SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Neoprobe Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule -11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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2003 ANNUAL MEETING OF STOCKHOLDERS
May 5, 2003
Dear Stockholder:
You are cordially invited to attend the 2003 Annual Meeting of
Stockholders of Neoprobe Corporation which will be held at 9:00 a.m., Eastern
Daylight Time, on June 12, 2003, at the Embassy Suites Hotel, 5100 Upper Metro
Place, Dublin, Ohio 43017 (phone: 614.790.9000). The matters on the meeting
agenda are described in the Notice of 2003 Annual Meeting of Stockholders and
proxy statement which accompany this letter.
We hope you will be able to attend the meeting, but whatever your
plans, we ask that you please complete, execute, and date the enclosed proxy
card and return it in the envelope provided so that your shares will be
represented at the meeting.
Very truly yours,
/s/ David C. Bupp
David C. Bupp
Chief Executive Officer and President
NEOPROBE CORPORATION
425 METRO PLACE NORTH, SUITE 300
DUBLIN, OHIO 43017
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF
NEOPROBE CORPORATION:
The Annual Meeting of the Stockholders of Neoprobe Corporation, a
Delaware corporation (the "Company"), will be held at the Embassy Suites Hotel,
5100 Upper Metro Place, Dublin, Ohio 43017 (phone: 614.790.9000), on June 12,
2003, at 9:00 a.m., Eastern Daylight Time, for the following purposes:
1. To elect one director, to serve for a term of three years or until
his successor is duly elected and qualified;
2. To increase the authorized number of shares of the Company from
55,000,000 to 80,000,000, consisting of 75,000,000 shares of common
stock, $.001 par value, and 5,000,000 shares of preferred stock,
$.001 par value.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 25,
2003, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof. A list
of stockholders will be available for examination by any stockholder at the
Annual Meeting and for a period of 10 days before the Annual Meeting at the
executive offices of the Company.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN,
DATE, AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors
/s/ David C. Bupp
David C. Bupp
Chief Executive Officer and President
Dublin, Ohio
May 5, 2003
NEOPROBE CORPORATION
-------------------------------
2003 ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 2003
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PROXY STATEMENT
DATED MAY 5, 2003
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GENERAL INFORMATION
Solicitation. This proxy statement is furnished to the stockholders of
Neoprobe Corporation, a Delaware corporation, in connection with the
solicitation by the Board of Directors of the Company of proxies to be voted at
the Company's 2003 Annual Meeting of Stockholders to be held on June 12, 2003,
and any adjournment thereof. This proxy statement and the accompanying proxy
card are first being mailed to stockholders on or about May 5, 2003.
Company Address. The mailing address of our principal executive offices
is 425 Metro Place North, Suite 300, Dublin, Ohio 43017.
Voting Rights. Stockholders of record at the close of business on April
25, 2003, are entitled to notice of and to vote at the Annual Meeting. As of
that date, there were __________ shares of common stock of the Company, par
value $.001 per share, outstanding. Each holder of common stock of record on
April 25, 2003, is entitled to one vote per share held with respect to all
matters which may be brought before the Annual Meeting.
Authorization. The shares represented by the accompanying proxy will be
voted as directed if the proxy is properly completed, signed, and received by
us. If no directions are made to the contrary, your proxy will be voted FOR each
of the proposals set forth in the Notice of Annual Meeting of Stockholders. The
proxy will also be voted at the discretion of the persons acting under the proxy
to transact such other business as may properly come before the Annual Meeting
and any adjournment thereof.
Revocation. Any stockholder returning the accompanying proxy has the
power to revoke it at any time before its exercise by giving notice of
revocation to the Company, by duly executing and delivering to the Company a
proxy card bearing a later date, or by voting in person at the Annual Meeting.
Tabulation. Under Section 216 of the Delaware General Corporation Law
(DGCL) and our by-laws, the presence, in person or by proxy, of a majority of
the outstanding shares of our common stock is necessary to constitute a quorum
for the transaction of business at the Annual Meeting. Shares represented by
signed proxies that are returned to the Company will be counted toward the
quorum in all matters even though they are marked as "Abstain," "Against" or
"Withhold Authority" on one or more or all matters or they are not marked at all
(see General Information-Authorization). Broker/dealers, who hold their
customers' shares in street name, may, under the applicable rules of the
exchanges and other self-regulatory organizations of which such broker/dealers
are members, sign and submit proxies for such shares and may vote such shares on
routine matters, which, under such rules, typically include the election of
directors, but broker/dealers may not vote such shares on other matters without
specific instructions from the customer who owns such shares. Proxies signed and
submitted by broker/dealers that have not been voted on certain matters as
described in the previous sentence are referred to as broker non-votes. Such
proxies count toward the establishment of a quorum.
Under Section 216 of the DGCL and our by-laws, the election of the
director nominees requires the favorable vote a of a plurality of all votes cast
by the holders of our common stock at a meeting at which a quorum is present.
Proxies that are marked "Withhold Authority" and broker non-votes will not be
counted toward a
nominee's achievement of a plurality and, thus, will have no effect. Under
Section 242 of the DGCL and our by-laws, the amendment to our Restated
Certificate of Incorporation requires the affirmative vote of the holders of a
majority of the shares of our outstanding common stock. For purposes of
determining the number of shares of our common stock voting on the amendment to
our Restated Certificate of Incorporation, abstentions will be counted and will
have the effect of a negative vote; broker non-votes will be counted and thus
will have the effect of a negative vote. Each other matter to be submitted to
our stockholders for approval or ratification at the Annual Meeting requires the
affirmative vote of the holders of a majority of the shares of our common stock
present in person or by proxy and entitled to vote on the matter. For purposes
of determining the number of shares of our common stock voting on the matter,
abstentions will be counted and will have the effect of a negative vote; broker
non-votes will not be counted and, thus, will have no effect.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
We presently have eight directors on our Board of Directors, comprised
of three directors in each of two classes and two directors in a third class,
with terms expiring at the Annual Meeting in 2003, 2004 and 2005, respectively.
Effective upon the adjournment of the Annual Meeting, we will have six directors
on our Board of Directors, comprised of three directors in one class, two
directors in a second class, and one director in a third class, with terms
expiring at the Annual Meeting in 2004, 2005 and 2006, respectively. At the
Annual Meeting, the nominee to the Board of Directors receiving the highest
number of votes will be elected as a director to a term of three years expiring
in 2006.
J. Frank Whitley, Jr. is currently a director of the Company and is
being nominated by our Board of Directors for re-election as a director, to
serve for a term of three years. Dan Manor and John S. Christie, directors of
our Company whose terms expire at the Annual Meeting in 2003, will not stand for
re-election. Under the DGCL and our by-laws, our Board of Directors may appoint
persons as directors to fill these vacant positions. As of the date of this
proxy statement, we have not yet identified any prospective appointees for these
vacancies.
It is intended that, unless otherwise directed, the shares represented
by the enclosed proxy will be voted FOR the election of Mr. Whitley. We have no
reason to believe that any nominee will not stand for election or serve as a
director. In the event that a nominee fails to stand for election, the proxies
will be voted for the election of another person designated by the persons named
in the proxy. See General Information-Tabulation.
THE BOARD OF DIRECTORS HAS NOMINATED THE FOLLOWING PERSON TO SERVE AS A DIRECTOR
OF THE COMPANY UNTIL THE 2006 ANNUAL MEETING:
J. FRANK WHITLEY, JR., age 60, has served as a director of our Company since May
1994. Mr. Whitley was Director of Mergers, Acquisitions and Licensing at The Dow
Chemical Company (Dow), a multinational chemical company, from June 1993 until
his retirement in June 1997. After joining Dow in 1965, Mr. Whitley served in a
variety of marketing, financial, and business management functions. Mr. Whitley
has a B.S. degree in Mathematics from Lamar State College of Technology.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2004 ANNUAL MEETING:
REUVEN AVITAL, age 51, has served as a director of our Company since January
2002. Mr. Avital is a partner and general manager of Ma'Aragim Enterprises Ltd.,
an investment company in Israel, through which he is a member of the board of
Neoprobe as well as a number of privately held and Israeli public companies,
three of them in the medical device field. Mr. Avital was a board member of
Cardiosonix, Ltd. from April 2001 through December 31, 2001, when we acquired
the company. Previously, Mr. Avital served in the Israeli government in a
variety of middle and senior management positions. He is also chairman or board
member in several not-for-profit organizations, mainly involved in education for
the under-privileged and international peace-building. Mr. Avital has B.A.
degrees in The History of the Middle East and International Relations from the
Hebrew University of Jerusalem, and a M.P.A. from the Kennedy School of
Government at Harvard University.
DAVID C. BUPP, age 53, has served as President and a director of our Company
since August 1992 and as Chief Executive Officer since February 1998. From
August 1992 to May 1993, Mr. Bupp served as our Treasurer. In addition to the
foregoing positions, from December 1991 to August 1992, he was Acting President,
Executive Vice President, Chief Operating Officer and Treasurer, and from
December 1989 to December 1991, he was Vice President, Finance and Chief
Financial Officer. From 1982 to December 1989, Mr. Bupp was Senior Vice
President, Regional Manager for AmeriTrust Company National Association, a
nationally chartered bank holding company, where he was in charge of commercial
banking operations throughout Central Ohio. Mr. Bupp has a B.A.
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degree in Economics from Ohio Wesleyan University. Mr. Bupp completed a course
of study at Stonier Graduate School of Banking at Rutgers University.
JULIUS R. KREVANS, M.D., age 78, has served as a director of our Company since
May 1994 and as Chairman of the Board of Directors of our Company since February
1999. Dr. Krevans served as Chancellor of the University of California, San
Francisco from July 1982 until May 1993. Prior to his appointment as Chancellor,
Dr. Krevans served as a Professor of Medicine and Dean of the School of Medicine
at the University of California, San Francisco from 1971 to 1982. Dr. Krevans is
a member of the Institute of Medicine, National Academy of Sciences, and led its
committee for the National Research Agenda on Aging until 1991. He is Chairman
of the Bay Area Economic Forum, a member of the Medical Panel of A.P. Giannini
Foundation, and a member of the Board of Directors of the Bay Area BioScience
Center. Dr. Krevans has a B.S. degree and a M.D. degree, both from New York
University. Dr. Krevans also serves on the Board of Directors and the
compensation committee of the Board of Directors of Calypte Biomedical
Corporation (Calypte), a publicly held corporation, and on the Board of
Directors and nominating committee of AccuImage Diagnostics Corp., a publicly
held company. Nancy E. Katz, a director of our Company, is President and Chief
Executive Officer of Calypte.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2005 ANNUAL MEETING:
NANCY E. KATZ, age 43, has served as a director of our Company since January
2001. Ms. Katz currently serves as President, Chief Executive Officer and a
director of Calypte. Ms. Katz joined Calypte in October 1999 as President, Chief
Operating Officer and Chief Financial Officer. Prior to joining Calypte, Ms.
Katz served as President of Zila Pharm Inc. From 1997 to 1998, Ms. Katz served
as Vice President of Sales & Marketing of LifeScan (the diabetes testing
division of Johnson & Johnson) and Vice President of U.S. Marketing, directing
LifeScan's marketing and customer call center departments from 1995 to 1997.
During her seven-year career at Schering-Plough Healthcare Products from 1987 to
1994, she held numerous positions including Senior Director & General Manager,
Marketing Director for Footcare New Products, and Product Director of OTC New
Products. Ms. Katz also held various product management positions at American
Home Products from 1981 to 1987. Ms. Katz received her B.A. in Business
Administration from the University of South Florida.
FRED B. MILLER, age 63, has served as a director of our Company since January
2002. Mr. Miller is the President and Chief Operating Officer of Seicon,
Limited, a privately held company that specializes in developing, applying and
licensing technology to reduce seismic and mechanically induced vibration. Mr.
Miller also serves on the boards of two other privately held companies. Until
his retirement in 1995, Mr. Miller had been employed with Price Waterhouse LLP
since 1962. Mr. Miller is a Certified Public Accountant, a member of the
American Institute of Certified Public Accountants (AICPA), a past member of the
Council of the AICPA and a member and past president of the Ohio Society of
Certified Public Accountants. He also has served on the boards or advisory
committees of several universities and not-for-profit organizations. Mr. Miller
has a B.S. degree in Accounting from the Ohio State University.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS MEETINGS
Our Board of Directors held a total of ten meetings in fiscal 2002 and
each of the directors attended at least 75 percent of the aggregate number of
meetings of the Board of Directors and committees (if any) on which he or she
served.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Through September 2002, the Chairman of the Board of Directors of our
Company received $2,000 per board meeting attended in person and other
non-employee directors received $1,000 each per meeting attended in person. We
also paid directors $500 each per committee meeting attended in person through
September 2002. After September 2002, non-employee directors waived fees for
attendance at board or committee meetings until further notice. We did not pay
directors for telephonic participation in board or committee meetings in fiscal
2002. We
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also reimbursed non-employee directors for travel expenses for meetings
attended during fiscal 2002. In addition, the Chairman and each non-employee
director received 35,000 and 25,000 options, respectively, to purchase common
stock as a part of our annual stock incentive grants. Options granted to
purchase common stock vest on an annual basis over a three-year period and have
an exercise price equal to not less than the closing market price of common
stock at the date of grant.
Directors who are also officers or employees of our Company do not
receive any compensation for their services as directors.
COMMITTEES
We have a standing Audit Committee and a standing Compensation
Committee. We do not have a standing committee whose functions include
nominating directors.
AUDIT COMMITTEE
The Audit Committee of the Board of Directors recommends the annual
appointment of our independent public accountants with whom the Audit Committee
reviews the scope of audit and non-audit assignments and related fees, the
accounting principles that we use in financial reporting, internal financial
auditing procedures and the adequacy of our internal control procedures. The
members of our Audit Committee are: Fred B. Miller (Chairman), Reuven Avital,
John S. Christie and J. Frank Whitley, each of whom is an independent director.
The Audit Committee held five meetings in fiscal 2002.
COMPENSATION COMMITTEE
The Compensation Committee establishes the compensation of all
employees and consultants of the Company, administers and interprets the
Company's 2002 Stock Incentive Plan, Amended and Restated Stock Option Plan,
Restricted Stock Purchase Plan and the 1996 Stock Incentive Plan, and takes any
action that is permitted to be taken by a committee of the Board of Directors
under the terms of such plans, including the granting of options. The members of
the Compensation Committee are Nancy E. Katz and Julius R. Krevans, each of whom
is an independent director. The Compensation Committee held two meetings in
fiscal 2002.
EXECUTIVE OFFICERS
In addition to Mr. Bupp, the following individuals are executive
officers of our Company and serve in the position(s) indicated below:
NAME AGE POSITION
---- --- --------
Carl M. Bosch 46 Vice President, Instrument Development
Rodger A. Brown 52 Vice President, Regulatory Affairs
and Quality Assurance
Brent L. Larson 40 Vice President, Finance; Chief Financial Officer;
Treasurer and Assistant Secretary
CARL M. BOSCH has served as Vice President, Instrument Development of our
Company since March 2000. Prior to that, Mr. Bosch served as our Director,
Instrument Development from May 1998 to March 2000. Before joining our Company,
Mr. Bosch was employed by GE Medical Systems from 1994 to 1998 where he served
as Manager, Nuclear Programs. From 1977 to 1994, Mr. Bosch was employed by GE
Aerospace in several engineering and management functions. Mr. Bosch has a B.S.
degree in Electrical Engineering from Lehigh University and a M.S. degree in
Systems Engineering from the University of Pennsylvania.
RODGER A. BROWN has served as Vice President, Regulatory Affairs and Quality
Assurance of our Company since November 2000. From July 1998 through November
2000, Mr. Brown served as our Director, Regulatory Affairs and Quality
Assurance. Prior to joining our Company, Mr. Brown served as Director of
Operations for Biocore
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Medical Technologies, Inc. from April 1997 to April 1998. From 1981 through
1996, Mr. Brown served as Director, Regulatory Affairs/Quality Assurance for E
for M Corporation, a subsidiary of Marquette Electronics, Inc.
BRENT L. LARSON has served as Vice President, Finance and Chief Financial
Officer of our Company since February 1999. Prior to that, he served as our Vice
President, Finance from July 1998 to January 1999 and as Controller from July
1996 to June 1998. Before joining our Company, Mr. Larson was employed by Price
Waterhouse LLP. Mr. Larson has a B.B.A. degree in Accounting from Iowa State
University of Science and Technology and is a Certified Public Accountant.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS, NOMINEES AND EXECUTIVE
OFFICERS AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of April 15, 2003, certain
information with respect to the beneficial ownership of shares of our common
stock by: (i) each person known to us to be the beneficial owner of more than 5
percent of our outstanding shares of common stock, (ii) each director or nominee
for director of our Company, (iii) each of the Named Executives (see "Executive
Compensation - Summary Compensation Table"), and (iv) our directors and
executive officers as a group.
NUMBER OF
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(*) OF CLASS(**)
--------------------------------------- ------------------ --------------
Reuven Avital 2,793,457(a) 6.8%
Carl M. Bosch 184,218(b) (o)
Rodger A. Brown 120,498(c) (o)
David C. Bupp 1,132,237(d) 2.8%
John S. Christie 89,034(e) (o)
Nancy E. Katz
28,334(f) (o)
Julius R. Krevans 158,667(g) (o)
Brent L. Larson 272,656(h) (o)
Dan Manor 1,261,410(i) 3.1%
Fred B. Miller 9,334(j) (o)
J. Frank Whitley, Jr. 89,334(k) (o)
All directors and officers as a group 6,138,779(l) 15.0%
(11 persons)
First Isratech Fund LLC 2,568,133(m) 6.3%
Greatway Commercial, et al. 2,567,952(n) 6.3%
(*) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities. Unless otherwise
indicated, voting and investment power are exercised solely by the person
named above or shared with members of such person's household.
(**) Percent of class is calculated on the basis of the number of shares
outstanding on April 15, 2003, plus the number of shares the person has the
right to acquire within 60 days of April 15, 2003.
(a) This amount consists of 2,785,123 shares of our common stock owned by N.
Assia Trusteeship Ltd, Trustee for Ma'Aragim Enterprises Ltd., an
investment fund under the management and control of Mr. Avital, and 8,334
shares issuable upon exercise of options which are exercisable within 60
days but does not include 36,666 shares issuable upon exercise of options
which are not exercisable within 60 days. Of the shares held by N. Assia
Trusteeship Ltd., 2,286,712 were acquired by Ma'Aragim in exchange for
surrendering its shares in Cardiosonix Ltd. on December 31, 2001, in
connection with our acquisition of Cardiosonix and 498,411 were acquired by
Ma'Aragim based on the satisfaction of certain developmental milestones on
December 30, 2002, associated with our acquisition of Cardiosonix.
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(b) This amount includes 121,667 shares issuable upon exercise of options which
are exercisable within 60 days and 22,551 shares in Mr. Bosch's account in
the 401(k) Plan, but does not include 118,333 shares issuable upon exercise
of options which are not exercisable within 60 days. Mr. Bosch is one of
three trustees of the 401(k) Plan and may, as such, share investment power
over common stock held in such plan. The 401(k) Plan holds an aggregate
total of 205,858 shares of common stock. Mr. Bosch disclaims any beneficial
ownership of shares held by the 401(k) Plan that are not allocated to his
personal account.
(c) This amount includes 116,167 shares issuable upon exercise of options which
are exercisable within 60 days and 4,331 shares held in the 401(k) Plan by
Mr. Brown's wife, but does not include 118,333 shares issuable upon
exercise of options which are not exercisable within 60 days. Mr. Brown
disclaims beneficial ownership of the shares in his wife's 401(k) account.
(d) This amount includes 410,000 shares issuable upon exercise of options which
are exercisable within 60 days, 375,000 warrants which are exercisable
within 60 days and 30,737 shares in Mr. Bupp's account in the 401(k) Plan,
but it does not include 450,000 shares issuable upon exercise of options
which are not exercisable within 60 days. Mr. Bupp is one of three trustees
of the 401(k) Plan and may, as such, share investment power over common
stock held in such plan. The 401(k) Plan holds an aggregate total of
205,858 shares of common stock. Mr. Bupp disclaims any beneficial ownership
of shares held by the 401(k) Plan that are not allocated to his personal
account.
(e) This amount includes 88,334 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 46,666 shares issuable
upon exercise of options which are not exercisable within 60 days. Mr.
Christie is not standing for re-election as a member of our Board of
Directors at the 2003 Annual Meeting.
(f) This amount includes 28,334 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 46,666 shares issuable
upon the exercise of options which are not exercisable within 60 days.
(g) This amount includes 156,667 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 63,333 shares issuable
upon exercise of options which are not exercisable within 60 days.
(h) This amount includes 173,867 shares issuable upon exercise of options which
are exercisable within 60 days and 22,889 shares in Mr. Larson's account in
the 401(k) Plan, but it does not include 123,333 shares issuable upon
exercise of options which are not exercisable within 60 days. Mr. Larson is
one of three trustees of the 401(k) Plan and may, as such, share investment
power over common stock held in such plan. The 401(k) Plan holds an
aggregate total of 205,858 shares of common stock. Mr. Larson disclaims any
beneficial ownership of shares held by the 401(k) Plan that are not
allocated to his personal account.
(i) This amount includes 16,667 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 73,333 shares issuable
upon exercise of options which are not exercisable within 60 days. Mr.
Manor acquired 1,021,990 of his shares in exchange for surrendering his
shares in Cardiosonix Ltd. on December 31, 2001, in connection with our
acquisition of Cardiosonix. An additional 222,753 shares were acquired by
Mr. Manor based on the satisfaction of certain developmental milestones on
December 30, 2002, associated with our acquisition of Cardiosonix.
(j) This amount includes 8,334 shares issuable upon exercise of options which
are exercisable within 60 days and 1,000 shares held by Mr. Miller's wife
for which he disclaims beneficial ownership, but does not include 36,666
shares issuable upon the exercise of options which are not exercisable
within 60 days.
(k) This amount includes 88,334 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 46,666 shares issuable
upon exercise of options which are not exercisable within 60 days.
(l) This amount includes 1,216,705 shares issuable upon exercise of options
which are exercisable within 60 days and 80,508 shares held in the 401(k)
Plan, but it does not include 1,159,995 shares issuable upon the exercise
of options which are not exercisable within 60 days. Certain executive
officers of our Company are the trustees of the 401(k) Plan and may, as
such, share investment power over common stock held in such plan. Each
trustee disclaims any beneficial ownership of shares held by the 401(k)
Plan that are not allocated to his personal account. The 401(k) Plan holds
an aggregate total of 205,858 shares of common stock.
(m) This amount consists of 1,698,405 shares owned by First Isratech Fund LLC,
546,420 shares owned by First Isratech Fund LP and 323,308 shares owned by
First Isratech Fund Norway AS. First Isratech Fund LLC is the general or
managing partner of First Isratech Fund LP and First Isratech Fund Norway
AS (collectively, the First Isratech Funds). Although these shares have not
been so reported under SEC Regulation 13D, management believes they are
beneficially owned by First Isratech Fund LLC. The First Isratech Funds
acquired 2,108,555 of these shares in exchange for surrendering its shares
in Cardiosonix Ltd. on December 31, 2001, in connection with our
acquisition of Cardiosonix. The remaining 222,753 shares were acquired by
the First Isratech Funds based on the satisfaction of certain developmental
milestones on December 30, 2002, associated with our acquisition of
Cardiosonix.
(n) This amount consists of 197,549 shares owned by Greatway Commercial, Inc.,
398,097 shares owned by Uzi Zucker, 987,743 shares owned by Caremi Partners
and 987,743 shares owned by Emicar LLC (collectively, Greatway Commercial
et al.). Although these shares have not been so reported under SEC
Regulation 13D, management believes they are under common management and
has therefore grouped them for purposes of reporting our beneficial
ownership. Greatway Commercial et al. acquired 2,108,554 of these shares in
exchange for surrendering its shares in Cardiosonix Ltd. on December 31,
2001, in connection with our acquisition of Cardiosonix. The remaining
222,753 shares were acquired by Greatway Commercial et al. based on the
satisfaction of certain developmental milestones on December 30, 2002,
associated with our acquisition of Cardiosonix.
(o) Less than one percent.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
annual and long-term compensation of our Chief Executive Officer and our other
four highest paid executive officers having annual compensation in excess of
$100,000 during the last fiscal year (the Named Executives) for the last three
fiscal years.
LONG TERM
COMPENSATION AWARDS
--------------------------
RESTRICTED SECURITIES
ANNUAL COMPENSATION STOCK UNDERLYING
-------------------------------- AWARDS OPTIONS ALL OTHER
YEAR SALARY BONUS ($) (#) COMPENSATION
NAME AND PRINCIPAL POSITION ---- -------- -------- ---------- ---------- ------------
Carl M. Bosch, 2002 $129,375 $ - - 50,000 $ 3,093(c)
Vice President, 2001 129,375 25,250 - 45,000 3,081(c)
Instrument Development(a) 2000 125,625 68,325 42,180(b) 45,000 1,643(c)
Rodger A. Brown, 2002 $105,417 $ - - 50,000 $ -
Vice President, Regulatory Affairs/ 2001 99,875 19,000 - 45,000 -
Quality Assurance(d) 2000 83,534 33,240 - 35,000 -
David C. Bupp, 2002 $297,083 $ - - 180,000 $ 5,738(f)
President and 2001 310,000 46,500 - 180,000 5,161(f)
Chief Executive Officer 2000 304,769 106,300 140,600(e) 180,000 3,298(f)
Brent L. Larson, 2002 $129,375 $ - - 50,000 $ 2,993(c)
Vice President, Finance and 2001 131,250 20,250 - 60,000 3,400(c)
Chief Financial Officer 2000 126,250 44,900 56,240(g) 60,000 1,313(c)
Dan Manor, 2002 $145,000 $ - - 50,000 $14,000(i)
President and Chief Executive 2001 - - - - -
Officer, Cardiosonix Ltd.(h) 2000 - - - - -
-------------
(a) Mr. Bosch began his employment with our Company in May 1998 and was
promoted to Vice President in March 2000.
(b) The aggregate number of Mr. Bosch's restricted stock holdings at December
31, 2002, was 30,000 shares with an aggregate value of $3,900. Mr. Bosch
has the right to receive dividends other than dividends on or distributions
of shares of any class of stock issued by our Company which dividends or
distributions will be delivered to us under the same restrictions on
transfer and possibility of forfeitures as the shares of restricted stock
from which they derive.
(c) Amounts represent matching contribution under the Neoprobe Corporation
401(k) Plan (the "Plan"). Eligible employees may make voluntary
contributions and we may, but are not obligated to, make matching
contributions based on 40 percent of the employee's contribution, up to
five percent of the employee's salary. Employee contributions are invested
in mutual funds administered by an independent plan administrator. Company
contributions, if any, are made in the form of shares of common stock. The
Plan is intended to qualify under section 401 of the Internal Revenue Code,
which provides that employee and Company contributions and income earned on
contributions are not taxable to the employee until withdrawn from the
Plan, and that we may deduct our contributions when made.
(d) Mr. Brown began his employment with our Company in July 1998 and was
promoted to Vice President in November 2000.
(e) The aggregate number of Mr. Bupp's restricted stock holdings at December
31, 2002, was 210,000 shares with an aggregate value of $27,300. Mr. Bupp
has the right to receive dividends other than dividends on or distributions
of shares of any class of stock issued by our Company which dividends or
distributions will be delivered to us under the same restrictions on
transfer and possibility of forfeitures as the shares of restricted stock
from which they derive.
(f) Amounts represent matching contribution under the Neoprobe Corporation
401(k) Plan (the "Plan") and social luncheon club dues. Eligible employees
may make voluntary contributions and we may, but are not obligated to, make
matching contributions based on 40 percent of the employee's contribution,
up to five percent of the employee's salary. Employee contributions are
invested in mutual funds by an independent plan administrator. Company
contributions, if any, are made in the form of shares of common stock. The
Plan is intended to qualify under section 401 of the Internal Revenue Code,
which provides that employee and Company contributions and income earned on
contributions are not taxable to the employee until withdrawn from the
Plan, and that we may deduct our contributions when made.
(g) The aggregate number of Mr. Larson's restricted stock holdings at December
31, 2002, was 70,000 shares with an aggregate value of $9,100. Mr. Larson
has the right to receive dividends other than dividends on or distributions
of shares of any class of stock issued by our
-7-
Company which dividends or distributions will be delivered to us under the
same restrictions on transfer and possibility of forfeitures as the shares
of restricted stock from which they derive.
(h) Mr. Manor began his employment with our Company on January 1, 2002, in
connection with our acquisition of Cardiosonix Ltd. (formerly Biosonix
Ltd.).
(i) Amounts represent reimbursements for a Company car leased for Mr. Manor's
use.
OPTION GRANTS IN LAST FISCAL YEAR
The following table presents certain information concerning stock
options granted to the Named Executives under our Amended and Restated Stock
Option and Restricted Stock Purchase Plan during the 2002 fiscal year.
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED (SHARES) FISCAL YEAR PER SHARE DATE
---- --------------- ----------- --------- ----
Carl M. Bosch 50,000(a) 6% $0.42(b) 1/7/12(c)
Rodger A. Brown 50,000(a) 6% $0.42(b) 1/7/12(c)
David C. Bupp 180,000(a) 20% $0.42(b) 1/7/12(c)
Brent L. Larson 50,000(a) 6% $0.42(b) 1/7/12(c)
Dan Manor 50,000(a) 6% $0.42(b) 1/7/12(c)
(a) Vests as to one-third of these shares on each of the first three
anniversaries of the date of grant.
(b) The per share weighted average fair value of these stock options during
2002 was $0.36 on the date of grant using the Black-Scholes option pricing
model with the following assumptions: an expected life of 4 years, an
average risk-free interest rate of 4.00%, volatility of 145% and no
expected dividend rate.
(c) The options terminate on the earlier of the expiration date, nine months
after death or disability, 90 days after termination of employment without
cause or by resignation or immediately upon termination of employment for
cause.
FISCAL YEAR-END OPTION NUMBERS AND VALUES
The following table sets forth certain information concerning the
number and value of unexercised options held by the Named Executives at the end
of the last fiscal year (December 31, 2002). There were no stock options
exercised by the Named Executives during the fiscal year ended December 31,
2002.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END: AT FISCAL YEAR-END:
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------------------- -------------------------
Carl M. Bosch 75,000 / 95,000 0 / 0
Rodger A. Brown 72,834 / 91,666 0 / 0
David C. Bupp 230,000 / 460,000 0 / 0
Brent L. Larson 117,200 / 110,000 0 / 0
Dan Manor 0 / 50,000 0 / 0
-8-
EMPLOYMENT AND OTHER COMPENSATION AGREEMENTS
COMPENSATION OF MR. BUPP
Employment Agreement. David C. Bupp is employed under a thirty-six
month employment agreement effective July 1, 2001. The employment agreement
originally provided for an annual base salary of $310,000 with an increase to
$325,000 on July 1, 2003. On August 1, 2002, Mr. Bupp agreed to amend the terms
of his 2001 employment agreement to defer 10% of his then annual base salary
until the satisfaction of certain milestones relating to our financial
condition. Effective February 1, 2003, Mr. Bupp agreed to a new amendment to his
employment agreement to reduce his annual base salary to $217,000 for the
remainder of the term of his employment agreement. In exchange for his agreement
to waive the salary deferred under the previous amendment to his employment
agreement, the Compensation Committee agreed to vest Mr. Bupp's interest in
210,000 shares of previously restricted stock and to authorize the removal of
the restrictive legend on such shares of our common stock. In exchange for
agreeing to the amendment lowering his annual base salary, Mr. Bupp received
70,000 options to purchase our common stock with an exercise price of $0.13 per
share that vest one third annually on the anniversary of the date of grant.
The Compensation Committee of the Board of Directors will, on an annual
basis, review the performance of our Company and of Mr. Bupp and will pay a
bonus to Mr. Bupp as it deems appropriate, in its discretion. Such review and
bonus will be consistent with any bonus plan adopted by the Compensation
Committee that covers the executive officers of our Company generally. No bonus
was paid to Mr. Bupp relating to fiscal year 2002.
If a change in control occurs with respect to our Company and:
- Mr. Bupp's employment is concurrently or subsequently terminated by our
Company without cause (cause is defined as any willful breach of a
material duty by Mr. Bupp in the course of his employment or willful
and continued neglect of his duty as an employee);
- the term of Mr. Bupp's employment agreement expires; or
- Mr. Bupp resigns because his authority, responsibilities or
compensation have materially diminished, a material change occurs in
his working conditions or we breach the agreement;
then, Mr. Bupp will be paid a severance payment of $650,500 (less amounts paid
as Mr. Bupp's salary and benefits that continue for the remaining term of the
agreement if his employment is terminated without cause). If any such
termination occurs after the substantial completion of the liquidation of our
assets, the severance payment shall be increased by $81,250.
For purposes of Mr. Bupp's employment agreement, a change in control
includes:
- the acquisition, directly or indirectly, by a person (other than our
Company or an employee benefit plan established by the Board of
Directors) of beneficial ownership of 15 percent or more of our
securities with voting power in the next meeting of holders of voting
securities to elect the directors;
- a majority of the directors elected at any meeting of the holders of
our voting securities are persons who were not nominated by our then
current Board of Directors or an authorized committee thereof;
- our stockholders approve a merger or consolidation of our Company with
another person, other than a merger or consolidation in which the
holders of our voting securities 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 eighty percent
(80%) or more of the voting power for all purposes of the surviving or
resulting corporation; or
-9-
- our stockholders approve a transfer of substantially all of our assets
to another person other than a transfer to a transferee, eighty percent
(80%) or more of the voting power of which is owned or controlled by us
or by the holders of our voting securities outstanding immediately
before such transfer in the same relative proportions to each other as
existed before such event.
Mr. Bupp's compensation will continue for the longer of twenty-four months or
the full term of the agreement if his employment is terminated without cause.
Restricted Stock Agreements. Mr. Bupp holds 100,000, 35,000, 45,000
shares and 30,000 shares of our common stock that were originally granted as
restricted stock on March 22, 2000, April 30, 1999, May 20, 1998 and June 1,
1996, respectively, pursuant to restricted stock purchase agreements of the same
dates. The original grants did not allow Mr. Bupp to transfer or sell any of the
restricted shares unless and until they vest and contained certain change of
control provisions. However, in connection with the February 1, 2003 amendment
to Mr. Bupp's employment agreement, we vested Mr. Bupp's interest in the shares
and authorized the removal of the restricted legend. We will recognize
compensation expense related to the vesting of the restricted stock in 2003
concurrent with the execution of the amendment.
COMPENSATION AGREEMENTS WITH OTHER NAMED EXECUTIVES
Carl M. Bosch
Employment Agreement. Carl Bosch is employed under an eleven-month
employment agreement effective February 1, 2003. The employment agreement
provides for an annual base salary of $135,000; however, receipt of 20% of the
base amount has been deferred until the satisfactory achievement of certain
milestones relating to our financial position or until or unless Mr. Bosch is
terminated by us or we become financially insolvent. In exchange for entering
into a new agreement with a portion of his annual base salary deferred, Mr.
Bosch received 30,000 options to purchase our common stock with an exercise
price of $0.13 per share that vest one third annually on the anniversary of the
date of grant.
Mr. Bupp will, on an annual basis, review the performance of our
Company and of Mr. Bosch and we will pay a bonus to Mr. Bosch as we deem
appropriate, in our discretion. Such review and bonus will be consistent with
any bonus plan adopted by the Compensation Committee that covers the executive
officers of our Company generally. No bonus was paid to Mr. Bosch relating to
fiscal year 2002.
If a change in control occurs with respect to our Company and:
- the employment of Mr. Bosch is concurrently or subsequently terminated
without cause (cause is defined as any willful breach of a material
duty by Bosch in the course of his employment or willful and continued
neglect of his duty as an employee);
- the term of Mr. Bosch's employment agreement expires; or
- Mr. Bosch resigns because his authority, responsibilities or
compensation have materially diminished, a material change occurs in
his working conditions or we breach the agreement;
then, Mr. Bosch will be paid a severance payment of $202,500 and will continue
his benefits for the longer of six months or the remaining term of his
employment agreement.
For purposes of Mr. Bosch's employment agreement, a change in control
includes:
- the acquisition, directly or indirectly, by a person (other than our
Company or an employee benefit plan established by the Board of
Directors) of beneficial ownership of 30 percent or more of our
securities with voting power in the next meeting of holders of voting
securities to elect the directors;
-10-
- a majority of the directors elected at any meeting of the holders of
our voting securities are persons who were not nominated by our then
current Board of Directors or an authorized committee thereof;
- our stockholders approve a merger or consolidation of our Company with
another person, other than a merger or consolidation in which the
holders of our voting securities 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 eighty percent
(80%) or more of the voting power for all purposes of the surviving or
resulting corporation; or
- our stockholders approve a transfer of substantially all of the assets
of our Company to another person other than a transfer to a transferee,
eighty percent (80%) or more of the voting power of which is owned or
controlled by us or by the holders of our voting securities outstanding
immediately before such transfer in the same relative proportions to
each other as existed before such event.
Mr. Bosch will be paid a severance amount of $135,000 if his employment is
terminated at the end of his employment agreement or without cause, and his
benefits will be continued for up to twelve months.
Restricted Stock Agreement. Mr. Bosch also holds 30,000 shares of our
common stock that were originally granted to him as restricted stock on March
22, 2000, pursuant to a restricted stock purchase agreement with our Company as
of the same date. Under the original terms of the underlying restricted stock
purchase agreement, Mr. Bosch could not transfer or sell any of the restricted
shares unless and until they vest. However, in connection with the execution of
his new employment agreement effective February 1, 2003, and Mr. Bosch's
agreement to waive receipt of amounts previously deferred under an August 1,
2002, amendment to his previous employment agreement, we vested Mr. Bosch's
interest in the shares and authorized the removal of the restricted legend. We
will recognize compensation expense related to the vesting of the restricted
stock in 2003 concurrent with the execution of the new employment agreement.
Rodger A. Brown
Employment Agreement. Rodger Brown is employed under an eleven-month
employment agreement effective February 1, 2003. The employment agreement
provides for an annual base salary of $115,000; however, receipt of 20% of the
base amount has been deferred until the satisfactory achievement of certain
milestones relating to our financial position or until or unless Mr. Brown is
terminated by us or we become financially insolvent. In exchange for entering
into a new agreement with a portion of his salary deferred, Mr. Brown received
30,000 options to purchase our common stock with an exercise price of $0.13 per
share that vest one third annually on the anniversary of the date of grant. The
terms of Mr. Brown's employment agreement are substantially identical to Mr.
Bosch's employment agreement except that Mr. Brown would be paid $172,500 if
terminated due to a change of control and $115,000 if terminated at the end of
his employment or without cause.
Mr. Bupp will, on an annual basis, review the performance of our
Company and of Mr. Brown and we will pay a bonus to Mr. Brown as we deem
appropriate, in our discretion. Such review and bonus will be consistent with
any bonus plan adopted by the Compensation Committee that covers the executive
officers of our Company generally. No bonus was paid to Mr. Brown relating to
fiscal year 2002.
Brent L. Larson
Employment Agreement. Brent Larson is employed under an eleven-month
employment agreement effective February 1, 2003. The employment agreement
provides for an annual base salary of $135,000; however, receipt of 20% of the
base amount has been deferred until the satisfactory achievement of certain
milestones relating to our financial position or until or unless Mr. Larson is
terminated by us or we become financially insolvent. In exchange for entering
into a new agreement with a portion of his annual base salary deferred, Mr.
Larson received 30,000 options to purchase our common stock with an exercise
price of $0.13 per share that vest one third annually on the anniversary of the
date of grant. The terms of Mr. Larson's employment agreement are substantially
identical to Mr. Bosch's employment agreement.
-11-
Mr. Bupp will, on an annual basis, review the performance of our
Company and of Mr. Larson and we will pay a bonus to Mr. Larson as we deem
appropriate, in our discretion. Such review and bonus will be consistent with
any bonus plan adopted by the Compensation Committee that covers the executive
officers of our Company generally. No bonus was paid to Mr. Larson relating to
fiscal year 2002.
Restricted Stock Agreement(s). Mr. Larson also holds 40,000 shares,
20,000 shares and 10,000 shares of our common stock that were originally granted
to him as restricted at a price of $0.001 per share on March 22, 2000, April 30,
1999 and October 23, 1998, respectively, pursuant to restricted stock purchase
agreements of the same dates. The terms of Mr. Larson's restricted stock
purchase agreement are identical to those contained in Mr. Bosch's restricted
stock purchase agreement discussed above regarding vesting, forfeiture and
rights of ownership. However, in connection with the execution of his new
employment agreement effective February 1, 2003, and Mr. Larson's agreement to
waive receipt of amounts previously deferred under an August 1, 2002, amendment
to his previous employment agreement, we vested Mr. Larson's interest in the
shares and authorized the removal of the restricted legend. We will recognize
compensation expense related to the vesting of the restricted stock in 2003
concurrent with the execution of the new employment agreement.
Dan Manor
Employment Agreement. Dan Manor is employed by our subsidiary,
Cardiosonix Ltd., as its President under a two-year employment agreement
effective January 1, 2002. The employment agreement provides for a monthly basic
salary of $12,083 and automatically renews for one-year increments unless
written notice is given ninety days prior to the end of the then term of the
agreement. The Compensation Committee of our Board of Directors will, on an
annual basis, review the performance of our Company and of Mr. Manor and he will
be paid a bonus as is deemed appropriate, in the Committee's discretion. Such
review and bonus will be consistent with any bonus plan adopted by the
Compensation Committee that covers the executive officers of our Company
generally. No bonus was paid to Mr. Manor relating to fiscal year 2002. Mr.
Manor will also receive one third of 1% of the Net Revenues (as defined in Mr.
Manor's employment agreement) from Cardiosonix products for up to five years
from the effective date of the agreement. Cardiosonix also provides Mr. Manor
with an automobile allowance not to exceed $450 per month, and provides certain
statutory benefits under the laws of the State of Israel.
Mr. Manor will be paid a severance payment of the greater of $145,000
or the then statutorily determined amount if he is terminated by Cardiosonix
without cause prior to the end of the term of the agreement.
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES
Our Restated Certificate of Incorporation currently authorizes us to
issue up to 50,000,000 shares of common stock, $.001 par value, and 5,000,000
shares of our preferred stock, $.001 par value.
Our board of directors has adopted, subject to stockholder approval, an
amendment to our Restated Certificate of Incorporation to increase the
authorized number of shares of our common stock from 50,000,000 shares to
75,000,000 shares. Under the amendment, Section 4.1 of Article FOUR of the
Amended and Restated Certificate of Incorporation would read:
4.1 AUTHORIZED SHARES. The total number of shares of capital stock
which the Corporation has authority to issue is 80,000,000 shares,
consisting of:
(a) 75,000,000 shares of Common Stock, par value $.001 per share (the
Common Stock); and
(b) 5,000,000 shares of Preferred Stock, par value $.001 per share
(the Preferred Stock).
As of April 25, 2003, of the 50,000,000 shares of common stock
presently authorized, __________ shares were issued and outstanding, and
___________ shares were reserved for issuance under our stock option plans or
related to outstanding warrants. In addition, warrants to acquire an additional
__________ shares of our common stock were issued and outstanding.
-12-
We also anticipate that we may in the future issue additional shares in
connection with one or more of the following:
- acquisitions;
- strategic investments;
- corporate transactions, such as stock splits or stock dividends;
- financing transactions, such as public offerings of common stock or
convertible securities;
- incentive and employee benefit plans; and
- otherwise for corporate purposes that have not yet been identified.
In order to provide our Board of Directors with certainty and
flexibility to undertake such transactions to support our future business
growth, the Board deems it appropriate at this time to increase the number of
authorized shares of our common stock. No such transactions are currently under
consideration by the Board.
If this proposal is adopted, the additional authorized shares of common
stock may be issued upon the approval of our Board of Directors at such times,
in such amounts, and upon such terms as our Board of Directors may determine,
without further approval of the stockholders, unless such approval is expressly
required by applicable law, regulatory agencies, or the OTC Bulletin Board (or
any other exchange or quotation service on which our common stock may then be
listed). Further, our stockholders will have no preemptive rights to purchase
additional shares. Stockholder approval of this proposal will not, by itself,
cause any change in our capital accounts. The issuance of additional shares of
our common stock may, however, dilute existing our stockholders' equity
interest.
If this proposal is not adopted, management believes we will be
severely limited in our ability to raise capital. As is discussed more fully in
the Risk Factors included in our Annual Report on Form 10-KSB for the year ended
December 31, 2002, we believe we will need to raise additional capital in order
to complete the development and commercialization of our blood flow product
line. If we are unsuccessful in gaining approval for this increase our
authorized shares, and other funding sources are not available to us, we will
likely have to make significant modifications to our blood flow
commercialization plan and/or severely curtail our operations.
The affirmative vote of the holders of a majority of the shares of our
outstanding common stock is required to adopt this proposal. It will become
effective upon the filing of an Amended Certificate of Incorporation with the
Secretary of State of Delaware, which we intend to make on June 13, 2003, the
day after the completion of the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT OUR STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On April 2, 2003, we completed a secured note financing in the
aggregate amount of $500,000, which included the participation of our President
and CEO, David C. Bupp. Under the terms of Mr. Bupp's bridge loan financing
agreement with our Company, Mr. Bupp advanced us $250,000 in exchange for a note
bearing interest at 8.5%, payable monthly, and due on June 30, 2004. In
consideration for the loan, we issued Mr. Bupp 375,000 warrants to purchase our
common stock at an exercise price of $0.13 per share.
-13-
REPORT OF AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee consults with the independent auditors with regard
to the plan of audit; reviews, in consultation with the independent auditors,
their report of audit, or proposed report of audit and the accompanying
management letter, if any; and consults with the independent auditors with
regard to the adequacy of the internal accounting controls. The Board of
Directors has previously adopted a written charter for the Audit Committee that
was included with the proxy statement for the 2001 annual meeting of
stockholders.
The Audit Committee has reviewed and discussed with management and the
independent auditors the Company's audited financial statements; discussed with
the independent auditors the matters required to be discussed by Codification of
Statements on Auditing Standards No. 61; received the written disclosures and
the letter from the independent auditors required by Independence Standards
Board Standard No. 1; and discussed with the independent accountants their
independence from the Company.
Based on the reviews and discussions with management and KPMG LLP, the
Audit Committee recommended to the Board that the Company's audited consolidated
financial statements be included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2002, filed with the Securities and
Exchange Commission.
The Audit Committee is comprised of Reuven Avital, John S. Christie,
Fred B. Miller and J. Frank Whitley, Jr., each of whom is "independent" under
the standards set forth in Rule 4200(a)(14) of the NASD's listing standards.
Submitted by the Audit Committee
of the Board of Directors:
Reuven Avital
John S. Christie
Fred B. Miller
J. Frank Whitley, Jr.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Act of 1934 requires our officers and
directors, and greater than 10% stockholders, to file reports of ownership and
changes in ownership of our securities with the Securities and Exchange
Commission. Copies of the reports are required by SEC regulation to be furnished
to us. Based on our review of these reports and written representations from
reporting persons, we believe that all reporting persons complied with all
filing requirements during the fiscal year ended December 31, 2002, except for
one late Form 4 filing for each of Messrs. Bosch, Bupp and Larson.
INDEPENDENT ACCOUNTANTS
KPMG LLP was engaged as the Company's principal accountant on December
7, 1998, and has audited the Company's financial statements for each of the five
fiscal years in the period ended December 31, 2002. At the suggestion of
management, the Audit Committee has recommended the retention of KPMG LLP as the
Company's independent accountant for the 2003 fiscal year.
A representative of KPMG LLP is expected to be present at the Annual
Meeting. The representative will have an opportunity to make a statement if he
so desires and is expected to be available to respond to appropriate questions
of stockholders.
-14-
FEES OF THE INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL 2002
The following table sets forth certain information concerning auditor
fees incurred during the fiscal year ended December 31, 2002.
DESCRIPTION OF FEES AMOUNT
------------------- ------
Audit Fees (1)....................................................................................... $ 110,730
Financial Information Systems Design and Implementation Fees......................................... $ 0
All Other Fees (2) .................................................................................. $ 24,000
--------------
(1) Includes fees for the audit of the December 31, 2002, financial statements
and reviews of the related quarterly financial statements.
(2) The Audit Committee of the Company's Board of Directors has considered
whether the provision of such non-audit services by KPMG LLP is compatible
with maintaining their independence and has concluded that it is.
COST OF SOLICITATION OF PROXIES
The cost of this solicitation will be paid by the Company. The Company
may request persons holding shares in their names for others to forward
soliciting materials to their principals to obtain authorization for the
execution of proxies, and the Company will reimburse such persons for their
expenses in so doing.
STOCKHOLDER PROPOSALS
A stockholder proposal intended for inclusion in the proxy statement
and form of proxy for the Annual Meeting of Stockholders of the Company to be
held in 2004 must be received by the Company before January 6, 2004, at its
executive offices, Attention: Brent Larson. Any stockholder proposal submitted
outside the processes of Rule 14a-8 under the Securities Exchange Act of 1934
for presentation at our 2004 Annual Meeting will be considered untimely for
purposes of Rule 14a-4 and 14a-5 if notice thereof is received by us after March
20, 2004.
A stockholder who wishes to nominate a candidate for election to the
Board of Directors must follow the procedures set forth in Article III, Section
2 of the Company's By-Laws. A copy of these procedures is available upon request
from the Company at 425 Metro Place North, Suite 300, Dublin, Ohio 43017-1367,
Attention: Brent Larson. In order for a stockholder to nominate a candidate for
the Board of Directors election at the 2004 Annual Meeting, notice of the
nomination must be delivered to the Company's executive offices, Attention:
Brent Larson, before January 6, 2004.
OTHER BUSINESS
The Board of Directors does not intend to present, and has no knowledge
that others will present, any other business at the Annual Meeting. If, however,
any other matters are properly brought before the Annual Meeting, it is intended
that the persons named in the enclosed proxy will vote the shares represented
thereby in accordance with their best judgment.
-15-
NEOPROBE CORPORATION DIRECTORS THIS PROXY IS SOLICITED BY THE BOARD OF
P The undersigned hereby appoints David C. Bupp and Brent L. Larson, and
R each of them, severally, with full power of substitution, as proxies
O for the undersigned, and hereby authorizes them to represent and to
X vote, as designated below, all of the shares of Common Stock, par
Y value $.001 per share, of Neoprobe Corporation held of record by the
undersigned on April 25, 2003, at the Annual Meeting of Stockholders
to be held on June 12, 2003, or any adjournment thereof, with all the
power the undersigned would possess if present in person.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF THE NOMINEE.
1. To elect as a director the nominee named below for a term of three
years and until his successor is duly elected and qualified.
NOMINEE: J. Frank Whitley, Jr.
[ ] FOR the nominee listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for the nominee listed above
THE UNDERSIGNED MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY
LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE.
2. To increase the authorized number of shares of the Company from
55,000,000 to 80,000,000, consisting of 75,000,000 shares of common
stock, $.001 par value, and 5,000,000 shares of preferred stock,
$.001 par value.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued, to be dated and signed, on the other side.)
Proxy Card
(Continued from the other side.)
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF
STOCKHOLDERS OR ANY ADJOURNMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTIONS ARE
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 ABOVE.
The undersigned hereby acknowledges receipt with this Proxy of a
copy of the Notice of Annual Meeting and Proxy Statement dated May 5,
2003, and a copy of the Company's 2002 Annual Report to Stockholders.
Date: __________________, 2003
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Signature
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Signature (if held jointly)
IMPORTANT: Please sign
exactly as name or names
appear to the left. When
shares are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
Corporations should sign in
their full corporate name by
their president or other
authorized officer. If a
partnership, please sign in
partnership name by an
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Proxy Card