SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 10, 1996
-------------------------------------------------
Date of Report (Date of earliest event reported)
INTERCELL CORPORATION
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(Exact name of Registrant as specified in its charter)
Colorado 0-14306 84-0928627
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification
Number)
4455 E. Camelback Rd. E-160
Phoenix, Arizona 85018
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(Address of principal executive offices) (Zip Code)
(602) 952-1528
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(Registrant's telephone number, including area code)
5210 East Williams Circle, Suite 730
Tucson, Arizona 85711
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(Former name or former address)
<PAGE>
ITEM 5 OTHER EVENTS
On July 10, 1996, Intercell Corporation, (the "Registrant") completed an
offering of One Thousand (1,000) of its Series B No Par Value Preferred Stock
(the "Preferred Shares"), with attached Warrants, for an aggregate of Ten
Million Dollars ($10,000,000.00) pursuant to Regulation S under the Securities
Act of 1933, as amended.
The terms of the Preferred Shares provide that they may be converted into common
stock of the Registrant at a price of $3.9375 per share convertible as follows:
1. Up to One-Third (1/3) of the Preferred Shares initially issued to
the holder at any time beginning Forty-Five (45) days following the
date of the last closing, which is July 10, 1996 and thereafter;
2. Up to an additional One-Third (1/3) of the Preferred Shares at any
time beginning Seventy-Five (75) days following July 10, 1996 or at any
time thereafter; and
3. All remaining Preferred Shares held by the holder at any time
beginning One Hundred and Five (105) days following July 10, 1996.
Each share of Preferred Stock is accompanied by a Warrant to purchase a number
of common shares of the Company equal to thirty percent (30%) of the original
aggregate purchase price of the Preferred Stock at an exercise price of $3.9375
per share, beginning One Hundred and Five (105) Days after July 1, 1996. The
Warrants contain a provision for a cashless exercise. If the holder elects to
exercise the Warrants, on a cashless exercise basis, the number of shares
issuable upon such exercise is reduced. The Registrant also agreed to certain
registration obligations relating to the Securities offered pursuant to the
Regulation S Offering.
The Regulation S Offering was sold to Twenty-Three (23) non-U.S. institutional
persons.
Registrant received net proceeds from the Regulation S Offering of Eight point
Nine Million Dollars ($8,900,000.00).
See Item 7, Exhibits.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Exhibits.
4.1 Certificate of Designation for Series B Preferred Stock.
4.2 Specimen Warrant attached to Series B Preferred Stock.
4.3 Specimen Registration Rights Agreement.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 10, 1996
INTERCELL CORPORATION
/s/ Gordon J. Sales
-------------------------------------
Gordon J. Sales, President &
Chief Executive Officer
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Mail to: Secretary of State For office use only
Corporations Section
Please include a typed 1560 Broadway, Suite 200
self-addressed envelope Denver, CO 80202
(303) 894-2251
MUST BE TYPED Fax (303) 894-2242 ___________________
FILING FEE: $10.00
MUST SUBMIT TWO COPIES
CERTIFICATE OF CORRECTION
Pursuant to the Colorado Business Corporation Act, the undersigned hereby
executes the following certificate of correction:
FIRST: The exact name of the corporation is Intercell Corporation
organized under the laws of Colorado.
SECOND: Description of the documents being corrected (i.e. Articles of
Incorporation, Amendment, Merger or other) or an attached copy
of the document:
Certificate of Correction
THIRD: Date document was filed July 3, 1996.
FOURTH: Statement of incorrect information:
SEE ATTACHMENT A
FIFTH: Statement of corrected information:
SEE ATTACHMENT A
INTERCELL CORPORATION
/S/ Gordon Sales, President
By________________________________
Signature and Title
/S/ Alan M. Smith, Secretary
By________________________________
Signature and Title
<PAGE>
ATTACHMENT A
FOURTH:
The last paragraph of Subsection 5(a) now incorrectly reads:
"For purposes hereof, the term "Closing Bid Price" shall mean
the closing bid price as reported by the OTC Bulletin Board or
the NASDAQ Small Cap Market, or if not traded on the OTC
Bulletin Board or the NASDAQ Small Cap Market, the closing bid
price on the over the counter market, the principal national
securities exchange or the National Market System on which the
Common Stock is so traded and if not available, the mean of
the high and low prices on the over the counter market, the
principal national securities exchange of the National Market
System on which the Common Stock is so traded."
Subsection 9(a) now incorrectly reads:
"alter or change the rights, preferences or privileges of the
Series B Preferred Stock or any securities so as to affect
adversely the Series B Preferred Stock; provided however, that
no cash change may be approved at any time on or prior to the
fortieth (40th) day following the Last Closing Date unless
such change is unanimously approved by all Holders:"
FIFTH:
The last paragraph of Subsection 5(a) shall now correctly read:
"For purposes hereof, the term "Closing Bid Price" shall mean
the closing bid price as reported by the OTC Bulletin Board or
the NASDAQ Small Cap Market, or if not traded on the OTC
Bulletin Board or the NASDAQ Small Cap Market, the closing bid
price on the over the counter market, the principal national
securities exchange or the National Market System on which the
Common Stock is so traded and if not available, the mean of
the high and low prices on the over the counter market, the
principal national securities exchange or the National Market
System on which the Common Stock is so traded."
Subsection 9(a) shall now correctly read:
"alter or change the rights, preferences or privileges of the
Series B Preferred Stock or any securities so as to affect
adversely the Series B Preferred Stock; provided however, that
no such change may be approved at any time on or prior to the
fortieth (40th) day following the Last Closing Date unless
such change is unanimously approved by all Holders:"
<PAGE>
Mail to: Secretary of State For office use only
Corporations Section
Please include a typed 1560 Broadway, Suite 200
self-addressed envelope Denver, CO 80202
(303) 894-2251
MUST BE TYPED Fax (303) 894-2242 ___________________
FILING FEE: $10.00
MUST SUBMIT TWO COPIES
CERTIFICATE OF CORRECTION
Pursuant to the Colorado Business Corporation Act, the undersigned hereby
executes the following certificate of correction:
FIRST: The exact name of the corporation is Intercell Corporation
organized under the laws of Colorado.
SECOND: Description of the documents being corrected (i.e. Articles of
Incorporation, Amendment, Merger or other) or an attached copy
of the document:
Certificate of Designation of Series B Preferred Stock
THIRD: Date document was filed July 1, 1996.
FOURTH: Statement of incorrect information:
SEE ATTACHMENT A
FIFTH: Statement of corrected information:
SEE ATTACHMENT A
INTERCELL CORPORATION
/S/ Gordon Sales, President
By________________________________
Signature and Title
/S/ Alan M. Smith, Secretary
By________________________________
Signature and Title
<PAGE>
ATTACHMENT A
FOURTH:
The last paragraph of Subsection 5(a) now incorrectly reads:
"For purposes hereof, the term "Closing Bid Price" shall mean
the closing bid price as reported by the OTC Bulletin Board or
the NASDAQ Small Cap Market, or if not traded on the OTC
Bulletin Board or the NASDAQ Small Cap Market, the closing bid
price on the over the counter market, the principal national
securities exchange or the National Market System on which the
Common Stock is so traded and if not available, the mean of
the high and low prices on the over the counter market, the
principal national securities exchange of the National Market
System on which the Common Stock is so traded."
Subsection 9(a) now incorrectly reads:
"alter or change the rights, preferences or privileges of the
Series B Preferred Stock or any securities so as to affect
adversely the Series B Preferred Stock; provided however, that
no cash change may be approved at any time on or prior to the
fortieth (40th) day following the Last Closing Date unless
such change is unanimously approved by all Holders:"
FIFTH:
The last paragraph of Subsection 5(a) shall now correctly read:
"For purposes hereof, the term "Closing Bid Price" shall mean
the closing bid price as reported by the OTC Bulletin Board or
the NASDAQ Small Cap Market, or if not traded on the OTC
Bulletin Board or the NASDAQ Small Cap Market, the closing bid
price on the over the counter market, the principal national
securities exchange or the National Market System on which the
Common Stock is so traded and if not available, the mean of
the high and low prices on the over the counter market, the
principal national securities exchange of the National Market
System on which the Common Stock is so traded."
Subsection 9(a) shall now correctly read:
"alter or change the rights, preferences or privileges of the
Series B Preferred Stock or any securities so as to affect
adversely the Series B Preferred Stock; provided however, that
no cash change may be approved at any time on or prior to the
fortieth (40th) day following the Last Closing Date unless
such change is unanimously approved by all Holders:"
<PAGE>
CERTIFICATE OF DESIGNATION OF FILED
SERIES B PREFERRED STOCK 1996 JUL -1 PM 3:15
SECRETARY OF STATE
OF STATE OF COLORADO
INTERCELL CORPORATION
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is
Intercell Corporation, a Colorado corporation.
2. The certificate of incorporation of the Company authorize the
issuance of Ten Million (10,000,000) shares of preferred stock, no par value per
share, and expressly vests in the Board of Directors of the Company the
authority provided therein to issue any or all of said shares in one (1) or more
series and by resolution or resolutions to establish the designation and number
and to fix the relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series B issue of Preferred Stock:
RESOLVED, that one thousand (1,000) of the Ten Million (10,000,000)
authorized shares of Preferred Stock of the Company shall be designated Series B
Preferred Stock, no par value per share, and shall possess the rights and
preferences set forth below:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall have
no par value and shall be designated as Series B Preferred Stock (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be one thousand (1,000). The Series B Preferred Stock shall be
offered at a purchase price of Ten Thousand Dollars ($10,000) per share (the
"Original Series B Issue Price"), with a ten percent (10%) per annum accretion
rate as set forth herein.
Section 2. RANK. The Series B Preferred Stock shall rank: (i) junior to
any other class or series of capital stock of the Company hereafter created
specifically ranking by its terms senior to the Series B Preferred Stock
(collectively, the "Senior Securities"); (ii) prior to all of the Company's
Common Stock, no par value per share ("Common Stock"); (iii) prior to any
existing class or series of preferred stock ("Existing Preferred Stock"); (iv)
prior to any class or series of capital stock of the Company hereafter created
not specifically ranking by its terms senior to or on parity with any Series B
Preferred Stock of whatever subdivision (collectively, with the Common Stock and
the Existing Preferred Stock, "Junior Securities"); and (v) on parity with any
class or series of capital stock of the Company hereafter created specifically
ranking by its terms on parity with the Series B Preferred Stock ("Parity
Securities") in each case as to distributions of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary (all
such distributions being referred to collectively as "Distributions").
Section 3. DIVIDENDS. The Series B Preferred Stock will bear no
dividends, and the holders of the Series B Preferred Stock ("Holders") shall not
be entitled to receive dividends on the Series B Preferred Stock.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Company, either voluntary or involuntary, the Holders of shares of Series
B Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Company's Certificate of
Incorporation or any certificate of designation, and prior in preference to any
distribution to Junior Securities but in parity with any distribution to Parity
Securities, an amount per share equal to the sum of (i) the Original Series B
Issue Price for each outstanding share of Series B Preferred Stock and (ii) an
amount equal to ten percent (10%) of the Original Series B Issue Price per annum
<PAGE>
for the period that has passed since the date that, in connection with the
consummation of the purchase by Holder of shares of Series B Preferred Stock
from the Company, the escrow agent first had in its possession funds
representing full payment for the shares of Series B Preferred Stock (such
amount being referred to herein as the "Premium"). If upon the occurrence of
such event, and after payment in full of the preferential amounts with respect
to the Senior Securities, the assets and funds available to be distributed among
the Holders of the Series B Preferred Stock and Parity Securities shall be
insufficient to permit the payment to such Holders of the full preferential
amounts due to the Holders of the Series B Preferred Stock and the Parity
Securities, respectively, then the entire assets and funds of the Company
legally available for distribution shall be distributed among the Holders of the
Series B Preferred Stock and the Parity Securities, pro rata, based on the
respective liquidation amounts to which each such series of stock is entitled by
the Company's Certificate of Incorporation and any certificate(s) of designation
relating thereto.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in this Company, they shall be distributed to
holders of Junior Securities in accordance with the Company's Certificate of
Incorporation including any duly adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or disposition
of all or substantially all of the assets of the Company or the effectuation by
the Company of a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of shall
be deemed to be a liquidation, dissolution or winding up within the meaning of
this Section 4; provided further that an event described in the prior clause
that the Holder does not elect to treat as a liquidation and a consolidation,
merger, acquisition, or other business combination of the Company with or into
any other company or companies shall not be treated as a liquidation,
dissolution or winding up within the meaning of this Section 4, but instead
shall be treated pursuant to Section 5(f) hereof.
(d) In the event that, immediately prior to the closing of a
transaction described in Section 4(c) which would constitute a liquidation
event, the cash distributions required by Section 4(a) or Section 6 have not
been made, the Company shall either: (i) cause such closing to be postponed
until such cash distributions have been made, or (ii) cancel such transaction,
in which event the rights of the Holders of Series B Preferred Stock shall be
the same as existing immediately prior to such proposed transaction.
Section 5. CONVERSION. The record Holders of this Series B Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each record Holder of Series B Preferred
Stock shall be entitled (at the times and in the amounts set forth below) and
subject to the Company's right of redemption set forth in Section 6(a), at the
office of the Company or any transfer agent for the Series B Preferred Stock
(the "Transfer Agent"), to convert (in multiples of one (1) share of Preferred
Stock) as follows: (x) up to one-third (1/3) of the shares of Series B Preferred
Stock initially issued to such Holder at any time beginning forty-five (45) days
following the date of the last closing of a purchase and sale of Series B
Preferred Stock that occurs pursuant to the offering of the Series B Preferred
Stock by the Company (the "Last Closing Date") and at any time thereafter, (y)
up to an additional one-third (1/3) of the shares of Series B Preferred Stock
initially issued to such Holder at any time beginning seventy-five (75) days
following the Last Closing Date and at any time thereafter, and (z) all
remaining Series B Preferred Stock held by such Holder at any time beginning one
hundred five (105) days following the Last Closing Date (each of the time
periods referenced in subclauses (x), (y) and (z) is hereinafter referred to
singularly as a "Conversion Gate") at the office of the Company or any Transfer
Agent for the Series B Preferred Stock, into that number of fully-paid and
non-assessable shares of Common Stock of the Company calculated in accordance
with the following formula (the "Conversion Rate"):
Number of shares issued upon conversion of one (1) share of Series B
Preferred Stock =
(.10) (N/365) (10,000) + 10,000
-------------------------------
Conversion Price
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<PAGE>
where,
* N= the number of days between (i) the date that, in connection with
the consummation of the initial purchase by Holder of shares of Series
B Preferred Stock from the Company, the escrow agent first had in its
possession funds representing full payment for the shares of Series B
Preferred Stock for which conversion is being elected, and (ii) the
applicable Date of Conversion (as defined in Section 5(c)(iv) below)
for the shares of Series B Preferred Stock for which conversion is
being elected, and
* Conversion Price = the lesser of (x) 100% of the average Closing Bid
Price, as that term is defined below, for the five (5) trading days
ending on June 26, 1996, which amount is equal to $ 3.9375 (the "Fixed
Conversion Price"), or (y) 85% of the average Closing Bid Price, as
that term is defined below, of the Company's Common Stock for the five
(5) trading days immediately preceding the Date of Conversion, as
defined below (the "Variable Conversion Price").
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price on the Nasdaq Small Cap Market, or if not traded on the Nasdaq
Small Cap Market, the closing bid price on the principal national securities
exchange or the National Market System on which the Common Stock is so traded
and if not available, the mean of the high and low prices on the principal
national securities exchange or the National Market System on which the Common
Stock is so traded.
(b) CONVERSION AT MARKET PRICE. Notwithstanding the
limitations on conversion set forth above, each record Holder of Series B
Preferred Stock shall be entitled to convert, subject to the Company's right of
redemption set forth in section 6(a), the Preferred Stock (in multiples of one
(1) share of Preferred Stock) prior to the applicable Conversion Gate (but no
earlier than forty-five (45) days following the Last Closing Date), at the
office of the Transfer Agent, into that number of fully-paid and non-assessable
shares of Common Stock of Company calculated in accordance with the Conversion
Rate set forth above; provided, however, that, for purposes of the conversion
pursuant to this subsection 4(b), the Conversion Price shall equal the Closing
Bid Price of the Company's Common Stock on the trading day immediately prior to
the Date of Conversion.
(c) MECHANICS OF CONVERSION. In order to convert Series B
Preferred Stock into full shares of Common Stock, the Holder shall (i) fax, on
or prior to 11:59 p.m., New York City time (the "Conversion Notice Deadline") on
the date of conversion, a copy of the fully executed notice of conversion
("Notice of Conversion") to the Company at the office of the Company or its
designated transfer agent (the "Transfer Agent") for the Series B Preferred
Stock stating that the Holder elects to convert, which notice shall specify the
date of conversion, the number of shares of Series B Preferred Stock to be
converted, the applicable conversion price and a calculation of the number of
shares of Common Stock issuable upon such conversion (together with a copy of
the front page of each certificate to be converted) and (ii) surrender to a
common courier for delivery to the office of the Company or the Transfer Agent,
the original certificates representing the Series B Preferred Stock being
converted (the "Preferred Stock Certificates"), duly endorsed for transfer;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless
either the Preferred Stock Certificates are delivered to the Company or its
Transfer Agent as provided above, or the Holder notifies the Company or its
Transfer Agent that such certificates have been lost, stolen or destroyed
(subject to the requirements of subparagraph (i) below). Upon receipt by Company
of a facsimile copy of a Notice of Conversion, Company shall immediately send,
via facsimile, a confirmation of receipt of the Notice of Conversion to Holder
which shall specify that the Notice of Conversion has been received and the name
and telephone number of a contact person at the Company whom the Holder should
contact regarding information related to the Conversion. In the case of a
dispute as to the calculation of the Conversion Rate, the Company shall promptly
issue to the Holder the number of Shares that are not disputed and shall submit
the disputed calculations to its outside accountant via facsimile within three
(3) days of receipt of Holder's Notice of Conversion. The Company shall cause
the accountant to perform the calculations and notify Company and Holder of the
results no later than forty-eight (48) hours from the time it receives the
disputed calculations. Accountant's calculation shall be deemed conclusive
absent manifest error.
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<PAGE>
(i) LOST OR STOLEN CERTIFICATES. Upon receipt by the
Company of evidence of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing shares of Series B Preferred Stock,
and (in the case of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Company, and upon surrender and cancellation of
the Preferred Stock Certificate(s), if mutilated, the Company shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date. However,
Company shall not be obligated to re-issue such lost or stolen Preferred Stock
Certificates if Holder contemporaneously requests Company to convert such Series
B Preferred Stock into Common Stock.
(ii) DELIVERY OF COMMON STOCK UPON CONVERSION. The
Transfer Agent or the Company (as applicable) shall, no later than the close of
business on the second (2nd) business day (the "Deadline") after receipt by the
Company or the Transfer Agent of a facsimile copy of a Notice of Conversion and
receipt by Company or the Transfer Agent of all necessary documentation duly
executed and in proper form required for conversion, including the original
Preferred Stock Certificates to be converted (or after provision for security or
indemnification in the case of lost or destroyed certificates, if required),
issue and surrender to a common courier for either overnight or (if delivery is
outside the United States) two (2) day delivery to the Holder at the address of
the Holder as shown on the stock records of the Company a certificate for the
number of shares of Common Stock to which the Holder shall be entitled as
aforesaid.
(iii) NO FRACTIONAL SHARES. If any conversion of the
Series B Preferred Stock would create a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares of Common Stock issuable upon
conversion, in the aggregate, shall be the next lower number of shares.
(d) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Series B Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all then outstanding
Series B Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of Series B Preferred Stock, the Company will
take such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(e) AUTOMATIC CONVERSION. Each share of Series B Preferred
Stock outstanding on the date which is three (3) years after the Last Closing
Date automatically shall be converted into Common Stock on such date at the
Conversion Rate then in effect (calculated in accordance with the formula in
Section 5(a) above), and the date which is three (3) years after the Last
Closing Date shall be deemed the Date of Conversion with respect to such
conversion.
(f) ADJUSTMENT TO CONVERSION RATE.
(i) ADJUSTMENT TO FIXED CONVERSION PRICE DUE TO STOCK
SPLIT, STOCK DIVIDEND, ETC. If, prior to the conversion of all of the Series B
Preferred Stock, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, or other similar event, the Fixed Conversion
Price shall be proportionately reduced, or if the number of outstanding shares
-4-
<PAGE>
of Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Fixed Conversion Price shall be proportionately
increased.
(ii) ADJUSTMENT TO VARIABLE CONVERSION PRICE. If, at any
time when any shares of the Series B Preferred Stock are issued and outstanding,
the number of outstanding shares of Common Stock is increased or decreased by a
stock split, stock dividend, or other similar event, which event shall have
taken place during the reference period for determination of the Conversion
Price for any conversion of the Series B Preferred Stock, then the Variable
Conversion Price shall be calculated giving appropriate effect to the stock
split, stock dividend, combination, reclassification or other similar event for
all five (5) trading days immediately preceding the Date of Conversion.
(iii) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If,
prior to the conversion of all Series B Preferred Stock, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or
other similar event, as a result of which shares of Common Stock of the Company
shall be changed into the same or a different number of shares of the same or
another class or classes of stock or securities of the Company or another entity
or there is a sale of all or substantially all the Company's assets or there is
a change of control transaction not deemed to be a liquidation pursuant to
section 4(c), then the Holders of Series B Preferred Stock shall thereafter have
the right to receive upon conversion of Series B Preferred Stock, upon the basis
and upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such stock,
securities and/or other assets which the Holder would have been entitled to
receive in such transaction had the Series B Preferred Stock been converted
immediately prior to such transaction, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the Holders
of the Series B Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for the adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the Series B
Preferred Stock) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities thereafter deliverable upon the exercise hereof.
The Company shall not effect any transaction described in this subsection
5(f)(iii) unless (a) it first gives thirty (30) business days prior notice of
such merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event (during which time the Holder shall be
entitled to convert its shares of Series B Preferred Stock into Common Stock)
and (b) the resulting successor or acquiring entity (if not the Company) assumes
by written instrument the obligations of the Company under this Certificate of
Designation including this subsection 5(f)(iii).
Section 6. REDEMPTION BY COMPANY.
(a) COMPANY'S RIGHT TO REDEEM UPON RECEIPT OF NOTICE OF
CONVERSION. If the Conversion Price of the Company's Common Stock is less than
the Fixed Conversion Price (as defined in Section 5(a)), at the time of receipt
of a Notice of Conversion pursuant to Section 5, the Company shall have the
right, in its sole discretion, to redeem in whole or in part any Series B
Preferred Stock submitted for conversion, immediately prior to and in lieu of
conversion ("Redemption Upon Receipt of Notice of Conversion"). If the Company
elects to redeem some, but not all, of the Series B Preferred Stock submitted
for conversion, the Company shall redeem from among the Series B Preferred Stock
submitted by the various shareholders for conversion on the applicable date, a
pro-rata amount from each such Holder so submitting Series B Preferred Stock for
conversion.
(i) REDEMPTION PRICE UPON RECEIPT OF A NOTICE OF
CONVERSION. The redemption price per share of Series B Preferred Stock under
this Section 6(a) shall be calculated in accordance with the following formula
("Redemption Rate"):
[[(.10)(N/365) (10,000)] + 10,000] x Closing Bid Price on Date of Conversion
_______________________________________
Conversion Price
-5-
<PAGE>
where,
"N", "Date of Conversion", "Closing Bid Price" and "Conversion Price"
shall have the same meanings as defined in Section 5.
(ii) MECHANICS OF REDEMPTION UPON RECEIPT OF NOTICE OF
CONVERSION. The Company shall effect each such redemption by giving notice of
its election to redeem, by facsimile, by 5:00 p.m. New York City time the next
business day following receipt of a Notice of Conversion from a Holder, and the
Company shall provide a copy of such redemption notice by overnight or two (2)
day courier, to (A) the Holder of the Series B Preferred Stock submitted for
conversion at the address and facsimile number of such Holder appearing in the
Company's register for the Series B Preferred Stock and (B) the Company's
Transfer Agent. Such redemption notice shall indicate whether the Company will
redeem all or part of the Series B Preferred Stock submitted for conversion and
the applicable redemption price.
(b) COMPANY'S RIGHT TO REDEEM AT ITS ELECTION. At any time,
commencing twelve (12) months and one (1) day after the Last Closing Date, the
Company shall have the right, in its sole discretion, to redeem ("Redemption at
Company's Election"), from time to time, any or all of the Series B Preferred
Stock; provided (i) Company shall first provide thirty (30) business days
advance written notice as provided in subparagraph 6(b)(ii) below (which can be
given beginning thirty (30) business days prior to the date which is twelve (12)
months and one (1) day after the Last Closing Date), and (ii) that the Company
shall only be entitled to redeem Series B Preferred Stock having an aggregate
Stated Value (as defined below) of at least One Million Five Hundred Thousand
Dollars ($1,500,000). If the Company elects to redeem some, but not all, of the
Series B Preferred Stock, the Company shall redeem a pro-rata amount from each
Holder of the Series B Preferred Stock.
(i) REDEMPTION PRICE AT COMPANY'S ELECTION. The
"Redemption Price At Company's Election" shall be calculated as a percentage of
Stated Value, as that term is defined below, of the Series B Preferred Stock
redeemed pursuant to this Section 6(b), which percentage shall vary depending on
the date of Redemption at Company's Election (as defined below), and shall be
determined as follows:
Date of Notice of Redemption at Company's Election % of Stated Value
- -------------------------------------------------- ----------------
12 months and 1 day to 18 months following Last Closing Date 130%
18 months and 1 day to 24 months following Last Closing Date 125%
24 months and 1 day to 30 months following Last Closing Date 120%
30 months and 1 day to 36 months following Last Closing Date 115%
For purposes hereof, "Stated Value" shall mean the Original Series B
Issue Price (as defined in Section 4(a)) of the shares of Series B Preferred
Stock being redeemed pursuant to this Section 6(b), together with the accrued
but unpaid Premium (as defined in Section 4(a)).
(ii) MECHANICS OF REDEMPTION AT COMPANY'S ELECTION. The
Company shall effect each such redemption by giving at least thirty (30)
business days prior written notice ("Notice of Redemption At Company's
Election") to (A) the Holders of the Series B Preferred Stock selected for
redemption, at the address and facsimile number of such Holder appearing in the
Company's Series B Preferred stock register and (B) the Transfer Agent, which
Notice of Redemption At Company's Election shall be deemed to have been
delivered three (3) business days after the Company's mailing (by overnight or
two (2) day courier, with a copy by facsimile) of such Notice of Redemption At
Company's Election. Such Notice of Redemption At Company's Election shall
indicate (i) the number of shares of Series B Preferred Stock that have been
selected for redemption, (ii) the date which such redemption is to become
effective (the "Date of Redemption At Company's Election") and (iii) the
applicable Redemption Price At Company's Election, as defined in subsection
(b)(i) above. Notwithstanding the above, Holder may convert into Common Stock
pursuant to section 5, prior to the close of business on the Date of Redemption
at Company's Election, any Series B Preferred Stock which it is otherwise
entitled to convert, including Series B Preferred Stock that has been selected
-6-
<PAGE>
for redemption at Company's election pursuant to this subsection 6(b); provided,
however, that the Company shall still be entitled to exercise its right to
redeem upon receipt of a Notice of Conversion pursuant to section 6(a).
(c) COMPANY MUST HAVE IMMEDIATELY AVAILABLE FUNDS OR CREDIT
FACILITIES. The Company shall not be entitled to send any Redemption Notice and
begin the redemption procedure under Sections 6(a) and 6(b) unless it has:
(i) the full amount of the redemption price in cash,
available in a demand or other immediately available account in a bank or
similar financial institution; or
(ii) immediately available credit facilities, in the
full amount of the redemption price with a bank or similar financial
institution; or
(iii) an agreement with a standby underwriter willing to
purchase from the Company a sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not converted prior to
redemption; or
(iv) a combination of the items set forth in (i), (ii)
and (iii) above, aggregating the full amount of the redemption price.
(d) PAYMENT OF REDEMPTION PRICE.
(i) Each Holder submitting Preferred Stock being
redeemed under this Section 6 shall send their Series B Preferred Stock
Certificates so redeemed to the Company or its Transfer Agent, and the Company
shall pay the applicable redemption price to that Holder within five (5)
business days of the Date of Redemption at Company's Election. The Company shall
not be obligated to deliver the redemption price unless the Preferred Stock
Certificates so redeemed are delivered to the Company or its Transfer Agent, or,
in the event one (1) or more certificates have been lost, stolen, mutilated or
destroyed, unless the Holder has complied with Section 5(c)(i).
(ii) If Company elects to redeem pursuant to Section 6(a)
hereof, and Company fails to pay Holder the redemption price within the time
frame as required by this Section 6(d), then Company shall issue shares of
Common Stock to any such Holder who has submitted a Notice of Conversion in
compliance with Section 5(c) hereof. The shares to be issued to Holder pursuant
to this provision shall be the number of shares determined using a Conversion
Price (as defined in Section 6 hereof) that equals the lesser of (i) the
Conversion Price on the date Holder sends its Notice of Conversion to Company or
Transfer Agent via facsimile or (ii) the Conversion Price on the date the
Transfer Agent issues Common Stock pursuant to this Section 6(d)(ii). The
issuance of such shares shall not affect the Company's liability for damages, if
any, to the Holder resulting from its failure to redeem.
(e) BLACKOUT PERIOD. Notwithstanding the foregoing, the
Company may not either send out a redemption notice or effect a redemption
pursuant to Section 6(b) above during a Blackout Period (defined as a period
during which the Company's officers or directors would not be entitled to buy or
sell stock because of their holding of material non-public information), unless
the Company shall first disclose the non-public information that resulted in the
Blackout Period; provided, however, that no redemption shall be effected until
at least ten (10) days after the Company shall have given the Holder written
notice that the Blackout Period has been lifted.
Section 7. ADVANCE NOTICE OF REDEMPTION.
(a) Holder's Right to Elect to Receive Notice of Cash
Redemption by the Company. Holder shall have the right to require Company to
provide advance notice stating whether the Company will elect to redeem Holder's
shares of Series B Preferred Stock in cash, pursuant to the Company's redemption
rights discussed in Section 6(a).
(b) MECHANICS OF HOLDER'S ELECTION NOTICE. Holder shall
send notice ("Election Notice") to the Company and such other person(s) as the
Company may designate, via facsimile, Holder's intention to require Company to
disclose that if Holder were to exercise his, her or its right of conversion
-7-
<PAGE>
(pursuant to Section 5) whether Company would elect to redeem a specific number
of shares of Holder's Series B Preferred Stock for cash in lieu of issuing
Common Stock. Company is required to disclose to Holder what action Company
would take over the subsequent twenty (20) business day period, including the
date of such Election Notice, as further discussed in subsection 7(c).
(c) COMPANY'S RESPONSE. Upon receipt by the Company of a
facsimile copy of an Election Notice, Company shall immediately send, via
facsimile, a confirmation of receipt of the Election Notice to Holder, which
shall specify that the Election Notice has been received and the name and
telephone number of a contact person at the Company whom the Holder should
contact regarding information related to the requested advance notice.
Thereafter, the Company must respond by the close of business on the next
business day following receipt of Holder's Election Notice (1) via facsimile and
(2) by depositing such response with an overnight or two (2) day courier. The
Company's response must state whether it would redeem the shares, in whole or in
part, or allow conversion into shares of Common Stock without redemption. If
Company does not respond to Holder within one (1) business day via facsimile and
overnight or two (2) day courier, Company shall be required to issue to Holder
Common Stock upon Holder's conversion within the subsequent twenty (20) business
day period of Holder's Election Notice. However, if the Company's Common Stock
price decreases so that under the Conversion Rate Company would be required to
issue more than an additional ten percent (10% ) of shares of Common Stock than
Holder was entitled to receive at the time Holder sent Company its Election
Notice, then Company shall no longer be bound to convert Holder's Preferred
Stock into Common Stock but may elect to redeem for cash.
SECTION 8. Voting Rights. The Holders of the Series B Preferred Stock
shall have no voting power whatsoever, except as otherwise provided by the
Colorado Business Corporation Act ("Colorado Law"), and no Holder of Series B
Preferred Stock shall vote or otherwise participate in any proceeding in which
actions shall be taken by the Company or the shareholders thereof or be entitled
to notification as to any meeting of the shareholders.
Notwithstanding the above, Company shall provide Holder with
notification of any meeting of the shareholders regarding any major corporate
events affecting the Company. In the event of any taking by the Company of a
record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire any share of any class or any other
securities or property (including by way of merger, consolidation or
reorganization), or to receive any other right, or for the purpose of
determining shareholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of
the Company, or any proposed liquidation, dissolution or winding up of the
Company, the Company shall mail a notice to Holder, at least ten (10) days prior
to the record date specified therein, of the date on which any such record is to
be taken for the purpose of such dividend, distribution, right or other event,
and a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time.
To the extent that under Colorado Law the vote of the Holders of the
Series B Preferred Stock, voting separately as a class, is required to authorize
a given action of the Company, the affirmative vote or consent of the Holders of
at least a majority of the shares of the Series B Preferred Stock represented at
a duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series B Preferred Stock (except as otherwise may be
required under Colorado Law) shall constitute the approval of such action by the
class. To the extent that under Colorado Law the Holders of the Series B
Preferred Stock are entitled to vote on a matter with holders of Common Stock,
voting together as one (1) class, each share of Series B Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is calculated.
Holders of the Series B Preferred Stock also shall be entitled to notice of all
shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Company's
by-laws and applicable statutes.
Section 9. PROTECTIVE PROVISION. So long as shares of Series B
Preferred Stock are outstanding, the Company shall not without first obtaining
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<PAGE>
the approval (by vote or written consent, as provided by Colorado Law) of the
Holders of at least seventy-five percent (75%) of the then outstanding shares of
Series B Preferred Stock, and at least seventy-five percent (75%) of the then
outstanding Holders:
(a) alter or change the rights, preferences or privileges of
the Series B Preferred Stock or any Senior Securities so as to affect adversely
the Series B Preferred Stock; provided, however, that no such change may be
approved at any time on or prior to the fortieth (40th) day following the Last
Closing Date unless such change is unanimously approved by all Holders;
(b) create any new class or series of stock having a
preference over or on parity with the Series B Preferred Stock with respect to
Distributions (as defined in Section 2 above) or increase the size of the
authorized number of Series B Preferred; or
(c) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series B Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
In the event Holders of at least seventy-five percent (75%) of the then
outstanding shares of Series B Preferred Stock and at least seventy-five percent
(75%) of the then outstanding Holders agree to allow the Company to alter or
change the rights, preferences or privileges of the shares of Series B Preferred
Stock, pursuant to subsection (a) above, so as to affect the Series B Preferred
Stock, then the Company will deliver notice of such approved change to the
Holders of the Series B Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and Dissenting Holders shall have the right
for a period of thirty (30) business days to convert pursuant to the terms of
this Certificate of Designation as they exist prior to such alteration or change
(notwithstanding the forty-five (45) day, seventy-five (75) day, and one hundred
five (105) day holding requirements set forth in Section 5(a) hereof), or
continue to hold their shares of Series B Preferred Stock provided, however,
that the Dissenting Holders may not convert anytime on or before the fortieth
(40th) day following the Last Closing Date.
Section 10. StaTUS OF CONVERTED OR REDEEMED STOCK. IN the event any
shares of Series B Preferred Stock shall be converted or redeemed pursuant to
Section 5 or Section 6 hereof, the shares so converted or redeemed shall be
canceled, shall return to the status of authorized but unissued Preferred Stock
of no designated series, and shall not be issuable by the Company as Series B
Preferred Stock.
Section 11. PREFERENCE RIGHTS. Nothing contained herein shall be
construed to prevent the Board of Directors of the Company from issuing one (1)
or more series of Preferred Stock with dividend and/or liquidation preferences
junior to the dividend and liquidation preferences of the Series B Preferred
Stock.
Signed on July 1, 1996
/s/ Gordon Sales
By:_____________________________________
Gordon Sales, President
<PAGE>
STATE OF COLORADO )
) SS.
COUNTY OF DENVER )
I, Paul H. Metzinger, a Notary Public, hereby certify that on the 1st day
of July, 1996, Gordon J. Sales personally appeared before me, Paul H. Metzinger,
who being by me first duly sworn declared that he is the person who signed the
foregoing, and that the statements therein contained are ttue.
IN WITNESS WHEREOF, I have hereunto set my hand and seal on the date
hereinbefore mentioned
My commission expires January 13, 1997.
(S E A L) /S/ Paul H. Metzinger
__________________________________________
Notary Public
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED BY OR ON BEHALF OF ANY U.S.
PERSON UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER,
SALE OR TRANSFER.
Warrant to Purchase
_______ shares
Warrant to Purchase Common Stock
of
INTERCELL CORPORATION
THIS CERTIFIES that ________________ or any subsequent ("Holder")
hereof, has the right to purchase from INTERCELL CORPORATION, a Colorado
corporation (the "Company"), up to ______ fully paid and nonassessable shares of
the Company's Common Stock, no par value ("Common Stock"), subject to adjustment
as provided herein, at a price equal to the Exercise Price as defined in Section
3 below, at any time beginning on October 14, 1996 (one hundred five (105) days
from the Date of Issuance as defined below) and ending at 5:00 p.m., Atlanta,
Georgia time, on July 1, 2001.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. DATE OF ISSUANCE.
This Warrant shall be deemed to be issued on July 1, 1996 ("Date of
Issuance").
2. EXERCISE.
(a) MANNER OF EXERCISE. This Warrant may not be exercised, in whole or
in part, for a period of one hundred five (105) days from the Date of Issuance.
Thereafter, this Warrant may be exercised as to all or any lesser number of full
shares of Common Stock covered hereby upon surrender of this Warrant, with the
Exercise Form attached hereto duly executed, together with the full Exercise
Price (as defined in Section 3) for each share of Common Stock as to which this
Warrant is exercised, at the office of the Company, 770-1130 West Pender Street,
Vancouver, British Columbia, Canada V6E 4A4; Attention: President, Telephone No.
(604) 684-1533, Telecopy No. (604) 688-7997, or at such other office or agency
as the Company may designate in writing, by overnight mail, with an advance copy
of the Exercise Form attached as Exhibit A ("Exercise Form") by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant and Exercise Form
are received by the Company as soon as practicable thereafter. Alternatively,
<PAGE>
the Date of Exercise shall be defined as the date the original Exercise Form is
received by the Company, if Holder has not sent advance notice by facsimile.
(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) HoldER OF RECORD. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to have become the
Holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The Exercise Price shall equal $3.9375 ("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(i) CASH EXERCISE: cash, certified check or cashiers check or wire
transfer; or
(ii) Cashless Exercise: surrender of this Warrant at the principal
office of the Company together with notice of cashless election, in which event
the Company shall issue Holder a number of shares of Common Stock computed using
the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for
purposes of this Section 3(ii), the "Market Price" shall be
defined as the average closing price of the Common Stock for
the five (5) trading days prior to the Date of Exercise of
this Warrant (the "Average Closing Price"), as reported by the
OTC Bulletin Board or National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), or if the
Common Stock is not traded on the OTC Bulletin Board or
NASDAQ, the price in the over-the-counter market; provided,
however, that if the Common Stock is listed on a stock
exchange, the Market Price shall be the average Closing on
such exchange. If the Common Stock is/was not traded during
the five (5) trading days prior to the Date of Exercise, then
the closing price for the last publicly traded day shall be
deemed to be the closing price for any and all (if applicable)
days during such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
<PAGE>
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such issuance (x) be immediately transferable in the United States free of any
restrictive legend, including without limitation under Rule 144; (y) be then
registered pursuant to an effective registration statement filed pursuant to
that certain Registration Rights Agreement dated on or about July 1, 1996 by and
among the Company and certain investors; or (z) otherwise be registered under
the Securities Act of 1933, as amended.
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
endorsed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
(b) REGISTRABLE SECURITIES. The Common Stock issuable upon the exercise
of this Warrant constitute "Registrable Securities" under that certain
Registration Rights Agreement dated on or about July 1, 1996 between the Company
and certain investors and, accordingly, has the benefit of the registration
rights, if applicable, pursuant to that agreement.
5. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then the Holder hereof, upon Exercise of this
Warrant after the record date for the determination of Holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is Exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been Exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction of
such character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which the Holder hereof shall
be entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give the Warrant Holder the same notice it provides to holders of
Common Stock of any transaction described in this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute to
Holders of Common Stock cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of earned surplus
<PAGE>
or net profits for the current or preceding year) then, in any such case, the
Holder of this Warrant shall be entitled to receive, upon exercise of this
Warrant, with respect to each share of Common Stock issuable upon such Exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which such Holder would have been entitled to receive with respect to each such
share of Common Stock as a result of the happening of such event had this
Warrant been Exercised immediately prior to the record date or other date fixing
shareholders to be affected by such event (the "Determination Date") or, in lieu
thereof, if the Board of Directors of the Company should so determine at the
time of such distribution, a reduced Exercise Price determined by multiplying
the Exercise Price on the Determination Date by a fraction, the numerator of
which is the result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board in its discretion) and the denominator of which is such
Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be assumed by the
acquiring entity or any affiliate thereof and thereafter this Warrant shall be
exerciseable into such class and type of securities or other assets as the
Holder would have received had the Holder exercised this Warrant immediately
prior to such Corporate Change; provided, however, that Company may not affect
any Corporate Change unless it first shall have given thirty (30) business days
notice to the Holder hereof of any Corporate Change.
(e) EXERCISE PRICE Adjusted. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the
effect of increasing the Exercise Price. The number of shares of Common Stock
subject hereto shall increase proportionately with each decrease in the Exercise
Price.
(f) ADJUSTMENTS: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
the Holder of this Warrant shall, upon Exercise of this Warrant, become entitled
to receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon
terms as nearly equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares
shall be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, the Holder hereof may purchase only a whole number of shares of Common
Stock. If, on Exercise of this Warrant, the Holder hereof would be entitled to a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
<PAGE>
7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such
number of authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for
Exercise and payment of the Exercise Price of this Warrant. The Company
covenants and agrees that upon Exercise of this Warrant, all shares of Common
Stock issuable upon such Exercise shall be duly and validly issued, fully paid,
nonassessable and not subject to preemptive rights, rights of first refusal or
similar rights of any person or entity.
8. RESTRICTIONS ON TRANSFER.
(a) REGISTRATION OR EXEMPTION REQUIRED. This warrant has been
issued in a transaction exempt from the registration requirements of the act by
virtue of regulation s. The warrant may not be resold into the united states, or
to a u.S. Person (as defined in regulation s) for a period of forty (40) days
from the date of issuance, and thereafter, the warrant and the common stock
issuable upon exercise of the warrant may not be sold into the united states or
to a u.S. Person (as defined in regulation s) except pursuant to an effective
registration statement or an exemption to the registration requirements of the
Act and applicable state laws.
(b) ASSIGNMENT. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any
person other than the Company and the Holder of this Warrant any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall be
for the sole and exclusive benefit of the Company and the Holder of this
Warrant.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the state of Colorado,
without giving effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by the Holder of
this Warrant to or on the Company shall be sufficiently given or made if sent by
<PAGE>
certified or registered mail, return receipt requested, postage prepaid, and
addressed, until another address is designated in writing by the Company,
770-1130 West Pender Street, Vancouver, British Columbia, Canada V6E 4A4,
Attention: President, Telephone No. (604) 684-1533, Telecopy No. (604) 688-7997.
Notices or demands pursuant to this Warrant to be given or made by the Company
to or on the Holder of this Warrant shall be sufficiently given or made if sent
by certified or registered mail, return receipt requested, postage prepaid, and
addressed, to the address of the Holder set forth in the Company's records,
until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
1st day of July, 1996.
INTERCELL CORPORATION
/s/ Gordon Sales
By: ________________________________
Gordon Sales
Print Name: ________________________________
President
Title: ________________________________
<PAGE>
EXHIBIT A
EXERCISE FORM
TO: INTERCELL CORPORATION
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of INTERCELL CORPORATION, a Colorado
corporation (the "Company"), evidenced by the attached Warrant, and herewith
makes payment of the Exercise Price with respect to such shares in full, all in
accordance with the conditions and provisions of said Warrant.
[ ] Cash Exercise [ ] Cashless Exercise
1. The undersigned hereby represents and warrants to the Company as follows:
(a) At least forty (40) days have passed since the date of the issuance
of the Warrant to the undersigned and the termination of the offering in which
the Warrant was distributed;
(b) The undersigned is not a U.S. person, as defined in Regulation S,
and is not exercising the Warrant on behalf of a U.S. person;
(c) The undersigned received the Warrant, and has kept the Warrant
since the date of receipt, outside of the U.S.;
(d) The person who made the financial decision on behalf of the
undersigned to exercise the Warrant was outside of the U.S. at the time of
making such decision;
(e) The common stock obtained on exercise of the Warrant will be
delivered to the undersigned at a location outside of the U.S.;
(f) The undersigned acknowledges that the Company's transfer agent has
been instructed not to issue common stock on exercise of this Warrant unless the
undersigned has certified that the statements contained in this Exercise Form
are true and correct as of the date of this Exercise Form.
2. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of Common Stock obtained on exercise of the Warrant, except in accordance
with the provisions of Section 8(a) of the Warrant.
3. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, and a warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant in the name of the Registered
Holder and delivered to the undersigned at the address set forth below:
Dated:
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Signature of Registered Holder
- --------------------------------------------------------------------------------
Name of Registered Holder (Print)
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Non-U.S. Address
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of INTERCELL CORPORATION evidenced
by the attached Warrant and does hereby irrevocably constitute and appoint
_______________________ attorney to transfer the said Warrant on the books of
the Company, with full power of substitution in the premises.
Dated: ______________________________
Signature
Fill in for new Registration of Warrant:
_______________________________________
Name
_______________________________________
Address
_______________________________________
Please print name and address of assignee
(including zip code number)
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NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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INTERCELL CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
July 1, 1996, by and among INTERCELL CORPORATION, a Colorado corporation
("Company"), and the subscribers ("Subscribers") to the Company's offering
("Offering") of up to Ten Million ($10,000,000) of Series B Preferred Stock
("Preferred Stock") pursuant to the Regulation S Subscription Agreement between
the Company and the Subscribers of even date herewith ("Subscription
Agreement").
1. DEFINITIONS. For purposes of this Agreement:
(a) The terms "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933 (the
"Act"), and pursuant to Rule 415 under the Act or any successor rule, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) For purposes of the Required Registration under Section 2
hereof, the term "Registrable Securities" means the Company's Common Stock
(together with any capital stock issued as a dividend on, in replacement of, in
exchange for, or otherwise in respect of such Common Stock or issued pursuant to
Section 17 hereof, the "Common Stock") issuable or issued upon conversion of the
Preferred Stock and exercise of the Warrants. For purposes of a Demand
Registration under Section 3 hereof or a Piggyback Registration under Section 4
hereof, the term "Registrable Securities" means the Company's Common Stock
issuable or issued upon conversion of the Preferred Stock and exercise of the
Warrants; provided, however, that after the expiration of the Restricted Period
(as defined in the Subscription Agreement), for purposes of Section 3 and
Section 4, shares of Common Stock obtainable on conversion of the Preferred
Stock and exercise of the Warrants (in whole or in part) shall not constitute
Registrable Securities, if those shares of Common Stock may be immediately sold
or transferred in the U.S. by the Holder free of any restrictive legend,
including without limitation under Rule 144;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock which
have been issued or are issuable upon conversion of the Preferred Stock or
exercise of the Warrants at the time of such determination;
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any permitted assignee thereof; (e)
The terms "Warrant" and "Warrants" refer to the warrant or warrants issued to
Subscribers as securities in connection with the Offering; and
(f) The term "Due Date" means the date which is ninety (90)
days after the Last Closing (as defined in the Subscription Agreement) of the
Offering.
<PAGE>
2. REQUIRED REGISTRATION.
(a) Within ninety (90) days after the Last Closing (as defined
in the Subscription Agreement) of the Offering, the Company shall file a
registration statement ("Registration Statement") on Form S-1, Form SB-2 or Form
S-3 (if filing on Form S-3 is available to Company) (or other suitable form),
covering the resale of all shares of Registrable Securities then outstanding.
(b) The Registration Statement shall be prepared as a "shelf"
registration statement under Rule 415, and shall be maintained effective until
the distribution described in the Registration Statement is completed. The
Company shall use its best efforts to have the Registration Statement declared
effective as soon as possible after filing.
(c) The Holders have the right to convert the Preferred Stock
into Common Stock pursuant to the terms of the Subscription Agreement and the
Certificate of Designation of Series B Preferred Stock of the Company and sell
the Common Stock under Regulation S and applicable exemptions until such time
that the Registration Statement becomes effective.
(d) Notwithstanding anything to the contrary contained herein,
any Holder (together with any assignee of its rights) (collectively referred to
as "Excluded Holders") shall be entitled, by written notice to the Company
delivered at any time prior to the filing of the Registration Statement
contemplated by this Section 2, to elect to have the Registrable Securities
issued or issuable to it excluded from the Registration Statement. In the event
a Holder elects not to have its Registrable Securities included in the
Registration Statement, the Holder shall, nonetheless, and notwithstanding
anything herein to the contrary, have the right (i) upon written notice to the
Company from Holders of at least twenty-five (25%) of the Registrable Securities
not subject to another registration statement then on file with the Securities
and Exchange Commission, at any time following the expiration of the ninety (90)
day period following the Last Closing, to cause the Company to effect a Demand
Registration (as defined in Section 3) registering the Registrable Securities
held by such Holders on Form S-1 or Form SB-2 or, if available, Form S-3 (or
other suitable form, subject to the approval of such Holders), and (ii) at any
time following the Due Date, to have its shares included in any Piggyback
Registration (as defined in Section 4), in each case in accordance with the
provisions of Sections 3 and 4 hereof. In connection with a Demand Registration
initiated by the Excluded Holders under this Subsection 2(d), the Company shall
pay all costs and expenses of Demand Registration in accordance with Section 9.
3. DEMAND REGISTRATION.
(a) If the Registration Statement described in Section 2 is
not filed by the Due Date, or if such Registration Statement is filed timely but
is not effective within a reasonable time thereafter, the Holders of Registrable
Securities obtained or obtainable upon conversion of at least twenty-five
percent (25%) of the shares of the Preferred Stock outstanding may notify the
Company in writing that they demand that the Company file a registration
statement under the Act covering the registration of all of the Registrable
Securities then outstanding on Form S-1 or Form SB-2, or if available, Form S-3.
Upon receipt of such notice, the Company shall, within ten (10) days, give
written notice of such request to all Holders and shall, subject to the
limitations of subsection 3(b), effect as soon as practicable, and in any event
within thirty (30) days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request, by notice given
to the Company within ten (10) days of receipt of the Company's notice, to be
registered as expeditiously as reasonably possible after the mailing of such
notice by the Company (a "Demand Registration").
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<PAGE>
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 3 and the
Company shall include such information in the written notice referred to in
subsection 3(a). In such event, the right of any Holder to include his
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
7(f)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders, and reasonably acceptable to the Company;
provided that no Holder shall be required to make any representations other than
with respect to its ownership of Registered Securities and its intended method
of distribution.
(c) The Company agrees to include all Registrable Securities
held by all Holders in such Registration Statement without cutback or reduction.
In the event the Company breaches its obligation of the preceding sentences, any
Holders of the Registrable Securities which were not included in such
Registration Statement shall be entitled to additional Demand Registrations for
such excluded securities on the same terms as the Demand Registration described
in this Agreement. In the event the Company breaches its obligations to effect
and maintain any registration statement filed pursuant to the terms of this
Agreement, any Holders of Registrable Securities which were not sold because of
such breach shall be entitled to additional Demand Registrations for such
securities which shall be maintained until such time as the securities are sold.
(d) The Company is not obligated to effect a demand
registration under this Section 3 if in the written opinion of counsel to the
Company reasonably acceptable to the person or persons from whom written request
for registration has been received (and satisfactory to the Company's transfer
agent to permit the transfer) that registration under the Act is not required
for the immediate transfer of the Registrable Securities pursuant to Rule 144 or
other applicable provision.
(e) The Company represents that it is eligible to effect the
registration contemplated hereby on Form S-1 or Form SB-2 and will continue to
take such actions as are necessary to maintain such eligibility. The Company
will use its best efforts to become eligible to use Form S-3 and maintain such
eligibility.
4. PIGGYBACK REGISTRATION. If the Registration Statement
described in Section 2 is not effective by the Due Date, and no demand for a
Demand Registration has been made pursuant to Section 3, and if (but without any
obligation to do so), the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Holders) any of its Common Stock under the Act in connection with the public
offering of such securities (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a registration on
Form S-4 promulgated under the Act or any successor or similar form registering
stock issuable upon a reclassification, upon a business combination involving an
exchange of securities or upon an exchange offer for securities of the issuer or
another entity), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given by fax within ten (10) days after mailing of such notice by the Company,
which request shall state the intended method of disposition of such shares by
such Holder, the Company shall cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered (a
"Piggyback Registration").
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<PAGE>
5. LIMITATION ON OBLIGATIONS TO REGISTEr.
(a) In the case of a Piggyback Registration on an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the inclusion in the registration statement of all
Registrable Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered by the Company,
then the number of such Registrable Securities to be included in the
registration statement shall be allocated among all Holders who had requested
Piggyback Registration, in the proportion that the number of Registrable
Securities which each such Holder seeks to register bears to the total number of
Registrable Securities sought to be included by all Holders; provided that in no
event shall the number of Registrable Securities be less than thirty-five
percent (35%) pro-rata of the total number of shares included in such
registration.
(b) Notwithstanding anything to the contrary herein, the
Company shall have the right (i) to defer the initial filing or request for
acceleration of effectiveness of any Demand Registration or Piggyback
Registration or (ii) after effectiveness, to suspend effectiveness of any such
registration statement, if, in the good faith judgment of the board of directors
of the Company and upon the advice of counsel of the managing underwriter (if
any) of the offering, such delay in filing or requesting acceleration of
effectiveness or such suspension of effectiveness is necessary in light of the
existence of material non-public information (financial or otherwise) concerning
the Company disclosure of which at the time is not, in the opinion of the board
of directors of the Company upon the advice of counsel, (A) otherwise required
and (B) in the best interests of the Company; provided however that the Company
will use its best efforts to terminate such delay or suspension as soon as
practicable and, in any event will not delay effectiveness of such registration
for more than two (2) months from the date of the demand or suspend
effectiveness for more than twenty (20) days, unless it is then engaged in an
acquisition that would make such registration impracticable, in which case it
will use its best efforts to eliminate such impracticability as soon as
possible.
6. OBLIGATIONS TO INCREASE AVAILABLE SHARES. In the event that
the number of shares available under a registration statement filed pursuant to
Section 3 is insufficient to cover all of the Registrable Securities then
outstanding, the Company shall amend that registration statement, or file a new
registration statement, or both, so as to cover all shares of Registrable
Securities then outstanding. The Company shall effect such amendment or new
registration within sixty (60) days of the date the registration statement filed
under Section 3 is insufficient to cover all the shares of Registrable
Securities then outstanding. Any Registration Statement filed hereunder shall,
to the extent permissible by the Rules of the Securities and Exchange Commission
("SEC"), state that, in accordance with Rule 416 under the Act, such
Registration Statement also covers such indeterminate numbers of additional
shares of Common Stock as may become issuable upon conversion of the Preferred
Stock to prevent dilution resulting from stock changes or by reason of changes
in the conversion price in accordance with the terms thereof.
7. OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
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<PAGE>
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) With respect to any Demand Registration, use best efforts
to keep such registration statement effective until the Holders of Registrable
Securities covered by such registration statement have completed the
distribution described in the registration statement.
(d) Furnish to the Holders (i) such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them
and (ii) copies of all correspondence to or with the SEC. Each Holder shall be
furnished with copies of drafts of all filings (including amendments and
supplements) prior to filing and given sufficient time to provide comments
thereon.
(e) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders of the Registrable Securities covered by such registration statement,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(f) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(g) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act upon the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an 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 in the light of the circumstances then existing.
(h) Furnish, at the request of any Holder whose shares are
being registered pursuant to this Agreement, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Agreement, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
(i) Maintain the listing of the Common Stock on the OTC
Bulletin Board or other automated quotation system or a national securities
exchange.
8. Furnish INFORMATION. IT SHALl be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement
that the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
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<PAGE>
disposition of such securities as shall be required to effect the registration
of their Registrable Securities or to determine that registration is not
required pursuant to Rule 144 or other applicable provision of the Act.
9. EXPENSES OF REQUIRED OR DEMAND REGISTRATION. All expenses
other than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 or 3, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and
including the reasonable fees and disbursements incurred of only one counsel for
the selling Holders shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Sections 2 or 3 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all Holders who had
requested such registration shall bear such expenses); provided further,
however, that if at the time of such withdrawal, the Holders have learned of a
material adverse change in the condition, business, or prospects of the Company
from that known to the Holders at the time of their request, then the Holders
shall not be required to pay any of such expenses and shall retain their rights
pursuant to Sections 2 and 3.
10. EXPENSES OF COMPANY REGISTRATION. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 4 for each Holder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto (and including the reasonable fees and
disbursements incurred of only one counsel for the selling Holders selected by
them), but excluding underwriting discounts and commissions relating to
Registrable Securities.
11. INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each "Holder Indemnified Persons" (defined for purposes of
this Section 11 as each Holder, the officers and directors of each Holder acting
in their capacity as such, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act")), against any losses, claims, damages, expenses, or liabilities
(joint or several) (hereinafter referred to singularly as "Loss" and
collectively as "Losses") to which they may become subject under the Act, the
1934 Act or other federal or state law, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement,
or alleged untrue statement, of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the 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 (iii) any violation
by the Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse each such Holder Indemnified Person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Loss or action; provided, however, that the indemnity
agreement contained in this subsection 11(a) shall not apply to amounts paid in
settlement of any such Loss or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case to an Indemnified Person for any
such Loss or action to the extent that it arises out of or is based upon a
Violation which occurs (i) in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder Indemnified Person or (ii) based upon a prospectus which included a
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<PAGE>
Violation after the Company has advised such Indemnified Person not to sell
pursuant to such prospectus, and has made available to such Indemnified Person
an amended or supplemental prospectus that corrects such Violation.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the "Company Indemnified Persons" (defined for the
purpose of this Section 11 as the Company, each of its directors in their
capacity as such, each of its officers who have signed the registration
statement in their capacity as such, each person, if any, who controls the
Company within the meaning of the Act in their capacity as such, any underwriter
and any other Holder Indemnified Person selling securities in such registration
statement), against any Loss (joint or several) to which the Company or any such
director, officer, controlling person, or underwriter or controlling person, or
other such Holder Indemnified Person may become subject, under the Act, the 1934
Act or other federal or state law, insofar as such Loss (or actions in respect
thereto) arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company and any such
Company Indemnified Person in connection with investigating or defending any
such Loss or action; provided, however, that the indemnity agreement contained
in this subsection 11(b) shall not apply to amounts paid in settlement of any
such Loss or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this subsection 11(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 11, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 11, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 11 to the extent it is prejudicial.
(d) The obligations of the Company and Holders under this
Section 11 shall survive the redemption and conversion, if any, of the Preferred
Stock, the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
12. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration,
the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
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(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of SEC
Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Act and the 1934 Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration.
13. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
Holder, each future Holder, and the Company; provided, however, that no
amendment or waiver that materially and adversely affects the rights of any
Holder shall be effective against such Holder unless such Holder agrees thereto.
14. NOTICES. All notices required or permitted under this
Agreement shall be made in writing signed by the party making the same, shall
specify the section under this Agreement pursuant to which it is given, and
shall be addressed if to (i) the Company at: President, 770-1130 West Pender
Street, Vancouver, BC V6E 4A4; Telephone No. (604) 684-1533; Telecopy No. (604)
688-7997 and (ii) the Holders at their respective last address as the party
shall have furnished in writing as a new address to be entered on such register.
Any notice, except as otherwise provided in this Agreement, shall be made by fax
and shall be deemed given at the time of transmission of the fax.
15. TERMINATIOn. This Agreement shall terminate on the later
to occur of (a) the date that is five (5) years from the date of this Agreement
and (b) the date that is ninety (90) days after the date on which all the
Warrants have been exercised; but without prejudice to (i) the parties' rights
and obligations arising from breaches of this Agreement occurring prior to such
termination or (ii) other indemnification obligations under this Agreement.
16. ASSIGNMENT. No assignment, transfer or delegation, whether
by operation of law or otherwise, of any rights or obligations under this
Agreement by the Company or any Holder, respectively, shall be made without the
prior written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a Demand
Registration or Piggyback Registration, a writing executed by such transferee
agreeing to be bound as a Holder by the terms of this Agreement); and provided
further that the Company may transfer its rights and obligations under this
Agreement to a purchaser of all or a substantial portion of its business if the
obligations of the Company under this Agreement are assumed in connection with
such transfer, either by merger or other operation of law (which may include
without limitation a transaction whereby the Registrable Securities are
converted into securities of the successor in interest) or by specific
assumption executed by the transferee.
17. PAYMENTS FOR FAILURE TO REGISTER OR FAILURE TO LIST. If
the Registration Statement required under Section 2 hereof is not filed on or
prior to ninety (90) days after the Last Closing or if a registration statement
filed pursuant to Section 3 is not effective within ninety (90) days of demand,
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<PAGE>
or if the Company fails to respond to any request for information from the SEC
related to such Registration Statement within fifteen (15) days of such request,
then the Company shall pay to all Holders of outstanding Preferred Stock an
aggregate amount equal to two percent (2%) per month of the aggregate amount of
Preferred Stock sold in the Offering, compounded monthly, and accruing daily,
payable in Common Stock, which Common Stock shall also be deemed "Registrable
Securities" hereunder. If, the Company is not eligible to effect a Registration
under Form S-1 or SB-2 or S-3, or other appropriate registration statement, at
the time of a Demand Registration under the terms of this agreement solely
through the act or failure to act by the Company, and not due to a change in
statute or regulation or other fact circumstance not under the Company's
control, then the Company shall pay to all Holders of outstanding Preferred
Stock an aggregate penalty equal to the amount of the Conversion Default Payment
("Conversion Default Payment") set forth in Section 7.6 of the Regulation S
Subscription Agreement between the Company and the Subscribers ("Subscription
Agreement") for each day beyond sixty (60) days of the receipt of a request for
a Demand Registration until such registration is complete. If, on the date (the
"Conversion Eligibility Date") that Preferred Stock becomes eligible for
conversion into Common Stock or the Warrants are exercisable, the Common Stock
is not listed on the OTC Bulletin Board or other national stock exchange or
automated quotation system, then the Company shall pay to all Holders of
outstanding Preferred Stock that are eligible for immediate conversion and to
all Holders of unexercised Warrants a penalty equal to the amount of the
Conversion Default Payment ("Conversion Default Payment") set forth in Section
7.6 of the Regulation S Subscription Agreement between the Company and the
Subscribers ("Subscription Agreement") for each day beyond the Conversion
Eligibility Date until such listing is complete.
18. GOVERNING LAW. This Registration Rights Agreement shall be
governed by and construed in accordance with the laws of the state of Colorado
applicable to agreements made in and wholly to be performed in that
jurisdiction, except for matters arising under the Act or the Securities
Exchange Act of 1934, which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard and determined only in either a federal or
province court sitting in the State of Colorado, Denver County.
[INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Registration
Rights Agreement as of the date first above written.
INTERCELL CORPORATION
By: ________________________________
Name: ______________________________
Title: _____________________________
Address: 770-1130 West Pender Street
Vancouver, BC V6E 4A4
INVESTOR(S)
___________________________________
Investor's Name
By:_________________________________
Signature)
Address: _________________________
_________________________
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