neoprobe within twenty (20) days after
the written notice from Cira is given. Such written request may specify all or a
part of Neoprobe's Registrable Securities.
(b) If the registration of which Cira gives notice is for a registered
public offering involving an underwriting, Cira shall so advise Neoprobe as a
part of the written notice given pursuant to paragraph (a) of this Section 6.2.
In such event, the right of Neoprobe to participate in such registration
pursuant to this Section 6.2 shall be conditioned upon Neoprobe's participation
in such underwriting and the inclusion of Neoprobe's Registrable Securities in
the underwriting to the extent provided herein. Neoprobe shall (together with
Cira and the other holders of securities of Cira with contractual registration
rights to participate therein distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriters selected by Cira.
(c) Notwithstanding any other provision of this Section 6.2, if the
representative of the underwriters advises Cira in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Registrable Securities from, or limit the number of Registrable Securities to be
included in, the registration and underwriting. Cira shall so advise all holders
of securities requesting registration, and the number of shares or securities
that are entitled to be included in the registration and underwriting shall be
allocated first to Cira for securities being sold for its own account and
thereafter among selling stockholders on a pro-rata basis according to their
total holdings. If any person does not agree to the terms of any such
underwriting, he shall be excluded therefrom by written notice from Cira or the
underwriter. If shares are so withdrawn from the registration and if the number
of shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, Cira shall then offer
(subject to the availability of a reasonable amount of time to make such offer
before the commencement of a distribution) to all persons who have retained the
right to include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
shares so withdrawn, with such shares to be allocated among the persons
requesting inclusion on a pro rata basis according to their total holdings.
SECTION 6.3. REGISTRATION PROCEDURES. In the case of any registration by
Cira under this Article 6 in which Neoprobe participates, Cira shall keep
Neoprobe advised in writing as to the initiation of each such registration and
the completion thereof; and Cira shall use its best efforts to:
(a) Keep such registration effective for a period of one hundred twenty
(120) days or until Neoprobe has completed the distribution described in
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the registration statement relating thereto, whichever occurs sooner; provided,
however, that (i) such one hundred twenty (120)-day period shall be extended for
a period of time equal to the period Neoprobe refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of Cira; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such one hundred twenty (120)-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities under such registration statement;
(c) Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as Neoprobe
may reasonably request from time to time;
(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares; such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing; and
(e) Cause all such Registrable Securities registered pursuant
thereunder to be listed on each securities exchange on which securities issued
by Cira and of the same class are then listed;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration;
(g) Comply with all applicable rules and regulations of the Commission,
and make available to its securityholders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12) months, but not
more than eighteen (18) months, beginning with the first month after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
SECTION 6.4. INFORMATION BY NEOPROBE. If Registrable Securities are being
registered pursuant to Section 6.2 above, Neoprobe shall furnish to Cira such
information regarding Neoprobe and the distribution proposed by it as Cira may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification, or compliance referred to in this Article
6.
SECTION 6.5. EXPENSES OF REGISTRATION. All expenses incurred by Cira in
complying with this Article 6 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for Cira, blue sky fees and expenses, and the expense of any special
audits incident to or required by any such registration shall be borne by Cira
and all underwriting discounts and selling commissions applicable to the sale of
the Registrable Securities shall be borne by Neoprobe.
SECTION 6.6. INDEMNIFICATION.
(a) Cira shall indemnify Neoprobe, each of its officers, directors,
stockholders and legal counsel, and each person who controls (within the meaning
of the Securities Act) Neoprobe against any and all claims, losses and
liabilities (and actions and proceedings in respect thereof) arising out of or
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based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement filed pursuant to Section 6.2, any
prospectus issued thereunder, or any amendment thereof based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, or (ii) any violation by Cira of any
federal or state law, rule or regulation applicable to Cira in connection with
any such registration, and will reimburse Neoprobe, each of its officers,
directors, stockholders and legal counsel, and each person who controls
Neoprobe, for any legal and any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, liability, action or
proceeding, as incurred, provided that Cira will not be liable in any such case
to the extent that any such claim, loss, liability, action or proceeding arises
out of or is based on any untrue statement or omission based upon information
furnished to Cira by Neoprobe in writing pursuant to Section 6.4 above.
(b) If Option Shares and the Purchased Shares held by Neoprobe are
included in a registration statement filed pursuant to Section 6.2, Neoprobe
shall indemnify Cira, each of its directors and officers, each legal counsel and
independent accountant of Cira, each underwriter, if any, of Cira's securities
covered by such a registration statement, each person who controls Cira or such
underwriter (within the meaning of the Securities Act), against any and all
claims, losses and liabilities (and actions and proceedings in respect thereof)
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement, any
prospectus issued thereunder, or any amendment thereof, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, or (ii) breach of the covenant set
forth in Section 6.8 below and will reimburse Cira, such directors, officers,
counsel, accountants underwriters or control persons for any legal or any other
expense reasonably incurred in connection with investigating or defending any
such claim, loss, liability, action or proceeding, as incurred, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus or other document in reliance upon and in conformity with
information furnished to Cira by Neoprobe in writing pursuant to Section 6.4
above.
(c) Each party entitled to indemnification under this Section 6.6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has received written notice of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The Indemnified Party may participate in such defense
at such party's expense; provided, however, that the Indemnifying Party shall
bear the expense of such defense of the Indemnified Party if representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest. The failure of any Indemnified Party to give
notice as provided herein shall relieve the Indemnifying Party of its
obligations under this Section 6.6 only to the extent that such failure to give
notice shall materially adversely prejudice the Indemnifying Party in the
defense of any such claim or any such litigation. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 6.6 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of
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such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
SECTION 6.7. "LOCK-UP" AGREEMENT. If requested by an underwriter of Common
Stock, Neoprobe will not sell or otherwise transfer or dispose of any Common
Stock held by Neoprobe (other than those included in the registration) during a
period of up to one hundred eighty (180) days following the effective date of a
registration statement; provided that all persons having contractual
registration rights and all officers and directors of Cira enter into similar
agreements. The obligations described in this Section 6.7 shall not apply to a
registration relating solely to employee benefit plans, Rule 145 transactions or
exchange offers. Cira may impose stop-transfer instructions with respect to the
securities subject to the foregoing restriction until the end of the applicable
period.
SECTION 6.8. RULE 10b-6. Neoprobe hereby covenants and agrees with Cira
that, for so long as any of the Option Shares and the Purchased Shares are
saleable under a registration statement filed pursuant to this Article 6,
Neoprobe shall not purchase any Common Stock in a transaction that would violate
Commission Rule 10b-6.
SECTION 6.9. TERMINATION OF REGISTRATION RIGHTS. The right of Neoprobe to
request inclusion in any registration pursuant to Section 6.2 above, shall
terminate when, (a) all Registrable Securities held by Neoprobe may be sold by
it under Rule 144(k), (b) the Common Stock (including all Registrable
Securities) are listed on the New York or American Stock Exchange or the Nasdaq
National Market and (c) all transfer restrictions on the Registrable Securities
held by Neoprobe and any legends concerning such restrictions on certificates
representing such stock have been removed.
ARTICLE 7. COVENANTS OF CIRA. From the date hereof until such time as (a) the
Common Stock of Cira has been registered and sold in a firm-commitment
underwriting after the date hereof or (b) the Option has either been exercised
or expired and the Common Stock owned by Neoprobe constitute less than five
percent (5%) of the then outstanding Common Stock; whichever is later, and
unless Neoprobe otherwise consents, Cira will perform and observe the following
covenants:
SECTION 7.1. BASIC FINANCIAL INFORMATION. Cira will furnish the following
reports to Neoprobe:
(a) As soon as practicable after the end of each fiscal year of Cira,
and in any event within ninety (90) days thereafter, a consolidated balance
sheet of Cira and its subsidiaries, if any, as at the end of such fiscal year,
and consolidated statements of operations, cash flow and changes in equity of
Cira and its subsidiaries, if any, for such year, prepared in accordance with
GAAP consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and audited and
reported on by independent public accountants of recognized national standing
selected by Cira, accompanied by a Cira prepared comparison to Cira's financial
plan and budget for such year adopted under Section 7.2(b) below.
(b) As soon as practicable after the end of the first, second, and
third quarterly accounting periods in each fiscal year of Cira, and in any event
within forty-five (45) days thereafter, a consolidated balance sheet of Cira and
its subsidiaries, if any, as of the end of each such quarterly period, and
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consolidated statements of operations and cash flow of Cira and its subsidiaries
for such period and for the current fiscal year to date, prepared in accordance
with GAAP consistently applied and setting forth in comparative form the figures
for the corresponding periods of the previous fiscal year and to Cira's
operating plan then in effect and approved by its board of directors, subject to
changes resulting from normal year-end audit adjustments, all in reasonable
detail and certified by the principal financial or accounting officer of Cira,
accompanied by a comparison of such statements to Cira's financial plan and
budget for such period except that such financial statements need not contain
the notes required by generally accepted accounting principles.
(c) From the date Cira becomes subject to the reporting requirements of
the Exchange Act, and in lieu of the financial information required pursuant to
Sections 7.1(a) and (b), copies of its annual reports on Form 10-K and all
exhibits thereto and its quarterly reports on Form 10-Q, respectively.
(d) As soon as practicable after the end of each month and in any event
within twenty (20) days thereafter a consolidated balance sheet of Cira and its
subsidiaries, if any, as of the end of such month and consolidated statements of
operations and cash flow of Cira and its subsidiaries, for each month and for
the current fiscal year of Cira to date, all subject to normal year-end audit
adjustments, prepared in accordance with generally accepted accounting
principles consistently applied, together with a comparison of such statements
to the corresponding periods of the prior fiscal year and to Cira's then
effective financial plan and budget.
(e) As soon as practicable after transmission or occurrence and in any
event within ten (10) days thereof, copies of any reports or communications
delivered to any class of Cira's securityholders or broadly to the financial
community, including any filings by Cira with any securities exchange, the
Commission or the National Association of Securities Dealers.
SECTION 7.2. ADDITIONAL INFORMATION AND RIGHTS.
(a) Cira will permit a representative of Neoprobe to visit and inspect
any of the properties of Cira, including its books of account and other records
(and make copies thereof and take extracts therefrom), and to discuss its
affairs, finances and accounts with Cira's officers and its independent public
accountants, all upon reasonable notice at such reasonable times and as often as
any such person may reasonably request. Cira shall provide to Neoprobe such
other information and data with respect to Cira and its subsidiaries as Neoprobe
may from time to time reasonably request.
(b) Annually and at least sixty (60) days before the beginning of each
fiscal year of Cira, Cira shall prepare a financial plan and budget, which shall
be approved by the board of directors of Cira (provided that the approving
majority includes one director who was nominated by Neoprobe), which financial
plan and budget shall include a projection of operations and cash flows for such
fiscal year, a projected balance sheet as of the end of such fiscal year and a
detailed list of proposed capital expenditures during such fiscal year. Any
material changes in such business plan and budget shall be approved by the board
of directors of Cira (provided that the approving majority includes one director
who was nominated by Neoprobe), which approval shall be required before such
changes take effect unless they are not under the control of Cira. Cira shall
provide copies of the annual financial plan and budget and any changes thereto
to Neoprobe promptly after they are approved by the board of directors.
(c) Cira shall provide Neoprobe with (i) a report from Cira on its
compliance with the terms and conditions of this Agreement and any other
agreement pursuant to which Cira has borrowed money or sold its securities
within ninety (90) days after the end of each fiscal year and (ii) a copy of the
annual management review letter of Cira's independent public accountants, as
soon as practicable after the end of each fiscal year and in any event within
one hundred twenty (120) days thereafter.
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<PAGE> 12
(d) The provisions of Section 7.1 and this Section 7.2 shall not limit
any rights which Neoprobe may have to inspect and copy the books and records of
Cira and its subsidiaries, to inspect their properties or discuss their affairs
and finances, under the laws of the jurisdictions in which they are
incorporated.
(e) Neoprobe hereby agrees to hold in confidence and not use for its
own benefit nor disclose any confidential information provided pursuant to
Section 7.1 or this Section 7.2. Information that is provided to any news media
or that is otherwise publicly available shall not be deemed to be confidential.
SECTION 7.3. INDEPENDENT ACCOUNTANTS. Cira will retain an independent
public accountant who will audit and report on Cira's financial statements at
the end of each fiscal year. If the services of the independent public
accountants so selected, or any firm of independent public accountants hereafter
employed by Cira, are terminated, Cira will promptly notify Neoprobe and will
request the firm of independent public accountants whose services are terminated
to deliver to Neoprobe a letter from such firm setting forth the reasons for the
termination of their services. In its notice to Neoprobe, Cira shall state
whether the change of accountants was recommended or approved by the board of
directors of Cira or any committee thereof. In the event of such termination,
Cira will promptly thereafter engage another firm of independent public
accountants reasonably acceptable to Neoprobe.
SECTION 7.4. ACCOUNTS AND RECORDS. Cira shall make and keep books, records,
and accounts, which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of assets of Cira, its subsidiaries and their
employee benefit plans; and shall devise and maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or specific
authorization; (b) transactions have been and are recorded as necessary (i) to
permit preparation of financial statements in conformity with GAAP, and (ii) to
maintain accountability for assets; (c) access to assets is permitted only in
accordance with management's general or specific authorization; and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action has been and is taken with respect
to any differences.
SECTION 7.5. CORPORATE EXISTENCE. Cira shall maintain in full force and
effect its corporate existence, rights and franchises and those of its
subsidiaries. Cira shall hold its annual meeting of stockholders as provided in
its regulations.
SECTION 7.6. MAINTENANCE OF PROPERTIES. Cira shall and shall cause each of
its subsidiaries to maintain their respective properties in good repair, working
order and condition, reasonable wear and tear excepted, and from time to time
make all needed and proper repairs and replacements thereof and additions and
improvements thereto.
SECTION 7.7. INSURANCE. Cira shall maintain insurance with respect to the
properties and businesses of Cira and its subsidiaries against loss, damage or
liability of the kinds and in the amounts required by law or customarily insured
against by prudent business persons engaged in similar businesses and similarly
situated.
SECTION 7.8. PAYMENT OF TAXES, ETC. Cira shall and shall cause each of its
subsidiaries to promptly pay and discharge (a) all taxes imposed upon it or upon
any of its properties, (b) all lawful claims of materialmen, mechanics,
carriers, warehousemen, landlords and other similar persons for labor,
materials, supplies and rentals, which if unpaid, might become a lien upon its
properties, and (c) any debt incurred by it before or after the date of this
Agreement when due; provided, however, that Cira and its subsidiaries shall not
be required to pay any of the foregoing if (i) the amount or validity thereof is
being contested in good faith by appropriate proceedings, (ii) Cira has provided
for on its books, in accordance with GAAP, adequate reserves or provisions with
respect thereto and (C) such non-payment does not have a material adverse effect
on Cira or its subsidiaries.
SECTION 7.9. COMPLIANCE WITH LAWS. Cira shall and shall cause each of its
subsidiaries to comply with all laws, orders of a tribunal or governmental
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<PAGE> 13
permits relating to the conduct of their businesses or to their properties or
assets.
SECTION 7.10. PERFORMANCE OF CONTRACTS. Cira shall and shall cause each of
its subsidiaries to comply with each material provision of all of their
respective contracts if the breach of such provision would have a material
adverse effect on Cira or any of its subsidiaries.
SECTION 7.11. NATURE OF THE BUSINESS. Cira shall not change the general
character of the business conducted by it and its subsidiaries on the date
hereof, nor engage in any type of business not reasonably related to such
business.
SECTION 7.12. ISSUANCE OF STOCK. Cira shall not sell or issue any Common
Stock or any other debt or equity securities in any offering except pursuant to
plans or transactions approved by a majority of the board of directors that
includes at least one director who was nominated by Neoprobe.
SECTION 7.13. DIVIDENDS ON OR REDEMPTION OF SECURITIES. Except for (a)
purchases of Common Stock from employees of Cira pursuant to restricted stock
agreements, buy-back agreements, or similar arrangements, and (c) dividends paid
to Cira by a wholly-owned subsidiary of Cira, neither Cira nor any of its
subsidiaries shall declare or pay any dividend or make any other distribution
with respect to any of its capital stock, or purchase, redeem, or otherwise
acquire for a valuable consideration any of their securities.
SECTION 7.14. DEBT. Cira shall not incur any debt in excess of the amount
of debt projected under Cira's then current financial plan and budget approved
under Section 7.2(b) above, other than in transactions approved by a majority of
the board of directors that includes at least one director who was nominated by
Neoprobe or trade credit incurred in the ordinary course of business. Compliance
with the covenant set forth in this Section 7.14 shall be determined as of the
end of each month.
SECTION 7.15. LOANS, ADVANCES AND INVESTMENTS.
(a) Cira shall not and shall cause its subsidiaries to not (i) acquire,
hold or purchase any stock, bond, note or other security of any person in the
nature of an investment, (ii) make any loan, advance or capital contribution to
any person, (iii) become a general partner in any partnership or a member in any
joint venture, (iv) assume, guarantee, endorse or otherwise become liable for
the debts or obligations of any other person (except for the endorsements of
negotiable instruments for deposit or collection in the regular course of
business or guaranties by Cira of obligations of Cira's wholly-owned
subsidiaries, and guaranties by a subsidiary of obligations of Cira), nor (v)
enter into contracts relating to commodity futures, financial futures, or
similar investments.
(b) Notwithstanding the provisions of Section 7.15(a) above, Cira may
purchase without limitation (i) certificates of deposit of the banks that are
insured by the Federal Deposit Insurance Corporation, (ii) securities issued by
the United States of America or any agency or instrumentality thereof or (iii)
commercial paper having a maturity of two hundred seventy (270) days or less
that has an investment grade rating from a recognized rating agency. Furthermore
and notwithstanding the provisions of Section 7.15(a) above, Cira and its
subsidiaries may advance trade credit to their respective customers in the
ordinary course of business.
SECTION 7.16. CONSULTING AGREEMENT. Cira shall neither amend nor modify the
Consulting Agreements of even date herewith between it and Richard Olsen and it
and Pierre Triozzi. Cira will take all reasonable precautions to ensure that its
proprietary information, trade secrets and confidential information remain
proprietary, secret or confidential and will require each of its employees and
any other person who has access to such proprietary information, trade secrets
or confidential information to execute a written contract to maintain the
proprietary, secret or confidential status thereof.
SECTION 7.17. INDEMNITY BY CIRA. Cira agrees to indemnify and hold harmless
Neoprobe from and
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<PAGE> 14
against any and all liabilities, costs and expenses, including reasonable fees
of counsel (including fees incurred in establishing the right to indemnity),
resulting from the breach or default in the performance by Cira of any of the
covenants or other obligations which it is to perform hereunder, including the
failure by Cira or any of its subsidiaries to comply with any law, order of a
tribunal or governmental permit relating to the environment or the ownership by
Cira or any of its subsidiaries of property that does not comply with such laws,
orders of a tribunal or governmental permits. Cira shall indemnify any person
nominated by Neoprobe to be a director under Section 5.3 above against any
liability, cost or expense arising out of their actions or omissions as
directors to the fullest extent permitted by Ohio Revised Code Section 1701.13,
or the Certificate of Incorporation and Bylaws of Cira.
ARTICLE 8. STOCKHOLDERS' COVENANTS. Each of the Stockholders, individually,
covenants to and agrees with Neoprobe that:
SECTION 8.1. VOTING OF STOCK. He will vote any and all shares of Common
Stock or other voting securities of Cira that he owns or has the right or power
to vote, to cause Cira to comply with and perform fully each of its obligations,
commitments, covenants, and agreements contained in this Agreement, or any other
document contemplated hereby (including the Technology Agreement), and will take
any and all action available to him as a stockholder of Cira as may be necessary
to cause Cira to comply with such obligations, commitments, covenants, and
agreements.
SECTION 8.2. NO CONTRARY ACTION. He will not take any action as a
stockholder of Cira which would prevent Cira from providing Neoprobe with the
rights and benefits contemplated by this Agreement or any other document
contemplated hereby, or which would otherwise cause Cira to breach its covenants
to and agreements with Neoprobe contained in this Agreement or in any of such
other documents.
SECTION 8.3. TERMINATION OF COVENANTS. The covenants of the Stockholders
set forth in Sections 8.1 and 8.2 above are intended by the parties hereto as an
additional assurance of the performance of the provisions of Articles 2, 3, 5, 6
and 7 hereof. The covenants set forth in Sections 8.1 and 8.2 above shall
terminate when and to the extent the provisions of Articles 2, 3, 5, 6 and 7
have terminated.
SECTION 8.4. TRANSFERS OF STOCKHOLDERS' STOCK. Except as provided in
Sections 8.6 and 8.7 below, no interest in Common Stock that is owned, directly
or indirectly, by any of the Stockholders on the date hereof or is subject to an
option, warrant or other right to purchase in favor of the Stockholders existing
on the date hereof or any other securities of Cira issued in respect thereof in
any recapitalization (all of which may be referred to herein as "Original
Shares") may be given, sold, pledged or otherwise transferred to or owned by any
person, and Cira shall not register on its books any transfer in violation of
this Section 8.4.
SECTION 8.5. LEGENDS. Any certificate representing any Original Shares
shall bear the following legends in larger or other contrasting type or color:
These securities have not been registered under the Securities Act of
1933. These securities may not be offered for sale, sold or otherwise
transferred unless they are registered under the Securities Act of 1933 or
they or such offer, sale or transfer are exempt from such registration and
the Issuer has received an opinion of counsel reasonably satisfactory to
the Issuer in form and substance, to that effect.
The transfer of these shares is restricted by the terms of a
Subscription and Option Agreement among the Corporation and its
Stockholders dated March 14, 1996. Except as provided in such Agreement,
these Shares may not be given, sold, pledged or otherwise transferred. The
Corporation will mail to the Stockholder a copy of such Agreement without
charge within five days after receipt of written request therefor.
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<PAGE> 15
SECTION 8.6. RIGHT OF FIRST REFUSAL.
(a) If any of the Stockholders receives and intends to sell any of his
Original Shares pursuant to a bona fide offer to purchase Original Shares owned
by him (an "Offer") which (i) is open and irrevocable for ninety (90) days from
the date thereof, (ii) states the per share cash value of the consideration to
be given for the shares to be sold and the number of such shares, (iii) states
the identity of the proposed purchaser, and (iv) provides that the purchaser
agrees to comply with the terms and provisions of this Agreement in completing
such Offer, such Stockholder (a "Seller") shall send a copy of such Offer to
Neoprobe within five (5) days of his receipt thereof. No Offer shall be bona
fide if the proposed purchaser is an affiliate of the Seller. An offer which
does not comply with the prerequisites of the first sentence of this paragraph
(a) shall not trigger any provisions of this Section 8.6.
(b) Neoprobe may notify the Seller within forty-five (45) days of the
Offer (the "Response Period") that it desires to purchase the Original Shares
subject to the Offer pursuant to its right of first refusal under this Section
8.6, in which case the Seller shall not sell the Original Shares subject to the
Offer pursuant to the Offer and shall sell the Original Shares subject to the
Offer to Neoprobe on the terms and subject to the conditions of the Offer. Such
notice from Neoprobe is referred to as a "Response" herein. The Response shall
set forth a date, within ten (10) days after the date thereof, on which Neoprobe
will purchase the Original Shares subject to the Offer. On that date the Seller
shall deliver the certificates representing Original Shares subject to the
Offer, duly endorsed for transfer to Neoprobe at its principal place of business
and Neoprobe shall take up and pay for such shares by delivering a certified or
cashiers' check payable to the order of Seller in the amount of the cash value
of the consideration for such shares specified in the Offer. Upon receipt of
such consideration, the Seller shall sell the Original Shares subject to the
Offer to Neoprobe, free and clear of all liens, encumbrances and adverse claims
(other than restrictions on transfer under this Agreement and applicable federal
and state securities laws or those that are imposed by or through Neoprobe).
(c) If (i)(A) the Seller delivers a copy of the Offer to Neoprobe as
provided in paragraph (a) of Section 8.6 above and (B) Neoprobe does not deliver
a Response within the Response Period, or (ii) Neoprobe, having elected to
exercise its right of first refusal under paragraph (b) of Section 8.6 above,
fails to take up and pay for the securities as required herein, the Seller may,
subject to the rights of first refusal of the other Stockholders in the
Stockholders Agreement, sell his Original Shares pursuant to the terms and
conditions of the Offer within ninety (90) days of the date of the Offer. If the
sale of the shares pursuant to the Offer is not completed within ninety (90)
days of the date of the Offer, the Offer shall be invalid and the Seller may not
sell any of his Original Shares pursuant thereto.
SECTION 8.7. CERTAIN TRANSFERS. The transfer restriction imposed by Section
8.4 above shall not apply to:
(a) any bona fide gift to a member of the immediate family of the donor or
to a trust solely for the benefit of the donor or a member of his immediate
family; provided, however, that (i) the Stockholder shall notify Neoprobe of
such gift before he makes it; (ii) the donee shall execute a written instrument
in which such donee agrees to be bound by and comply with the provisions of this
Article 8; and (iii) if such gift is not in compliance with all applicable
federal and state securities laws and Cira has not received (at its sole option)
an Opinion of counsel, in form and substance reasonably satisfactory to Cira, to
the effect that such gift is so in compliance, no such gift shall be made; or
(b) any transfer under the terms of the will of a Stockholder or pursuant
to the laws of descent and distribution applicable to a Stockholder, provided
however, that the transferee shall execute a written instrument in which such
transferee agrees to be bound by and comply with the provisions of this Article
8.
Any Original Shares transferred pursuant to the provisions of this Section
8.7 remain Original Shares hereunder and the donee thereof shall be treated as a
"Stockholder" for the purposes of this Agreement.
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<PAGE> 16
SECTION 8.8 TERMINATION. The provisions of Sections 8.4 through 8.7 above
shall terminate when (a) the Common Stock of Cira has been registered and sold
in a firm-commitment underwriting after the date hereof or (b) the Option has
either been exercised or expired and the Common Stock owned by Neoprobe
constitute less than five percent (5%) of the then outstanding Common Stock;
whichever is later.
ARTICLE 9. DEFINITIONS.
SECTION 9.1. GENERAL. Certain words and phrases used in this Agreement
shall have the meanings given to them below in this Section.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, par value $.001 per share, of Cira.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
"GAAP" means generally accepted accounting principles.
"Includes" means includes, but is not limited to.
"Or" is disjunctive but not exclusive.
"Recapitalization" means, with respect to any security, any issuance of
securities with respect thereto as a dividend or any issuance, combination or
other change in such security pursuant to any amendment of the issuer's
certificate or articles of incorporation or a merger, consolidation, purchase or
sale of assets, dissolution, or plan of arrangement, compromise or
reorganization of the issuer.
"Rule 144" means Rule 144 as promulgated by the Commission under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
"Rule 145" means Rule 145 as promulgated by the Commission under the
Securities Act, as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
"Securities" means securities as such term is defined in the Securities Act
whether or not the securities in question are exempt from any of the provisions
of such act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar successor federal statute and the rules and regulations thereunder, all
as the same shall be in effect from time to time.
"Securities laws" means the Securities Act, the Exchange Act, all
regulations and rules thereunder, and all applicable state securities or "blue
sky" laws and the rules and regulations thereunder, each as they may be amended
from time to time.
"Stockholders Agreement" means the Stockholders Agreement among the
Stockholders of Cira signatories thereto dated of even date herewith.
"Transfer" means every mode, direct or indirect, absolute or conditional,
voluntary or involuntary, of disposing of or parting with an asset or property
or of an interest therein, and includes payment of money, release, lease,
abandonment and creation of a lien or other encumbrance.
SECTION 9.2. OTHER. The following defined terms shall have the definitions
set forth in the sections indicated:
TERM SECTION
Agreement 9.5
Cira Parties
Exercise Price 2.1
Indemnified Party 6.6 (c)
Indemnifying Party 6.6 (c)
Technology Agreement Preamble 2
Neoprobe Parties
New Securities 5.1 (c)
Offer 8.6 (a)
Option 2.1
Option Shares 2.1
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<PAGE> 17
TERM SECTION
Original Shares 8.4
Pre-Money Value 2.1
Purchased Shares 1.1
Registrable Securities 6.1 (a)
Registration 6.1 (a)
Response 8.6 (b)
Response Period 8.6 (b)
Seller 8.6 (a)
Stockholders Parties
Technology Preamble 1
Valuation Date 2.5 (b)
SECTION 9.3. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
SECTION 9.4. EFFECT OF DEFINITIONS. The definitions set forth in Section
9.1 above or referenced in Section 9.2 above shall apply equally to the
singular, plural, adjectival, adverbial and other forms of any of the words and
phrases defined regardless of whether they are capitalized.
SECTION 9.5. THIS AGREEMENT. This Agreement consists of the title, date,
names of parties, and preamble set forth above, these terms, the signatures of
the parties and the information set forth on the signature pages below, the
exhibits attached hereto and the certificates, documents and other instruments
required to be delivered hereunder; and any reference to this Agreement refers
to all of such constituents. The date first set forth above shall be deemed to
be the date hereof for all purposes. The statements set forth in the preamble
are made for the purpose of providing background information that will assist
persons who read this Agreement in interpreting it. Such statements do not
constitute representations, warranties or covenants of the parties hereto and
they may be contradicted by the parties.
SECTION 9.6. CASE AND GENDER. In this Agreement words in the singular
number include the plural, and in the plural include the singular; and words of
the masculine gender include the feminine and the neuter, and when the sense so
indicates words of the neuter gender may refer to any gender.
ARTICLE 10. MISCELLANEOUS.
SECTION 10.1. OPPORTUNITIES. Nothing contained in this Agreement or
Neoprobe's ownership of the Purchased Shares or the Option Shares or its right
to nominate directors or election of any affiliate of Neoprobe as a director or
officer of Cira shall require Neoprobe to offer any business opportunity to Cira
or provide any funds to Cira not specifically mentioned in this Agreement.
SECTION 10.2. SURVIVAL. The representations, warranties, covenants and
agreements made by the parties herein shall survive any investigation made by
Neoprobe or Cira and shall survive the closing of the transactions contemplated
hereby.
SECTION 10.3. EXPENSES. Cira and Neoprobe shall each bear its own expenses
and legal fees incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby.
SECTION 10.4. NOTICES. Any notice, request or other communication required
or permitted to be given under this Agreement shall be in writing and deemed to
have been properly given: (a) when delivered, if delivered in person; (b) when
sent, if sent by telecopy or other electronic means and confirmation of receipt
is received; (c) the day designated as the delivery date, if sent by nationally
recognized overnight courier service; or (d) two (2) days after being sent, if
sent by certified or registered United States mail, return receipt requested,
postage prepaid, addressed to the party at the address set forth next to such
party's signature hereto and with such copies delivered, transmitted, couriered
or mailed to such persons as are specified therein. Any party may change his
address for notices in the manner set forth above.
SECTION 10.5. SUCCESSORS. The terms of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs, personal
representatives or corporate successors.
SECTION 10.6. THIS AGREEMENT. This Agreement, the schedules and exhibits
hereto and the agreements and instruments required to be executed and delivered
hereunder set forth the entire agreement of the parties with respect to the
subject
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<PAGE> 18
matter hereof and supersede and discharge all prior agreements (written or oral)
and negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to the
effectiveness of this Agreement.
SECTION 10.7. NON-WAIVER. Neither the failure of nor any delay by any party
to this Agreement to enforce any right hereunder or to demand compliance with
its terms is a waiver of any right hereunder. No action taken pursuant to this
Agreement on one or more occasions is a waiver of any right hereunder or
constitutes a course of dealing that modifies this Agreement.
SECTION 10.8. WAIVERS. No waiver of any right or remedy under this
Agreement shall be binding on any party unless it is in writing and is signed by
the party to be charged. No such waiver of any right or remedy under any term of
this Agreement shall in any event be deemed to apply to any subsequent default
under the same or any other term contained herein.
SECTION 10.9. AMENDMENTS. No amendment, modification or termination of this
Agreement shall be binding on any party hereto unless it is in writing and is
signed by the party to be charged.
SECTION 10.10. SEVERABILITY. The terms of this Agreement are severable and
the invalidity of all or any part of any term of this Agreement shall not render
invalid the remainder of this Agreement or the remainder of such term. If any
term of this Agreement is so broad as to be unenforceable, such term shall be
interpreted to be only so broad as is enforceable.
SECTION 10.11. THIRD PARTIES. Nothing herein expressed or implied is
intended or shall be construed to give any person other than the parties hereto
any rights or remedies under this Agreement.
SECTION 10.12. JOINT PREPARATION. This Agreement shall be deemed to have
been prepared jointly by the parties hereto. Any ambiguity herein shall not be
interpreted against any party hereto and shall be interpreted as if each of the
parties hereto had prepared this Agreement.
SECTION 10.13. SATURDAYS, SUNDAYS AND HOLIDAYS. Where this Agreement
authorizes or requires a payment or performance on a Saturday, Sunday or public
holiday, such payment or performance shall be deemed to be timely if made on the
next succeeding business day.
SECTION 10.14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing one or more counterparts.
SECTION 10.15. GOVERNING LAW. The validity, terms, performance and
enforcement of this Agreement shall be governed by laws of the State of Ohio
that are applicable to agreements negotiated, executed, delivered and performed
solely in the State of Ohio.
SECTION 10.16. ARBITRATION. Any disputes, controversies or claims arising
out of or relating to the negotiation, execution, delivery, performance or
breach of this Agreement shall be settled by arbitration conducted in Franklin
County, Ohio in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and judgment upon the award rendered by the arbitrators
may be entered in any Court having jurisdiction thereof. If the amount claimed
or disputed in such arbitration is equal to or more than One Hundred Thousand
Dollars ($100,000), it shall be conducted before a panel of three arbitrators.
All proceedings before and papers submitted to any arbitrator hereunder shall be
held in the strictest confidence by the parties, the arbitrators and any
attorneys participating therein.
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<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ADDRESS: NEOPROBE CORPORATION
425 Metro Place North, Suite 400
Dublin, Ohio 43017-1367 By: /s/ David C. Bupp
-----------------------------------
David C. Bupp, President
CIRA TECHNOLOGIES, INC.
2232 Summit Street
Columbus, Ohio 43201 By: /s/ Richard G. Olsen
-----------------------------------
Richard G. Olsen, President
2255 St. Route 56 /s/ Richard G. Olsen
London, Ohio 43140 -----------------------------------
RICHARD G. OLSEN
2112 Iuka Avenue /s/ John L. Ridihalgh
Columbus, Ohio 43212 --------------------------------------
JOHN L. RIDIHALGH
2087 Tremont Road /s/ Richard McMorrow
Columbus, Ohio 43221 --------------------------------------
RICHARD MCMORROW
2356 St. Route 56 SW /s/ James R. Blakesee
London, Ohio 43140 --------------------------------------
JAMES R. BLAKESLEE
MUELLER & SMITH, LTD.
7700 Rivers Edge Drive
Columbus, Ohio 43235 By: /s/ Jerry K. Meuller, Jr.
--------------------------------------
Name: Jerry K. Meuller, Jr.
Title: Member
360 West Seventh Avenue /s/ Pierre L. Triozzi
Columbus, Ohio 43201 --------------------------------------
PIERRE L. TRIOZZI
2731 Selma Pike /s/ Gregory Noll
Springfield, Ohio 45505 --------------------------------------
GREGORY NOLL
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<PAGE> 1
EXHIBIT 11.1
NEOPROBE CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1995 1996
---- ----
<S> <C> <C>
Net Loss ($ 2,541,298) ($ 3,550,199)
============ ============
Weighted average number of
shares outstanding:
Weighted average common shares
outstanding beginning of period 10,854,515 17,334,800
Weighted average common shares
issued during period 1,002,169 91,814
----------- ----------
Weighted average number of shares outstanding
used in computing primary net loss per share 11,856,684 17,426,614
=========== ===========
Weighted average number of shares used in
computing fully diluted net loss per share 11,856,684 17,426,614
=========== ===========
Earnings (Net Loss) Per Share:
Primary ($0.21) ($0.20)
=========== ===========
Fully diluted ($0.21) ($0.20)
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000810509
<NAME> NEOPROBE CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 9,944,949
<SECURITIES> 4,947,670
<RECEIVABLES> 159,874
<ALLOWANCES> 0
<INVENTORY> 406,089
<CURRENT-ASSETS> 17,055,710
<PP&E> 3,974,228
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,209,868
<CURRENT-LIABILITIES> 2,224,024
<BONDS> 583,324
0
0
<COMMON> 17,852
<OTHER-SE> 20,384,668
<TOTAL-LIABILITY-AND-EQUITY> 23,209,868
<SALES> 196,397
<TOTAL-REVENUES> 196,397
<CGS> 150,741
<TOTAL-COSTS> 150,741
<OTHER-EXPENSES> 2,552,746
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,212
<INCOME-PRETAX> (3,550,199)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,550,199)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,550,199)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> (.20)
</TABLE>
