WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 14, 1996
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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 (Commission (IRS Employer
jurisdiction File Number) Identification
of incorporation) Number)
7201 East Camelback Road, Suite 250
Scottsdale, Arizona 85251
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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)
4455 East Camelback Road, E-160
Phoenix, Arizona 85018
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(Former name or former address)
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ITEM 1. ACQUISITION OR DISPOSITION OF ASSETS
On October 14, 1996, Intercell Corporation ("Registrant") by virtue of a merger
of A.C. Magnetics, d/b/a M.C. Davis & Company, an Arizona corporation, into
Cellular Magnetics, Inc., an Arizona corporation (the "Subsidiary"), a wholly
owned subsidiary of the Registrant, acquired substantially all of the
properties, assets and business operations of A.C. Magnetics, Inc., d/b/a M.C.
Davis & Company.
In connection with the Merger, the Registrant paid the shareholders of A.C.
Magnetics, Inc., d/b/a/ M.C. Davis & Company, the sum of Eight Hundred Thousand
Dollars ($800,000.00) cash. In addition, the Registrant issued Two Hundred and
Seventy-Seven Thousand, Seven Hundred and Seventy-Eight (277,778) of its common,
restricted, no par value shares, valued at approximately $3.60 per share to the
shareholders of A.C. Magnetics, Inc., d/b/a M.C. Davis & Company. The Merger and
Corporate Reorganization was effected under Section 368(a)(1)(A) and
368(a)(1)(2)(D) of the Internal Revenue Code of 1986. As of the date of this
Report, Jerry W. Tooley, one of the former shareholders of A.C. Magnetics, Inc.,
d/b/a M.C. Davis & Company, was elected to the Board of Directors of Cellular
Magnetics, Inc., and to the office of President of Cellular Magnetics, Inc. In
addition, Mr. David Putnam, a former shareholder of A.C. Magnetics, Inc., d/b/a
M.C. Davis & Company, was appointed as Chief Financial Officer of Cellular
Magnetics, Inc.
The consideration conveyed, in connection with, the Merger was determined by
arms length negotiation between independent, unaffiliated parties represented by
counsel of their choice.
A.C. Magnetics, Inc., d/b/a M.C. Davis & Company, is a small manufacturer and
distributor of electrical devices and equipment. In addition to its facilities
near Phoenix, Arizona, it has manufacturing operations in the province of
Sonora, Mexico which were acquired by the Registrant by the virtue of the
acquisition of A.C. Magnetics, Inc., d/b/a M.C. Davis & Company.
The Registrant intends to manufacture its cellular phone antennae at these
facilities, through the subsidiary.
For further information, please refer to Item 7 of this Report.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
A. Financial Statements
Financial Statements of the acquired corporation will be provided
within the time period specified by the rules relating to filing reports on a
Current Report on Form 8K, by amendment, if required.
B. Exhibits.
Exhibit 2.1 Plan and Agreement of Merger, dated October 14, 1996 by
and between A. C. Magnetics, Inc., d/b/a M.C. Davis &
Company, Cellular Magnetics, Inc. and Intercell
Corporation.
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SIGNATURE PAGE
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: October 21, 1996
INTERCELL CORPORATION
/s/ Gordon J. Sales
______________________________________________
Gordon J. Sales,
President & Chief Executive Officer
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AGREEMENT AND PLAN OF MERGER
A.C. MAGNETICS, INC.
(An Arizona Corporation)
CELLULAR MAGNETICS, INC.
(An Arizona Corporation)
INTERCELL CORPORATION
(A Colorado Corporation)
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AGREEMENT AND PLAN OF MERGER
(Pursuant to Section 7-111-107 of the Colorado Business Corporation Act
and Section 10-1101 of the Arizona Revised Statutes)
This Agreement and Plan of Merger (the "Agreement"), dated and effective
as of September 30, 1996 is by and between A.C. Magnetics, Inc. ("Magnetics"),
an Arizona corporation, Jerry W. Tooley and June E. Tooley, a married couple as
trustees of the June and Jerry Tooley Family Trust ("Tooley"), and David Putnam
and Ann E. Putnam, a married couple ("Putnam") constituting all of the
shareholders of Magnetics (the "Shareholders"), Cellular Magnetics, Inc.
("Cellular"), an Arizona corporation, and Intercell Corporation, ("Intercell"),
a Colorado corporation.
WITNESSETH:
WHEREAS, the Board of Directors of Magnetics, Cellular and Intercell
deem it advisable and in the best interests of Magnetics, Cellular and Intercell
and their respective shareholders that Magnetics merge with and into Cellular
(the "Merger") resulting in the issuance of the no par value common stock of
Intercell ("Intercell Common Stock") in exchange for the shares of no par value
common stock of Magnetics ("Magnetics Common Stock"), all as provided in this
Agreement; and
WHEREAS, the specific business purpose of Magnetics, Cellular and
Intercell for entering into this Agreement is to consolidate the respective
assets of Magnetics and Cellular into one entity which is more capable of
acquiring additional capitalization and which is more competitive; and
WHEREAS, Magnetics, Cellular and Intercell desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger, and also desire to prescribe various conditions to the Merger; and
WHEREAS, the Boards of Directors of Magnetics, Cellular and Intercell
have each approved and adopted this Agreement as a Plan of Merger between
Magnetics, Cellular and Intercell within the meaning of Sections 368(a)(1)(A)
and 368(a)(2)(D) of the Internal Revenue Code of 1968, as amended (the "Code").
NOW THEREFORE, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows:
ARTICLE I
THE MERGER
1.01 CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall occur at the offices of May, Potenza, Judson & Baran, P.C., 201
North Central Avenue, Suite 2210, Phoenix, Arizona 85073 or at such other place
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as is mutually agreeable to the parties, on the earliest practicable date
following the day on which the last of any required shareholder approvals shall
have been obtained, and on which any and all conditions precedent to the merger
contemplated herein have been satisfied which date is contemplated to be October
8, 1996 (the "Closing Date"). If the Closing Date can be accelerated or must be
delayed, the parties agree to consent to such change.
1.01.1 ARTICLES FOR MERGER. This instrument shall also be considered
Articles of Merger which shall be filed with the Arizona Corporation Commission
on the Closing Date.
1.02 EFFECTIVE TIME OF THE MERGER. The "Effective Time of the Merger"
shall be the date and time that the Articles of Merger are filed with the
Arizona Corporation Commission.
1.02.1 REQUISITE APPROVAL. This Agreement and the Merger have been:
(a) Approved by the Boards of Directors of Magnetics, Cellular
and Intercell, as required by applicable law; and
(b) Approved by the number of votes cast, by each voting group
of Magnetics, Cellular and Intercell, entitled to vote separately on the Merger,
sufficient for approval by that voting group, as required by applicable law.
1.03 CORPORATE EXISTENCE OF THE SURVIVING CORPORATION. At the Effective
Time of the Merger, Magnetics shall be merged with and into Cellular which shall
be the surviving corporation. The corporate identity, existence, purposes,
powers, franchises, rights and immunities of Magnetics (hereinafter sometimes
referred to as the "Surviving Corporation") shall continue unaffected and
unimpaired by the Merger and the corporate identity, existence, purposes,
powers, franchises, rights and immunities of Magnetics shall be merged into the
separate existence of Magnetics, except insofar as otherwise specifically
provided by law, shall cease at the effective Time of the Merger, whereupon
Magnetics and the Surviving Corporation shall be and become one single
corporation.
1.04 ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. The Articles
of Incorporation of Cellular, as in effect immediately prior to the Effective
Time of the Merger, shall continue in full force and effect as the Articles of
Incorporation of the Surviving Corporation.
1.05 BYLAWS OF SURVIVING CORPORATION. The Bylaws of Cellular as in
effect immediately prior to the Effective Time of the Merger shall continue in
full force and effect as the Bylaws of the Surviving Corporation until amended
in accordance with the law.
1.06 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The duly
qualified and acting directors and officers of Cellular immediately prior to the
Effective Time of the Merger shall be the directors and officers of the
Surviving Corporation, provided, however, that Jerry W. Tooley shall, at the
Closing, be elected as the President and a director of the Surviving
Corporation, each such director and officer to hold office until the term for
which he or she has previously been elected shall expire and until his or her
successor has been elected and qualified.
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1.07 EFFECT OF THE MERGER. At the Effective Time of the Merger, the
Surviving Corporation shall succeed to, without other transfer, and shall
possess and enjoy, all the rights, subject to all the restrictions, disabilities
and duties of both Cellular and Magnetics; and all the rights privileges,
immunities, powers and franchises of both Cellular and Magnetics, and all
property, real, personal and mixed, tangible or intangible, and all debts due to
both Cellular and Magnetics on whatever account, for stock subscriptions as well
as for all other things in action or belonging to each of said corporations
shall be vested in the Surviving Corporation; and all property, rights,
privileges, immunities, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of both Cellular and Magnetics; and the title to or any interest in
any real estate or oil, gas or mineral or be in any way impaired by reason of
the Merger; provided, however, that all rights of creditors and liens upon any
property of either Cellular or Magnetics shall be preserved unimpaired, limited
in lien to the property affected by such liens at the Effective Time of the
Merger; and all debts, liabilities and duties of both Cellular and Magnetics,
respectively, shall thenceforth attach to the Surviving corporation and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by the Surviving Corporation.
1.08 ADDITIONAL OBLIGATIONS. If at any time the Surviving Corporation
shall deem or be advised that any further grants, assignments, confirmations or
assurances are necessary or desirable to vest or to perfect or confirm of record
or otherwise in the Surviving Corporation the title to any property of
Magnetics, the officers or any of them and directors of Magnetics shall execute
and deliver any and all such deeds, assignments, confirmations and assurances
and do all things necessary or proper so as to best prove, confirm and ratify
title to such property in the Surviving Corporation or to otherwise carry out
the purposes of the Merger and the terms of this Agreement or both. The
Surviving Corporation shall have the same power and authority to act in respect
to any debts, liabilities and duties of Magnetics as Magnetics would have had,
had it continued in existence.
1.09 CONVERSION AND EXCHANGE OF SHARES.
(a) The manner and basis of converting or exchanging the shares of
each of Cellular and Magnetics shall be as follows:
(1) Each share (and fraction thereof) of no par value common
stock of Magnetics which shall be outstanding immediately prior to the Effective
Time of the Merger (except any such shares which shall then be held in the
treasury of Magnetics) shall be changed, by virtue of the Merger and without any
action on the part of the holder thereof, into: Two Hundred Seventy-Seven and
78/100ths shares (277.78) shares of Intercell so that upon the Effective Time of
the Merger Intercell shall issue Two Hundred Seventy-Seven Thousand Seven
Hundred Seventy-Eight(277,778) shares in exchange for all capital stock of
Magnetics.
(2) At the Effective Time of the Merger, all capital stock of
Magnetics owned by Magnetics as treasury shares, if any, shall be canceled and
such shares shall not be converted into shares of the Common Stock of Intercell.
At the Effective Time of the Merger, all capital stock of Magnetics issued and
outstanding shall be canceled and automatically subject to conversion into
Intercell Common Stock as described in subparagraph 1.09(a)(1).
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(3) No fractional shares of Intercell Common Stock shall be
issued in connection with the Merger. Instead, each holder of record shares of
Intercell Common Stock at the Effective Date entitled to a fractional interest
arising from the conversion of such shares shall receive a cash payment for such
fractional share. The cash payment for such fractional share shall be based upon
the book value of such shares. No such holder shall be entitled to dividends or
other rights in respect of any such fractional interest.
(b) If not previously surrendered to Intercell, at the Closing,
not later than twenty (20) days after the Effective Time of the Merger, each
holder of an outstanding certificate or certificates which prior thereto
represented shares of Magnetics Common Stock shall surrender the same to
Corporate Stock Transfer, Inc. ("Exchange Agent"), and each such holder shall be
entitled upon such surrender to receive in exchange therefore, a certificate or
certificates representing the number of shares of Intercell Common Stock into
which the certificate or certificates so surrendered shall have been converted
as aforesaid. After the Effective Time of the Merger and until surrendered to,
and canceled by the Exchange Agent, each certificate which, prior to the
Effective Time of the Merger, represented outstanding shares of Magnetics Common
Stock shall be deemed for all corporate purposes to evidence the number of
shares of Intercell Common Stock into which the same shall be been converted.
Dividends on common stock of Intercell (if any are declared) payable after the
Effective Time of the Merger with respect to such shares shall not be paid with
respect thereto until the related Magnetics certificates shall be been
surrendered, whereupon they shall be paid without interest to the person in
whose name Intercell Common Stock certificates are issued. Notwithstanding the
foregoing, any shareholder of Magnetics who lawfully elects to exercise his or
her right to dissent from the Merger in accordance with the Arizona Revised
Statutes Section 10-1302 et. seq. will not be deemed to have converted his or
her shares of Magnetics Common Stock into shares of Intercell Common Stock until
such time as that shareholder is no longer entitled to payment for his shares.
At that time shares of Magnetics Common Stock held by a dissenting shareholder,
but with respect to which such shareholder did not exercise his right to dissent
form the Merger, shall be deemed converted into shares of Intercell Common Stock
as aforesaid as of the Effective Time.
(c) For purposes of paragraphs 1.09(a) and (b) of this Article I,
shares of Magnetics Common Stock outstanding immediately prior to the Effective
Time of the Merger shall not include any shares of Magnetics Common Stock with
respect to which the holders thereof ("Dissenting Magnetics Stockholders") shall
have filed written objections to the Merger in the manner provided in the
Arizona Revised Statutes Section 10-1321, provided, that if any such person
shall subsequently lose his or her dissenter's rights, the shares of Magnetics
Common Stock held by such person shall be deemed changed into shares of
Intercell Common Stock as provided herein, as of the Effective Time of the
Merger, and shall be exchanged in the manner and entitled to the rights provided
herein. Magnetics shall give Intercell (i) prompt notice of any written
objections or demands for payment of the value of their shares of Magnetics
Common Stock received from the Dissenting Magnetics Stockholders and (ii) the
opportunity to participate in all negotiations and proceeding s with respect to
any such demands. Magnetics shall not, without the prior written consent of
Intercell voluntarily make any payment with respect to, or settle or offer to
settle, any such demands.
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(d) If any certificate for shares of Intercell Common Stock is to
be issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer with signatures thereon duly guaranteed by a bank or
trust company and that the person requesting such exchange (i) pay to the
Exchange Agent any transfer expenses or other taxes required by reason of the
issuance of a certificate for share of Intercell Common Stock in any name other
than that of the registered holder of the certificate surrendered or (ii)
establish to the satisfaction of the Exchange Agent that such transfer expenses
or other taxes required by the issuance of a certificate for shares of Intercell
Common Stock in the same name of the registered holder of the certificate for
Magnetics Common Stock surrendered shall be paid by Intercell Corporation.
(e) If Intercell has not previously delivered the Intercell Common
Stock deliverable hereunder, at the Closing, to the holders of the Magnetics
Common Stock, as requested by such holders, then Intercell shall issue and
deliver, or cause to be issued and delivered to the Exchange Agent one
certificate representing the aggregate number of shares of Intercell Common
Stock to which all holders of Magnetics Common Stock shall be entitled pursuant
to this Agreement and Plan of Merger, but in no event exceeding Two Hundred
Seventy-Seven Thousand Seven Hundred Seventy-Eight (277,778) shares of Intercell
Common Stock. The certificate so delivered in such names as requested by the
shareholders of Magnetics, but under no circumstances shall Intercell be
required to issue certificates for fractional shares.
(f) If after the date hereof and prior to the Effective Time of
the Merger, (i) there shall be any recapitalization, split-up or consolidation
of shares of Intercell Common Stock or Magnetics Common Stock or (ii) the
outstanding shares of Intercell or Magnetics Common Stock are, in connection
with a Merger or consolidation of Intercell or Magnetics exchanged for a
different number or class of shares of stock of Intercell or Magnetics or for
the shares of the capital stock of any other corporation or (iii) the record
date for determination of holders of Intercell or Magnetics Common Stock
entitled to receive a dividend payable in such stock shall occur, then there
shall be made an appropriate adjustment in the number and class of the shares to
be issued and delivered upon the Merger.
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ARTICLE 11
EXPENSES
2.01 EXPENSES. In the event that this Agreement shall be terminated,
all further obligations of the parties under this Agreement shall terminate
without further liability of either party and each party shall be responsible,
without reimbursement from the other, for all its costs and expenses incurred
incident to negotiations and preparation of this Agreement and to performance of
and compliance with all agreements and conditions contained herein on their part
to be performed or complied with, including the fees, expenses and disbursements
of counsel. In the event that the Merger shall be consummated each party hereto
will pay all of its costs and expenses in connection therewith. Notwithstanding
anything hereinabove contained, whether or not the Merger shall be consummated,
Magnetics and Cellular shall divide any printing and mailing costs incurred in
connection therewith in proportion to the number of stockholders of record of
Magnetics and Cellular respectively if such is required by applicable laws.
ARTICLE III
SPECIFIC CONDITIONS
3.01 FINANCIAL STATEMENT REQUIREMENTS. Intercell shall undertake, within
Thirty (30) days after the Effective Time of the Merger an audit of Magnetics
for the period ended September 30, 1996 with the object of obtaining audited
financial statements for such period, prepared in accordance with generally
accepted accounting principles and satisfying the requirements of the Securities
and Exchange Commission. The Shareholders agree to cooperate with Intercell's
efforts to obtain such financial statements. The cost of such audit, and of any
related expenses, shall be borne solely by Intercell. In the event that, due
solely to the accounting and/or bookkeeping practices of Magnetics prior to the
Effective Time of Merger, Intercell, is unable to obtain or generate such
audited financial statements, then Intercell shall have the right (upon proof of
delivery of written Notice of Termination to Magnetics) to terminate the Merger
Ten (10) days thereafter and all parties shall be returned to their status quo,
without reservation, prior to the Effective Time of the Merger.
3.02 ADDITIONAL OBLIGATIONS OF MAGNETICS AND SHAREHOLDERS. The parties
acknowledge and agree that Magnetics and/or the Shareholders shall have the
following additional obligations hereunder, and that the satisfaction of each
such obligations on or before the closing is a material inducement and condition
precedent for Intercell and Cellular to enter into this Agreement and perform
their respective obligations hereunder.
1. The Shareholders shall deliver stock certificates evidencing
all of the issued and outstanding shares of stock of Magnetics,
duly endorsed for transfer.
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2. Shareholders Jerry W. Tooley and David Putnam shall each
execute and deliver to Cellular an employment agreement in the
form attached hereto as Exhibits "A" and "B", respectively.
3. Magnetics shall cause to be executed and delivered to Cellular
employment agreements for Jesse Salazar and Kong Wong, in the form
attached hereto as Exhibits "C" and "D", respectively.
4. The Shareholders shall deliver stock certificates evidencing
all of the shares of stock of M.C. Davis Internacional S.A. de
C.V. "International" owned by them, duly endorsed for transfer.
3.03 ADDITIONAL OBLIGATIONS OF CELLULAR AND INTERCELL. The parties
acknowledge and agree that Cellular and Intercell shall have the following
additional obligations hereunder, and that the satisfaction of each such
obligation is a material inducement for Magnetics and the Shareholders to enter
into this Agreement and perform their respective obligations hereunder.
3.03.1 OBLIGATIONS AT CLOSING. At or before the Closing, Intercell
and/or Cellular shall perform the following, each of which shall be a condition
precedent to the performance by Magnetics and the Shareholders of their
respective obligations hereunder.
a. Intercell shall deliver to the Shareholders and/or their
designees the shares of stock of Intercell determined in
accordance with Section 1.09, above, or evidence satisfactory
to the Shareholders of appropriate instructions to the Exchange
Agent for the issuance of such shares.
b. Intercell shall deliver to Tooley a certified check in the
amount of Six Hundred Thirty-Nine Thousand Dollars ($639,000).
c. Intercell shall deliver to Putnam a certified check in the
amount of Seventy-One Thousand Dollars ($71,000).
d. Intercell shall deliver to First U.S. Securities, Inc. a
certified check in the amount of Ninety Thousand Dollars
($90,000).
e. Cellular shall execute and deliver to Jerry W. Tooley and David
Putnam employment agreements in the form attached hereto as
Exhibits "A" and "B", respectively.
f. Cellular shall execute and deliver to Magnetics employment
agreements for Jesse Salazar and Kong Wong in the form attached
hereto as Exhibits "C" and "D", respectively.
g. Intercell shall execute and deliver to Tooley a promissory note
in the form attached hereto as Exhibit "E", in the principal
amount of Eighty Thousand Dollars ($80,000.00).
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3.03.2 OBLIGATIONS AFTER CLOSING.
3.03.2.1. Within (i) Sixty (60) days after the Effective Time of Merger
or (ii) ten days after written request from Jerry Tooley, whichever is earlier,
Intercell shall satisfy in full (a) that certain line of credit in the amount of
One Hundred Thousand Dollars ($100,000) of Magnetics, with Bank of Casa Grande
Valley, and any other liabilities or obligations of Magnetics for which Tooley
or Putnam are personally liable.
3.03.2.2. Intercell shall comply with the provisions of any applicable
laws of Mexico respecting to the transfer of ownership in, and the
reorganization of International, and shall indemnify and hold Putnam and Tooley
harmless from and against any liability associated with their ownership of
International pending such reorganization.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 GENERAL. Magnetics (and its shareholders), Cellular and Intercell
hereby mutually represent, warrant, acknowledge and agree that each has had made
available to it all material information deemed necessary, essential,
appropriate or material to such party toward making an informed investment
decision in connection with the transaction described herein. Further,
Magnetics, Cellular and Intercell mutually represent and warrant to each other
that full and unrestricted access to all information necessary to verify such
information and an opportunity to question the officers and directors of each
has been made available to it. Magnetics, Cellular and Intercell mutually
represent and warrant that each is in whatever capacity, in corporate good
standing under the laws of their respective jurisdictions, legally competent and
duly authorized by action of its Board of Directors (and if applicable, by
action of its shareholders) to enter into and to execute this Agreement as a
valid, legal, binding and enforceable agreement. EXCEPT AS SPECIFICALLY SET
FORTH HEREIN, NO PARTY HERETO MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED TO ANY OTHER PARTY.
4.02 SPECIFIC.
4.02.1 INVESTMENT INTENT. All shareholders of Magnetics who are
acquiring the securities of Intercell by virtue of this Agreement and the
transaction described herein, represent and warrant to Intercell, its transfer
agent, its counsel, officers and directors and to all applicable governmental
authorities, that each is acquiring the securities of Intercell, with a view
toward investment and not distribution, acknowledges that the securities being
receive are "restricted securities" within the meaning of the Securities Act of
1933, as amended, restrictive legend and that Intercell shall place a "Stop
Transfer" order with its transfer agent against further transfer of such
securities unless and until such transfers may be made in compliance with
applicable federal and state securities laws. If requested by counsel to
Intercell the shareholders of Magnetics agree to execute Investment
Representation Letters to that effect and deliver same to counsel to Intercell.
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4.02.2 OFFER AND SALE REPRESENTATION BY COUNSEL. All shareholders of
Magnetics acknowledge and represent that this Agreement and the Merger were
negotiated while they collectively and physically were present and assembled in
the State of Arizona, in the presence of counsel of their choice, and that the
offer, sale and delivery after sale of the Intercell Common Stock made to them
was initially and exclusively made to them which they were present at such
negotiations in Arizona. Each shareholder of Magnetics specifically represents
and warrants that at no time did Intercell or any affiliate of Intercell make
any offer, sale or delivery after sale to them, at anytime, of any type of
security of Intercell or its affiliates, in any other state.
Each of the shareholders of Magnetics represent and warrant that they
have had an adequate opportunity to discuss all of the terms and conditions of
this Agreement and the Merger with their counsel, to their full satisfaction and
that they have read the Agreement and fully understand, accept and approve the
Agreement and the Merger.
ARTICLE V
GENERAL
5.01 AMENDMENT. To the extent permitted by applicable law, this
Agreement and any exhibit attached hereto may be amended upon authorization by
the Boards of Directors of the parties hereto before or after any meeting of the
stockholders or of the parties, at any time prior to the Closing Date, except
that no such amendment shall affect the rate of exchange provided herein, unless
approved in writing, by all parties.
5.02 NOTICES. Any notice or other communications required or permitted
hereunder shall be sufficiently given if sent by express delivery, registered or
certified mail, postage prepaid, or delivered by messenger, addressed if to
Magnetics:
A.C. Magnetics
Jerry Tooley
10671 West Battaglia Road
Arizona City, AZ 85223
with a copy to:
Austin Potenza II
May, Potenza, Judson & Baran
2210 Bank One Center
201 North Central Avenue
Phoenix, AZ 85073-0022
and if to Cellular or Intercell:
Intercell Corporation
999 West Hastings Street, Suite 1750
Vancouver, BC Canada V6C 2W2
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with a copy to:
Paul Metzinger, P.C.
370 17th Street, Suite 3290
Denver, CO 80202
or such other address as shall be furnished in writing by either party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed (except that notice of change of address shall not be deemed to have
been given until received by the addressee) or the date of delivery of the
notice if delivered by messenger.
5.03 NO ASSIGNMENT. This Agreement may not be assigned by operation of
law or otherwise.
5.04 HEADINGS. The description heading of the several Articles,
Sections and paragraphs of this Agreement are inserted for convenience only and
do not constitute part of this Agreement.
5.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which may be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to each of the other parties hereto.
5.06 CONFIDENTIAL TREATMENT OF INFORMATION. Magnetics and Intercell
agree that in the event the transactions contemplated by this Agreement shall
not be consummated, each party will keep and maintain in strict confidence all
information concerning the properties, business, activities and assets of
Magnetics and Intercell obtained in the course of its or their examination
pursuant to the provisions of this Agreement and shall return to the other all
copies of documents, data, schedules and the like that such part shall have
theretofore acquired from the other party in connection with this Agreement.
5.07 PUBLICITY. All notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by Magnetics and Intercell and approved by their
respective counsel. No party shall act unilaterally in this regard without the
prior approval of the other.
5.08 FURTHER DOCUMENTS. Intercell, Cellular and Magnetics agree to
execute any and all other documents and to take such other action or corporate
proceedings as may be necessary or desirable to carry out the terms hereof.
5.09 ENTIRE AGREEMENT. This Agreement and the Exhibits attached hereto
and the Schedules and other documents and materials referred to herein embody
the entire agreement and understanding between the parties hereto and supersede
all prior agreements and understandings relating to the subject matter hereof.
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5.10 APPLICABLE LAW. This Agreement shall be governed by, and the terms
and provisions shall be construed and enforced in accordance with the laws of
the State of Arizona.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed by its officers thereunto duly authorized, all as of the day and year
written.
A.C. MAGNETICS, INC.
(An Arizona Corporation)
/s/ Jerry Tooley
By:_________________________________________
Jerry Tooley, President
ATTEST:
/s/ David Putnam
By:_________________________________________
David Putnam, Secretary
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 8th day of
October, 1996 by Jerry Tooley and David Putnam, respectively, of A.C. Magnetics,
Inc., an Arizona corporation, on behalf of the corporation.
/s/ Marilyn F. Miles
_____________________________________________
Notary Public
My commission expires: 12/14/97
CELLULAR MAGNETICS, INC.
(An Arizona Corporation)
/s/ Gordon J. Sales
By:_________________________________________
Gordon J. Sales, President
11
<PAGE>
ATTEST:
/s/ Alan M. Smith
By:_________________________________________
Alan M. Smith, Secretary
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 8th day of
October, 1996 by Gordon J. Sales and Alan M. Smith, respectively, of Cellular
Magnetics, Inc., an Arizona corporation, on behalf of the corporation.
/s/ Marilyn F. Miles
____________________________________________
Notary Public
My commission expires: 12/14/97
INTERCELL CORPORATION,
(A Colorado Corporation)
/s/ Gordon J. Sales
By:_________________________________________
Gordon J. Sales, President
ATTEST:
/s/ Alan M. Smith
By:_________________________________________
Alan M. Smith, Secretary
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 8th day of
October, 1996 by Gordon J. Sales and Alan M. Smith, respectively, of Intercell
Corporation, a Colorado corporation, on behalf of the corporation.
/s/ Marilyn F. Miles
____________________________________________
Notary Public
My commission expires: 12/14/97
12
<PAGE>
SHAREHOLDERS
Jerry W. Tooley and June E. Tooley, as Trustees
of the June and Jerry Tooley Family Trust.
/s/ Jerry W. Tooley, Trustee
___________________________________________
Jerry W. Tooley
/s/ June E. Tooley, Trustee
___________________________________________
June E. Tooley
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 8th day of
October, 1996 by Jerry W. Tooley and June E. Tooley, as Trustees of the June and
Jerry Tooley Family Trust.
/s/ Marilyn F. Miles
_____________________________________________
Notary Public
My commission expires: 12/14/97
/s/ David Putnam
___________________________________________
David Putnam
/s/ Ann E. Putnam
___________________________________________
Ann E. Putnam
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 8th day of
October, 1996 by David Putnam and Ann E. Putnam.
/s/ Marilyn F. Miles
____________________________________________
Notary Public
My commission expires: 12/14/97
13
<PAGE>
EXHIBIT "A"
<PAGE>
EMPLOYMENT AGREEMENT
This Agreement is between Cellular Magnetics, an Arizona corporation,
(hereinafter referred to as the "Company"), and Jerry W. Tooley (hereinafter
referred to: as "Employee").
1. ENGAGEMENT. The Company hereby engages the Employee and the Employee
hereby accepts engagement upon the terms and conditions hereinafter set forth.
Employee's compensation set forth herein shall be subject to all applicable
federal or state tax withholding provisions.
2. TERM. Subject to the provisions for termination as hereafter
provided, the term of this Agreement shall be for a period of thirty-six (36)
months commencing on October 15, 1996. The parties hereby acknowledge and agree
it is their intent that: (a) any extension or renewal of this Agreement shall be
concluded at least Three (3) months prior to the expiration date of the initial
thirty-six (36) months term and Three (3) months prior to the expiration date of
any subsequent extension or renewal term hereof; and (b) absent mutual agreement
to the contrary, the failure to conclude such extension or renewal by the dates
indicated shall be deemed notice to the Company and the Employee that the
Agreement shall not be extended.
3. DUTIES. The Employee shall be the President of the Company. As such,
the Employee shall, during the term of this Agreement, perform the
responsibilities and duties, exercise the powers and follow the instructions
which from time to time may be lawfully assigned to or vested in him by the
Board of Directors of the Company. It is agreed that during the term of this
Agreement, and for so long as no Event of Default has occurred hereunder, the
Employee will not accept an officership or directorship, participate in the
operation or management of or act as an Employee to any other company, which is
in the same line of business as or in competition with the Company unless it be
a company either owned or controlled by the Company, without the prior written
consent of the Board of Directors of the Company.
4. EXTENT OF SERVICES. Employee agrees to provide not less than 30
hours per week of executive services to the Company for the compensation paid to
the Employee. Employee shall not be prevented from investing his assets in any
manner, except that in no event may the Employee make investments in any firms
in competition with, or in the business of supplying goods or services to the
Company, unless such investments are disclosed to and approved by the Board of
Directors of the Company.
5. COMPENSATION. For services rendered by the Employee under this
Agreement, the Company shall pay the Employee the compensation and bonus, and
grant such other benefits, as are set forth on EXHIBIT "A". If during the term
of the Agreement the Employee is unavailable because of illness which prevents
Employee from performing his duties described herein, the Company shall be
obligated to pay the Employee for all such periods of absence; not to exceed
however three (3) months.
<PAGE>
6. BONUS AND STOCK OPTION PLANS AND BENEFIT PROGRAMS. The Company
proposes to establish certain bonus and stock option plans. During the term of
this Agreement, and as additional compensation, the Employee will be eligible to
participate in those plans currently in effect and as they may be amended from
time to time, so long as such plans remain in existence. Furthermore, during the
term of this Agreement, the Employee shall be entitled to participate in all
current or subsequently enacted benefit programs applicable to other officers,
directors, agent and employees of the Company. For purposes of this Agreement,
all references to stock option plans, bonus plans or benefit programs shall be
deemed to mean that Employee shall be eligible to participate in such plans or
programs of the Company in which Employee presently participates or is eligible
for, or such plans or programs of the Company that may subsequently be by the
Company. Options, if any, under this Agreement as are set forth on EXHIBIT "B"
7. EXPENSES. The Employee is authorized to incur reasonable expenses
with regard to the business of the Company, including expenses for
entertainment, travel and other items of a similar character. The Company will
reimburse the Employee for all such expenses incurred by him in the performance
of his duties hereunder.
8. TERMINATION BY COMPANY. This Agreement may be terminated by the
Company as follows:
a) If the Employee shall commit a breach of this Agreement, and
such breach, if capable of rectification, is not rectified
within thirty (30) calendar days of receipt by Employee from
the Company of written notice requiring him so to do.
b) If the Employee shall be convicted of a felony criminal
offense, or been found in a judicial proceeding initiated after
the date of this Agreement by a court of competent
jurisdiction, in a decision subject to no further appeals, to
have committed any dishonest or unlawful act or to have been
engaged or engaging in any conduct which might irreparably
injure or tend to injure the reputation or business of the
Company.
c) If the Employee shall grossly, willfully or inexcusably neglect
the performance of Employee's duties as set forth herein. Such
standard of neglect shall however be determined only by the
Board of Directors, based upon written opinion of independent
counsel and written advice to Employee and unanimously approved
by the full Board of Directors especially convened for such
purpose.
9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement with
or without cause, and if terminated, the Company and Employee agree to abide by
and promptly honor the provisions of SECTION 10 of this Agreement. Cause for
2
<PAGE>
termination by Employee shall not consist of the Company's refusal to follow the
bona-fide professional recommendations of the Employee.
10. PAYMENTS UPON TERMINATION BY COMPANY OR EMPLOYEE. It is agreed that
if this Agreement is terminated payments and/or provisions for payments will be
made as follows:
a) If the Company terminates this Agreement on some basis other
than for any of the reasons as stated in Paragraph 8 hereof,
the Company will take the actions set forth in Subparagraphs,
(i) through (v) of this Paragraph. If the Employee terminates
this Agreement for cause, which shall be limited to a failure
by the Company to pay Employee his compensation, or a breach by
Employer of that certain Agreement and Plan of Merger of even
date herewith to which Employer and Employee are partners, or
that certain Promissory Note of even date herewith in the
principal amount of Eighty Thousand Dollars ($80,000), the
Company will take all of the following actions:
(i) All stock options granted to the Employee pursuant to
this Agreement will become immediately vested for the
full amount of Optioned Shares and shall be
exercised, if ever, in accordance with and subject to
the terms and provisions of the Company's
Compensatory Stock Option Plan and Employee's Stock
Option Agreement; and
(ii) The Employee will receive within fifteen (15) days of
the effective date of such termination, all
compensation and all other benefits that would have
accrued and/or been payable to the Employee during
the term of this Agreement; and
(iii) The Employee will be paid in full any other
contractual benefits Employee may have with the
Company and be reimbursed for all un-reimbursed
accountable expenses; and
(iv) Within ninety (90) days thereafter, Employee shall
have the option, on giving Employer fifteen (15) days
prior written notice, to require Employer to redeem
for cash all or any portion of the stock of Employer
then owned by Employee, at one hundred percent (100%)
of its then fair market value.
(v) Within thirty (30) days after the effective date of
such termination, Employer shall pay to Employee the
amount of any Minimum Bonus payable to Employee
during the first two (2) years hereof, as set forth
3
<PAGE>
on Exhibit "A", Section B, which has not theretofore
been paid to Employee.
b) If the Company terminates this Agreement for a reason or
reasons set forth in paragraph 9 hereof or the Employee
terminates this Agreement without cause, the Company will only
be obligated to pay to the Employee the actual amount of
compensation accrued to the date of termination to which
Employee is otherwise entitled pursuant to this Employment
Agreement, including, but not limited to, the minimum bonus set
forth on EXHIBIT "A", SECTION B hereto and, all other payments
or benefits recited herein shall be canceled and terminated,
without recourse.
11. TERMINATION DUE TO CHANGE IN CONTROL. If EMPLOYEE is terminated by
the Company, for any reason as part or because of a change in control of the
Company, or of Intercell, Inc., the Company's parent.,, then Employee shall be
entitled to a one time lump sum payment of cash for the termination of this
Agreement as follows:
TERMINATION OCCURRING IN AMOUNT
Years One (1) through Three (3) $216,000.00
The cash payment set forth herein, shall be made within Five (5) days of the
date of delivery to Employee of written termination of this Agreement by the
Company. Upon receipt of the payment as set forth herein, the Employee and the
Company shall in writing cancel this Agreement and the parties shall be released
of all further obligations under this Agreement, provided however, that any
options which have been granted to Employee and which are otherwise vested shall
remain unimpaired and in full force and effect.
A change in control of the Company shall be deemed to have occurred when, as a
result of any type of corporate reorganization, execution of proxies or voting
trusts or other arrangements, a person or group or persons acquire sufficient
equity or voting control of the Company to elect more than a majority of the
Board of Directors.
12. NOTICES OF TERMINATION. All Notices of Termination provided for in
this Agreement must be in writing and must provide for a minimum notice period
of Sixty (60) calendar days between the date of such notification and the
effective date of such termination.
13. ARBITRATION. Any controversy or claim arising out of, or relating
to this Agreement, or the breach hereof, shall be settled by arbitration in the
City of Phoenix, Arizona in accordance with the then effective rules of the
American Arbitration Association. Such ruling shall be binding upon the parties.
4
<PAGE>
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered or
certified mail to the Employee's residence in the case of the Employee, or to is
principal office in the case of the Company.
15. WAIVER, MODIFICATION OR CANCELLATION. Any waiver, alteration or
modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the Parties.
16. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns, including but not limited
to any entity which may acquire all or substantially all of the Company's assets
and business or with or into which the Company may be consolidated or merged,
and the Employee, his successors, representatives and assigns, provided that the
duties of the Employee as described herein may not be delegated.
17. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall in no way affect the validity or enforceability of any
other provision.
18. ENTIRE AGREEMENT. This Agreement represents the entire Agreement
between the parties. Each party represents that there are no other oral,
written, express or implied contracts, agreements or understandings between
them.
19. AUTHORIZATION. Each party represents that he, she or it is duly
competent, authorized and capable of executing this Agreement as a valid,
binding and enforceable Agreement.
20. GOVERNING LAW. The substantive law of Arizona shall govern all the
terms, conditions and interpretations of this Agreement and all other
instruments, documents or agreements executed pursuant hereto. In the event of
litigation concerning this Agreement or any other instrument, document or
agreement relating to it, the parties hereto agree that the exclusive venue and
place of jurisdiction shall be the State of Arizona, County of Maricopa.
Further, each of Employee and Employer by execution hereof, irrevocably and
unconditionally consents to receive service of process and further agrees to
file a general appearance upon either acceptance of process by the other party
or actual service of process upon such party.
21. NONDISCLOSURE AND NON-COMPETITION. Employee agrees to the terms and
conditions of his obligations, if any, relating to nondisclosure and
non-competition as set forth on EXHIBIT "C".
5
<PAGE>
22. SPECIFIC REPRESENTATIONS. Each party represents that:
a) The consideration recited herein shall conclusively be deemed
fair, adequate, reasonable and sufficient.
b) He, she or it has voluntarily and without fraud, duress,
coercion, undue influence or improper persuasion executed this
Agreement
DATED: October 8, 1996
Intercell Corporation
/s/ Gordon J. Sales /s/ Jerry W. Tooley
By:____________________________________ By:_______________________________
Gordon J. Sales Jerry W. Tooley
Chief Executive Officer and President Individually
6
<PAGE>
EXHIBIT "A"
A. Base Compensation $72,000 annually
B. Minimum Bonus:
1. On or before October 1, 1997: $90,000
2. On or before October 1, 1998: $90,000
C. Performance Bonus:
Annually, based on _________ percent (___%) of the amount by which Net
Operating Profit exceeds One Hundred Thousand Dollars ($100,000.00).
For purposes hereof "Net Operating Profit" shall be as determined for
financial accounting purposes, without taking into consideration
inter-company expenditures, and expenses in excess of current
(September 30, 1996) expense ratios.
D. Fringe Benefits:
Use of own company vehicle.
3 weeks paid vacation annually
<PAGE>
EXHIBIT "B"
<PAGE>
EXHIBIT "C"
NONDISCLOSURE AND NON-COMPETITION
1. During the term of Employee's employment with the Company and for
one (1) year thereafter, and further provided that neither Company nor
Intercell, Inc. are then in default of any of their respective obligations to
Employee under any agreement to which they are parties, Employee shall not,
directly or indirectly, as principal, agent, employee, trustee, or in any like
capacity, or through the agency of any corporation, partnership, association,
agent, agency or any other like entity.
i. engage in any business that is similar to the business
conducted by the Company, its subsidiaries or affiliates; or
ii. solicit any person (natural or otherwise) who is or has been
within three (3) years prior to the date Employee's association
is terminated, a customer or client of the Company, its
subsidiaries or affiliates; or
iii. induce any present or future Employee or affiliate of the
Company, its subsidiaries or affiliates to accept employment or
similar association with the Employee or any person, firm,
association, corporation or other entity with whom the Employee
is now or may hereafter become associated; or
iv. in any manner interfere with, disrupt or attempt to disrupt the
relationship between the Company and/or any of its customers,
or use in any manner whatsoever, the Company's customer list,
database, or trade secrets.
2. The parties agree that in light of the specialized nature of the
industry and the national-customer base of the Company's business that the
restrictions set forth in Paragraph 1 hereof shall apply to Employee within the
territory of the United States of America.
3. In the event of a violation by Employee of any of the covenants
contained in this Agreement, it is mutually agreed that the term of said
covenant and/or covenants shall be automatically extended against Employee for a
period of one (1) year from the date on which Employee permanently ceases such
violation or for a period of time of one (1) year from the date of the entry by
a Court of competent jurisdiction of a final order or judgment enforcing said
covenant(s), whichever period is later. The extension of the term(s) of said
covenant(s) as provided in this sub-paragraph 3 shall be in addition to and not
in lieu of the remedies provided below.
4. Other than within the proper course of Employee's duties, the
Employee will not during or at any time after the termination of association
with the Company, use for himself or others or divulge or convey to others any
secret or confidential information, knowledge or data of the Company, its
subsidiaries its affiliates or that of third parties obtained by him during the
period of his employment with the Company. Such information, knowledge or data
includes but is not limited to secret or confidential matters.
i
<PAGE>
i. of a technical nature such as but not limited to research
methods, know-how, reporting procedures, composition,
processes, computer databases and similar terms or research
project.
ii. of a business nature such as but not limited to information
about finances, costs, profits, sales, contracts, transactions,
or customer lists, or
iii. pertaining to future developments such as but not limited to
research and development or future marketing or advertising
programs.
Further, the Employee shall, during and after the period of Employee's
employment, diligently endeavor to prevent the publication or disclosure of any
such secret or confidential information, knowledge or data.
5. All forms, manuals, letters, notes, notebooks, reports, sketches,
formulas, computer programs and similar items, memoranda, client lists,
business, marketing and financial plans and studies and all other materials and
all copies thereof relating in any way to the business of the Company or of its
subsidiaries or affiliates and in any way obtained or produced by the Employee
during the period of his employment with the Company or its authorized
representative upon the termination of the employment or at any other time at
the request of the Company. Employee further agrees that Employee will not make
or retain any copies of any of the foregoing and will so represent to the
Company upon the termination of Employee's employment.
6. The Company and Employee agree that the Company would not have an
adequate remedy at law for money damages in the event that the provisions of
this Agreement are not complied with in accordance with their terms, and
therefore agree that in the event of any breach of any of these provisions by
the Employee, the Company shall be entitled to equitable relief by way of
injunction or otherwise, together with costs and expenses incurred by it,
including attorneys' fees, in addition to such other remedies as the Company may
have.
7. In the event, Employee violates the terms of this Nondisclosure and
Non-Competition section, and in the further event that Company is not made aware
of such violation until a point in time after which Employee has commenced
engaging in services similar to those engaged in by Company, for clients for
whom Company has provided services within three years of the date of Employee's
termination of employment, then in addition to the injunctive relief provide for
in subparagraph 6 above, Company shall be entitled to liquidated damages which
shall be based upon the revenues generated by Employee from Company's clients as
follows.
a) Employee shall pay to Company one-third of all revenues
collected by Employee from Company's clients for a period of
three (3) years from the date on which Employee first collected
revenues from any such Company client.
The parties hereby acknowledge that the restrictive covenants contained in this
Agreement are fair and reasonable in light of all of the facts and circumstances
of the relationship between Employee and Company; however, Employee and Company
are aware that in certain circumstances courts ave refused to enforce certain
ii
<PAGE>
agreements not to compete. Therefore, in furtherance and not in derogation of
the provisions of this Agreement, Company and Employee agree that in the event a
court of competent jurisdiction should for any reason decline to enforce any of
said covenants, that his Agreement shall be deemed to be modified to restrict
Employee's competition with Company to the maximum extent in time, geography and
otherwise as the court shall deem enforceable and/or to grant Company such other
relief at law or in equity as shall be reasonable necessary to protect the
interest of Company.
iii
<PAGE>
EXHIBIT "B"
<PAGE>
EMPLOYMENT AGREEMENT
This Agreement is between Cellular Magnetics an Arizona corporation,
(hereinafter referred to as the "Company"), and David Putnam (hereinafter
referred to as "Employee").
1. ENGAGEMENT. The Company hereby engages the Employee and the Employee
hereby accepts engagement upon the terms and conditions hereinafter set forth.
Employee's compensation set forth herein shall be subject to all applicable
federal or state tax withholding provisions.
2. TERM. Subject to the provisions for termination as hereafter
provided, the term of this Agreement shall be for a period of sixty (601 months
commencing on October 15, 1996. The parties hereby acknowledge and agree it is
their intent that: (a) any extension or renewal of this Agreement shall be
concluded at least Three (3) months prior to the expiration date of the initial
sixty (60@ months term and Three (3) months prior to the expiration date of any
subsequent extension or renewal term hereof; and (b) absent mutual agreement to
the contrary, the failure to conclude such extension or renewal by the dates
indicated shall be deemed notice to the Company and the Employee that the
Agreement shall not be extended.
3. DUTIES. The Employee shall, during the term of this Agreement,
perform the responsibilities and duties, exercise the powers and follow the
instructions which from time to time may be lawfully assigned to or vested in
him by the Board of Directors of the Company. It is agreed that during the term
of this Agreement, and for so long as no Event of Default has occurred
hereunder, the Employee will not accept an officership or directorship,
participate in the operation or management of or act as an Employee to any other
company, which is in the same line of business as or in competition with the
Company unless it be a company either owned or controlled by the Company,
without the prior written consent of the Board of Directors of the Company.
4. EXTENT OF SERVICES. Employee agrees to provide not less than 40
hours per week of services to the Company for the compensation paid to the
Employee. Employee shall not be prevented from investing his assets in any
manner, except that in no event may the Employee make investments in any firms
in competition with, or in the business of supplying goods or services to the
Company, unless such investments are disclosed to and approved by the Board of
Directors of the Company.
5. COMPENSATION.. For services rendered by the Employee under this
Agreement, the Company shall pay the Employee the compensation and bonus, and
grant such other benefits, as are set forth ON EXHIBIT "A". If during the term
of the Agreement the Employee is unavailable because of illness which prevents
Employee from performing his duties described herein, the Company shall be
obligated to pay the Employee for all such periods of absence; not to exceed
however three (3) months.
<PAGE>
6. BONUS AND STOCK OPTION PLANS AND BENEFIT PROGRAMS. The Company
proposes to establish certain bonus and stock option plans. During the term of
this Agreement, and as additional compensation, the Employee will be eligible to
participate in those plans currently in effect and as they may be amended from
time to time, so long as such plans remain in existence. Furthermore, during the
term of this Agreement, the Employee shall be entitled to participate in all
current or subsequently enacted benefit programs applicable. to other officers,
directors, agent and employees of the Company. For purposes of this Agreement,
all references to stock option plans, bonus plans or benefit programs shall be
deemed to mean that Employee shall be eligible to participate in such plans or
programs of the Company in which Employee presently participates or is eligible
for, or such plans or programs of the Company that may subsequently be by the
Company. Options, if any, under this Agreement as are set forth on EXHIBIT "B".
7. EXPENSES. The Employee is authorized to incur reasonable expenses
with regard to the business of the Company, including expenses for
entertainment, travel and other items of a similar character. The Company will
reimburse the Employee for all such expenses incurred by him in the performance
of his duties hereunder.
8. TERMINATION BY COMPANY. This Agreement may be terminated by the
Company as follows:
a) If the Employee shall commit a breach of this Agreement, and
such breach, if capable of rectification, is not rectified
within thirty (30) calendar days of receipt by Employee from
the Company of written notice requiring him so to do.
b) If the Employee shall be convicted of a felony criminal
offense, or been found in a judicial proceeding initiated
after the date of this Agreement by a court of competent
jurisdiction, in a decision subject to no further appeals, to
have committed any dishonest or unlawful act or to have been
engaged or engaging in any conduct which might irreparably
injure or tend to injure the reputation or business of the
Company
c) If the Employee shall grossly, willfully or inexcusably
neglect the performance of Employee's duties as set forth
herein. Such standard of neglect shall however be determined
only by the Board of Directors, based upon written opinion of
independent counsel and written advice to Employee and
unanimously approved by the full Board of Directors especially
convened for such purpose.
9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement with
or without cause, and if terminated, the Company and Employee agree to abide by
and promptly honor the provisions of SECTION 10 of this Agreement. Cause for
termination by Employee shall not consist of the Company's refusal to follow the
bona-fide professional recommendations of the Employee.
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<PAGE>
10. PAYMENTS UPON TERMINATION BY COMPANY OR EMPLOYEE. It is agreed that
if this Agreement is terminated payments and/or provisions for payments will be
made as follows:
a) If the Company terminates this Agreement on some basis other
than for any of the reasons as stated in Paragraph 8 hereof,
the Company will take the actions set forth in Subparagraphs
(i) through (v) of this Paragraph. If the Employee terminates
this Agreement for cause, which shall be limited to a failure
by the Company to pay Employee his compensation, or a breach
by Employer of that certain Agreement and Plan of Merger of
even date herewith to which Employer and Employee are parties,
the Company will take all of the following actions:
(i) All stock options granted to the Employee pursuant to
this Agreement will become immediately vested for the
full amount of Optioned Shares and shall be
exercised, if ever, in accordance with and subject to
the terms and provisions of the Company's
Compensatory Stock Option Plan and Employee's Stock
Option Agreement; and
(ii) The Employee will receive within fifteen (15) days of
the effective date of such termination, all
compensation and all other benefits that would have
accrued and/or been payable to the Employee during
the term of this Agreement; and
(iii) The Employee will be paid in full any other
contractual benefits Employee may have with the
Company and be reimbursed for all un-reimbursed
accountable expenses; AND
(iv) Within ninety (90) days thereafter, Employee shall
have the option, upon giving Employer fifteen (15)
days prior written notice, to require Employer to
redeem for cash all or any portion of the stock of
Employer then owned by Employee, at One Hundred
percent (100%) of its then fair market value.
(v) Within thirty (30) days after the effective date of
such termination, Employer shall pay to Employee the
amount of any Minimum Bonus payable to Employee
during the first two (2) years hereof, as set forth
on Exhibit "A", Section B, which has not theretofore
been paid to Employee.
3
<PAGE>
b) If the Company terminates this Agreement for a reason or
reasons set forth in paragraph 9 hereof or the Employee
terminates this Agreement without cause, the Company will only
be obligated to pay to the Employee the actual amount of
compensation accrued to the date of termination to which
Employee is otherwise entitled pursuant to this Employment
Agreement, including, but not limited to, the minimum bonus
set forth on Exhibit "A", Section B hereto and, all other
payments or benefits recited herein shall be canceled and
terminated, without recourse.
11. TERMINATION DUE TO CHANGE IN CONTROL. INTENTIONALLY LEFT BLANK.
12. NOTICES OF TERMINATION. All Notices of Termination provided for in
this Agreement must be in writing and must provide for a minimum notice period
of Sixty (60) calendar days between the date of such notification and the
effective date of such termination.
13. ARBITRATION. Any controversy or claim arising out of, or relating
to this Agreement, or the breach hereof, shall be settled by arbitration in the
City of Phoenix, Arizona in accordance with the then effective rules of the
American Arbitration Association. Such ruling shall be binding upon the parties.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered or
certified mail to the Employee's residence in the case of the Employee, or to is
principal office in the case of the Company.
15. WAIVER, MODIFICATION OR CANCELLATION. Any waiver, alteration or
modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the Parties.
16. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns, including but not limited
to any entity which may acquire all or substantially all of the Company's assets
and business or with or into which the Company may be consolidated or merged,
and the Employee, his successors, representatives and assigns, provided that the
duties of the Employee as described herein may not be delegated.
17. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall in no way affect the validity or enforceability of any
other provision.
18. ENTIRE AGREEMENT. This Agreement represents the entire Agreement
between the parties. Each party represents that there are no other oral,
written, express or implied contracts, agreements or understandings between
them.
19. AUTHORIZATION. Each party represents that he, she or it is duly
competent, authorized and capable of executing this Agreement as a valid,
binding and enforceable Agreement.
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<PAGE>
20. GOVERNING LAW. The substantive law of Arizona shall govern all the
terms, conditions and interpretations of this Agreement and all other
instruments, documents or agreements executed pursuant hereto. In the event of
litigation concerning this Agreement or any other instrument, document or
agreement relating to it, the parties hereto agree that the exclusive venue and
place of jurisdiction shall be the State of Arizona, County of Maricopa.
Further, each of Employee and Employer by execution hereof, irrevocably and
unconditionally consents to receive service of process and further agrees to
file a general appearance upon either acceptance of process by the other party
or actual service of process upon such party.
21. NONDISCLOSURE AND NON-COMPETITION. Employee agrees to the terms and
conditions of his obligations, if any, relating to nondisclosure and
non-competition as set forth on EXHIBIT "C".
22. SPECIFIC REPRESENTATIONS. Each party represents that:
a) The consideration recited herein shall conclusively be deemed
fair, adequate, reasonable and sufficient.
b) He, she or it has voluntarily and without fraud, duress,
coercion, undue influence or improper persuasion executed this
Agreement.
DATED: October 8, 1996
Intercell Corporation
/s/ Gordon J. Sales /s/ David Putnam
By:__________________________________ By:_________________________________
Gordon J. Sales David Putnam
Chief Executive Officer and President Individually
5
<PAGE>
EXHIBIT "A"
A. Base Compensation $47,623 annually
B. Bonus Compensation:
Minimum Bonus:
1. On or before October 1, 1997: $10,000
2. On or before October 1, 1998: $10,000
C. Performance Bonus:
Annually, based on _________ percent (___%) of the amount by which Net
Operating Profit exceeds One Hundred Thousand Dollars ($100,000.00).
For purposes hereof "Net Operating Profit" shall be as determined for
financial accounting purposes, without taking into consideration
inter-company expenditures, and expenses in excess of current
(September 30, 1996) expense ratios.
D. Fringe Benefits:
2 weeks paid vacation annually
<PAGE>
EXHIBIT "B"
<PAGE>
EXHIBIT "C"
NONDISCLOSURE AND NON-COMPETITION
1. During the term of Employee's employment with the Company and for
one (1) year thereafter, and further provided that neither Company nor
Intercell, Inc. are then in default of any of their respective obligations to
Employee under any agreement to which they are parties, Employee shall not,
directly or indirectly, as principal, agent, employee, trustee, or in any like
capacity, or through the agency of any corporation, partnership, association,
agent, agency or any other like entity.
i. engage in any business that is similar to the business
conducted by the Company, its subsidiaries or affiliates; or
ii. solicit any person (natural or otherwise) who is or has been
within three (3) years prior to the date Employee's
association is terminated, a customer or client of the
Company, its subsidiaries or affiliates; or
iii. induce any present or future Employee or affiliate of the
Company, its subsidiaries or affiliates to accept employment
or similar association with the Employee or any person, firm,
association, corporation or other entity with whom the
Employee is now or may hereafter become associated; or
iv. in any manner interfere with, disrupt or attempt to disrupt
the relationship between the Company and/or any of its
customers, or use in any manner whatsoever, the Company's
customer list, database, or trade secrets.
2. The parties agree that in light of the specialized nature of the
industry and the national-customer base of the Company's business that the
restrictions set forth in Paragraph 1 hereof shall apply to Employee within the
territory of the United States of America.
3. In the event of a violation by Employee of any of the covenants
contained in this Agreement, it is mutually agreed that the term of said
covenant and/or covenants shall be automatically extended against Employee for a
period of one (1) year from the date on which Employee permanently ceases such
violation or for a period of time of one (1) year from the date of the entry by
a Court of competent jurisdiction of a final order or judgment enforcing said
covenant(s), whichever period is later. The extension of the term(s) of said
covenant(s) as provided in this sub-paragraph 3 shall be in addition to and not
in lieu of the remedies provided below.
4. Other than within the proper course of Employee's duties, the
Employee will not during or at any time after the termination of association
with the Company, use for himself or others or divulge or convey to others any
secret or confidential information, knowledge or data of the Company, its
subsidiaries its affiliates or that of third parties obtained by him during the
period of his employment with the Company. Such information, knowledge or data
includes but is not limited to secret or confidential matters.
i
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i. of a technical nature such as but not limited to research
methods, know-how, reporting procedures, composition,
processes, computer databases and similar terms or research
project.
ii. of a business nature such as but not limited to information
about finances, costs, profits, sales, contracts,
transactions, or customer lists, or
iii. pertaining to future developments such as but not limited to
research and development or future marketing or advertising
programs.
Further, the Employee shall, during and after the period of Employee's
employment, diligently endeavor to prevent the publication or disclosure of any
such secret or confidential information, knowledge or data.
5. All forms, manuals, letters, notes, notebooks, reports, sketches,
formulas, computer programs and similar items, memoranda, client lists,
business, marketing and financial plans and studies and all other materials and
all copies thereof relating in any way to the business of the Company or of its
subsidiaries or affiliates and in any way obtained or produced by the Employee
during the period of his employment with the Company or its authorized
representative upon the termination of the employment or at any other time at
the request of the Company. Employee further agrees that Employee will not make
or retain any copies of any of the foregoing and will so represent to the
Company upon the termination of Employee's employment.
6. The Company and Employee agree that the Company would not have an
adequate remedy at law for money damages in the event that the provisions of
this Agreement are not complied with in accordance with their terms, and
therefore agree that in the event of any breach of any of these provisions by
the Employee, the Company shall be entitled to equitable relief by way of
injunction or otherwise, together with costs and expenses incurred by it,
including attorneys' fees, in addition to such other remedies as the Company may
have.
7. In the event, Employee violates the terms of this Nondisclosure and
Non-Competition section, and in the further event that Company is not made aware
of such violation until a point in time after which Employee has commenced
engaging in services similar to those engaged in by Company, for clients for
whom Company has provided services within three years of the date of Employee's
termination of employment, then in addition to the injunctive relief provide for
in subparagraph 6 above, Company shall be entitled to liquidated damages which
shall be based upon the revenues generated by Employee from Company's clients as
follows.
a) Employee shall pay to Company one-third of all revenues
collected by Employee from Company's clients for a period of
three (3) years from the date on which Employee first
collected revenues from any such Company client.
The parties hereby acknowledge that the restrictive covenants contained in this
Agreement are fair and reasonable in light of all of the facts and circumstances
of the relationship between Employee and Company; however, Employee and Company
are aware that in certain circumstances courts have refused to enforce certain
ii
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agreements not to compete. Therefore, in furtherance and not in derogation of
the provisions of this Agreement, Company and Employee agree that in the event a
court of competent jurisdiction should for any reason decline to enforce any of
said covenants, that his Agreement shall be deemed to be modified to restrict
Employee's competition with Company to the maximum extent in time, geography and
otherwise as the court shall deem enforceable and/or to grant Company such other
relief at law or in equity as shall be reasonably necessary to protect the
interest of Company.
iii
<PAGE>
EXHIBIT "C"
<PAGE>
EMPLOYMENT AGREEMENT
This Agreement is between Cellular Magnetics, an Arizona corporation,
(hereinafter referred to as the "Company"), and Jesse Salazar, (hereinafter
referred to as " Employee").
1. ENGAGEMENT. The Company hereby engages the Employee and the Employee
hereby accepts engagement upon the terms and conditions hereinafter set forth.
Employee's compensation set forth herein shall be subject to all applicable
federal or state tax withholding provisions.
2. TERM. Subject to the provisions for termination as hereafter
provided, the term of this Agreement shall be for a period of thirty-six (36)
months commencing on October 15, 1996. The parties hereby acknowledge and agree
it is their intent that: (a) any extension or renewal of this Agreement shall be
concluded at least Three (3) months prior to the expiration date of the initial
thirty-six (36) months term and Three (3) months prior to the expiration date of
any subsequent extension or renewal term hereof; and (b) absent mutual agreement
to the contrary, the failure to conclude such extension or renewal by the dates
indicated shall be deemed notice to the Company and the Employee that the
Agreement shall not be extended.
3. DUTIES. The Employee shall, during the term of this Agreement,
perform the responsibilities and duties, exercise the powers and follow the
instructions which from time to time may be lawfully assigned to or vested in
him by the Board of Directors of the Company. It is agreed that during the term
of this Agreement, and for so long as no Event of Default has occurred
hereunder, the Employee will not accept an officership or directorship,
participate in the operation or management of or act as an Employee to any other
company, which is in the same line of business as or in competition with the
Company unless it be a company either owned or controlled by the Company,
without the prior written consent of the Board of Directors of the Company.
4. EXTENT OF SERVICES. Employee agrees to provide not less than 40
hours per week of services to the Company for the compensation paid to the
Employee. Employee shall not be prevented from investing his assets in any
manner, except that in no event may the Employee make investments in any turns
in competition with, or in the business of supplying goods or services to the
Company, unless such investments are disclosed to and approved by the Board of
Directors of the Company.
5. COMPENSATION. For services rendered by the Employee under this
Agreement, the Company shall pay the Employee the compensation and bonus, and
grant such other benefits, as are set forth on EXHIBIT "A". If during the term
of the Agreement the Employee is unavailable because of illness which prevents
Employee from performing his duties described herein, the Company shall be
obligated to pay the Employee for all such periods of absence; not to exceed
however three (3) months.
<PAGE>
6. BONUS AND STOCK OPTION PLANS AND BENEFIT PROGRAMS. The Company
proposes to establish certain bonus and stock option plans. During the term of
this Agreement, and as additional compensation, the Employee will be eligible to
participate in those plans currently in effect and as they may be amended from
time to time, so long as such plans remain in existence. Furthermore, during the
term of this Agreement, the Employee shall be entitled to participate in all
current or subsequently enacted benefit programs applicable to other officers,
directors, agent and employees of the Company. For purposes of this Agreement,
all references to stock option plans, bonus plans or benefit programs shall be
deemed to mean that Employee shall be eligible to participate in such plans or
programs of the Company in which Employee presently participates or is eligible
for, or such plans or programs of the Company that may subsequently be adopted
by the Company. Options, if any, under this Agreement as are set forth on
EXHIBIT "B".
7. EXPENSES. The Employee is authorized to incur reasonable expenses
with regard to the business of the Company, including expenses for
entertainment, travel and other items of a similar character. The Company will
reimburse the Employee for all such expenses incurred by him in the performance
of his duties hereunder.
8. TERMINATION BY COMPANY. This Agreement may be terminated by the
Company as follows:
a) If the Employee shall commit a breach of this Agreement, and
such breach, if capable of rectification, is not rectified
within thirty (30) calendar days of receipt by Employee from
the Company of written notice requiring him so to do.
b) If the Employee shall be convicted of a felony criminal
offense, or been found in a judicial proceeding initiated
after the date of this Agreement by a court of competent
jurisdiction, in a decision subject to no further appeals, to
have committed any dishonest or unlawful act or to have been
engaged or engaging in any conduct which might irreparably
injure or tend to injure the reputation or business of the
Company
c) If the Employee shall grossly, willfully or inexcusably
neglect the performance of Employee's duties as set forth
herein. Such standard of neglect shall however be determined
only by the Board of Directors, based upon written opinion of
independent counsel and written advice to Employee and
unanimously approved by the full Board of Directors especially
convened for such purpose.
9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement with
or without cause, and if terminated, the Company and Employee agree to abide by
and promptly honor the provisions of SECTION 10 of this Agreement. Cause for
termination by Employee shall not consist of the Company's refusal to follow the
bona-fide professional recommendations of the Employee.
2
<PAGE>
10. PAYMENTS UPON TERMINATION BY COMPANY OR EMPLOYEE. It is agreed that
if this Agreement is terminated payments and/or provisions for payments will be
made as follows:
a) If the Company terminates this Agreement on some basis other
than for any of the reasons as stated in Paragraph 8 hereof,
the Company win take the actions set for in Subparagraphs (1),
(2) and (3) of this Paragraph. If the Employee terminates this
Agreement for cause, which shall be limited to a failure by
the Company to pay Employee his compensation, the Company will
take the actions set forth in Subparagraphs (1), (2) and (3)
of this Paragraph.
(i) All stock options granted to the Employee pursuant to
this Agreement will become immediately vested for the
full amount of Optioned Shares and shall be
exercised, if ever, in accordance with and subject to
the terms and provisions of the Company's
Compensatory Stock Option Plan and Employee's Stock
Option Agreement; and
(ii) The Employee will receive within fifteen (15) days of
the effective date of such termination, all
compensation and all other benefits that would have
accrued and/or been payable to the Employee during
the term of this Agreement; and
(iii) The Employee will be paid in full any other
contractual benefits Employee may have with the
Company and be reimbursed for all un-reimbursed
accountable expenses.
b) If the Company terminates this Agreement for a reason or
reasons set forth in paragraph 9 hereof or the Employee
terminates this Agreement without cause, the Company will only
be obligated to pay to the Employee the actual amount of
compensation accrued to the date of termination, and, all
other payments or benefits to which Employee is otherwise
entitled pursuant to this Employee Agreement shall be canceled
and terminated, without recourse.
11. TERMINATION DUE TO CHANGE IN CONTROL. INTENTIONALLY LEFT BLANK.
12. NOTICES OF TERMINATION. All Notices of Termination provided for in
this Agreement must be in writing and must provide for a minimum notice period
of Sixty (60) calendar days between the date of such notification and the
effective date of such termination.
3
<PAGE>
13. ARBITRATION. Any controversy or claim arising out of, or relating
to this Agreement, or the breach hereof, shall be settled by arbitration in the
City of Phoenix, Arizona in accordance with the then effective rules of the
American Arbitration Association. Such ruling shall be binding upon the parties.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered or
certified mail to the Employee's residence in the case of the Employee, or to is
principal office in the case of the Company.
15. WAIVER, MODIFICATION OR CANCELLATION. Any waiver, alteration or
modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the Parties.
16. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns, including but not limited
to any entity which may acquire all or substantially all of the Company's assets
and business or with or into which the Company may be consolidated or merged,
and the Employee, his successors, representatives and assigns, provided that the
duties of the Employee as described herein may not be delegated.
17. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall in no way affect the validity or enforceability of any
other provision.
18. ENTIRE AGREEMENT. This Agreement represents the entire Agreement
between the parties. Each party represents that there are no other oral,
written, express or implied contracts, agreements or understandings between
them.
19. AUTHORIZATION. Each party represents that he, she or it is duly
competent, authorized and capable of executing this Agreement as a valid,
binding and enforceable Agreement.
20. GOVERNING LAW. The substantive law of Arizona shall govern all the
terms, conditions and interpretations of this Agreement and all other
instruments, documents or agreements executed pursuant hereto. In the event of
litigation concerning this Agreement or any other instrument, document or
agreement relating to it, the parties hereto agree that the exclusive venue and
place of jurisdiction shall be the State of Arizona, County of Maricopa.
Further, each of Employee and Employer by execution hereof, irrevocably and
unconditionally consents to receive service of process and further agrees to
file a general appearance upon either acceptance of process by the other party
or actual service of process upon such party.
21. NONDISCLOSURE AND NON-COMPETITION. Employee agrees to the terms and
conditions of his obligations, if any, relating to nondisclosure and
non-competition as set forth on EXHIBIT "C".
4
<PAGE>
22. SPECIFIC REPRESENTATIONS. Each party represents that:
a) The consideration recited herein shall conclusively be deemed
fair, adequate, reasonable and sufficient.
b) He, she or it has voluntarily and without fraud, duress,
coercion, undue influence or improper persuasion executed this
Agreement.
DATED: October 8, 1996
Intercell Corporation
/s/ Gordon J. Sales /s/ Jesse Salazar
By:__________________________________ By:__________________________________
Gordon J. Sales Jesse Salazar
Chief Executive Officer and President Individually
5
<PAGE>
EXHIBIT "A"
A. Base Compensation $30,000
B. Bonus Compensation:
C. Minimum Bonus of $1,000 per calendar quarter, or 2% of Net Operating
Profits
For purposes hereof "Net Operating Profit" shall be as determined for
financial accounting purposes, without taking into consideration
inter-company expenditures, and expenses in excess of current (September
30, 1996) expense ratios.
D. Fringe Benefits:
Use of own company vehicle
2 weeks paid vacation annually
<PAGE>
EXHIBIT "B"
<PAGE>
EXHIBIT "C"
NONDISCLOSURE AND NON-COMPETITION
1. During the term of Employee's employment with the Company and for one
(1) year thereafter, and further provided that neither Company nor Intercell,
Inc. are then in default of any of their respective obligations to Employee
under any agreement to which they are parties, Employee shall not, directly or
indirectly, as principal, agent, employee, trustee, or in any like capacity, or
through the agency of any corporation, partnership, association, agent, agency
or any other like entity.
i. engage in any business that is similar to the business
conducted by the Company, its subsidiaries or affiliates; or
ii. solicit any person (natural or otherwise) who is or has been
within three (3) years prior to the date Employee's
association is terminated, a customer or client of the
Company, its subsidiaries or affiliates; or
iii. induce any present or future Employee or affiliate of the
Company, its subsidiaries or affiliates to accept employment
or similar association with the Employee or any person, firm,
association, corporation or other entity with whom the
Employee is now or may hereafter become associated; or
iv. in any manner interfere with, disrupt or attempt to disrupt
the relationship between the Company and/or any of its
customers, or use in any manner whatsoever, the Company's
customer list, database, or trade secrets.
2. The parties agree that in light of the specialized nature of the
industry and the national-customer base of the Company's business that the
restrictions set forth in Paragraph 1 hereof shall apply to Employee within the
territory of the United States of America.
3. In the event of a violation by Employee of any of the covenants
contained in this Agreement, it is mutually agreed that the term of said
covenant and/or covenants shall be automatically extended against Employee for a
period of one (1) year from the date on which Employee permanently ceases such
violation or for a period of time of one (1) year from the date of the entry by
a Court of competent jurisdiction of a final order or judgment enforcing said
covenant(s), whichever period is later. The extension of the term(s) of said
covenant(s) as provided in this sub-paragraph 3 shall be in addition to and not
in lieu of the remedies provided below.
4. Other than within the proper course of Employee's duties, the
Employee will not during or at any time after the termination of association
with the Company, use for himself or others or divulge or convey to others any
secret or confidential information, knowledge or data of the Company, its
subsidiaries its affiliates or that of third parties obtained by him during the
period of his employment with the Company. Such information, knowledge or data
includes but is not limited to secret or confidential matters.
i
<PAGE>
i. of a technical nature such as but not limited to research
methods, know-how, reporting procedures, composition,
processes, computer databases and similar terms or research
project.
ii. of a business nature such as but not limited to information
about finance s, costs, profits, sales, contracts,
transactions, or customer lists, or
iii. pertaining to future developments such as but not limited to
research and development or future marketing or advertising
programs.
Further, the Employee shall, during and after the period of Employee's
employment, diligently endeavor to prevent the publication or disclosure of any
such secret or confidential information, knowledge or data.
5. All forms, manuals, letters, notes, notebooks, reports, sketches,
formulas, computer programs and similar items, memoranda, client lists,
business, marketing and financial plans and studies and all other materials and
all copies thereof relating in any way to the business of the Company or of its
subsidiaries or affiliates and in any way obtained or produced by the Employee
during the period of his employment with the Company or its authorized
representative upon the termination of the employment or at any other time at
the request of the Company. Employee further agrees that Employee will not make
or retain any copies of any of the foregoing and will so represent to the
Company upon the termination of Employee's employment.
6. The Company and Employee agree that the Company would not have an
adequate remedy at law for money damages in the event that the provisions of
this Agreement are not complied with in accordance with their terms, and
therefore agree that in the event of any breach of any of these provisions by
the Employee, the Company shall be entitled to equitable relief by way of
injunction or otherwise, together with costs and expenses incurred by it,
including attorneys' fees, in addition to such other remedies as the Company may
have.
7. In the event, Employee violates the terms of this Nondisclosure and
Non-Competition section, and in the further event that Company is not made,
aware of such violation until a point in time after which Employee has commenced
engaging in services similar to those engaged in by Company, for clients for
whom Company has provided services within three years of the date of Employee's
termination of employment, then in addition to the injunctive relief provide for
in subparagraph 6 above, Company shall be entitled to liquidated damages which
shall be based upon the revenues generated by Employee from Company's clients as
follows.
a) Employee shall pay to Company one-third of all revenues
collected by Employee from Company's clients for a period of
three (3) years from the date on which Employee first
collected revenues from any such Company client.
The parties hereby acknowledge that the restrictive covenants contained in this
Agreement are fair and reasonable 'in light of all of the facts and
circumstances of the relationship between Employee and Company; however,
Employee and Company are aware that in certain circumstances courts have refused
ii
<PAGE>
to enforce certain agreements not to compete. Therefore, in furtherance and not
in derogation of the provisions of this Agreement, Company and Employee agree
that in the event a court of competent jurisdiction should for any reason
decline to enforce any of said covenants, that his Agreement shall be deemed to
be modified to restrict Employee's competition with Company to the maximum
extent in time, geography and otherwise as the court shall deem enforceable
and/or to grant Company such other relief at law or in equity as shall be
reasonable necessary to protect the interest of Company.
iii
<PAGE>
EXHIBIT "D"
<PAGE>
EMPLOYMENT AGREEMENT
This Agreement is between Cellular Magnetics, an Arizona corporation,
(hereinafter referred to as the "Company"), and Kong Wong, (hereinafter referred
to as "Employee").
1. ENGAGEMENT. The Company hereby engages the Employee and the Employee
hereby accepts engagement upon the terms and conditions hereinafter set forth.
Employee's compensation set forth herein shall be subject to all applicable
federal or state tax withholding provisions.
2. TERM. Subject to the provisions for termination as hereafter
provided, the term of this Agreement shall be for a period of thirty-six (36)
months commencing on October 15, 1996. The parties hereby acknowledge and agree
it is their intent that: (a) any extension or renewal of this Agreement shall be
concluded at least Three (3) months prior to the expiration date of the initial
thirty-six (36) months term and Three (3) months prior to the expiration date of
any subsequent extension or renewal term hereof; and (b) absent mutual agreement
to the contrary, the failure to conclude such extension or renewal by the dates
indicated shall be deemed notice to the Company and the Employee that the
Agreement shall not be extended.
3. DUTIES. The Employee shall, during the term of this Agreement,
perform the responsibilities and duties, exercise the powers and follow the
instructions which from time to time may be lawfully assigned to or vested in
him by the Board of Directors of the Company. It is agreed that during the term
of this Agreement, and for so long as no Event of Default has occurred
hereunder, the Employee will not accept an officership or directorship,
participate in the operation or management of or act as an Employee to any other
company, which is in the same line of business as or in competition with the
Company unless it be a company either owned or controlled by the Company,
without the prior written consent of the Board of Directors of the Company.
4. EXTENT OF SERVICES. Employee agrees to provide not less than 40
hours per week of services to the Company for the compensation paid to the
Employee. Employee shall not be prevented from investing his assets in any
manner, except that in no event may the Employee make investments in any firms
in competition with, or in the business of supplying goods or services to the
Company, unless such investments are disclosed to and approved by the Board of
Directors of the Company.
5. COMPENSATION. For services rendered by the Employee under this
Agreement, the Company shall pay the Employee the compensation and bonus, and
grant such other benefits, as are set forth on EXHIBIT "A". If during the term
of the Agreement the Employee is unavailable because of illness which prevents
Employee from performing his duties described herein, the Company shall be
obligated to pay the Employee for all such periods of absence; not to exceed
however three (3) months.
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<PAGE>
6. BONUS AND STOCK OPTION PLANS AND BENEFIT PROGRAMS. The Company
proposes to establish certain bonus and stock option plans. During the term of
this Agreement, and as additional compensation, the Employee will be eligible to
participate in those plans currently in effect and as they may be amended from
time to time, so long as such plans remain in existence. Furthermore, during the
term of this Agreement, the Employee shall be entitled to participate in all
current or subsequently enacted benefit programs applicable to other officers,
directors, agent and employees of the Company. For purposes of this Agreement,
all references to stock option plans, bonus plans or benefit programs shall be
deemed to mean that Employee shall be eligible to participate in such plans or
programs of the Company in which Employee presently participates or is eligible
for, or such plans or programs of the Company that may subsequently be
adopted by the Company. Options, if any, under this Agreement as are set forth
on EXHIBIT "B".
7. EXPENSES. The Employee is authorized to incur reasonable expenses
with regard to the business of the Company, including expenses for
entertainment, travel and other items of a similar character. The Company will
reimburse the Employee for all such expenses incurred by him in the performance
of his duties hereunder.
8. TERMINATION BY COMPANY. This Agreement may be terminated by the
Company as follows:
a) If the Employee shall commit a breach of this Agreement, and
such breach, if capable of rectification, is not rectified
within thirty (30) calendar days of receipt by Employee from
the Company of written notice requiring him so to do.
b) If the Employee shall be convicted of a felony criminal
offense, or been found in a judicial proceeding initiated
after the date of this Agreement by a court of competent
jurisdiction, in a decision subject to no further appeals, to
have committed any dishonest or unlawful act or to have been
engaged or engaging in any conduct which might irreparably
injure or tend to injure the reputation or business of the
Company.
c) If the Employee shall grossly, willfully or inexcusably
neglect the performance of Employee's duties as set forth
herein. Such standard of neglect shall however be determined
only by the Board of Directors, based upon written opinion of
independent counsel and written advice to Employee and
unanimously approved by the full Board of Directors especially
convened for such purpose.
9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement with
or without cause, and if terminated, the Company and Employee agree to abide by
and promptly honor the provisions of SECTION 10 of this Agreement. Cause for
termination by Employee shall not consist of the Company's refusal to follow the
bona-fide professional recommendations of the Employee.
2
<PAGE>
10. PAYMENTS UPON TERMINATION BY COMPANY OR EMPLOYEE. It is agreed that
if this Agreement is terminated payments and/or provisions for payments will be
made as follows:
a) If the Company terminates this Agreement on some basis other
than for any of the reasons as stated in Paragraph 8 hereof,
the Company will take the actions set for in Subparagraphs
(1), (2) and (3) of this Paragraph. If the Employee terminates
this Agreement for cause, which shall be limited to a failure
by the Company to pay Employee his compensation, the Company
will take the actions set forth in Subparagraphs (1), (2) and
(3) of this Paragraph.
(i) All stock options granted to the Employee pursuant to
this Agreement will become immediately vested for the
full amount of Optioned Shares and shall be
exercised, if ever, in accordance with and subject to
the terms and provisions of the Company's
Compensatory Stock Option Plan and Employee's Stock
Option Agreement; and
(ii) The Employee will receive within fifteen (15) days of
the effective date of such termination, all
compensation and all other benefits that would have
accrued and/or been payable to the Employee during
the term of this Agreement; and
(iii) The Employee will be paid in full any other
contractual benefits Employee may have with the
Company and be reimbursed for all un-reimbursed
accountable expenses.
b) If the Company terminates this Agreement for a reason or
reasons set forth in paragraph 9 hereof or the Employee
terminates this Agreement without cause, the Company will only
be obligated to pay to the Employee the actual amount of
compensation accrued to the date of termination, and, all
other payments or benefits to which Employee is otherwise
entitled pursuant to this Employee Agreement shall be canceled
and terminated, without recourse.
11. TERMINATION DUE TO CHANGE IN CONTROL. INTENTIONALLY LEFT BLANK.
12. NOTICES OF TERMINATION. All Notices of Termination provided for in
this Agreement must be in writing and must provide for a minimum notice period
of Sixty (60) calendar days between the date of such notification and the
effective date of such termination.
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13. ARBITRATION. Any controversy or claim arising out of, or relating
to this Agreement, or the breach hereof, shall be settled by arbitration in the
City of Phoenix, Arizona in accordance with the then effective rules of the
American Arbitration Association. Such ruling shall be binding upon the parties.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered or
certified mail to the Employee's residence in the case of the Employee, or to is
principal office in the case of the Company.
15. WAIVER, MODIFICATION OR CANCELLATION. Any waiver, altercation or
modification of any of the provisions of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the Parties.
16. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns, including but not limited
to any entity which may acquire all or substantially all of the Company's assets
and business or with or into which the Company may be consolidated or merged,
and the Employee, his successors, representatives and assigns, provided that the
duties of the Employee as described herein may not be delegated.
17. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall in no way affect the validity or enforceability of any
other provision.
18. ENTIRE AGREEMENT. This Agreement represents the entire Agreement
between the parties. Each party represents that there are no other oral,
written, express or implied contracts, agreements or understandings between
them.
19. AUTHORIZATION. Each party represents that he, she or it is duly
competent, authorized and capable of executing this Agreement as a valid,
binding and enforceable Agreement.
20. GOVERNING LAW. The substantive law of Arizona shall govern all the
terms, conditions and interpretations of this Agreement and all other
instruments, documents or agreements executed pursuant hereto. In the event of
litigation concerning this Agreement or any other instrument, document or
agreement relating to it, the parties hereto agree that the exclusive venue and
place of jurisdiction shall be the State of Arizona, County of Maricopa.
Further, each of Employee and Employer by execution hereof, irrevocably and
unconditionally consents to receive service of process and further agrees to
file a general appearance upon either acceptance of process by the other party
or actual service of process upon such party.
21. NONDISCLOSURE AND NON-COMPETITION. Employee agrees to the terms and
conditions of his obligations, if any, relating to nondisclosure and
non-competition as set forth on EXHIBIT "C".
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22. SPECIFIC REPRESENTATIONS. Each party represents that:
a) The consideration recited herein shall conclusively be deemed
fair, adequate, reasonable and sufficient.
b) He, she or it has voluntarily and without fraud, duress,
coercion, undue influence or improper persuasion executed this
Agreement.
DATED: October 8, 1996
Intercell Corporation
/s/ Gordon S. Sales /s/ Kong Wong
By:_________________________________ By:___________________________________
Gordon J. Sales Kong Wong
Chief Executive Officer and President Individually
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EXHIBIT "A"
A. Base Compensation $28,000 annually
B. Bonus Compensation:
Minimum Bonus of $1,000 per calendar quarter, or 2% of Net Operating
Profits.
For purposes hereof "Net Operating Profit" shall be as determined for
financial accounting purposes, without taking into consideration
inter-company expenditures, and expenses in excess of current (September
30, 1996) expense ratios.
C. Fringe Benefits:
2 weeks paid vacation annually
<PAGE>
EXHIBIT "B"
<PAGE>
EXHIBIT "C"
NONDISCLOSURE AND NON-COMPETITION
1. During the term of Employee's employment with the Company and for
one (1) year thereafter, and further provided that neither Company nor
Intercell, Inc. are then in default of any of their respective obligations to
Employee under any agreement to which they are parties, Employee shall not,
directly or indirectly, as principal, agent, employee, trustee, or in any like
capacity, or through the agency of any corporation, partnership, association,
agent, agency or any other like entity.
i. engage in any business that is similar to the business
conducted by the Company, its subsidiaries or affiliates; or
ii. solicit any person (natural or otherwise) who is or has been
within three (3) years prior to the date Employee's
association is terminated, a customer or client of the
Company, its subsidiaries or affiliates; or
iii. induce any present or future Employee or affiliate of the
Company, its subsidiaries or affiliates to accept employment
or similar association with the Employee or any person, firm,
association, corporation or other entity with whom the
Employee is now or may hereafter become associated; or
iv. in any manner interfere with, disrupt or attempt to disrupt
the relationship between the Company and/or any of its
customers, or use in any manner whatsoever, the Company's
customer list, database, or trade secrets.
2. The parties agree that in light of the specialized nature of the
industry and the national-customer base of the Company's business that the
restrictions set forth in Paragraph 1 hereof shall apply to Employee within the
territory of the United States of America.
3. In the event of a violation by Employee of any of the covenants
contained in this Agreement, it is mutually agreed that the term of said
covenant and/or covenants shall be automatically extended against Employee for a
period of one (1) year from the date on which Employee permanently ceases such
violation or for a period of time of one (1) year from the date of the entry by
a Court of competent jurisdiction of a final order or judgment enforcing said
covenant(s), whichever period is later. The extension of the term(s) of said
covenant(s) as provided in this sub-paragraph 3 shall be in addition to and not
in lieu of the remedies provided below.
4. Other than within the proper course of Employee's duties, the
Employee will not during or at any time after the termination of association
with the Company, use for himself or others or divulge or convey to others any
secret or confidential information, knowledge or data of the Company, its
subsidiaries its affiliates or that of third parties obtained by him during the
period of his employment with the Company. Such information, knowledge or data
includes but is not limited to secret or confidential matters.
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i. of a technical nature such as but not limited to research
methods, know-how, reporting procedures, composition,
processes, computer databases and similar terms or research
project.
ii. of a business nature such as but not limited to information
about finances, costs, profits, sales, contracts,
transactions, or customer lists, or
iii. pertaining to future developments such as but not limited to
research and development or future marketing or advertising
programs.
Further, the Employee shall, during and after the period of Employee's
employment, diligently endeavor to prevent the publication or disclosure of any
such secret or confidential information, knowledge or data.
5. All forms, manuals, letters, notes, notebooks, reports, sketches,
formulas, computer programs and similar items, memoranda, client lists,
business, marketing and financial plans and studies and all other materials and
all copies thereof relating in any way to the business of the Company or of its
subsidiaries or affiliates and in any way obtained or produced by the Employee
during the period of his employment with the Company or its authorized
representative upon the termination of the employment or at any other time at
the request of the Company. Employee further agrees that Employee will not make
or retain any copies of any of the foregoing and will so represent to the
Company upon the termination of Employee's employment.
6. The Company and Employee agree that the Company would not have an
adequate remedy at law for money damages in the event that the provisions of
this Agreement are not complied with in accordance with their terms, and
therefore agree that in the event of any breach of any of these provisions by
the Employee, the Company shall be entitled to equitable relief by way of
injunction or otherwise, together with costs and expenses incurred by it,
including attorneys' fees, in addition to such other remedies as the Company may
have.
7. In the event, Employee violates the terms of this Nondisclosure and
Non-Competition section, and in the further event that Company is not made aware
of such violation until a point in time after which Employee has commenced
engaging in services similar to those engaged in by Company, for clients for
whom Company has provided services within three years of the date of Employee's
termination of employment, then in addition to the injunctive relief provide for
in subparagraph 6 above, Company shall be entitled to liquidated damages which
shall be based upon the revenues generated by Employee from Company's clients as
follows.
a) Employee shall pay to Company one-third of all revenues
collected by Employee from Company's clients for a period of
three (3) years from the date on which Employee first
collected revenues from any such Company client.
The parties hereby acknowledge that the restrictive covenants contained in this
Agreement are fair and reasonable in light of all of the facts and circumstances
of the relationship between Employee and Company; however, Employee and Company
are aware that in certain circumstances courts have refused to enforce certain
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agreements not to compete. Therefore, in furtherance and not in derogation of
the provisions of this Agreement, Company and Employee agree that in the event a
court of competent jurisdiction should for any reason decline to enforce any of
said covenants, that his Agreement shall be deemed to be modified to restrict
Employee's competition with Company to the maximum extent in time, geography and
otherwise as the court shall deem enforceable and/or to grant Company such other
relief at law or in equity as shall be reasonable necessary to protect the
interest of Company.
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EXHIBIT "E"
<PAGE>
PROMISSORY NOTE
Principal Amount: October 8, 1996
$80,000.00 Phoenix, Arizona
FOR VALUE RECEIVED, the undersigned Intercell Corporation, a Colorado
Corporation ("Intercell"), and Cellular Magnetics, Inc, an Arizona corporation
("Magnetics") (hereinafter collectively referred to as "Makers") hereby jointly
and severally promise to pay to the order of Jerry W. Tooley and June E. Tooley,
a married couple and their successors and assigns (hereinafter referred to as
"Holder"), the principal sum of Eighty Thousand Dollars ($80,000.00), plus
interest thereon, from the date hereof through the date on which such principal
sum is paid in full (whether payment in fall is at stated maturity, by
acceleration or otherwise). This Promissory Note is hereinafter referred to as
the "Note".
1. CALCULATION OF INTEREST. Interest shall accrue on the unpaid
principal balance of this Note at the rate of Ten Percent (10%) per annum (the
"Stated Rate of Interest") from the date hereof. Interest shall be compounded
monthly and computed daily on the basis of a three hundred sixty-five (365)-day
year. Notwithstanding the foregoing, in no event shall the interest accrued or
unpaid hereunder exceed the maximum legal rate permitted by the laws of the
jurisdiction applicable to this loan transaction.
2. SCHEDULE OF PAYMENT. The full unpaid principal balance of this Note,
together with accrued and unpaid interest and any other amounts payable under
this Note shall be due and payable on December 15, 1996 (hereinafter referred to
as the "Maturity Date"). All payments shall be applied first to accrued interest
and then to reduce the principal balance.
3. PREPAYMENT. This Note may be prepaid in full, or in part, at any
time without premium or penalty.
4. MANNER AND LOCATION OF PAYMENT. All payments of principal and
interest of this Note are payable in lawful money of the United States of
America, to Holders at 16825 South 18th Way, Phoenix, Arizona 85048, or to such
other person or at such other address as the Holder may designate from time to
time by written notice to Makers.
5. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default 91 under this Agreement: (a) Makers, or either
of them, shall fail to pay principal or interest hereunder when due; (b) any
Maker is in breach of or in default under any provision of that certain
Agreement and Plan of Merger of between Makers, Holder and David Putnam and Ann
E. Putnam dated of even date herewith (the "Merger Agreement"); (c) Magnetics is
in breach of or in default under any provision contained in that certain
Employment Agreement between Magnetics and Jerry W. Tooley dated of even date
herewith; (d) any Maker shall admit in writing that it is unable to pay its
debts as they become due, make a general assignment for the benefit of
creditors, or file a petition or answer seeking to take advantage of any
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bankruptcy or insolvency laws; (e) any Maker shall wind up, liquidate or
dissolve its affairs, or Magnetics shall enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or substantially all of its
property or assets; (f) an involuntary petition or complaint shall be filed
against any Maker seeking bankruptcy of such Maker or the Company and such
petition or complaint shall not have been dismissed within thirty (30) days of
the filing thereof; or (g) the Maker shall be in default under any of its other
debt obligations.
6. ACCELERATION. Upon the occurrence of an Event of Default, the Holder
hereof may, in its sole discretion, declare the principal balance of this Note,
and all interest then accrued to be immediately due and payable, whereupon the
same shall immediately become due and payable without notice, presentment,
demand, protest, notice of intention to accelerate, or other notice of any kind,
all of which Makers hereby expressly waives.
7. LATE PAYMENT CHARGE. Time is of the essence. Makers agrees to pay a
late charge in an amount equal to five percent (5 %) of any payment which is not
paid when due, including, without limitation, as a result of the acceleration of
the principal balance of this Note. Such late charge represents the reasonable
estimate of Makers and Holder of a fair compensation for the loss which would be
sustained by Holder due to the failure of the Makers to make timely payment.
Such late charge shall be paid without prejudice to the rights of Holder to
collect any other amounts provided to be paid or to declare an Event of Default
hereunder.
8. DEFAULT INTEREST. Upon an Event of Default the unpaid principal sum
hereof and accrued but unpaid interest shall bear interest at a rate equal to
Five Percent (5%) above the Stated Rate of Interest (as defined in Section 1
hereof), compounded monthly, retroactive to the date of occurrence of such Event
of Default. At such time as a judgment is obtained for any amounts owing under
this Note or any documents or instrument securing this Note, interest shall
continue to accrue on the amount of the judgment at a rate equal to Five Percent
(5%) above the Stated Rate of Interest, compounded monthly.
9. WAIVERS. Makers waive any right of offset against this Note,
diligence, demand, presentment for payment, protest and notice of non-payment
and of protest, notice of default, notice of acceleration, and all other notices
or demands of any kind. The Makers consent, without notice and without release
of liability, to extensions or accommodations given by the Holder, to the
release, modification, or exchange of any security, and to the release, in whole
or in part, of any other maker, endorser or guarantor.
10. NO OFFSET BY MAKERS. No offset or claim of any kind or nature that
Makers now have or may in the future have against the Holder, including but not
limited to any claims arising pursuant to the Merger Agreement or the Employment
Agreement, shall constitute a defense to the payment of, or relieve Makers from
paying to Holder or its order, the payments required by Makers under this Note,
and Makers hereby waive any right to assert such offset or claim as a defense to
its obligations under this Note.
11. COST OF COLLECTION. The Makers agree to pay all costs of
collection. Costs of collection include, without limitation, reasonable
attorneys' fees if this Note is placed in the hands of attorneys for collection
or if suit is brought, together with all court costs and other expenses incurred
in the prosecution of suit. If Makers shall become subject to any case or
proceeding under any bankruptcy or insolvency laws (collectively, the
"Bankruptcy Laws"), Makers shall pay to Holder all attorneys' fees, costs and
expenses which Holder may incur to obtain relief from any provision of the
Bankruptcy Laws which delays or otherwise impairs Holder's exercise of any right
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<PAGE>
or remedy under this Note, or any other documents given by Makers in connection
with this loan, or to obtain adequate protection for any of Holder's rights or
collateral.
12. ADDITIONAL SUMS. For the purpose of assuring compliance with any
laws of the State of Arizona which may now or hereafter limit the maximum rate
of interest to be charged, all fees, charges, goods, claims, or any other sums
or things of value (collectively, the "Additional Sums") paid or transferred to
the holder hereof, whether pursuant to this Note or otherwise with respect to
the indebtedness evidenced hereby and which may be deemed to be interest, shall
be payable as and shall be deemed to be additional interest. For such purposes
only, the agreed upon and contracted rate of interest described above shall be
deemed to be increased by the Additional Sums.
13. NO CONTINUING WAIVER. The failure of the Holder to exercise any
option hereunder shall not constitute a waiver of the right to exercise the same
in the event of any subsequent default or in the event of continuance of any
existing default.
14. CHOICE OF LAW. This Note shall be governed by and construed in
accordance with the substantive, internal laws of the State of Arizona, but not
the conflicts or choice of law provisions thereof. Any action to enforce any
provision of this Agreement, or to obtain any remedy with respect hereto shall
be brought in the Superior Court, Maricopa County, Arizona, and for this
purpose, each party hereto expressly and irrevocably consents to the
jurisdiction and venue of such Court.
15. CUMULATIVE REMEDIES. All rights and remedies of Holder as set forth
in this Note or otherwise allowed in law or in equity shall be cumulative and
may be enforced by the Holder hereof concurrently or sequentially.
16. NO ORAL MODIFICATION. This Note may be waived, changed, modified or
discharged only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
17. INTERPRETATION. Makers agree that it and its counsel have reviewed
and revised this Note and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party, shall not apply to
the interpretation of this Note.
18. OBLIGATION OF MAKERS. The obligations of Makers to this Note shall
be joint and several. All assets whatsoever of each Maker are committed for the
payment of this Note, including, without limitation, separate assets, community
assets and assets held in partnership, joint tenancy, tenancy in common or other
forms of whole or partial ownership.
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<PAGE>
IN WITNESS WHEREOF, this Note has been executed as of the date first
hereinabove written.
Intercell Corporation, a Colorado Cellular Magnetics, Inc., an Arizona
corporation corporation
/s/ Gordon J. Sales /s/ Gordon J. Sales
By:________________________________ By:_________________________________
Gordon J. Sales, President Gordon J. Sales, President
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