SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 16, 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 File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
7201 East Camelback Road, Suite 250
Scottsdale, Arizona 85251
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(Address of principal executive offices ) (Zip Code)
(602) 970-5500
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(Registrant's telephone number, including area code)
4455 E. Camelback Rd. E-160
Phoenix, Arizona 85018
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(Former name or former address)
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ITEM 5 OTHER EVENTS
On December 16, 1996, Intercell Corporation, (the "Registrant") closed an
offering of up to Six Hundred (600) of its Series C No Par Value Preferred Stock
(the "Preferred Shares"), with attached Warrants, for an aggregate of Six
Million Dollars ($6,000,000.00) pursuant to Regulation D under the Securities
Act of 1933, as amended. Registrant sold 525 shares of Preferred Shares for an
aggregate amount of $5,250,000.00.
The terms of the Preferred Shares provide that they may be converted into Common
Stock of the Registrant. Section 5 of the Certificate of Designation provides in
relevant part:
Each record Holder of this Series C Preferred Stock shall be entitled
to convert a percentage of the aggregate Series C Preferred Stock
initially issued to such Holder (i) at the Fixed Conversion Price, at
any time after the date that is four (4) months after the date of the
Last Closing and (ii) at the Variable Conversion Price, at the time
and in the amounts as follows:
Percentage of Series C
No. of Months Preferred Stock Initially
After the Last Closing Date Issued to such holder Available
for Conversion
4 months 20%
5 months 40%
6 months 60%
7 months 80%
8 months 100%
provided, however, that a Holder may not convert more than twenty-five
percent (25%) of the aggregate number of shares of Preferred Stock
initially issued to such Holder at the Variable Conversion Price in
any given one month period, beginning on the date that is four (4)
months following the Last Closing Date and beginning the same day of
each subsequent month thereafter until the date that is eight (8)
months following the Last Closing Date, there shall be no restrictions
on the number of shares of Series C Preferred Stock convertible into
Common Stock.
As used herein, "Last Closing Date" shall mean the date of the last
closing of a purchase and sale of the Series C Preferred Stock that
occurs pursuant to the offering of the Series C Preferred Stock by the
Company.
The date that is four (4) months following the Last Closing Date and
the same day of each subsequent monthly period referenced above are
hereinafter referred to singularly as a "Conversion Gate" and
collectively as "Conversion Gates". At the applicable Conversion Gate
and at any time thereafter, the percentage of the aggregate Series C
Preferred Stock initially issued to such Holder which is available for
conversion as set forth above is convertible into that number of
fully-paid and non-assessable shares of Common Stock of the Company
calculated in accordance with the following formula (the "Conversion
Rate"):
Number of shares issued upon conversion of one (1) share of Series C
Preferred Stock =
(.08)(N/365)(10,000) + 10,000
----------------------------
Conversion Price
where, *N = the number of days between (i) the date that, in
connection with the consummation of the initial purchase by Holder of
shares of Series C Preferred Stock from the Company, the escrow agent
first had in its possession funds representing full payment for the
shares of Series C Preferred Stock for which conversion is being
elected, and (ii) the applicable Date of Conversion for the shares of
Series C Preferred Stock for which conversion is being elected, and
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*Conversion Price = the lesser of (x) $3.25 (the "Fixed Conversion
Price"), or (y) 85% of the average Closing Bid Price of the Company's
Common Stock for the five (5) trading days immediately preceding the
Date of Conversion (the "Variable Conversion Price").
In the event that a Subscriber purchased Fifty (50) or more shares of Preferred
Stock, each share of the Preferred Stock was accompanied by a Warrant or
Warrants to purchase a number of common shares of the Company equal to
Twenty-Five Percent (25%) of the original aggregate purchase price of the
Preferred Stock divided by the fixed Conversion Price of $3.25 per share. The
Warrants are exercisable beginning six (6) months after issuance and have a five
(5) year term. In the event that a Subscriber purchased One Hundred (100) or
more shares of Preferred Stock, or in the event that a previous Series B
Preferred Stockholder, who purchased a number of Series C Preferred Stock, which
when combined with its previous Series B Preferred Stock totaled One Hundred
(100) or more shares of Preferred Series C Stock, then each share of the Series
C Preferred Stock is accompanied by a Warrant or Warrants to purchase a number
of common shares of the Company equal to Fifty Percent (50%) of the original
aggregate purchase price of the Preferred Stock divided by the Fixed Conversion.
Such Warrants, likewise, are exercisable beginning Six (6) months after
re-issuance, with the Five (5) year term.
The Warrants issued to the Holders of the Series C Preferred Stock, permit the
Holder to elect to exercise such Warrants on a cashless exercise basis. Should
such option be elected by the Holder, it permits the Holder to acquire a reduced
number of common shares without the need for any cash payment.
The Common Stock underlying the Convertible Series C Preferred Stock and the
Common Stock underlying the Warrants, accompanying the Series C Preferred Stock
are subject to a Registration Rights Agreement in favor of the Holder of the
Series C Preferred Stock. The Company intends to include such securities in a
Registration Statement to be filed with the Securities and Exchange Commission
within Thirty (30) days of the date of this Report.
The Regulation D Offering was sold to eleven (11) institutions.
Registrant received net proceeds from the Regulation D Offering of approximately
$4,628,000.00.
See Item 7, Exhibits.
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ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Exhibits.
4.1 Certificate of Designation for Series C Preferred Stock.
4.2 Specimen Warrant attached to Series C Preferred Stock.
10.1 Specimen Registration Right Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 18, 1996
INTERCELL CORPORATION
/s/ Gordon J. Sales
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Gordon J. Sales, President &
Chief Executive Officer
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CERTIFICATE OF DESIGNATION OF
SERIES C PREFERRED STOCK
OF
INTERCELL CORPORATION
It is hereby certified that:
1. The name of the Company (hereinafter called the "Company") is
Intercell Corporation, a Colorado corporation.
2. The certificate of incorporation of the Company authorizes the
issuance of Ten Million (10,000,000) shares of preferred stock, no par value per
share, and expressly vests in the Board of Directors of the Company the
authority provided therein to issue any or all of said shares in one (1) or more
series and by resolution or resolutions to establish the designation and number
and to fix the relative rights and preferences of each series to be issued.
3. The Board of Directors of the Company, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series C issue of Preferred Stock:
RESOLVED, that Six Hundred (600) of the Ten Million (10,000,000)
authorized shares of Preferred Stock of the Company shall be designated Series C
Preferred Stock, no par value per share, and shall possess the rights and
preferences set forth below:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall have
no par value per share and shall be designated as Series C Preferred Stock (the
"Series C Preferred Stock") and the number of shares constituting the Series C
Preferred Stock shall be Six Hundred (600). The Series C Preferred Stock shall
be offered at a purchase price of Ten Thousand Dollars ($10,000) per share (the
"Original Series C Issue Price"), with an eight percent (8%) per annum accretion
rate as set forth herein.
Section 2. RANK. The Series C Preferred Stock shall rank: (i) junior to
the Company's Series B Preferred Stock and any other class or series of capital
stock of the Company hereafter created specifically ranking by its terms senior
to the Series C Preferred Stock (collectively, the "Senior Securities"); (ii)
prior to all of the Company's Common Stock, no par value per share ("Common
Stock"); (iii) prior to any class or series of capital stock of the Company
hereafter created not specifically ranking by its terms senior to or on parity
with any Series C Preferred Stock of whatever subdivision (collectively, with
the Common Stock, "Junior Securities"); and (iv) on parity with any class or
series of capital stock of the Company hereafter created specifically ranking by
its terms on parity with the Series C Preferred Stock ("Parity Securities") in
each case as to distributions of assets upon liquidation, dissolution or winding
up of the Company, whether voluntary or involuntary (all such distributions
being referred to collectively as "Distributions").
Section 3. DIVIDENDS. The Series C Preferred Stock will bear no
dividends, and the holders of the Series C Preferred Stock ("Holders") shall not
be entitled to receive dividends on the Series C Preferred Stock.
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Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Company ("Liquidation Event"), either voluntary or involuntary, the
Holders of shares of Series C Preferred Stock shall be entitled to receive,
immediately after any distributions to Senior Securities required by the
Company's Certificate of Incorporation or any certificate of designation, and
prior in preference to any distribution to Junior Securities but in parity with
any distribution to Parity Securities, an amount per share equal to the sum of
(i) the Original Series C Issue Price for each outstanding share of Series C
Preferred Stock and (ii) an amount equal to eight percent (8%) of the Original
Series C Issue Price per annum for the period that has passed since the date
that, in connection with the consummation of the purchase by Holder of shares of
Series C Preferred Stock from the Company, the escrow agent first had in its
possession funds representing full payment for the shares of Series C Preferred
Stock (such amount being referred to herein as the "Premium"). If upon the
occurrence of such event, and after payment in full of the preferential amounts
with respect to the Senior Securities, the assets and funds available to be
distributed among the Holders of the Series C Preferred Stock and Parity
Securities shall be insufficient to permit the payment to such Holders of the
full preferential amounts due to the Holders of the Series C Preferred Stock and
the Parity Securities, respectively, then the entire assets and funds of the
Company legally available for distribution shall be distributed among the
Holders of the Series C Preferred Stock and the Parity Securities, pro rata,
based on the respective liquidation amounts to which each such series of stock
is entitled by the Company's Certificate of Incorporation and any certificate(s)
of designation relating thereto.
(b) Upon the completion of the distribution required by
subsection 4(a), if assets remain in this Company, they shall be distributed to
holders of Junior Securities in accordance with the Company's Certificate of
Incorporation including any duly adopted certificate(s) of designation.
(c) At each Holder's option, a sale, conveyance or disposition
of all or substantially all of the assets of the Company or the effectuation by
the Company of a transaction or series of related transactions in which any
person or entity acquires more than fifty percent (50%) of the voting power of
the Company (a "Change of Control") shall be deemed to be a Liquidation Event as
defined in Section 4(a); provided further that (i) a consolidation, merger,
acquisition, or other business combination of the Company with or into any other
publicly traded company or companies shall not be treated as a Liquidation Event
as defined in Section 4(a), but instead shall be treated pursuant to Section
5(e)(iii) hereof, and (ii) a consolidation, merger, acquisition, or other
business combination of the Company with or into any other non-publicly traded
company or companies shall be treated as a Liquidation Event as defined in
Section 4(a). The Company shall not effect any transaction described in
subsection 4(c)(ii) unless it first gives thirty (30) business days prior notice
of such transaction (during which time the Holder shall be entitled to
immediately convert any or all of its shares of Series C Preferred Stock into
Common Stock at the Conversion Price, as defined below, then in effect, which
conversion shall not be subject to the conversion restrictions set forth in
Section 5(a)).
(d) In the event that, immediately prior to the closing of a
transaction described in Section 4(c) which would constitute a Liquidation
Event, the cash distributions required by Section 4(a) or Section 6 have not
been made, the Company shall either: (i) cause such closing to be postponed
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until such cash distributions have been made, or (ii) cancel such transaction,
in which event the rights of the Holders of Series C Preferred Stock shall be
the same as existing immediately prior to such proposed transaction.
Section 5. CONVERSION. The record Holders of this Series C Preferred
Stock shall have conversionrights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each record Holder of Series C Preferred
Stock shall be entitled to convert the aggregate Series C Preferred Stock
initially issued to such Holder i) at the Fixed Conversion Price (as defined
below), at any time after the date that is four (4) months after the date of the
Last Closing and ii) at the Variable Conversion Price (as defined below), at the
times and in the amounts as follows:
No. of Months Percentage of Series C Preferred Stock Initially
After The Last Closing Date Issued To Such Holder Available For Conversion
- --------------------------- ------------------------------------------------
4 months 20%
5 months 40%
6 months 60%
7 months 80%
8 months 100%
provided, however, that a Holder may not convert more than twenty-five percent
(25%) of the aggregate number of shares of Preferred Stock initially issued to
such Holder at the Variable Conversion Price in any given one month period,
beginning on the date that is four (4) months following the Last Closing Date
and beginning the same day of each subsequent month thereafter until the date
that is eight (8) months following the Last Closing Date (the "Monthly
Conversion Limit"). Subsequent to the date that is eight (8) months following
the Last Closing Date, there shall be no restrictions on the number of shares of
Series C Preferred Stock convertible into Common Stock.
As used herein, "Last Closing Date" shall mean the date of the last
closing of a purchase and sale of the Series C Preferred Stock that
occurs pursuant to the offering of the Series C Preferred Stock by the
Company.
The date that is four (4) months following the Last Closing Date and
the same day of each subsequent monthly period referenced above are
hereinafter referred to singularly as a "Conversion Gate" and
collectively as "Conversion Gates". At the applicable Conversion Gate
and at any time thereafter, the percentage of the aggregate Series C
Preferred Stock initially issued to such Holder which is available for
conversion as set forth above is convertible into that number of
fully-paid and non-assessable shares of Common Stock of the Company
calculated in accordance with the following formula (the "Conversion
Rate"):
Number of shares issued upon conversion of one (1) share of Series C
Preferred Stock =
(.08)(N/365)(10,000) + 10,000
-----------------------------
Conversion Price
where,
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* N= the number of days between (i) the date that, in connection with
the consummation of the initial purchase by Holder of shares of Series
C Preferred Stock from the Company, the escrow agent first had in its
possession funds representing full payment for the shares of Series C
Preferred Stock for which conversion is being elected, and (ii) the
applicable Date of Conversion (as defined in Section 5(b)(iv) below)
for the shares of Series C Preferred Stock for which conversion is
being elected, and
* CONVERSION PRICE = the lesser of (x) $3.25 (the "Fixed
Conversion Price"), or (y) 85% of the average Closing Bid
Price, as that term is defined below, of the Company's Common
Stock for the five (5) trading days immediately preceding the
Date of Conversion, as defined below (the "Variable Conversion
Price").
For purposes hereof, any Holder which acquires shares of Series C
Preferred Stock from another Holder (the "Transferor") and not upon
original issuance from the Company shall be entitled to exercise its
conversion right as to the percentages of such shares specified under
Section 5(a) in such amounts and at such times such that the number of
shares eligible for conversion by such Holder at any time shall be in
the same proportion that the number of shares of Series C Preferred
Stock acquired by such Holder from its Transferor bears to the total
number of shares of Series C Preferred Stock originally issued by the
Company to such Transferor (or its predecessor Transferor).
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price as reported by the OTC Bulletin Board or the Nasdaq
Small Cap Market or the Nasdaq National Market, or if not traded on the
OTC Bulletin Board or the Nasdaq Small Cap Market or the Nasdaq
National Market, the closing bid price on the over the counter market,
the principal national securities exchange or the National Market
System on which the Common Stock is so traded and if not available, the
mean of the high and low prices on the over the counter market,
including but not limited to the Bulletin Board or the Pink Sheets, the
principal national securities exchange or the National Market System on
which the Common Stock is so traded.
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(b) MECHANICS OF CONVERSION. In order to convert Series C
Preferred Stock into full shares of Common Stock, the Holder shall (i) fax, on
or prior to 11:59 p.m., New York City time (the "Conversion Notice Deadline") on
the Date of Conversion (as defined below), a copy of the fully executed notice
of conversion ("Notice of Conversion") to the Company and to First Union
National Bank, the custodian of the Common Stock (the "Custodian") stating that
the Holder elects to convert, which notice shall specify the date of conversion,
the number of shares of Series C Preferred Stock to be converted, the applicable
conversion price and a calculation of the number of shares of Common Stock
issuable upon such conversion (together with a copy of the front page of each
certificate to be converted) and (ii) surrender to a common courier for delivery
to the office of the Company or the Custodian, the original certificates
representing the Series C Preferred Stock being converted (the "Preferred Stock
Certificates"), duly endorsed for transfer; provided, however, that the Company
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless either the Preferred Stock
Certificates are delivered to the Company or the Custodian as provided above, or
the Holder notifies the Company or the Custodian that such certificates have
been lost, stolen or destroyed (subject to the requirements of subparagraph (i)
below). Upon receipt by Company of a facsimile copy of a Notice of Conversion,
Company shall immediately send, via facsimile, a confirmation of receipt of the
Notice of Conversion to Holder which shall specify that the Notice of Conversion
has been received and the name and telephone number of a contact person at the
Company whom the Holder should contact regarding information related to the
Conversion. In the case of a dispute as to the calculation of the Conversion
Rate, the Company shall promptly issue or cause the Custodian to issue to the
Holder the number of shares that are not disputed and shall submit the disputed
calculations to its outside accountant via facsimile within three (3) days of
receipt of Holder's Notice of Conversion. The Company shall cause the accountant
to perform the calculations and notify Company, Custodian and Holder of the
results no later than forty-eight (48) hours from the time it receives the
disputed calculations. Accountant's calculation shall be deemed conclusive
absent manifest error. All Notices of Conversion shall be irrevocable.
(i) LOST OR STOLEN CERTIFICATES. Upon receipt by the
Company of evidence of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing shares of Series C Preferred Stock,
and (in the case of loss, theft or destruction) of indemnity or security
reasonably satisfactory to the Company, and upon surrender and cancellation of
the Preferred Stock Certificate(s), if mutilated, the Company shall execute and
deliver new Preferred Stock Certificate(s) of like tenor and date. However,
Company shall not be obligated to re-issue such lost or stolen Preferred Stock
Certificates if Holder contemporaneously requests Company to convert such Series
C Preferred Stock into Common Stock.
(ii) DELIVERY OF COMMON STOCK UPON CONVERSION. The Company
either:
(x) shall use its best efforts to cause the Custodian,
no later than the close of business on the following business day,
and, in any event, shall cause the Custodian, no later than the close
of business on the second (2nd) business day after receipt by the
Company or the Custodian of a facsimile copy of a Notice of Conversion
(the "Custodian's Deadline"), to surrender to a common courier for
overnight delivery to the Company's transfer agent (the "Transfer
Agent") a certificate or certificates for the number of shares of
Common Stock to which the Holder shall be entitled as aforesaid and
shall cause the Transfer Agent to countersign the Common Stock
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certificate(s) which it receives from the Custodian and, no later than
the close of business on the business day following the day it
receives the Common Stock certificate(s) and receives written
confirmation from the Custodian or the Company that the Custodian or
the Company has received all necessary documentation duly executed and
in proper form required for conversion, including the original
Preferred Stock Certificates to be converted (or after provision for
security or indemnification in the case of lost or destroyed
certificates, if required)(the "Transfer Agent's Deadline"), to
surrender such Common Stock certificate(s) to a common courier for
either overnight or (if delivery is outside the United States) two (2)
day delivery to the Holder at the address of the Holder as shown on
the stock records of the Company (or to such other address as the
Holder shall provide in writing), or
(y) shall use its best efforts to cause its Transfer
Agent, no later than the close of business on the following business
day, and, in any event shall cause its Transfer Agent, no later than
the close of business on the second (2nd) business day (the
"Deadline"), after receipt by the Company or the Custodian of a
facsimile copy of a Notice of Conversion and receipt by the Company or
the Custodian of all necessary documentation duly executed and in
proper form required for conversion, including the original Preferred
Stock Certificates to be converted (or after provision for security or
indemnification in the case of lost or destroyed certificates, if
required), to issue and surrender for either overnight or (if delivery
is outside the United States) two (2) day delivery to the Holder at
the address of the Holder as shown on the stock records of the Company
(or to such other address as the Holder shall provide in writing) a
countersigned certificate for the number of shares of Common Stock to
which the Holder shall be entitled as aforesaid.
(iii) NO FRACTIONAL SHARES. If any conversion of the Series
C Preferred Stock would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion,
in the aggregate, shall be the next lower number of shares.
(iv) DATE OF CONVERSION. The date on which conversion
occurs (the "Date of Conversion") shall be deemed to be the date set forth in
such Notice of Conversion, provided (i) that the advance copy of the Notice of
Conversion is faxed to the Company or the Custodian before 11:59 p.m., New York
City time, on the Date of Conversion, and (ii) that the original Preferred Stock
Certificates representing the shares of Series C Preferred Stock to be converted
are surrendered by depositing such certificates with a common courier, for
delivery to the Company or the Custodian as provided above, as soon as
practicable after the Date of Conversion. The person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record Holder or Holders of such shares of
Common Stock on the Date of Conversion.
(c) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Series C Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all then outstanding
Series C Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of Series C Preferred Stock, the Company will
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take such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(d) AUTOMATIC CONVERSION. Each share of Series C Preferred
Stock outstanding on the date which is three (3) years after the Last Closing
Date or, if not a business day, the first business day thereafter ("Termination
Date") automatically shall either (i) be converted ("Automatic Conversion") into
Common Stock on such date at the Conversion Rate then in effect (calculated in
accordance with the formula in Section 5(a) above), and the Termination Date
shall be deemed the Date of Conversion with respect to such conversion or, at
the Company's option, (ii) be redeemed ("Automatic Redemption") by the Company
for cash in an amount equal to the Stated Value (as defined in Section 6(b)(i)
below) of the shares of Series C Preferred Stock being redeemed. If the Company
elects to redeem, the Company shall send to the Holders of outstanding Series C
Preferred Stock notice (the "Automatic Redemption Notice") on the fifth (5th)
day immediately preceding the Termination Date, via facsimile of its intent to
effect an Automatic Redemption of the outstanding Series C Preferred Stock. If
the Company does not send such notice to Holder on such date, an Automatic
Conversion shall be deemed to have occurred. If an Automatic Conversion occurs,
the Company and the Holders shall follow the applicable conversion procedures
set forth in this Certificate of Designation; provided, however, that the
Holders are not required to send the Notice of Conversion contemplated by
Section 5(b). If the Company elects to redeem, each Holder of outstanding Series
C Preferred Stock shall send their certificates representing the Series C
Preferred Stock to the Company within five (5) days of the date of receipt of
the Automatic Redemption Notice from the Company, and the Company shall pay the
applicable redemption price to each respective Holder within five (5) days of
the receipt of such certificates. The Company shall not be obligated to deliver
the redemption price unless the certificates representing the Series C Preferred
Stock are delivered to the Company, or, in the event one or more certificates
have been lost, stolen, mutilated or destroyed, unless the Holder has complied
with Section 5(b)(i). If the Company elects to redeem under this Section 5(d)
and the Company fails to pay the Holders the redemption price within five (5)
days of the Termination Date as required by this Section 5(d), then an Automatic
Conversion shall be deemed to have occurred and, upon receipt of the Preferred
Stock Certificates, the Company shall immediately deliver to the Holders the
certificates representing the number of shares of Common Stock to which the
Holders would have been entitled upon Automatic Conversion.
(e) ADJUSTMENT TO CONVERSION RATE.
(i) ADJUSTMENT TO FIXED CONVERSION PRICE DUE TO STOCK
SPLIT, STOCK DIVIDEND, ETC. If, prior to the conversion of all of the Series C
Preferred Stock, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, or other similar event, the Fixed Conversion
Price shall be proportionately reduced, or if the number of outstanding shares
of Common Stock is decreased by a combination or reclassification of shares, or
other similar event, the Fixed Conversion Price shall be proportionately
increased.
(ii) ADJUSTMENT TO VARIABLE CONVERSION PRICE. If, at
any time when any shares of the Series C Preferred Stock are issued and
outstanding, the number of outstanding shares of Common Stock is increased or
decreased by a stock split, stock dividend, or other similar event, which event
shall have taken place during the reference period for determination of the
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Conversion Price for any conversion of the Series C Preferred Stock, then the
Variable Conversion Price shall be calculated giving appropriate effect to the
stock split, stock dividend, combination, reclassification or other similar
event for all five (5) trading days immediately preceding the Date of
Conversion.
(iii) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC.
If, prior to the conversion of all Series C Preferred Stock, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization, or
other similar event, as a result of which shares of Common Stock of the Company
shall be changed into the same or a different number of shares of the same or
another class or classes of stock or securities of the Company or another entity
or there is a sale of all or substantially all the Company's assets or there is
a Change of Control deemed not to be a Liquidation Event pursuant to section
4(c), then the Holders of Series C Preferred Stock shall thereafter have the
right to receive upon conversion of Series C Preferred Stock, upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore issuable upon conversion, such stock,
securities and/or other assets which the Holder would have been entitled to
receive in such transaction had the Series C Preferred Stock been converted
immediately prior to such transaction, and in any such case appropriate
provisions shall be made with respect to the rights and interests of the Holders
of the Series C Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for the adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the Series C
Preferred Stock) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities thereafter deliverable upon the exercise hereof.
The Company shall not effect any transaction described in this subsection
5(e)(iii) unless (a) it first gives thirty (30) business days prior notice of
such merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event (during which time the Holder shall be
entitled to convert its shares of Series C Preferred Stock into Common Stock)
and (b) the resulting successor or acquiring entity (if not the Company) assumes
by written instrument the obligations of the Company under this Certificate of
Designation including this subsection 5(e)(iii).
(iv) NO FRACTIONAL SHARES. If any adjustment under
this Section 5(e) would create a fractional share of Common Stock or a right to
acquire a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon conversion
shall be the next lower number of shares.
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Section 6. REDEMPTION BY COMPANY.
(a) COMPANY'S RIGHT TO REDEEM UPON RECEIPT OF NOTICE OF
CONVERSION. If the Conversion Price of the Company's Common Stock is less than
the Fixed Conversion Price (as defined in Section 5(a)), at the time of receipt
of a Notice of Conversion pursuant to Section 5, the Company shall have the
right, in its sole discretion, to redeem in whole or in part any Series C
Preferred Stock submitted for conversion at the Redemption Rate (as defined
below), immediately prior to and in lieu of conversion ("Redemption Upon Receipt
of Notice of Conversion"). If the Company elects to redeem some, but not all, of
the Series C Preferred Stock submitted for conversion, the Company shall redeem
from among the Series C Preferred Stock submitted by the various shareholders
for conversion on the applicable date, a pro-rata amount from each such Holder
so submitting Series C Preferred Stock for conversion.
(i) REDEMPTION PRICE UPON RECEIPT OF A NOTICE OF
CONVERSION. The redemption price of Series C Preferred Stock under this Section
6(a) shall be calculated as follows ("Redemption Rate"):
Redemption Rate = Stated Value x 117.6%
where,
"Stated Value" shall have the same meaning as defined in Section
6(b)(i) below.
(ii) MECHANICS OF REDEMPTION UPON RECEIPT OF NOTICE OF
CONVERSION. The Company shall effect each such redemption by giving notice to
the Holder and to the Custodian of its election to redeem, by facsimile, by 5:00
p.m. New York City time the next business day following receipt of a Notice of
Conversion from a Holder, and the Company shall provide a copy of such
redemption notice by overnight or two (2) day courier, to (A) the Holder of the
Series C Preferred Stock submitted for conversion at the address and facsimile
number of such Holder appearing in the Company's register for the Series C
Preferred Stock and (B) the Custodian. Such redemption notice shall indicate
whether the Company will redeem all or part of the Series C Preferred Stock
submitted for conversion and the applicable redemption price.
(b) COMPANY'S RIGHT TO REDEEM AT ITS ELECTION. At any time,
commencing twelve (12) months and one (1) day after the Last Closing Date, the
Company shall have the right, in its sole discretion, to redeem ("Redemption at
Company's Election"), from time to time, any or all of the Series C Preferred
Stock; provided that (i) Company shall first provide thirty (30) business days
advance written notice as provided in subparagraph 6(b)(ii) below (which can be
given beginning thirty (30) business days prior to the date which is twelve (12)
months and one (1) day after the Last Closing Date), and (ii) the Company shall
only be entitled to redeem Series C Preferred Stock having an aggregate Stated
Value (as defined below) of at least One Million Five Hundred Thousand Dollars
($1,500,000). If the Company elects to redeem some, but not all, of the Series C
Preferred Stock, the Company shall redeem a pro-rata amount from each Holder of
the Series C Preferred Stock.
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(i) REDEMPTION PRICE AT COMPANY'S ELECTION. The
"Redemption Price At Company's Election" shall be calculated as a percentage of
Stated Value, as that term is defined below, of the Series C Preferred Stock
redeemed pursuant to this Section 6(b), which percentage shall vary depending on
the date of Redemption at Company's Election (as defined below), and shall be
determined as follows:
DATE OF NOTICE OF REDEMPTION AT COMPANY'S ELECTION % OF STATED VALUE
12 months and 1 day to 18 months following Last Closing Date 130%
18 months and 1 day to 24 months following Last Closing Date 125%
24 months and 1 day to 30 months following Last Closing Date 120%
30 months and 1 day to 36 months following Last Closing Date 115%
For purposes hereof, "Stated Value" shall mean the Original Series C
Issue Price (as defined in Section 1) of the shares of Series C Preferred Stock
being redeemed pursuant to this Section 6(b), together with the accrued but
unpaid Premium (as defined in Section 4(a)).
(ii) MECHANICS OF REDEMPTION AT COMPANY'S ELECTION.
The Company shall effect each such redemption by giving at least thirty (30)
business days prior written notice ("Notice of Redemption At Company's
Election") to (A) the Holders of the Series C Preferred Stock selected for
redemption, at the address and facsimile number of such Holder appearing in the
Company's Series C Preferred stock register and (B) the Custodian, which Notice
of Redemption At Company's Election shall be deemed to have been delivered three
(3) business days after the Company's mailing (by overnight or two (2) day
courier, with a copy by facsimile) of such Notice of Redemption At Company's
Election. Such Notice of Redemption At Company's Election shall indicate (i) the
number of shares of Series C Preferred Stock that have been selected for
redemption, (ii) the date which such redemption is to become effective (the
"Date of Redemption At Company's Election") and (iii) the applicable Redemption
Price At Company's Election, as defined in subsection (b)(i) above.
Notwithstanding the above, Holder may convert into Common Stock pursuant to
section 5, prior to the close of business on the Date of Redemption at Company's
Election, any Series C Preferred Stock which it is otherwise entitled to
convert, including Series C Preferred Stock that has been selected for
redemption at Company's election pursuant to this subsection 6(b); provided,
however, that the Company shall still be entitled to exercise its right to
redeem upon receipt of a Notice of Conversion pursuant to section 6(a).
(c) COMPANY MUST HAVE IMMEDIATELY AVAILABLE FUNDS OR CREDIT
FACILITIES. The Company shall not be entitled to send any Redemption Notice and
begin the redemption procedure under Sections 6(a) and 6(b) unless it has:
(i) the full amount of the redemption price in cash,
available in a demand or other immediately available account in a bank or
similar financial institution; or
(ii) immediately available credit facilities, in the
full amount of the redemption price with a bank or similar financial
institution; or
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(iii) a firm commitment agreement with an underwriter
to purchase from the Company a sufficient number of shares of stock to provide
proceeds necessary to redeem any stock that is not converted prior to
redemption; or
(iv) a combination of the items set forth in (i), (ii)
and (iii) above, aggregating the full amount of the redemption price.
(d) PAYMENT OF REDEMPTION PRICE.
(i) Each Holder submitting Preferred Stock being
redeemed under this Section 6 shall send their Series C Preferred Stock
Certificates so redeemed to the Custodian, and the Company shall pay the
applicable redemption price to that Holder within five (5) business days of the
Date of Redemption at Company's Election. The Company shall not be obligated to
deliver the redemption price unless the Preferred Stock Certificates so redeemed
are delivered to the Custodian, or, in the event one (1) or more certificates
have been lost, stolen, mutilated or destroyed, unless the Holder has complied
with Section 5(b)(i).
(ii) If Company elects to redeem pursuant to Section
6(a) hereof, and Company fails to pay Holder the redemption price within the
time frame as required by this Section 6(d), then Company shall issue shares of
Common Stock to any such Holder who has submitted a Notice of Conversion in
compliance with Section 5(b) hereof. The shares to be issued to Holder pursuant
to this provision shall be the number of shares determined using a Conversion
Price (as defined in Section 6 hereof) that equals the lesser of (i) the
Conversion Price on the date Holder sends its Notice of Conversion to Company
and the Custodian via facsimile or (ii) the Conversion Price on the date the
Custodian issues Common Stock pursuant to this Section 6(d)(ii).
(e) BLACKOUT PERIOD. Notwithstanding the foregoing, the
Company may not either send out a redemption notice or effect a redemption
pursuant to Section 6(b) above during a Blackout Period (defined as a period
during which the Company's officers or directors would not be entitled to buy or
sell stock because of their holding of material non-public information), unless
the Company shall first publicly disclose the non-public information that
resulted in the Blackout Period; provided, however, that no redemption shall be
effected until at least ten (10) days after the Company shall have given the
Holder written notice that the Blackout Period has been lifted.
Section 7. ADVANCE NOTICE OF REDEMPTION.
(a) HOLDER'S RIGHT TO ELECT TO RECEIVE NOTICE OF CASH
REDEMPTION BY THE COMPANY. Holder shall have the right to require Company to
provide advance notice stating whether the Company will elect to redeem Holder's
shares of Series C Preferred Stock in cash, pursuant to the Company's redemption
rights discussed in Section 6(a).
(b) MECHANICS OF HOLDER'S ELECTION NOTICE. Holder shall send
notice ("Election Notice") to the Company and such other person(s) as the
Company may designate, via facsimile, of the Holder's intention to require
Company to disclose that if Holder were to exercise his, her or its right of
conversion (pursuant to Section 5) whether Company would elect to redeem a
specific number of shares of Holder's Series C Preferred Stock for cash in lieu
of issuing Common Stock. Company is required to disclose to Holder what action
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Company would take, as set forth in subsection 7(c) below. The Holder is not
bound to exercise his, her or its right of conversion by virtue of having
delivered a notice pursuant to this Section.
(c) COMPANY'S RESPONSE. Upon receipt by the Company of a
facsimile copy of an Election Notice, Company shall immediately send, via
facsimile, a confirmation of receipt of the Election Notice to Holder, which
shall specify that the Election Notice has been received and the name and
telephone number of a contact person at the Company whom the Holder should
contact regarding information related to the requested advance notice.
Thereafter, the Company must respond by the close of business on the next
business day following receipt of Holder's Election Notice (1) via facsimile and
(2) by depositing such response with an overnight or two (2) day courier. The
Company's response must state whether it would redeem the shares, in whole or in
part, or allow conversion into shares of Common Stock without redemption. If
Company does not respond to Holder within one (1) business day via facsimile and
overnight or two (2) day courier, Company shall be required to issue to Holder
Common Stock upon Holder's conversion within the subsequent three (3) business
day period of Holder's Election Notice. However, if the Company's Common Stock
price decreases so that under the Conversion Rate applicable to such conversion,
Company would be required to issue more than an additional ten percent (10%) of
shares of Common Stock than Holder would have been entitled to receive if Holder
had sent a Conversion Notice on the same date Holder sent Company its Election
Notice, then Company shall no longer be bound to convert Holder's Preferred
Stock into Common Stock but may elect to redeem for cash.
Section 8. VOTING RIGHTS. The Holders of the Series C Preferred Stock
shall have no voting power whatsoever, except as otherwise provided by the
corporation law of the State of Colorado ("Colorado Law"), and no Holder of
Series C Preferred Stock shall vote or otherwise participate in any proceeding
in which actions shall be taken by the Company or the shareholders thereof or be
entitled to notification as to any meeting of the shareholders.
Notwithstanding the above, Company shall provide Holder with
notification of any meeting of the shareholders regarding any major corporate
events affecting the Company. In the event of any taking by the Company of a
record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire any share of any class or any other
securities or property (including by way of merger, consolidation or
reorganization), or to receive any other right, or for the purpose of
determining shareholders who are entitled to vote in connection with any
proposed sale, lease or conveyance of all or substantially all of the assets of
the Company, or any proposed liquidation, dissolution or winding up of the
Company, the Company shall mail a notice to Holder, at least ten 10) days prior
to the record date specified therein, of the date on which any such record is to
be taken for the purpose of such dividend, distribution, right or other event,
and a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time.
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To the extent that under Colorado Law the vote of the Holders of the
Series C Preferred Stock, voting separately as a class, is required to authorize
a given action of the Company, the affirmative vote or consent of the Holders of
at least a majority of the shares of the Series C Preferred Stock represented at
a duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series C Preferred Stock (except as otherwise may be
required under Colorado Law) shall constitute the approval of such action by the
class. To the extent that under Colorado Law the Holders of the Series C
Preferred Stock are entitled to vote on a matter with holders of Common Stock,
voting together as one (1) class, each share of Series C Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is calculated.
Holders of the Series C Preferred Stock also shall be entitled to notice of all
shareholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Company's
by-laws and applicable statutes.
Section 9. PROTECTIVE PROVISION. So long as shares of Series C
Preferred Stock are outstanding, the Company shall not without first obtaining
the approval (by vote or written consent, as provided by Colorado Law) of the
Holders of at least seventy-five percent (75%) of the then outstanding shares of
Series C Preferred Stock, and at least seventy-five percent (75%) of the then
outstanding Holders:
(a) alter or change the rights, preferences or privileges of
the Series C Preferred Stock or any other Securities so as to affect adversely
the Series C Preferred Stock;
(b) create any new class or series of stock having a
preference over or on parity with the Series C Preferred Stock with respect to
Distributions (as defined in Section 2 above) or increase the size of the
authorized number of Series C Preferred; or
(c) do any act or thing not authorized or contemplated by this
Certificate of Designation which would result in taxation of the holders of
shares of the Series C Preferred Stock under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended).
(d) issue any additional shares of the Series C Preferred
Stock after the Last Closing Date.
In the event Holders of at least seventy-five percent (75%) of the then
outstanding shares of Series C Preferred Stock and at least seventy-five percent
(75%) of the then outstanding Holders agree to allow the Company to alter or
change the rights, preferences or privileges of the shares of Series C Preferred
Stock, pursuant to subsection (a) above, so as to affect the Series C Preferred
Stock, then the Company will deliver notice of such approved change to the
Holders of the Series C Preferred Stock that did not agree to such alteration or
change (the "Dissenting Holders") and Dissenting Holders shall have the right
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for a period of thirty (30) business days to convert pursuant to the terms of
this Certificate of Designation as they exist prior to such alteration or change
(notwithstanding the holding requirements set forth in Section 5(a) hereof), or
continue to hold their shares of Series C Preferred Stock.
Section 10. STATUS OF CONVERTED OR REDEEMED STOCK. In the event any
shares of Series C Preferred Stock shall be converted or redeemed pursuant to
Section 5 or Section 6 hereof, the shares so converted or redeemed shall be
canceled, shall return to the status of authorized but unissued Preferred Stock
of no designated series, and shall not be issuable by the Company as Series C
Preferred Stock.
Section 11. PREFERENCE RIGHTS. Nothing contained herein shall be
construed to prevent the Board of Directors of the Company from issuing one (1)
or more series of Preferred Stock with dividend and/or liquidation preferences
junior to the dividend and liquidation preferences of the Series C Preferred
Stock.
Section 12. EVENTS OF DEFAULT. Upon the occurrence of and during the
continuation of an Event of Default (as defined below) and upon delivery of a
notice of acceleration by any Holder, the Company shall pay to the Holder an
amount (the "Acceleration Payment") equal to one hundred thirty percent (130%)
of the Stated Value of the Holder's outstanding Series C Preferred Stock to the
date of payment and all other amounts payable hereunder shall immediately become
due and payable, all without demand, presentment, or notice, all of which hereby
are expressly waived, together with all costs, including, without limitation,
legal fees and expenses, of collection, and the Holder shall be entitled to
exercise all other rights and remedies available at law or equity.
If the Company fails to pay any amounts due pursuant to this Section 12
within five (5) business days of such amounts being due and payable, then the
Holder shall have the right at any time, so long as the Company remains in
default, to require the Company, upon written notice, to immediately issue, in
lieu of such amounts, the number of shares of Common Stock of the Company equal
to the amounts owed by Company to the Holder divided by the Conversion Price
then in effect on the date the Company issues shares pursuant to this Section
12.
The Company shall be required promptly upon its knowledge of an Event
of Default hereunder to give notice of such Event of Default to the Holder
hereof.
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An "Event of Default" shall mean the following:
(a) CONVERSION. If the Company fails to issue shares of Common
Stock to any Holder upon exercise by such Holder of the Conversion Rights of the
Holder in accordance with the terms of this Certificate of Designation, fails to
transfer any certificate for shares of Common Stock issued to any Holder upon
conversion of any Preferred Stock and when required by the Certificate of
Designation or fails to remove any restrictive legend on any certificate for any
shares of Common Stock issued to a Holder upon conversion of any Preferred Stock
as and when required by this Certificate of Designation or any Subscription
Agreement by and between Company and Holders and any such failure shall continue
uncured for ten (10) business days;
(b) BREACH OF COVENANT. If the Company breached any material
covenant or other material term or condition of this Certificate of Designation
or any Subscription Agreement by and between Company and Holder (including the
failure to have enough stock available for issuance upon conversion), and such
breach continues for a period of ten (10) business days after written notice
thereof to the Company from the Holder;
(c) BREACH OF REPRESENTATIONS AND WARRANTIES. Any
representation or warranty of the Company made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection
herewith (including, without limitation, any Subscription Agreement by and
between Company and Holder), shall be false or misleading in any material
respect when made;
(d) RECEIVER OR TRUSTEE. The Company or any subsidiary of the
Company shall make an assignment for the benefit of creditors, or apply for or
consent to the appointment of a receiver or trustee for it or for a substantial
part of its property or business; or such a receiver or trustee shall otherwise
be appointed;
(e) JUDGMENTS. Any money judgment, writ or similar process
shall be entered or filed against the Company or any subsidiary of the Company
or any of its property or other assets for more than Five Hundred Thousand
Dollars ($500,000), and shall remain unvacated, unbonded or unstayed for a
period or twenty (20) days unless otherwise consented to by the Holder, which
consent will not be unreasonably withheld; or
(f) BANKRUPTCY. Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief or debtors shall be instituted by or against the
Company or any subsidiary of the Company.
Section 13. FUTURE OFFERING OF SECURITIES. In the event that in a
capital raising transaction, the Company, after the date of this Certificate,
issues any Common Stock or debt or equity securities convertible into Common
Stock (collectively referred to hereinafter as "Future Equity") and such shares
of Common Stock are or will become freely tradable on or prior to eight (8)
months following the Last Closing Date pursuant to a registration statement or
pursuant to an exemption from the registration requirements of the Securities
Act of 1933, the Holders of the outstanding Series C Preferred Stock shall have
the right, on the date of the closing of such Future Equity transaction and at
any time thereafter, to convert any or all of its outstanding Series C Preferred
Stock into Common Stock pursuant to the terms of this Certificate of Designation
(notwithstanding the holding requirements set forth in Section 5(a) hereof).
Signed on ____________________, 1996
___________________________________
Gordon J. Sales, President and CEO
Attest:
____________________________________
_________________, Secretary
15
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase
___________ shares
WARRANT TO PURCHASE COMMON STOCK
OF
INTERCELL CORPORATION
THIS CERTIFIES that _____________________________ or any subsequent
("Holder") hereof, has the right to purchase from INTERCELL CORPORATION, a
Colorado corporation (the "Company"), up to _______ fully paid and nonassessable
shares of the Company's Common Stock, no par value ("Common Stock"), subject to
adjustment as provided herein, at a price equal to the Exercise Price as defined
in Section 3 below, at any time beginning on the Date of Issuance and ending at
5:00 p.m., New York, New York time, on November 30, 2001.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. DATE OF ISSUANCE.
This Warrant shall be deemed to be issued on December 10, 1996 ("Date
of Issuance").
2. EXERCISE.
(a) MANNER OF EXERCISE. This Warrant may not be exercised prior to
June 1, 1997. Thereafter, this Warrant may be exercised as to all or any lesser
number of full shares of Common Stock covered hereby upon surrender of this
Warrant, with the Exercise Form attached hereto duly executed, together with the
full Exercise Price (as defined in Section 3) for each share of Common Stock as
to which this Warrant is exercised, at the office of the Company, Suite 1750,
999 West Hastings St., Vancouver, B.C. V6C 2W2; Attention: President, Telephone
No. (604) 684-1533, Telecopy No. (604) 688-7997, or at such other office or
agency as the Company may designate in writing, by overnight mail, with an
advance copy of the Exercise Form attached as Exhibit A ("Exercise Form") by
facsimile (such surrender and payment of the Exercise Price hereinafter called
the "Exercise of this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant and Exercise Form
are received by the Company as soon as practicable thereafter. Alternatively,
the Date of Exercise shall be defined as the date the original Exercise Form is
received by the Company, if Holder has not sent advance notice by facsimile.
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(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) HOLDER OF RECORD. Each person in whose name any Warrant for
shares of Common Stock is issued shall, for all purposes, be deemed to have
become the Holder of record of such shares on the Date of Exercise of this
Warrant, irrespective of the date of delivery of such shares of Common Stock.
Nothing in this Warrant shall be construed as conferring upon the Holder hereof
any rights as a shareholder of the Company.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The Exercise Price shall equal $3.25 ("Exercise Price").
Payment of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of Holder:
(i) CASH EXERCISE: cash, certified check or cashiers check or wire
transfer; or
(ii) CASHLESS EXERCISE: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one (1) share of Common Stock (for
purposes of this Section 3(ii), the "Market Price" shall be
defined as the average closing price of the Common Stock for
the five (5) trading days prior to the Date of Exercise of
this Warrant (the "Average Closing Price"), as reported by the
OTC Bulletin Board, or if the Common Stock is not traded on
the OTC Bulletin Board, the Average Closing Price in the
over-the-counter market; provided, however, that if the Common
Stock is listed on a stock exchange, the Market Price shall be
the Average Closing Price on such exchange. If the Common
Stock is/was not traded during the five (5) trading days prior
to the Date of Exercise, then the closing price for the last
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publicly traded day shall be deemed to be the closing price
for any and all (if applicable) days during such five (5)
trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such (x) be then registered pursuant to an effective registration statement
filed pursuant to that certain Registration Rights Agreement dated on or about
December 9, 1996 by and among the Company and certain investors; or (y)
otherwise be registered under the Securities Act of 1933, as amended.
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
endorsed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
(b) REGISTRABLE SECURITIES. The Common Stock issuable upon the
exercise of this Warrant constitute "Registrable Securities" under that certain
Registration Rights Agreement dated on or about December 9, 1996 between the
Company and certain investors and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
5. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then the Holder hereof, upon
Exercise of this Warrant after the record date for the determination of Holders
of Common Stock entitled to receive such dividend, shall be entitled to receive
upon Exercise of this Warrant, in addition to the number of shares of Common
Stock as to which this Warrant is Exercised, such additional shares of Common
Stock as such Holder would have received had this Warrant been Exercised
immediately prior to such record date and the Exercise Price will be
proportionately adjusted.
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(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at
any time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be changed
into or become exchangeable for a larger or smaller number of shares, then upon
the effective date thereof, the number of shares of Common Stock which the
Holder hereof shall be entitled to purchase upon Exercise of this Warrant shall
be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
recapitalization, reclassification or similar transaction, and the Exercise
Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of shares,
proportionally increased. The Company shall give the Warrant Holder the same
notice it provides to holders of Common Stock of any transaction described in
this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute to
Holders of Common Stock cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of earned surplus
or net profits for the current or preceding year) then, in any such case, the
Holder of this Warrant shall be entitled to receive, upon exercise of this
Warrant, with respect to each share of Common Stock issuable upon such Exercise,
the amount of cash or evidences of indebtedness or other securities or assets
which such Holder would have been entitled to receive with respect to each such
share of Common Stock as a result of the happening of such event had this
Warrant been Exercised immediately prior to the record date or other date fixing
shareholders to be affected by such event (the "Determination Date") or, in lieu
thereof, if the Board of Directors of the Company should so determine at the
time of such distribution, a reduced Exercise Price determined by multiplying
the Exercise Price on the Determination Date by a fraction, the numerator of
which is the result of such Exercise Price reduced by the value of such
distribution applicable to one share of Common Stock (such value to be
determined by the Board in its discretion) and the denominator of which is such
Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be exerciseable into such
class and type of securities or other assets as the Holder would have received
had the Holder exercised this Warrant immediately prior to such Corporate
Change; provided, however, that Company may not affect any Corporate Change
unless it first shall have given thirty (30) business days notice to the Holder
hereof of any Corporate Change.
(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in Section 3
of this Warrant, until the occurrence of an event stated in subsection (a), (b)
or (c) of this Section 5, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection. No such
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adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the
effect of increasing the Exercise Price. The number of shares of Common Stock
subject hereto shall increase proportionately with each decrease in the Exercise
Price.
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
the Holder of this Warrant shall, upon Exercise of this Warrant, become entitled
to receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon
terms as nearly equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, the
Holder hereof may purchase only a whole number of shares of Common Stock. If, on
Exercise of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon conversion shall be the next higher number of shares.
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7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise and
payment of the Exercise Price of this Warrant. The Company covenants and agrees
that upon Exercise of this Warrant, all shares of Common Stock issuable upon
such Exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. RESTRICTIONS ON TRANSFER.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has been issued
in a transaction exempt from the registration requirements of the Act by virtue
of Regulation D. The Warrant and the Common Stock issuable upon exercise of the
Warrant may not be sold except pursuant to an effective registration statement
or an exemption to the registration requirements of the Act and applicable state
laws.
(b) ASSIGNMENT. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and the Holder of this Warrant any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and the Holder of this Warrant.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the state of Colorado, without
giving effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft, destruction
or mutilation of this Warrant, and (in the case of loss, theft or destruction)
of indemnity or security reasonably satisfactory to the Company, and upon
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surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by the
Holder of this Warrant to or on the Company shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Company, to Attention: President, Intercell Corporation, Suite 1750, 999 West
Hastings St., Vancouver, B.C. V6C 2W2, Attention: President, Telephone No. (604)
684-1533, Telecopy No. (604) 688-7997. Notices or demands pursuant to this
Warrant to be given or made by the Company to or on the Holder of this Warrant
shall be sufficiently given or made if sent by certified or registered mail,
return receipt requested, postage prepaid, and addressed, to the address of the
Holder set forth in the Company's records, until another address is designated
in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
______ day of ______, 1996.
INTERCELL CORPORATION
By: ________________________________
Print Name:
________________________________
Title: ________________________________
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EXHIBIT A
EXERCISE FORM
TO: INTERCELL CORPORATION
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of INTERCELL CORPORATION, a Colorado
corporation (the "Company"), evidenced by the attached Warrant, and herewith
makes payment of the Exercise Price with respect to such shares in full, all in
accordance with the conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of Common Stock obtained on exercise of the Warrant, except in accordance
with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, and a warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant in the name of the Registered
Holder and delivered to the undersigned at the address set forth below:
Dated:
________________________________________________________________________________
Signature of Registered Holder
________________________________________________________________________________
Name of Registered Holder (Print)
________________________________________________________________________________
Non-U.S. Address
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of INTERCELL CORPORATION evidenced
by the attached Warrant and does hereby irrevocably constitute and appoint
_______________________ attorney to transfer the said Warrant on the books of
the Company, with full power of substitution in the premises.
Dated: ______________________________
Signature
Fill in for new Registration of Warrant:
_________________________________________
Name
_________________________________________
Address
_________________________________________
Please print name and address of assignee
(including zip code number)
________________________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
________________________________________________________________________________
9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
_____________, 1996, by and among Intercell Corporation, a Colorado corporation
("Company"), Swartz Investments, LLC, a Georgia limited liability company
("Swartz Investments") and the subscribers (hereinafter referred to as
"Subscribers" or "Investors") to the Company's offering ("Offering") of up to
Six Million Dollars ($6,000,000) of Series C Convertible Preferred Stock (the
"Preferred Stock") pursuant to the Regulation D Securities Subscription
Agreement between the Company and the Subscribers ("Subscription Agreement").
1. DEFINITIONS. For purposes of this Agreement:
(a) The terms "register", "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933 (the "Act"), and
pursuant to Rule 415 under the Act or any successor rule, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) For purposes of the Required Registration under Section 2
hereof, the term "Registrable Securities" means the shares of the Company's
Common Stock together with any capital stock issued in replacement of, in
exchange for or otherwise in respect of such Common Stock, the "Common Stock"),
issuable or issued upon (i) conversion of the Series C Preferred Stock (the
"Preferred Stock") issued to Subscribers in the Offering and (ii) exercise of
the Warrants.
For purposes of a Demand Registration under Section 3 hereof or a
Piggyback Registration under Section 4 hereof, "Registrable Securities" shall
have the meaning set forth above, except that the following shall not constitute
Registrable Securities for purposes of a Demand Registration under Section 3
hereof or a Piggyback Registration under Section 4 hereof:
1. shares of Common Stock obtainable (x) on conversion of the
Preferred Stock (in whole or in part) and (y) on exercise of
the Warrant (the "Warrant Shares"), shall not constitute
Registrable Securities if those shares of Common Stock may be
resold in a public transaction without registration under the
Act, including without limitation pursuant to Rule 144 under
the Act; and
2. any Registrable Securities resold in a public transaction
shall cease to constitute Registrable Securities.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock which
have been issued or are issuable upon conversion of the Preferred Stock and
exercise of the Warrants at the time of such determination;
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(d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any permitted assignee thereof;
(e) The terms "Warrant" and "Warrants" refer to (i) the warrants
granted to Swartz Investments or to persons designated by Swartz Investments in
connection with this Offering or in connection with the offering of the
Company's Series B Preferred Stock and (ii) the warrant or warrants issued to
Subscribers as securities in connection with the Offering;
(f) The term "Initiating Holders" means (i) holders of Registrable
Securities obtained or obtainable upon conversion of at least Fifty (50) shares
of Preferred Stock; and
(g) The term "Due Date" means the date which is four (4) months
after the Last Closing (as defined in the Subscription Agreement) of the
Offering (as defined in the Subscription Agreement).
2. REQUIRED REGISTRATION.
(a) Within thirty (30) days after the Last Closing of the Offering
(as defined in the Subscription Agreement), the Company shall file a
registration statement ("Registration Statement") on Form S-1 (or other suitable
form, at the Company's discretion but subject to the reasonable approval of the
Investors), covering the resale of all shares of Registrable Securities then
outstanding including an indeterminate number of shares of Common Stock as
required to effect conversion of the Preferred Stock and exercise of the
Warrants. Such Registration Statement shall initially cover at least Four
Million (4,000,000) shares of Common Stock and allocated and reserved pro rata
among the Subscribers.
(b) The Registration Statement shall be prepared as a "shelf"
registration statement under Rule 415, and shall be maintained effective until
the distribution described in the Registration Statement is completed. The
Company shall use its best efforts to have the Registration Statement declared
effective within four (4) months after the Last Closing (as defined in the
Subscription Agreement).
(c) If the Registration Statement is not declared effective by the
Due Date, the Company must continue to use its best efforts to obtain a
declaration of effectiveness and shall pay the Investors an amount equal to two
percent (2%) per month of the aggregate amount of Preferred Stock sold in the
Offering, compounded monthly and accruing daily, until the Registration
Statement or a registration statement filed pursuant to Section 3 or Section 4
is declared effective, payable in common stock, which common stock shall also be
deemed "Registrable Securities" for the purpose of this Agreement. The accrual
amount payable will be tolled for any periods occasioned by a delay of a
Registration Statement under Section 3 as a result of the choice of the Holders
to have that Registration Statement underwritten.
3. DEMAND REGISTRATION.
(a) If the Registration Statement described in Section 2 above is
not effective by the Due Date, Initiating Holders may notify the Company in
writing and, subject to the terms of Section 5(d) below, demand that the Company
file a registration statement under the Securities Act (a "Demand Registration
Statement") covering the resale of the Registrable Securities then outstanding.
Upon receipt of such notice, the Company shall, within ten (10) days thereafter,
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<PAGE>
give written notice of such request to all Holders and shall, subject to the
limitations of subsections 3(b) and 5(b), as soon as practicable, and in any
event within sixty (60) days after the receipt of such request, effect
registration under the Act of all Registrable Securities which the Holders
request, by notice given to the Company within ten (10) days of receipt of the
Company's notice. The election of initiating Holders to demand the Company to
file a Demand Registration Statement shall not impact the amount payable to
investors pursuant to Section 2(c) herein.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 3
and the Company shall include such information in the written notice referred to
in subsection 3(a). In such event, the right of any other Holder to include such
Holder's Registrable Securities in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as provided in
subsection 6(f)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders, and reasonably acceptable to the Company.
The Holder will not be required to make any representation other than as to its
ownership of the Registrable Securities and its intended method of distribution.
(c) The Company is obligated to effect only one (1) demand
registration pursuant to Section 3 of this Agreement. The Company agrees to
include all Registrable Securities held by all Holders in such registration
statement without cutback or reduction. In the event the Company breaches its
obligation of the preceding sentences, any Holders of the Registrable Securities
which were not included in such registration statement shall be entitled to a
second demand registration for such excluded securities and the Company shall
keep such registration statement effective as required by Section 6.
(d) The Company represents that it is presently eligible to effect
the registration contemplated hereby on Form S-1 and will use its best efforts
to continue to take such actions as are necessary to maintain such eligibility.
4. PIGGYBACK REGISTRATION. If the Registration Statement described in
Section 2 is not effective by the Due Date, and no demand for a Demand
Registration Statement has been made pursuant to Section 3, and if (but without
any obligation to do so) the Company proposes to register (including for this
purpose a registration effected by the Company for shareholders other than the
Holders) any of its Common Stock under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely for the sale of securities to participants in a Company stock plan or a
registration on Form S-4 promulgated under the Act or any successor or similar
form registering stock issuable upon a reclassification, upon a business
combination involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall, at such time,
promptly give each Holder written notice of such registration (a "Piggyback
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<PAGE>
Registration Statement"). Upon the written request of each Holder given by fax
within ten (10) days after mailing of such notice by the Company, the Company
shall cause to be included in such registration statement under the Act all of
the Registrable Securities that each such Holder has requested to be registered
("Piggyback Registration"); nothing herein shall prevent the Company from
withdrawing or abandoning the registration statement prior to its effectiveness.
The election of initiating Holders to participate in a Piggyback Registration
Statement shall not impact the amount payable to investors pursuant to Section
2(c) herein.
5. LIMITATION ON OBLIGATIONS TO REGISTER.
(a) In the case of a Piggyback Registration on an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the inclusion in the registration statement of all
Registrable Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered by the Company,
then the number of such Registrable Securities to be included in the
registration statement shall be allocated among all Holders who had requested
Piggyback Registration, in the proportion that the number of Registrable
Securities which each such Holder, including Swartz Investments, seeks to
register bears to the total number of Registrable Securities sought to be
included by all Holders, including Swartz Investments.
(b) Notwithstanding anything to the contrary herein, the Company
shall have the right (i) to defer the initial filing or request for acceleration
of effectiveness of any Demand Registration Statement or Piggyback Registration
Statement or (ii) after effectiveness, to suspend effectiveness of any such
registration statement, if, in the good faith judgment of the board of directors
of the Company and upon the advice of counsel to the Company, such delay in
filing or requesting acceleration of effectiveness or such suspension of
effectiveness is necessary in light of (i) the requirement by the underwriter in
a public offering by the Company that such registration statement be delayed or
suspended or (ii) the existence of material non-public information (financial or
otherwise) concerning the Company, disclosure of which at the time is not, in
the opinion of the board of directors of the Company upon the advice of counsel,
(A) otherwise required and (B) in the best interests of the Company; provided,
however, that solely in the case of a demand registration the Company will not
delay filing or suspend effectiveness of such registration for more than three
(3) months from the date of the demand, unless it is then engaged in an
acquisition that would make such registration impracticable, in which case it
will use its best efforts to eliminate such impracticability as soon as possible
after such three (3) month period.
(c) In the event the Company believes that shares sought to be
registered under Section 2, Section 3 or Section 4 by Holders do not constitute
"Registrable Securities" by virtue of Section 1(b) of this Agreement, and the
status of those shares as Registrable Securities is disputed, the Company shall
provide, at its expense, an Opinion of Counsel, reasonably acceptable to the
Holders of the Securities at issue (and satisfactory to the Company's transfer
agent to permit the sale and transfer) that those securities may be sold
immediately, without restriction or resale, without registration under the Act,
by virtue of Rule 144 or applicable provisions.
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(d) The Company is not obligated to effect a Demand Registration
under this Section 3: i) during the ninety (90) day period after the Due Date,
so long as the Registration Statement has been filed, and the Company is using
its best efforts to obtain a declaration of the effectiveness of the
Registration Statement during such period or, ii) if in the opinion of counsel
to the Company reasonably acceptable to the person or persons from whom written
request for registration has been received (and satisfactory to the Company's
transfer agent to permit the transfer) that registration under the Act is not
required for the immediate transfer of all of the Registrable Securities
pursuant to Rule 144 or other applicable provision.
6. OBLIGATIONS TO INCREASE THE NUMBER OF AVAILABLE SHARES. In the event
that the number of shares available under a registration statement filed
pursuant to Section 2 or Section 3 is insufficient to cover all of the
Registrable Securities then outstanding, the Company shall amend that
registration statement, or file a new registration statement, or both, so as to
cover all shares of Registrable Securities then outstanding. The Company shall
effect such amendment or new registration as soon as practicable, but in any
event within thirty (30) days of the date the registration statement filed under
Section 2 or Section 3 is insufficient to cover all the shares of Registrable
Securities then outstanding. Any registration statement filed hereunder shall,
to the extent permissible by the rules and regulations of the Securities and
Exchange Commission ("SEC"), state that, in accordance with Rule 416 under the
Act, such registration statement also covers such indeterminate numbers of
additional shares of Common Stock as may become issuable upon conversion of the
Preferred stock to prevent dilution resulting from stock changes or by reason of
changes in the conversion price in accordance with the terms thereof. Unless and
until such amendment or new registration statement is effective, the Investors
shall have the rights described in Section 2(c) above.
7. OBLIGATIONS OF THE COMPANY. Whenever required under this Agreement
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such Registrable Securities and
use its best efforts to cause such registration statement to become effective.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) With respect to any registration statement filed pursuant to
this Agreement, keep such registration statement effective until the sooner to
occur of (A) such time as the Holders of Registrable Securities covered by such
registration statement have completed the distribution described in the
registration statement, and (B) such time as all of the Registrable Securities
covered by such registration statement may be sold without any volume limitation
pursuant to Rule 144 promulgated under the Act.
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(d) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(e) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders of
the Registrable Securities covered by such registration statement, provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(g) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
(h) Furnish, at the request of any Holder whose shares are being
registered pursuant to this Agreement, on the date that such Registrable
Securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Agreement, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of outside
counsel of recognized standing (or reasonably acceptable to Holder) representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders whose shares are being registered pursuant to this Agreement.
(i) As promptly as practicable after becoming aware of such event,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the registration statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to each
Holder as such Holder may reasonably request.
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(j) Provide Holders with written notice of the date that a
registration statement registering the resale of the Registrable Securities is
declared effective by the SEC, and the date or dates when the registration
statement is no longer effective.
(k) Provide Holders and their representatives the opportunity to
conduct a reasonable due diligence inquiry of Company's pertinent financial and
other records and make available its officers, directors and employees for
questions regarding such information as it relates to information contained in
the registration statement.
(l) Provide Holders and their representatives the opportunity to
review the registration statement and all amendments thereto a reasonable period
of time prior to their filing with the SEC.
8. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
regard to each selling Holder that such selling Holders shall furnish to the
Company such information regarding themselves, the Registrable Securities held
by them, and the intended method of disposition of such securities as shall be
required to effect the registration of their Registrable Securities or to
determine that registration is not required pursuant to Rule 144 or other
applicable provision of the Act.
9. EXPENSES OF REQUIRED OR DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions and fees and expenses of counsel to the
selling Holders incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, shall be borne by the Company.
10. EXPENSES OF PIGGYBACK REGISTRATION. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registration
pursuant to Section 4 for each Holder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto but excluding underwriting discounts and
commissions and fees and expenses of counsel to the selling Holders relating to
Registrable Securities.
11. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
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or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
by the Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse each such Holder, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 11(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder, severally
and not jointly, will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls the Company within the meaning of the Act, any
underwriter and any other Holder selling securities in such registration
statement or any of its directors or officers or any person who controls such
Holder, against any losses, claims, damages, or liabilities (joint or several)
to which the Company or any such director, officer, controlling person, or
underwriter or controlling person, or other such Holder or director, officer or
controlling person may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by the
Company and any such director, officer, controlling person, underwriter or
controlling person, other Holder, officer, director, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 11(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this subsection
11(b) exceed the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 11 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 11, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
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the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses of one such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
11, but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 11.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 11 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each holder of Registrable
Securities agree to contribute to the aggregate claims, losses, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which the
Company and one or more of the holders of Registrable Securities may be subject
in such proportion as is appropriate to reflect the relative fault of the
Company and the holders in connection with the statements or omissions which
resulted in such Losses; provided, however, that in no case shall any holder be
responsible for any amount in excess of the net purchase price of securities
sold by it under the registration statement. Relative fault shall be determined
by reference to whether any alleged untrue statement or omission relates to
information provided by the Company or by the holders. The Company and the
holders agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 11,
each person who controls a holder of Registrable Securities within the meaning
of either the Securities Act or the Exchange Act and each director, officer,
partner, employee and agent of a holder shall have the same rights to
contribution as such holder, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act and each director of
the Company, and each officer of the Company who has signed the registration
statement, shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).
(e) The obligations of the Company and Holders under this Section 11
shall survive the redemption and conversion, if any, of the Preferred Stock, the
completion of any offering of Registrable Securities in a registration statement
under this Agreement, and otherwise.
12. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
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Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of SEC
Rule 144, the Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
13. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Registrable
Securities provided that the amendment treats all Holders equally. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon each
Holder, each future Holder, and the Company.
14. NOTICES. All notices required or permitted under this Agreement
shall be made in writing signed by the party making the same, shall specify the
section under this Agreement pursuant to which it is given, and shall be
addressed if to (i) the Company at: Intercell Corporation, Suite 1750, 999 West
Hastings St., Vancouver, B.C., V6C 2W2 Telephone No. (604) 684-1533, Telecopy
No. (604) 688-7997 and (ii) the Holders at their respective last address as the
party shall have furnished in writing as a new address to be entered on such
register. Any notice, except as otherwise provided in this Agreement, shall be
made by fax and shall be deemed given at the time of transmission of the fax.
15. TERMINATION. This Agreement shall terminate on the earlier to occur
of (a) the date that is three (3) years from the date of this Agreement and (b)
the date the distribution of all Registrable Securities described in any
registration statement filed pursuant to this Agreement is completed; but
without prejudice to (i) the parties' rights and obligations arising from
breaches of this Agreement occurring prior to such termination (ii) other
indemnification obligations under this Agreement or (iii) the Company's
obligation to maintain the effectiveness of a registration statement filed prior
thereto in accordance with the terms hereof, and to fulfill its obligation
hereunder in respect thereof until it is no longer required to maintain the
effectiveness thereof.
16. ASSIGNMENT. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this Agreement
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by the Company or any Holder, respectively, shall be made without the prior
written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a Demand
Registration or Piggyback Registration, a writing executed by such transferee
agreeing to be bound as a Holder by the terms of this Agreement); and provided
further that the Company may transfer its rights and obligations under this
Agreement to a purchaser of all or a substantial portion of its business if the
obligations of the Company under this Agreement are assumed in connection with
such transfer, either by merger or other operation of law (which may include
without limitation a transaction whereby the Registrable Securities are
converted into securities of the successor in interest) or by specific
assumption executed by the transferee.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado applicable to agreements made
in and wholly to be performed in that jurisdiction, except for matters arising
under the Act or the Securities Exchange Act of 1934, which matters shall be
construed and interpreted in accordance with such laws.
18. EXECUTION IN COUNTERPARTS PERMITTED. This Agreement may be executed
in any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one (1) instrument.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
INTERCELL CORPORATION
By: ________________________________
Gordon J. Sales, President
Address:
Intercell Corporation
Suite 1750, 999 West Hastings St.
Vancouver, B.C. V6C 2W2
Telephone No. (604) 684-1533
Telecopy No. (604) 688-7997
SWARTZ INVESTMENTS, LLC
By: ________________________________
Eric Swartz,
President
Address: 200 Roswell Summit, Suite 285
1080 Holcomb Bridge Road
Roswell, GA 30076
INVESTOR(S)
___________________________________
Investor's Name
By:_________________________________
(Signature)
Address: ____________________________________
____________________________________
____________________________________
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