SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: July 18, 1997
Intercell Corporation
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Colorado 0-14306 84-0928627
-------------- ------------ -------------------
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
370 Seventeenth Street, Suite 3290
Denver, Colorado 80202
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 592-1010
Not Applicable
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(Former Name or Former Address, if Change Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective July 18, 1997, Intercell Corporation (the "Company") sold,
transferred, assigned and delivered certain assets, liabilities, rights and
obligations of the Company and its wholly-owned subsidiaries (collectively, the
"Assets") to Intercell Technologies Corporation, a Colorado corporation,
formerly known as both "Secure Luggage Systems, Inc." and "Emulation Products,
Inc." (the "Buyer"), pursuant to the terms and conditions set forth in that
certain Stock Purchase Agreement (the "Stock Purchase Agreement") dated July 18,
1997 between the Company and Buyer and the additional agreements contemplated
therein (the "Transaction"). In accordance with the terms and provisions of the
Stock Purchase Agreement the Company took the following actions, among others:
(i) transferred and assigned to the Buyer (A) all of the issued and
outstanding shares of common stock, no par value per share, of the
Company's wholly-owned subsidiary Intercell Wireless Corp., an Arizona
corporation ("Wireless"), and (B) all of the issued and outstanding shares
of common stock, no par value per share, of the Company's wholly-owned
subsidiary Cellular Magnetics, Inc., doing business as M.C. Davis Company,
an Arizona corporation ("CMI");
(ii) transferred and assigned to the Buyer all of the Company's right,
title and interest in and to those certain patent applications, nos.
08/658,355 and 08/715,796, relating to the design of a dual resonance
antenna for use in portable telephones (collectively, the "Patents");
(iii) transferred and assigned to Buyer certain office furniture and
equipment located on the premises of the Company's Scottsdale, Arizona
office valued at $75,000;
(iv) loaned to the Buyer $375,000 to be repaid by the Buyer pursuant
to the terms of a $375,000 Promissory Note discussed below, and paid
certain expenses and legal fees of Messrs. Terry W. Neild and Lou Ross in
the aggregate amount of $46,736.
As consideration for the properties, rights and agreements conveyed by the
Company to the Buyer, the Buyer and certain officers and directors of the Buyer
paid the following consideration, delivered the following documents and took the
following actions, among others (collectively, the "Purchase Price"):
(t) issued and delivered to the Company 6,269,226 newly-issued shares
of the Buyer's common stock, no par value per share (the "Common Stock");
(u) issued and delivered to the Company warrants (the "Warrants") to
purchase 6,269,226 shares of Common Stock, at an exercise price of $2.25
per share, which Warrants are exercisable for a period of three years and
become exercisable on July 18, 1998;
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<PAGE>
(v) agreed to register the Common Stock, the Warrants, and the Common
Stock issuable upon exercise of the Warrants with the Securities and
Exchange Commission no later than July 31, 1998;
(w) transferred and assigned 1,100,000 shares of the Company's no par
value common stock to the Company, which are currently being held as
treasury shares. A substantial majority of these shares were previously
held by Terry W. Neild and Lou Ross;
(x) executed and delivered secured promissory notes (the "Notes") in
the amounts of $2,200,000 and $375,000, respectively, each bearing interest
at the rate of ten percent (10%) per annum. The $2,220,000 Note is due and
payable on or before April 1, 2007 and secured by the common stock of CMI.
The $375,000 Note is due and payable on November 30, 1997 and secured by
the office furniture purchased by the Buyer from the Company;
(y) executed and delivered that certain Royalty Agreement dated as of
July 18, 1997, under which the Buyer agreed to pay the Company a 10%
royalty on all gross revenues derived from the sale of products utilizing
the technology contained in the Patents, with an aggregate cap of
$5,000,000 on total royalties paid; and
(z) assumed full liability and responsibility for all operating
expenses associated with CMI and Wireless, including all related personnel
and compensation expenses.
At the time the Transaction was proposed, Mr. Neild served as a director
and Executive Vice President of the Company as well as a director and executive
officer of CMI and Wireless, and Mr. Ross acted as a consultant to the Company.
Mr. Terry W. Neild currently is a director, President and Chief Executive
Officer of the Buyer and Mr. Ross is a director of the Buyer. The Company's
Board of Directors (the "Board") were advised of the material relationships that
existed in regard to the Transaction. Mr. Neild tendered, and the Board
accepted, his resignation as a director and as Executive Vice President on May
28, 1997. Mr. Neild did not take part in either the discussion or the decision
approving the Transaction.
Prior to approving the Transaction, the Board commissioned William Scott &
Company, LLC ("William Scott"), an independent investment banking firm, to
review and provide a fairness opinion on the terms of the Transaction, which
opinion was received and considered by the Board.
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<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
statements present pro forma financial information for the Company giving effect
to the Transaction. The unaudited pro forma condensed consolidated balance sheet
as of March 31, 1997 is presented as if the transaction had occurred as of that
date. The unaudited pro forma condensed consolidated statement of operations for
the six months ended March 31, 1997 is presented as if the transaction had
occurred on October 1, 1996. The unaudited pro forma condensed consolidated
statement of operations for the year ended September 30, 1996 has not been
included as the Company's results of operations for that period did not include
the operations of Wireless or CMI. Wireless was formed subsequent to September
30, 1996 and CMI was purchased by the Company on September 30, 1996. The
following unaudited pro forma condensed consolidated financial information and
notes thereto do not purport to represent what the Company's results of
operations or financial position would have been if such Transaction had in fact
occurred on such dates and should not be viewed as predictive of the Company's
financial results or condition in the future. The unaudited pro forma condensed
consolidated financial information should be read in conjunction with the
consolidated financial statements of the Company and subsidiaries in the
Company's Annual Report on Form 10-K for the year ended September 30, 1996 and
Quarterly Report on Form 10-Q for the period ending March 31, 1997.
<TABLE>
AS OF MARCH 31, 1997
------------------------------------------------------------
<CAPTION>
Businesses Pro
to be forma
Historical Disposed Adjustments Pro Forma
---------- -------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and investments ............. $ 7,029,000 (197,000) (345,000)(1) 6,487,000
Accounts receivable, Net ......... 967,000 (182,000) -- 785,000
Inventories ...................... 1,398,000 (239,000) -- 1,159,000
Prepaid expenses and other
current assets ................. 137,000 (7,000) -- 130,000
------------ ------------ ------------ ------------
Total Current Assets ........... $ 9,531,000 (625,000) (345,000) 8,561,000
Investment land held for sale ...... 1,424,000 -- -- 1,424,000
Investment in affiliated company ... -- -- 1,965,000 1,965,000
Property, plant and equipment ...... 2,248,000 (370,000) (75,000)(2) 1,803,000
Goodwill ........................... 1,438,000 (1,092,000) -- 346,000
Other assets ....................... 54,000 -- -- 54,000
------------ ------------ ------------ ------------
Total Assets ................... $ 14,695,000 (2,087,000) 1,545,000 14,153,000
============ ============ ============ ============
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<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities .................... $ 868,000 (157,000) -- 711,000
Stockholder's equity:
Convertible preferred stock ...... 4,800,000 -- -- 4,800,000
Warrants ......................... 3,051,000 -- -- 3,051,000
Common stock ..................... 17,135,000 -- -- 17,135,000
Treasury stock ................... -- -- (385,000)(4) (385,000)
Deferred compensation ............ (199,000) -- -- (199,000)
Accumulated deficit .............. (10,960,000) -- -- (10,960,000)
------------ ------------ ------------ ------------
Total Stockholder's Equity ..... 13,827,000 -- (385,000) 13,442,000
------------ ------------ ------------ ------------
Total Liabilities and Stockholder's
Equity ........................... $ 14,695,000 (157,000) (385,000) 14,153,000
============ ============ ============ ============
</TABLE>
<TABLE>
SIX MONTHS ENDED MARCH 31, 1997
----------------------------------------------------------------
<CAPTION>
Businesses Pro
to be forma
Historical Disposed Adjustments Pro Forma
---------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue ........................... $ 3,448,000 (1,046,000) -- 2,402,000
Cost of Sales ..................... 2,441,000 (721,000) -- 1,720,000
------------ ------------ ------------ ------------
Gross Profit .................... 1,007,000 (325,000) -- 682,000
Selling, General and Administrative
Expenses ........................ 3,290,000 (321,000) 5,000 3,011,000
(47,000)(6)
Research, & Development Expenses .. 1,189,000 (113,000) -- 1,076,000
------------ ------------ ------------ ------------
Operating Profit (Loss) ......... (3,472,000) (109,000) (42,000) (3,405,000)
Interest income, net .............. 161,000 -- -- 161,000
Other income (expenses) ........... (70,000) (59,000) -- (11,000)
------------ ------------ ------------ ------------
Net income (loss) ............... $ (3,381,000) (168,000) (42,000) (3,255,000)
============ ============ ============ ============
Deemed preferred stock dividend
relating to in-the-money
conversions ..................... 717,000 -- -- 717,000
Accretion ......................... 295,000 -- -- 295,000
------------ ------------ ------------ ------------
Net loss applicable to
Common Stockholders ............. (4,393,000) (4,267,000)
Net Loss Per Share ................ (0.26) (0.27)
Weighted average shares ........... 16,996,221 15,896,221
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<PAGE>
<FN>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Represents a cash loan of $300,000 to Buyer and the payment of $45,000
for certain liabilities assumed by the Buyer.
2. Represents the sale of certain of the Company's corporate office
furniture and equipment at net book value.
3. Investment in Affiliated Company consists of the Notes, 6,269,226
common shares and warrants of Buyer, primarily valued at the Company's
historical book value of the net assets transferred as the Transaction
does not involve the culmination of the earnings process.
4. Represents the transfer of 1,100,000 shares of the Company's no par
value common stock, a substantial majority of which were previously
held by Terry W. Neild and Lou Ross, former affiliates of the Company.
5. Represents the elimination of deprecation expense recorded for the
Company's corporate office furniture and equipment sold to the Buyer
in the Transaction.
6. Represents the accrual of certain expenses and legal fees assumed by
the Company on behalf of the Buyer.
</FN>
</TABLE>
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
B. Pro Forma Financial Information.
The pro forma financial information on the Transaction is
contained in Item 2 of this Report.
C. Exhibits.
2.01 Stock Purchase Agreement dated July 18, 1997 between
Intercell Corporation and Intercell Technologies
Corporation and Addendum to Stock Purchase Agreement.
10.01 Patent Assignment Agreement dated as of July 18, 1997
between Intercell Corporation and Intercell
Technologies Corporation.
10.02 Warrant Agreement dated as of July 18, 1997 between
Intercell Corporation and Intercell Technologies
Corporation.
10.03 Royalty Agreement dated as of July 18, 1997 between
Intercell Corporation and Intercell Technologies
Corporation.
10.04 $2,200,000 Promissory Note dated as of July 18, 1997,
between Intercell Technologies Corporation (as maker)
and Intercell Corporation (as holder).
10.05 Stock Pledge and Security Agreement dated July 18,
1997 between Intercell Corporation and Intercell
Technologies Corporation.
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERCELL CORPORATION
Date: August 4, 1997 By: /s/ Alan M. Smith
----------------------------------------
Alan M. Smith, Chief Financial Officer,
Secretary and Treasurer
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<PAGE>
LIST OF EXHIBITS
2.01 Stock Purchase Agreement dated July 18, 1997 between Intercell
Corporation and Intercell Technologies Corporation.
10.01 Patent Assignment Agreement dated as of July 18, 1997 between
Intercell Corporation and Intercell Technologies Corporation.
10.02 Warrant Agreement dated as of July 18, 1997 between Intercell
Corporation and Intercell Technologies Corporation.
10.03 Royalty Agreement dated as of July 18, 1997 between Intercell
Corporation and Intercell Technologies Corporation.
10.04 $2,200,000 Promissory Note dated as of July 18, 1997, between
Intercell Technologies Corporation (as maker) and Intercell
Corporation (as holder).
10.05 Stock Pledge and Security Agreement dated July 18, 1997 between
Intercell Corporation and Intercell Technologies Corporation.
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EXHIBIT 2.01
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and entered into
this 18th day of July, 1997, by and between Intercell Technologies Corporation,
a Colorado corporation, formerly known both as "Secure Luggage Systems, Inc."
and "Emulation Products, Inc." (the "Company"), 7201 East Camelback Road, Suite
#250, Scottsdale, Arizona 85251, and Intercell Corporation, a Colorado
corporation (hereinafter referred to as the "Seller"), 370 Seventeenth Street,
Suite #3290, Denver, Colorado 80202.
RECITALS:
WHEREAS, the Seller desires to sell, assign, transfer, convey and deliver
to the Company, and the Company desires to purchase, acquire and receive from
the Seller, all 100 issued and outstanding shares of common stock, no par value
per share (the "IWC Common Shares"), of Intercell Wireless Corp., an Arizona
corporation ("IWC"), 7201 East Camelback Road, Suite #250, Scottsdale, Arizona
85251, and all 100 issued and outstanding shares of common stock, no par value
per share (the "CMI Common Shares"), of Cellular Magnetics, Inc., doing business
as M.C. Davis Company, an Arizona corporation ("CMI"), 10671 West Battaglia
Road, Arizona City, Arizona 85223, owned of record and beneficially by the
Seller, in exchange for the consideration described in Section 1.02 of this
Agreement, on the terms and subject to the conditions set forth herein; and
WHEREAS, Seller desires to sell, assign, transfer, convey and deliver to
the Company certain assets and liabilities of Seller, including without
limitation, all of the Seller's right, title and interest in and to those
certain patent applications, no. 08/658,355 and 08/715,796, relating to the
cellular antenna (the "Patents"), which were filed on behalf of the Seller with
the U.S. Patent and Trademark Office on June 5, 1996, and September 19, 1996,
respectively, and the Company desires to purchase and assume the same pursuant
to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, which
constitute a substantive part of this Agreement, and the mutual covenants,
agreements, representations and warranties contained herein, the parties hereto
agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES AND OTHER ASSETS
Section 1.01. SALE AND ASSIGNMENT OF SHARES AND OTHER ASSETS. Subject to
the terms and conditions of this Agreement, at the Closing, the Seller will
sell, assign, transfer, convey and deliver to the Company and the Company shall
purchase, receive and assume the following:
<PAGE>
(a) all of the issued and outstanding IWC Common Shares and the CMI
Common Shares (collectively, the "IWC and CMI Common Shares"), free and
clear of all liens, claims or encumbrances;
(b) all of the Seller's right, title and interest in and to the
Patents, substantially in the form of the assignment agreement attached
hereto as Exhibit A (the "Patent Assignment");
(c) a cashier's check, money order or other form of "cleared" funds in
the amount of $345,500.00 (less all payments previously advanced), which
shall include payment for the total amount of $17,500.00 due and payable
pursuant to the provisions of those certain management contracts between
the Seller and Messrs. Lou Ross and Terry W. Neild through June 30, 1997,
and the aggregate amount of $28,000.00 payable in full satisfaction of all
expenses for legal fees incurred by Mr. Lou Ross relating to the American
Microcell Corporation matter, as specified in the Assumption Obligation and
Release attached hereto as Exhibit B (the "Assumption and Release
Agreement");
(d) an opinion of Seller's counsel, substantially in the form attached
hereto as Exhibit C (the "Stock Option Opinion"), certifying the validity
of those certain option agreements to purchase the no par value common
stock of the Seller owned of record and beneficially by Messrs. Lou Ross
and Terry W. Neild; and
(e) if not previously delivered, a bill of sale dated as of the
Closing Date, substantially in the form attached hereto as Exhibit D (the
"Bill of Sale"), providing for the sale of all of the office furniture and
equipment presently located on the premises of the offices of the
Corporation in Scottsdale, Arizona for an aggregate sale price in the
amount of $75,000.
Section 1.02. CONSIDERATION. As consideration for the properties, rights
and agreements conveyed by Seller of the Company set forth in Section 1.01
above, the Company agrees to pay the following consideration, deliver the
following documents and take the following actions (collectively "the Purchase
Price"):
(a) issue to Seller newly-issued certificates of the Company's common
stock, no par value per share (the "Common Stock"), and Warrants (the
"Warrants") to purchase the Common Stock substantially in the form of the
Warrant Agreement attached hereto as Exhibit E (the "Warrant Agreement").
The Warrants shall entitle the Seller to purchase one share of the Common
Stock at an exercise price of $2.25 per share during the period ending
three (3) years from the Closing Date. The total number of shares of Common
Stock and Warrants to be issued shall be determined on the basis of one
share of Common Stock and one Warrant for each five (5) shares of common
stock, no par value per share (the "Seller's Common Shares") outstanding on
July 18, 1997;
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<PAGE>
(b) agree to register within one year of the Closing Date the Common
Stock, Warrants and the Common Stock underlying the Warrants, to be
delivered to Seller pursuant to subsection 1.02(a) in accordance with the
terms and provisions of the registration rights agreement substantially in
the form attached hereto as Exhibit F (the "Registration Rights
Agreement");
(c) deliver 1,100,000 shares of the no par value common stock of
Seller to Seller;
(d) if not previously delivered, execute and deliver a corporate
promissory note, dated as of the Closing Date, substantially in the form
attached hereto as Exhibit G (the "$2,200,000 Note"). The $2,200,000 Note
shall be for the principal amount of $2,200,000 and bear interest at the
rate of ten percent (10%) per annum and be guaranteed by a stock pledge and
security agreement substantially in the form attached hereto as Exhibit H
(the "Stock Pledge Agreement");
(e) enter into a royalty agreement substantially in the form attached
hereto as Exhibit I (the "Royalty Agreement"), which Royalty Agreement
shall provide the Seller with a 10% royalty on future revenues earned on
the sale of cellular phone antennas with a cap of $5,000,000 on total
royalties;
(f) execute and deliver a secured promissory note, dated as of the
Closing Date, substantially in the form attached hereto as Exhibit J (the
"Secured Promissory Note"). The Secured Promissory Note shall be for the
principal amount of $375,000 and bear interest at the rate of 10% per
annum, be payable on November 30, 1997, and be secured by a security
agreement substantially in the form attached hereto as Exhibit K (the
"Security Agreement"), and a financing statement on Form UCC-1 (the
"Financing Statement"), dated as of the Closing Date;
(g) execute an assignment and assumption of lease agreement
substantially in the form attached hereto as Exhibit L (the "Assignment and
Assumption of Lease Agreement"), wherein the Company will sublease from the
Seller the premises located in Scottsdale, Arizona, presently occupied by
the Seller for the balance of the rental term and upon the same terms and
conditions as currently paid by the Seller or otherwise enter into a new
lease with the landlord of the premises, with Seller being unconditionally
released from all obligations under the old lease; and
(h) enter into an assumption agreement substantially in the form
attached hereto as Exhibit M (the "Assumption Agreement"), wherein the
Company will assume full liability and responsibility for all operating
expenses associated with such entities, including all related personnel and
compensation expenses, including the Seller's obligations to pay the sums
of $35,500.00 and $10,000.00 to Messrs. Lou Ross and Terry W. Neild,
respectively.
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<PAGE>
Section 1.03. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated as set forth in Schedule 1.03 to this Agreement. The parties covenant
and agree that they shall not take any position inconsistent with the provisions
of this Section 1.03 in any filings with any governmental and/or taxing
authorities.
ARTICLE II
CLOSING
Section 2.01. The consummation of the sale to and purchase by the Company
of the IWC and CMI Common Shares and the related obligations and assets of the
Seller set forth in Section 1.01 (the "Closing") shall occur simultaneously with
the signing of this Agreement at the offices of Kutak Rock, located at 717
Seventeenth Street, Suite 2900, Denver, Colorado 80202, at 1:00 p.m., Mountain
Daylight Time, on July 18, 1997 (the "Closing Date"), or at such other time,
date and place not later than July 31, 1997, as the parties may mutually agree
in writing. As express conditions subsequent to the effectiveness of this
Agreement, (i) all documents to be delivered at Closing pursuant to the terms
and provisions of this Section 2.01 shall be delivered, in a form satisfactory
to the parties, by Thursday, July 24, 1997, or by such later date to which the
Closing may be extended as provided for in this Agreement, and (ii) all
representations and warranties of the parties to this Agreement must be true and
accurate as of July 24, 1997 or such later date agreed to by the parties. If any
of the preceding conditions subsequent are not met, then this Agreement shall
automatically terminate and be void ab initio, both parties shall pay their own
expenses incurred in connection herewith and neither party hereto shall have any
further obligations hereunder; provided, however, that no such termination shall
constitute a waiver by either party which is not in default of any of its
respective representations, warranties or covenants herein, of any rights or
remedies it might have at law if the other party is in default of any of its
respective representations, warranties or covenants under this Agreement. The
satisfaction of the foregoing conditions subsequent shall result in all acts,
deliveries and confirmations comprising the Closing, regardless of chronological
sequence, being deemed to occur contemporaneously and simultaneously at 5:00
p.m. on the Closing Date.
(a) At or prior to the Closing, but in no event later than Thursday,
July 24, 1997, the Company shall execute, deliver, or cause to be
delivered, to the Seller:
(i) newly-issued certificates in the name of Seller for that
number of shares of Common Stock and related Warrants set forth in
Section 1.02 of this Agreement and the Warrant Agreement;
(ii) the Registration Rights Agreement;
(iii) stock certificates or other written confirmation evidencing
1,100,000 shares of Seller's no par value common stock, duly executed,
endorsed and/or authenticated for transfer to the Seller;
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<PAGE>
(iv) the $2,200,000 Note;
(v) the Stock Pledge and Security Agreement;
(vi) the Royalty Agreement;
(vii) the Secured Promissory Note;
(viii) the Security Agreement and UCC-1 Financing Statement;
(ix) the Assignment and Assumption of Lease Agreement;
(x) the Assumption Agreement; and
(xi) the certified resolutions of the Company's Board of
Directors, certified as of the date of the Closing as being in full
force and effect by an appropriate officer of the Company, duly
adopted by the Board of Directors of the Company adopting and
approving this Agreement, which shall be in form and substance
reasonably satisfactory to the Seller and its counsel.
(b) At or prior to the Closing, but in no event later than Thursday,
July 24, 1997, the Seller shall deliver to the Company:
(i) duly executed, endorsed and/or authenticated for transfer
stock certificates evidencing the ownership by the Seller of the IWC
and CMI Common Shares;
(ii) a cashier's check, money order or other form of "cleared"
funds in the amount of $345,500.00 less all previous payments made to
the Company;
(iii) the Assignment of Patent Agreement;
(iv) the Stock Option Opinion Letter of the Seller's counsel;
(v) the Bill of Sale;
(vi) the certified resolutions of the Seller's Board of
Directors, certified as of the date of the Closing as being in full
force and effect by an appropriate officer of the Seller, duly adopted
by the Board of Directors of the Seller adopting and approving this
Agreement, which shall be in form and substance reasonably
satisfactory of the Company and its counsel; and
(vii) the opinion letters of the Seller's and IWC's and CMI's
counsel in the forms attached hereto as Exhibits O, P and Q.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Company as follows (it
being acknowledged that the Company is entering into this Agreement in material
reliance upon each of the following representations and warranties, and that the
truth and accuracy of each of which constitutes a condition precedent to the
obligations of the Company hereunder):
Section 3.01. ORGANIZATION AND CORPORATE POWER. IWC and CMI are
corporations duly organized, validly existing and in good standing under the
laws of the State of Arizona, and to the knowledge of Seller based upon
representations of Terry W. Neild, President of IWC and CMI, are duly qualified
and in good standing to do business as foreign corporations in each jurisdiction
in which such qualification is required and where the failure to be so qualified
would have a materially adverse effect upon said corporations. IWC and CMI have
all requisite corporate power and corporate authority to conduct their
respective businesses as now being conducted and to own and lease the personal
property, and to lease the real property, which they now own and lease,
respectively. The Articles of Incorporation of IWC and CMI, as amended to date,
certified by the Arizona Corporations Commissioner, and the Bylaws of IWC and
CMI, as amended to date, certified by the President and the Secretary of each
corporation, which have been delivered to the Company prior to the execution
hereof, are true and complete copies thereof as in effect as of the date of this
Agreement.
Section 3.02. AUTHORIZATION. The Seller has full power, legal capacity and
authority to enter into this Agreement and the Seller, IWC and CMI have full
power, legal capacity and corporate authority to enter into all attendant
documents and instruments necessary to consummate the transactions contemplated
by this Agreement, to sell, assign, transfer, convey and deliver the IWC and CMI
Common Shares to the Company and to perform all of the obligations to be
performed by each of them hereunder. All agreements, documents and instruments
to be executed in connection herewith by the Seller, IWC and CMI have been
effectively authorized by all necessary action, corporate or otherwise, on the
part of each corporation, which authorizations remain in full force and effect,
have been duly executed and delivered by each corporation and no other corporate
proceedings on the part of the Seller, IWC or CMI are required to authorize the
execution and delivery of such agreements, documents and instruments. This
Agreement has been duly executed and delivered by the Seller; constitutes the
legal, valid and binding obligation of the Seller; and is enforceable with
respect to the Seller in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, priority or
other laws or court decisions relating to or affecting generally the enforcement
of creditors' rights or affecting generally the availability of equitable
remedies. Neither the execution and delivery of this Agreement, the consummation
by the Seller, IWC and CMI of any of the transactions contemplated hereby nor
the compliance by the Seller, IWC or CMI with any of the provisions hereof will
(a) conflict with or result in a breach of, violation of or default under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, lease, credit agreement or other agreement, document, instrument
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<PAGE>
or obligation (including, without limitation, any of the Seller's, IWC's or
CMI's charter documents) to which any of the Seller, IWC or CMI is a party or by
which any of the assets or properties of the Seller, IWC or CMI may be bound or
(b) violate any judgment, order, injunction, decree, statute, rule or regulation
applicable to any of the Seller, IWC or CMI or any of the assets or properties
of the Seller, IWC or CMI. To the best knowledge of the Seller, no
authorization, consent or approval of any public body or authority is necessary
for the consummation by the Seller, IWC and CMI of the transactions contemplated
by this Agreement.
Section 3.03. CAPITALIZATION.
(a) The authorized capital stock of IWC consists of 10,000,000 IWC
Common Shares, no par value per share. As of the date of this Agreement,
there are 100 IWC Common Shares issued and outstanding, with no IWC Common
Shares held in IWC's treasury. All of the outstanding IWC Common Stock have
been duly authorized and validly issued and fully-paid and nonassessable.
(b) The authorized capital stock of CMI consists of 50,000,000 CMI
Common Shares, no par value per share. As of the date of this Agreement,
there are 100 CMI Common Shares issued and outstanding, with no CMI Common
Shares held in CMI's treasury. All of the outstanding shares of Common
Stock of CMI have been duly authorized and are validly issued and
fully-paid and nonassessable.
(c) There are no warrants, options, calls, commitments or other rights
to subscribe for or to purchase from IWC or CMI any capital stock of IWC or
CMI, respectively, or any securities convertible into or exchangeable for
any shares of capital stock of IWC or CMI, respectively, or any other
securities or agreement pursuant to which IWC or CMI is or may become
obligated to issue any shares of its capital stock, nor is there
outstanding any commitment, obligation or agreement on the part of IWC or
CMI to repurchase, redeem or otherwise acquire any of the outstanding IWC
or CMI Common Shares.
(d) There currently are no rights, agreements or commitments of any
character obligating IWC or CMI, contingently or otherwise, to register any
shares of the capital stock of either corporation under any applicable
federal or state securities laws.
Section 3.04. OWNERSHIP OF IWC AND CMI. The Seller owns 100 IWC Common
Shares and 100 CMI Common Shares, constituting all of the issued and outstanding
shares of capital stock of IWC and CMI, respectively, free and clear of (a) any
lien, charge, mortgage, pledge, conditional sale agreement or other encumbrance
of any kind or nature whatsoever and (b) any claims as to ownership thereof or
any rights, powers or interest therein by any third party, whether legal or
beneficial and whether based on contract, proxy or other document or otherwise.
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Section 3.05. BROKERAGE. The Seller has no obligation to any person or
entity for brokerage commissions, finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement, and the Seller
shall indemnify and hold the Company harmless against any liability or expenses
arising out of any such claim.
Section 3.06. INVESTMENT REPRESENTATION. The Seller has the knowledge and
experience in business and financial matters to meaningfully evaluate the merits
and risks of the disposition of the IWC and CMI Common Shares, the payment of
the cash, the assignment of the patent applications, the execution and delivery
of a bill of sale and the delivery of the other consideration as contemplated
hereby in exchange and consideration for the receipt of certain newly-issued
shares of the Common Stock, the receipt of certain of the Seller's Common Shares
to be held as treasury shares or canceled, the receipt of certain promissory
notes, agreements and Warrants and the receipt of other consideration as
contemplated hereby. The Seller has had the opportunity to conduct an
independent review of the business, assets, properties, books and records of the
Company for the purpose of satisfying itself as to the truth, accuracy and
completeness of the representations and warranties made by the Company. The
Seller understands and acknowledges that the newly-issued shares of the Common
Stock and certain of the Seller's Common Shares will be issued and/or delivered
to the Seller in the transactions contemplated hereby without registration or
qualification or other filings being made under the U.S. Securities Act of 1933,
as amended, or any applicable state securities or "Blue Sky" law, in reliance
upon specific exemptions therefrom, and in furtherance thereof the Seller
represents that the shares of the Common Stock will be taken and received by it
for its account for investment, with no present intention of a distribution or
disposition thereof to the Seller's shareholders on or before July 18, 1998 or,
absent a currently effective registration statement, to others within a 12-month
period of time. The Seller further acknowledges and agrees that the instruments
representing the newly issued shares of the Common Stock and Warrants issued to
it shall be subject to a stop-transfer order and shall bear a restrictive
legend, in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE REGISTERED UNDER
THE ACT."
Section 3.07. DISCLOSURE. Neither this Agreement, nor any certificate,
exhibit or other written document or statement, furnished to the Company by the
Seller, IWC or CMI in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to be stated in order to
make the statements contained herein or therein not misleading.
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<PAGE>
Section 3.08. SPECIFIC REPRESENTATION. The Seller specifically represents
that it is not aware of any agreements, contracts, understandings, or
commitments relating to the antenna technology, IWC, the Patents, sales orders,
potential deals or any similar events or transactions except for those
identified on Schedule 3.08 of this Agreement. The Seller acknowledges that if
the Company discovers that a material event or transaction has not been listed
on Schedule 3.08, within the time period set forth in Section 5.02, the Company
shall have the right to rescind this Agreement and cause the parties to be
returned to their "status quo" as if this Agreement had not been executed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Seller as follows (it
being acknowledged that the Seller is entering into this Agreement in material
reliance upon each of the following representations and warranties, and that the
truth and accuracy of each of which constitutes a condition precedent to the
obligations of the Seller hereunder):
Section 4.01. AUTHORIZATION. The Company has full power, legal capacity and
authority to enter into this Agreement, to execute all attendant documents and
instruments necessary to consummate the transactions herein contemplated, to
purchase and acquire the IWC and CMI Common Shares from the Seller and to
perform all of its obligations hereunder. This Agreement and all other
agreements, documents and instruments to be executed in connection herewith have
been effectively authorized by all necessary action, corporate or otherwise, on
the part of the Company, which authorizations remain in full force and effect
and have been duly executed and delivered by the Company and no other corporate
proceedings on the part of the Company are required to authorize this Agreement
and the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of the Company and the Agreement is enforceable
with respect to the Company in accordance with its terms, except as enforcement
hereof may be limited by bankruptcy, insolvency, reorganization, priority or
other laws or court decisions relating to or affecting generally the enforcement
of creditors' rights or affecting generally the availability of equitable
remedies. Neither the execution and delivery of this Agreement nor the
consummation by the Company of any of the transactions contemplated hereby, or
compliance with any of the provisions hereof, will (a) conflict with or result
in a breach of, violation of or default under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, credit
agreement or other agreement, document, instrument or obligation (including,
without limitation, any of its charter documents) to which the Company is a
party or by which the Company or any of its assets or properties may be bound or
(b) violate any judgment, order, injunction, decree, statute, rule or regulation
applicable to the Company or any of the assets or properties of the Company. To
the best knowledge of the Company, no authorization, consent or approval of any
public body or authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
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Section 4.02. BROKERAGE. The Company has no obligation to any person or
entity for brokerage commissions, finder's fees or similar compensation in
connection with the transactions contemplated by this Agreement and the Company
shall indemnify and hold the Seller harmless against any liability or expenses
arising out of any such claim.
Section 4.03. INVESTMENT REPRESENTATION. The Company has the knowledge and
experience in business and financial matters to meaningfully evaluate the merits
and risks of the acquisition of the IWC and CMI Common Shares in exchange and
partial consideration for the issuance of certain shares of the Common Stock,
the transfer of certain of the Seller's Common Shares to be held as treasury
shares or cancelled, the execution and delivery of certain promissory notes,
agreements and options and the delivery of the other consideration as
contemplated hereby. The Company has had an opportunity to conduct an
independent review of the business, assets, properties, books and records of IWC
and CMI for the purpose of satisfying itself as to the truth, accuracy and
completeness of the representations and warranties made by the Seller. The
Company understands and acknowledges that the IWC and CMI Common Shares were
originally issued to the Seller, and will be sold, assigned, transferred and
conveyed to the Company in the transactions contemplated hereby without
registration or qualification or other filings being made under the U.S.
Securities Act of 1933, as amended, or any applicable state securities or "Blue
Sky" law, in reliance upon specific exemptions therefrom, and in furtherance
thereof the Company represents that the IWC and CMI Common Shares will be taken
and received by the Company for its own account for investment, with no present
intention of a distribution or disposition thereof to others. The Company
further acknowledges and agrees that the certificates representing the IWC and
CMI Common Shares sold, assigned, transferred and conveyed to it shall be
subject to a stop-transfer order and shall bear a restrictive legend, in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE REGISTERED UNDER THE
ACT."
Section 4.04. DISCLOSURE. Neither this Agreement, nor any certificate,
exhibit or other written document or statement, furnished to the Seller by the
Company in connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to be stated in order to make the
statements contained herein or therein not misleading.
10
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Section 4.05. SPECIFIC REPRESENTATION. The Company specifically represents
that neither it nor any of its affiliates are aware of any agreements,
contracts, understandings, or commitments relating to the antenna technology,
IWC, the Patents, sales orders, potential deals or any similar events or
transactions except for those identified on Schedule 4.05 of this Agreement. The
Company acknowledges that if Seller discovers that a material event or
transaction has not been listed on Schedule 4.05, within the time period set
forth in Section 5.02, Seller shall have the right to rescind this Agreement and
cause the parties to be returned to their "status quo" as if this Agreement had
not been executed.
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES
Section 5.01. TAXES AND EXPENSES.
(a) Except as otherwise expressly provided in subsection 5.01(b)
below, IWC, CMI and the Seller, on the one hand, and the Company, on the
other hand, shall each pay all of their own respective taxes, attorneys'
fees and other costs and expenses payable in connection with or as a result
of the transactions contemplated hereby and the performance and compliance
with all agreements and conditions contained in this Agreement respectively
to be performed or observed by each of them.
(b) The Seller shall pay any and all Arizona and/or Colorado taxes, if
any, which become due on account of the sale, assignment, transfer and
conveyance of the IWC and CMI Common Shares to the Company.
(c) The Company shall pay any and all Arizona and/or Colorado taxes,
if any, which become due on account of the sale, assignment, transfer and
conveyance of the assets sold pursuant to the certain Bill of Sale and
Assignment Agreement.
Section 5.02. EXPIRATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of IWC, CMI, the Seller and the Company contained
herein and in any other document or instrument delivered by or on behalf of them
shall survive the Closing for a period of six months.
Section 5.03. INDEMNIFICATION.
(a) INDEMNIFICATION BY SELLER. Seller shall indemnify, defend and hold
harmless the Company and any of its affiliates and their respective
representatives, and their respective heirs, executors, administrators,
successors and assigns (collectively, "Company Representatives"), and shall
reimburse the Company and any of its affiliates and the Company
Representatives, if liability is established by binding judicial or
arbitration authority, for any claim, demand, loss, liability, damage or
expense, including, without limitation, interest, penalties, all reasonable
attorneys', accountants',
11
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all experts' fees and costs of investigations incurred as a result thereof
(collectively "Damages") resulting from any of the following:
(i) any breach or default in the performance by Seller of any
covenant or agreement of Seller contained herein, in any agreement
contemplated hereby, or in any Exhibit hereto or thereto, or in any
certificate or other instrument delivered or to be delivered by or on
behalf of Seller pursuant hereto or thereto; or
(ii) any breach of warranty or inaccurate or erroneous
representation made by Seller herein, in any agreement contemplated
hereby, or in any Exhibit hereto or thereto, or in any certificate or
other instrument delivered or to be delivered by or on behalf of
Seller pursuant hereto or thereto.
(b) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify,
defend and hold harmless Seller and any of its officers, directors,
affiliates, agents, shareholders, successors and assigns (collectively,
"Seller Representatives"), and shall reimburse Seller and the Seller
Representatives, if liability is established by binding judicial or
arbitration authority, for any Damages resulting from any of the following:
(i) any breach or default in the performance by the Company of
any covenant or agreement of the Company contained herein, in any
agreement contemplated hereby, or in any Exhibit hereto or thereto, or
in any certificate or other instrument delivered or to be delivered by
or on behalf of the Company pursuant hereto or thereto; or
(ii) any breach of warranty or inaccurate or erroneous
representation made by the Company herein, in any agreement
contemplated hereby, or in any Exhibit hereto or thereto, or in any
certificate or other instrument delivered or to be delivered by or on
behalf of the Company pursuant hereto or thereto.
(c) CLAIMS FOR INDEMNITY. Whenever a claim for Damages shall arise for
which one party ("Indemnitee") shall be entitled to indemnification
hereunder, Indemnitee shall notify the other party ("Indemnitor") in
writing within 30 days of the first receipt of notice of such claim, and in
any event within such shorter period as may be necessary for Indemnitor to
take appropriate action to resist such claim. Such notice shall specify all
facts known to Indemnitee giving rise to such indemnity rights and shall
estimate the amount of the liability arising therefrom. The right of
Indemnitee to indemnification and the estimated amount thereof, as set
forth in this notice, shall be deemed agreed to by Indemnitor unless,
within 30 days after the mailing of such notice, Indemnitor shall notify
Indemnitee in writing that it disputes the right of Indemnitee to
indemnification, or that Indemnitor elects to defend such claim in the
manner provided in Section 5.03(d) below. If Indemnitee shall be duly
notified of such dispute, the parties shall attempt to settle and
compromise the same, or if unable to do so within 20 days of Indemnitor's
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<PAGE>
delivery of notice of a dispute, such dispute shall be settled by
binding arbitration before a single arbitrator in the City and County of
Denver, State of Colorado, in proceedings conducted by the American
Arbitration Association and pursuant to such organization's rules for
commercial disputes, and any rights of indemnification established by
reason of such settlement, compromise or arbitration shall promptly
thereafter be paid and satisfied by Indemnitor.
(d) DEFENSE OF CLAIMS. Upon receipt by Indemnitor of a notice from
Indemnitee with respect to any claim of a third party against Indemnitee,
and acknowledgment by Indemnitor (whether after resolution of a dispute or
otherwise) of Indemnitee's right to indemnification hereunder with respect
to such claim, Indemnitor shall assume the defense of such claim with
counsel reasonably satisfactory to Indemnitee and Indemnitee shall
cooperate to the extent reasonably requested by Indemnitor in defense or
prosecution thereof and shall furnish such records, information and
testimony and attend all such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by Indemnitor in
connection therewith. If Indemnitor shall acknowledge Indemnitee's right to
indemnification and elect to assume the defense of such claim, Indemnitee
shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of Indemnitee. If
Indemnitor has assumed the defense of any claim against Indemnitee,
Indemnitor shall have the right to settle any claim for which
indemnification has been sought and is available hereunder; provided that,
to the extent that such settlement requires Indemnitee to take, or
prohibits Indemnitee from taking, any action or purports to obligate
Indemnitee, then Indemnitor shall not settle such claim without the prior
written consent of Indemnitee. If Indemnitor does not assume the defense of
a third party claim and disputes Indemnitee's right to indemnification,
Indemnitor shall have the right to participate in the defense of such claim
through counsel of its choice, at Indemnitor's expense, and Indemnitee
shall have control over the litigation and authority to resolve such claim
subject to this Section 5.03.
ARTICLE VI
MISCELLANEOUS
Section 6.01. OTHER DOCUMENTS. Each of the parties hereto shall execute and
deliver such other and further documents and instruments, and take such other
and further actions, as may be reasonably requested of it for the implementation
and consummation of this Agreement and the transactions herein contemplated.
Section 6.02. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and the successors and assigns of
each of them, but shall not confer, expressly or by implication, any rights or
remedies upon any other party.
13
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Section 6.03. GOVERNING LAW. This Agreement is made and shall be governed
in all respects, including validity, interpretation and effect, by the laws of
the State of Colorado.
Section 6.04. NOTICES. All notices, requests or demands and other
communications hereunder must be in writing and shall be deemed to have been
duly made if personally delivered or mailed, postage prepaid, to the parties as
follows:
If to the Company, to: Intercell Technologies Corporation
7201 East Camelback Road, Suite #250
Scottsdale, Arizona 85251
Attn: Mr. Terry W. Neild, President and
Chief Executive Officer
If to the Seller, to: Intercell Corporation
370 Seventeenth Street, Suite #3290
Denver, Colorado 80202
Attn: Mr. Paul H. Metzinger, President and
Chief Executive Officer
With copies to: Kutak Rock
717 Seventeenth Street, Suite #2900
Denver, Colorado 80202-3329
Attn: Brian D. Lewandowski and Robert J.
Ahrenholz
Either party hereto may change its address by written notice to the other party
given in accordance with this Section 6.04.
Section 6.05. ENTIRE AGREEMENT. This Agreement and all exhibits and
schedules, which comprise a material and substantive part of this Agreement,
attached hereto contain the entire agreement between the parties and supersede
all prior agreements, understandings and writings between the parties with
respect to the subject matter hereof and thereof. Each party hereto acknowledges
that no representations, inducements, promises or agreements, verbal or
otherwise, have been made by either party, or anyone acting with authority on
behalf of either party, which are not embodied herein or in an exhibit hereto,
and that no other agreement, statement or promise may be relied upon or shall be
valid or binding. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated verbally. This Agreement may be amended or any
term hereof may be changed, waived, discharged or terminated by an agreement in
writing signed by both parties hereto.
Section 6.06. HEADINGS. The captions and headings used herein are for
convenience only and shall not be construed as part of this Agreement.
14
<PAGE>
Section 6.07. ATTORNEYS' FEES. In the event of any litigation between the
parties hereto, the non-prevailing party shall pay the reasonable expenses,
including but not limited to the attorneys' fees, of the prevailing party in
connection therewith.
Section 6.08. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original but both of which taken together shall
constitute but one and the same document.
Section 6.09 PUBLICITY. Each party expressly agrees that it will not make
any public statement or announcement, whether written or oral, or cause any
unaffiliated party to do the same, with respect to this Agreement and the
transactions contemplated herein, without the prior written consent of the other
party until such time as all conditions subsequent as contained in Schedule 2.01
of this Agreement have been satisfied in full.
15
<PAGE>
IN WITNESS THEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
THE SELLER:
INTERCELL CORPORATION
ATTEST:
By /s/ Alan Smith By /s/ Paul H. Metzinger
----------------------------- -----------------------------------------
Alan Smith, Secretary Paul H. Metzinger, President and Chief
Executive Officer
THE COMPANY:
INTERCELL TECHNOLOGIES CORPORATION
ATTEST:
By /s/ Lolita C. Prescod By /s/ Terry W. Neild
---------------------------- -----------------------------------------
Lolita C. Prescod, Secretary Terry W. Neild, President and Chief
Executive Officer
16
<PAGE>
ADDENDUM TO STOCK PURCHASE AGREEMENT
This Addendum to Stock Purchase Agreement ("Addendum") is made and entered
into this 25th day of July, 1995, by and between Intercell Technologies
Corporation, a Colorado corporation (the "Company"), and Intercell Corporation,
a Colorado corporation ("Seller"). The Company and Seller are sometimes referred
to herein as the "Parties."
RECITALS
WHEREAS, the Parties have entered into that certain Stock Purchase
Agreement dated July 18, 1997 (the "Agreement"); and
WHEREAS, the parties desire to enter into this Addendum to supplement
certain provisions contained in the Agreement and further define certain
understandings of the Parties.
NOW, THEREFORE, in consideration for the foregoing Recitals, which are
hereby made a substantial part of this Addendum, and the mutual covenants,
agreements, representations and warranties contained herein, the Parties hereto
agree as follows.
1. TERMS. Terms not otherwise defined herein shall have the meanings set
forth in the Agreement.
2. PAYMENT OF LEGAL FEES. The Parties hereby agree that the aggregate
amount of expenses and legal fees incurred by Mr. Lou Ross in connection with
the American Microcell Corporation legal matter is $29,236.00 and not $28,000.00
as set forth in Section 1.01(c) of the Agreement. By execution of this Addendum
Seller hereby undertakes to reimburse Mr. Ross the additional amount of
$1,236.00
3. EXTENSION OF CLOSING DATE. Pursuant to Section 2.01 of the Agreement,
the parties agree to extend the date in which the express conditions subsequent
set forth in Section 2.01 are due to occur from Thursday, July 24, 1997 to
Monday, July 28, 1997.
4. EXECUTION VIA FACSIMILE. The Parties hereby agree that due to Mr. Neild
being unable to attend the Closing, that said Closing shall be conducted via
facsimile pursuant to the following terms:
Signatures on all agreements executed in connection with the
Agreement at the Closing, including this Addendum, may be executed by
facsimile transmission and shall be binding upon the Parties
transmitting the same by facsimile transmission. Counterparts with
original signatures shall be provided to the respective attorneys of
the other parties within five (5) days of the applicable facsimile
transmission; provided, however, that the failure to provide the
original counterpart shall have no effect on the validity or the
binding nature
<PAGE>
of such agreement. The Parties expressly agree that this provision
shall be applicable and binding on the Parties, irrespective of whether
the applicable agreement specifically provides for execution by
facsimile signature.
5. ALLOCATION OF PURCHASE PRICE. The Parties agree to use their best
efforts to reach an agreement in good faith on the manner in which the Purchase
Price shall be allocated on Schedule 1.03 of the Agreement.
6. EFFECT OF ADDENDUM. Except as expressly set forth in this Addendum, the
terms and provisions contained in the Agreement and any document or agreement
delivered in relation thereto shall remain in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
INTERCELL CORPORATION
By: /s/ Paul H. Metzinger
-------------------------------------------
Paul H. Metzinger, President and Chief
Executive Officer
INTERCELL TECHNOLOGIES CORPORATION
By: /s/ Terry W. Neild
-------------------------------------------
Terry W. Neild, President and Chief
Executive Officer
3
EXHIBIT 10.01
PATENT ASSIGNMENT
In consideration of Ten Dollars ($10.00) and the terms and provisions
contained in that certain Royalty Agreement dated July 18, 1997 between Assignee
and Assignor (the "Royalty Agreement"), which is incorporated herein by
reference, and other valuable consideration, the receipt of which is hereby
acknowledged, Intercell Corporation, having offices at 370 Seventeenth Street,
Suite 3290, Denver, Colorado 80202 ("Assignor") hereby sells and assigns to
Intercell Technologies Corporation, having offices at 7201 East Camelback Road,
Suite 250, Scottsdale, Arizona 85251 ("Assignee"), its successors and assigns,
the entire right, title and interest in and to the improvements of the following
United States Patent Applications:
1. U.S. Patent Application Number 08/658,355; Filing Date 5 June 1996;
Title: "PORTABLE TELEPHONE WITH DUAL RESONANCE ANTENNA," (as amended); and
2. U.S. Patent Application Number 08/715,796; Filing Date 19 September 1996;
Title: "DUAL RESONANCE ANTENNA FOR PORTABLE TELEPHONE."
and any and all applications for patent and patents therefor in any and all
countries, including all divisions, reissues, continuations and extensions
thereof, and all rights of priority resulting from the filing of said United
States patents and applications, and authorize and request any official whose
duty it is to issue patents, to issue any patent on said improvements or
resulting therefrom to said Assignee, or its successors or assigns and agree
that on request and without further consideration, but at the expense of
Assignee, Assignor will communicate to said Assignee, or its representatives or
nominees, any facts known to us respecting said improvements and testify in any
legal proceedings, sign all lawful papers, execute all divisional, continuing
and reissue applications, make all rightful oaths and generally do everything
possible to aid Assignee its successors, assigns and nominees, to obtain and
enforce proper patent protection for said inventions in all countries. Assignor
covenants with said Assignee, its successors and assigns, that the rights and
property hereby covered are free and clear of any encumbrances, and that
Assignee has full right to convey the same, subject to such subsequent
assignee's agreement to be bound by the terms and provisions of the Royalty
Agreement.
INTERCELL CORPORATION
Date: July 25, 1997 /s/ Paul H. Metzinger
------------------------------------------------
Paul H. Metzinger, President and Chief Executive
Officer
<PAGE>
On this 25th day of July, 1997, before me, the undersigned, personally
appeared Paul H. Metzinger, President and Chief Executive Officer of Intercell
Corporation, known to be to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the foregoing instrument for
the purposes therein contained.
IN WITNESS WHEREOF, I have set my hand and official seal.
My commission expires: April 18, 2000
[SEAL]
/s/ Kristi J. Kampmann
-----------------------------------------
Notary Public
2
EXHIBIT 10.02
WARRANT AGREEMENT
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
6,269,226 shares
- ---------
WARRANT TO PURCHASE COMMON STOCK
OF
INTERCELL TECHNOLOGIES CORPORATION
THIS CERTIFIES that INTERCELL CORPORATION or any subsequent ("Holder")
hereof, has the right to purchase from INTERCELL TECHNOLOGIES CORPORATION, a
Colorado corporation (the "Company"), up to 6,269,226 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., Pacific Daylight time, on July 18, 2000.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. DATE OF ISSUANCE. This Warrant shall be deemed to be issued on July 18,
1997 ("Date of Issuance").
2. EXERCISE.
(a) MANNER OF EXERCISE. This Warrant may be exercised at any time on
or after July 18, 1998 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 as Exhibit A (the "Exercise Form") 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, 7201 East Camelback Road, Suite 250, Scottsdale,
Arizona 85251; Attention: President, Telephone No. (602) 970-5500,
<PAGE>
Telecopy No. (602) 970-5501, or at such other office or agency as the
Company may designate in writing, by overnight mail (such surrender of the
Warrant, delivery of the Exercise Form and payment of the Exercise Price
are hereinafter called the "Exercise of this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
the date the original Exercise Form, the Exercise Price and this Warrant
are received by the Company.
(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon its
Exercise, and, within five (5) days 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 $2.25
per share ("Exercise Price"). Payment of the Exercise Price may be made by cash,
certified check or cashiers check or wire transfer, or a combination thereof, at
the election of Holder.
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in
whole or in part, in person or by attorney, upon surrender of this Warrant
properly endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of
this Warrant transferred, and the Holder of this Warrant shall be entitled
to receive a new Warrant or Warrants as to the portion hereof retained.
(b) REGISTRABLE SECURITIES. The Common Stock issuable upon the
exercise of this Warrant constitute "Registrable Securities" under that
certain Registration Rights Agreement dated on or about July 18, 1997
between the Company and Holder and, accordingly, has the benefit of the
registration rights pursuant to that agreement.
2
<PAGE>
5. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a
dividend payable in shares of Common Stock, then the Holder hereof, upon
Exercise of this Warrant after the record date for the determination of
Holders of Common Stock entitled to receive such dividend, shall be
entitled to receive upon Exercise of this Warrant, in addition to the
number of shares of Common Stock as to which this Warrant is Exercised,
such additional shares of Common Stock as such Holder would have received
had this Warrant been Exercised immediately prior to such record date and
the Exercise Price will be proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any
time effect a recapitalization, reclassification or other similar
transaction of such character that the shares of Common Stock shall be
changed into or become exchangeable for a larger or smaller number of
shares, then upon the effective date thereof, the number of shares of
Common Stock which the Holder hereof shall be entitled to purchase upon
Exercise of this Warrant shall be increased or decreased, as the case may
be, in direct proportion to the increase or decrease in the number of
shares of Common Stock by reason of such recapitalization, reclassification
or similar transaction, and the Exercise Price shall be, in the case of an
increase in the number of shares, proportionally decreased and, in the case
of decrease in the number of shares, proportionally increased. The Company
shall give the Warrant Holder the same notice it provides to holders of
Common Stock of any transaction described in this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute to
Holders of Common Stock cash, evidences of indebtedness or other securities
or assets (other than cash dividends or distributions payable out of earned
surplus 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
3
<PAGE>
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 exercisable 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. 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(d).
(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term
"Exercise Price" shall mean the purchase price per share specified in
Section 3 of this Warrant, until the occurrence of an event stated in
subsection (a), (b) or (c) of this Section 5, and thereafter shall mean
said price as adjusted from time to time in accordance with the provisions
of said subsection. No such adjustment under this Section 5 shall be made
unless such adjustment would change the Exercise Price at the time by $.01
or more; provided, however, that all adjustments not so made shall be
deferred and made when the aggregate thereof would change the Exercise
Price at the time by $.01 or more. The number of shares of Common Stock
subject hereto shall increase proportionately with each decrease in the
Exercise Price, and decrease proportionately with each increase 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. Notwithstanding the foregoing, the Company shall issue
at Holder's request, in accordance with Section 8 hereof, Warrants to purchase
fractional shares; provided, however, that any fractional shares issuable upon
the Exercise of such Warrants shall be subject to the first two sentences of
this Section 6.
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 of this Warrant. The
4
<PAGE>
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. Any shares of Common Stock issued upon
Exercise must contain a restrictive legend unless such shares of common
stock are subject to a currently effective registration statement or
otherwise are freely tradeable.
(b) ASSIGNMENT. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell,
transfer, assign, pledge or otherwise dispose of this Warrant, in whole or
in part. Holder shall deliver a written notice to Company, substantially in
the form of the Assignment attached hereto as Exhibit B, indicating the
person or persons to whom the Warrant shall be assigned and the respective
number of warrants to be assigned to each assignee. The Company shall
effect the assignment within ten (10) days, and shall deliver to the
assignee(s) designated by Holder a Warrant or Warrants of like tenor and
terms for the appropriate number of shares.
9. BENEFITS OF THIS WARRANT. Nothing in this Warrant shall be construed to
confer upon any person other than the Company and the Holder of this Warrant any
legal or equitable right, remedy or claim under this Warrant and this Warrant
shall be for the sole and exclusive benefit of the Company and the Holder of
this Warrant.
10. APPLICABLE LAW. This Warrant is issued under and shall for all purposes
be governed by and construed in accordance with the laws of the state of
Colorado, without giving effect to conflict of law provisions thereof.
11. LOSS OF WARRANT. Upon receipt by the Company of evidence of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of indemnity or security reasonably satisfactory to the
Company, and upon surrender and cancellation of this Warrant, if mutilated, the
Company shall execute and deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS. Notices or demands ("Notice") pursuant to this
Warrant to be given or made by the Holder of this Warrant or the Company, as the
case may be, to or on the Company or Holder, as the case may be, shall be
sufficiently given or made as follows:
5
<PAGE>
(a) if personally delivered, then Notice is effective on the next
business day after receipt;
(b) if delivered by mail, Notice is deemed given and delivered 72
hours after being deposited in any duly authorized United States mail
depository, postage prepaid, registered or certified, return receipt
requested;
(c) if sent by a reputable overnight courier service (e.g., Federal
Express), addressed as set forth below, the Notice shall be deemed
effective on the next business day after receipt, as evidenced by the
receipt obtained by the courier service; or
(d) if sent by telecopier to the phone number listed below, then
Notice shall be deemed delivered on the next business day after receipt, as
evidenced by a successful transmission report.
All notices shall be addressed as follows:
If to the Company: Intercell Technologies Corporation
7201 East Camelback Road, Suite 250
Scottsdale, Arizona 85251
Attention: President
Telephone No. (602) 970-5500
Telecopy No. (602) 970-5501
If to Holder to the address of the Holder set forth in the Company's records,
until another address is designated in writing by Holder.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
18th day of July, 1997.
INTERCELL TECHNOLOGIES CORPORATION
By: /s/ Terry W. Neild
----------------------------------------
Terry W. Neild, President
7
<PAGE>
EXHIBIT A
EXERCISE FORM
TO: INTERCELL TECHNOLOGIES CORPORATION
The undersigned hereby irrevocably exercises the right to purchase ____________
of the shares of Common Stock of INTERCELL TECHNOLOGIES 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 shares 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. The undersigned acknowledges that the Company will issue the requested
stock certificates free of any restrictive legend only in the event a
registration statement covering such shares is currently effective or such
shares are otherwise freely tradeable.
Dated:
-----------------------------------------
Signature of Registered Holder
-----------------------------------------
Name of Registered Holder (Print)
-----------------------------------------
Non-U.S. Address
A-1
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby
sells, assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of INTERCELL TECHNOLOGIES
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.
- --------------------------------------------------------------------------------
B-1
EXHIBIT 10.03
ROYALTY AGREEMENT
This Royalty "Agreement" is made and entered into as of the 18th day of
July, 1997 (the "Effective Date"), by and between Intercell Technologies
Corporation, a Colorado corporation, formerly known as "Secure Luggage Systems,
Inc." and "Emulation Products, Inc.," 7201 East Camelback Road, Suite 250,
Scottsdale, Arizona 85251 (the "Company"), and Intercell Corporation, a Colorado
corporation, 370 Seventeenth Street, Suite 3290, Denver, Colorado 80202
("Payee").
BACKGROUND
A. Payee developed certain intellectual property rights regarding antennas
for cellular telephones.
B. The Company purchased certain assets from Payee, including but not
limited to, the rights to (i) U.S. Patent Application No. 08/658,355; filing
date June 5, 1996; title: Portable Telephone with Dual Resonance Antenna (as
amended) and (ii) U.S. Patent Application No. 08/715,796; filing date 19
September 1996; title: Dual Resonance Antenna for Portable Telephone
(collectively, the "Patents").
C. As a portion of the consideration for the sale of these Patent rights
and other assets transferred from Payee to Company pursuant to that certain
Stock Purchase Agreement dated July 18, 1997, between the Company and Payee (the
"Stock Purchase Agreement"), Company has agreed to pay to Payee the royalty
defined below.
AGREEMENT
For valuable consideration received, the parties agree that:
1. INCORPORATION BY REFERENCE. The Background section of this Agreement and
all assignments and other documents regarding the Patents which were included as
Exhibits to the Stock Purchase Agreement are incorporated by reference into this
Agreement.
2. GOOD FAITH EFFORTS. The Company shall use its best and good faith
efforts to promote the commercialization and sale of the antenna technology
during the term of this Agreement.
3. TERM. The Company shall pay Payee the royalty specified below until
Payee has received a royalty payment equal to $5,000,000 at which time this
Agreement shall terminate; provided, however, that regardless of the dollar
amount of Royalty payments paid, this Agreement will terminate on July 30, 2007.
<PAGE>
4. COMPUTATION OF ROYALTY. The amount of the royalty (the "Royalty") shall
be equal to 10% of the first $50,000,000 in gross revenues ("Gross Revenues"),
which phrase is defined to mean those revenues actually received by the Company
in good funds from sales of goods that use the technology contained in the
Patents, including, without limitation, hand-held cellular telephone antennas
that communicate through ground based cell cites (collectively, the "Product").
For purposes of this Agreement, Gross Revenues from the sale of the Product
shall include (i) gross revenues on Product sold separately to independent third
parties or affiliates of Company, (ii) gross revenues on Product not sold
separately, but which are incorporated into cellular phones or any other
communication equipment manufactured by the Company, its affiliates or
independent third parties and (iii) all moneys received by the Company as a
joint venturer, partner, licensee, or other participant with any company which
directly manufactures, markets or sells the Product; PROVIDED, HOWEVER, that
Gross Revenues shall only include revenues directly derived from the sale of the
Product or royalty or other fees directly relating to such sales. The price of
Product not sold separately shall equal the gross sales price of Product sold
separately. "Company" shall include its wholly owned subsidiaries and divisions,
whether domestic or foreign.
5. METHOD AND TIMING OF PAYMENT. The Royalty payments shall be payable
quarterly (the "Payment Period") and shall be due on the last day of the month
after the end of the Payment Period. The first payment, if any, shall be due on
the last day of October for the Payment Period ending September 30, 1997.
Thereafter such payment shall consist of an amount equal to Royalty payable with
respect to the Product for the just completed Payment Period. Any Royalty
payment not received within 5 business days of the date due shall be charged a
late payment fee equal to 5% of the Royalty payment past due from the date
originally due until paid.
6. TERMINATION. Failure to pay any Royalty payment due Payee by Company
within sixty (60) days after written notice from Payee that any Royalty payment
has not been paid when due shall constitute a breach of this Agreement and shall
give Payee the right to terminate this Agreement. Upon the termination of this
Agreement pursuant to the provisions of this Section 6, the Company shall
discontinue manufacturing and distributing the Product and shall reassign the
Patents to Payee.
7. ACCOUNTING REVIEW.
(a) The Company shall keep true and accurate records covering all
transactions relating to the right hereby granted, and Payee and its duly
authorized representatives shall have reasonable and customary rights of
inspection and audit to verify the accuracy of these results. If the
Royalty payments paid are inaccurate by more than 5%, then Company shall
pay the cost of audit. Otherwise the cost of any audit shall be borne by
Payee.
(b) During the term of this Agreement, Company agrees to furnish to
Payee simultaneously with its regular Royalty payment a statement showing
the number,
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<PAGE>
description and gross sales price of the Product distributed or sold
by the Company during the preceding Payment Period, along with a statement
showing how the Royalty payment was computed.
8. SALE OF TECHNOLOGY. If the Company determines to sell, license or
otherwise dispose of the Patents or antenna technology, any consideration
received by the Company in connection with said transaction up to the first
$5,000,000 shall be paid, in full, in like kind, to Payee at the closing of such
transaction in accordance with the terms and conditions of the agreement
relating to the transaction. Payee shall have the right to require as a
condition of the closing of any such transaction that the party acquiring the
Patents or any rights thereunder shall, at a minimum, be required to
acknowledge, adopt and agree to be bound by all terms and conditions of this
Agreement.
9. TIME. If the time for performance of any obligation under this Agreement
expires on a Saturday, Sunday or legal holiday, the time for performance shall
be extended to the next succeeding day which is not a Saturday, Sunday or legal
holiday. For computation of time periods the phrase "a day" means a calendar day
which is not a legal holiday. Time is of the essence with respect to the
performance of all the terms, conditions, and provisions of this Agreement.
10. LAWS. This Agreement shall be construed and interpreted under, governed
and enforced according to the laws of the State of Colorado.
11. LEGAL FEES. If either party finds it necessary to employ legal counsel
or to bring an action at law, at equity, or other proceeding against the other
party to enforce any of the terms, covenants or conditions, the prevailing party
shall be paid its costs and actual attorney's fees by the losing party. If
judgment is secured by the prevailing party, then all costs and fees shall be
included in that judgment which judgment shall bear interest at twelve percent
per annum until paid in full.
12. SUCCESSORS/ASSIGNS. This Agreement shall inure to the benefit of and be
binding upon the heirs, executors, personal representatives, successors and
assigns of the parties. The rights under this Agreement may be assigned or
sublicensed by the Payee. This Agreement may not be assigned by the Company,
whether by operation of law or through a change in control, sale of assets,
consideration or similar transaction without the prior written consent of Payee.
13. ENFORCEABILITY. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, then the invalidity, illegality or
enforceability shall not alter the remaining provisions, as each provision of
this Agreement shall be deemed severable from all other provisions.
14. WAIVER OF RIGHT. The waiver of either party to any right granted to it
in this Agreement shall not be deemed to be a waiver of any other right granted
herein, nor shall the
3
<PAGE>
same be deemed to be a waiver of a subsequent right obtained by reason of the
continuation of any matter previously waived.
15. GENDER. All words used in singular shall include the plural; the
masculine gender includes the feminine and neuter; the feminine gender includes
the masculine and feminine; and the neuter gender includes the masculine and
feminine; all as required by the context.
16. FURTHER DOCUMENTATION. Each party agrees in good faith to execute such
further or additional documents as become necessary or appropriate to carry out
the intent and purpose of this Agreement.
17. INTERPRETATION. This Agreement is the result of negotiations between
the parties and, accordingly, shall not be construed for or against either party
solely because one party drafted this Agreement.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
19. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretations of this
Agreement.
20. SEVERABILITY. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity or any other provision of
this Agreement or the remaining portion of the applicable provision.
21. NOTICES. All notices, consents, approvals, waivers or other items given
or required to be given by one party to the other shall be in writing; these
"Notices" shall be delivered by one of these methods:
(a) if personally delivered, then notice is effective upon receipt;
(b) if delivered by mail, Notice is deemed given and delivered 48
hours after being deposited in any duly authorized United States mail
depository, postage prepaid, registered or certified, return receipt
requested;
(c) if sent by a reputable overnight courier service (e.g., Federal
Express), addressed as set forth below, the Notice shall be deemed
effective upon receipt, as evidenced by the receipt obtained by the courier
service;
(d) if sent by telecopier to the phone number listed below, then
Notice shall be deemed delivered upon receipt, as evidenced by a successful
transmission report; or
4
<PAGE>
(e) Notice to an attorney is not complete until actual receipt;
addresses and fax numbers for an attorney should be confirmed by checking
with the Arizona State Bar Association in Phoenix, Arizona. Notice
addresses shall be changed by providing the new address to all of the other
parties in conformance with these provisions. All Notices shall be
addressed to:
If to Payee: Intercell Corporation
c/o Paul H. Metzinger, Esq.
370 Seventeenth Street, Suite 3290
Denver, CO 80202
Telecopier: (303) 592-1054
If to Company: Intercell Technologies Corporation
c/o Terry Neild
7201 E. Camelback, Suite 250
Scottsdale, AZ 85251
Telecopier: (602) 970-5501
22. ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the parties with respect to this transaction. All prior or contemporaneous
agreements, understandings, representations, and statements, oral or written,
are merged into this Agreement. No provision of this Agreement may be waived,
modified, amended, discharged or terminated except by an instrument in writing,
signed by the party against which the enforcement of the waiver, modification,
amendment, discharge or termination is sought and then only to the extent set
forth in that instrument.
PAYEE:
INTERCELL CORPORATION, a Colorado corporation
By /s/ Paul H. Metzinger
------------------------------------------
Name: Paul H. Metzinger
----------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
INTERCELL TECHNOLOGIES CORPORATION,
a Colorado corporation
By /s/ Terry W. Neild
------------------------------------------
Name: Terry W. Neild
----------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
5
EXHIBIT 10.04
$2,200,000 PROMISSORY NOTE
U.S. $2,200,000.00 July 18, 1997
Phoenix, Arizona
FOR VALUE RECEIVED, on or before the Maturity Date (defined below) the
undersigned "Maker" hereby promises to pay to the order of INTERCELL CORPORATION
its successors or assigns ("Holder"), the principal amount of $2,200,000.00
United States' Dollars together with interest on the principal balance
outstanding, from (and including) the loan date, at a per annum rate equal to
the Stated Interest Rate (defined below), in accordance with these terms and
conditions:
1. STATED INTEREST RATE. Interest shall accrue on the principal balance
outstanding hereunder from time to time at the rate of 10% per annum (the
"Stated Interest Rate").
2. PAYMENTS. The principal balance outstanding, together with all accrued
and unpaid interest and other amounts payable hereunder, if not sooner paid,
shall be due and payable in accordance with the attached amortization schedule
but in no event later than May 1, 2007 (the "Maturity Date").
In addition to Default Interest, if any, Maker agrees to pay the Holder a
late charge equal to five percent (5%) of any payment of interest, principal or
Other Sums (defined below), which is not received by the Holder within five (5)
days after the same is due ("Late Charge"). Maker acknowledges that the Holder
will incur extra expenses for the handling of delinquent payment and servicing
the indebtedness evidenced hereby and that the exact amount of these extra
expenses is extremely difficult and impractical to ascertain, but that the Late
Charge would be a fair approximation of these expenses so incurred by the
Holder.
All such payments shall first be applied to the payment of Late Charges, if
any; second, to Default Interest; third, to any costs provided in the Security
Agreement (as defined below); fourth, to accrued and unpaid interest at the
Stated Interest Rate; and, finally, to the outstanding principal balance. All
payments hereunder shall be made at Suite 3290, 370 17th Street, Denver, CO
80202, or at such other address or addresses as Holder specifies to Maker in
writing.
3. PREPAYMENTS. Payments of principal may be made at any time, or from time
to time, in whole or in part, without premium, penalty or other charge.
4. CONTRACTED FOR RATE OF INTEREST. The agreed rate of interest of this
indebtedness, without limitation, consists of:
<PAGE>
(a) The Stated Interest Rate calculated daily on the basis of actual
days elapsed over a 365-day year, applied to the outstanding principal
balance; and
(b) The "Other Sums" as defined below.
5. EVENTS OF DEFAULT; ACCELERATION. The occurrence of any one of these
events constitutes an "Event of Default":
(a) Maker's failure to make payments of principal, interest or other
amounts within ten days after it is due and payable; or
(b) Maker's failure to perform or comply with any provision of this
Note or of the Security Agreement or of any other agreements made by Maker
for the benefit of Holder; or
(c) The adjudication of Maker as a bankrupt or insolvent, or entry of
any order appointing a receiver, or trustee for Maker or for all or any of
its property, or approving a petition seeking reorganization or other
similar relief under the bankruptcy or other similar laws in the United
States of America or any other competent jurisdiction, and if the order is
not set aside or withdrawn within forty-five days after entry, or the
filing by Maker of a petition seeking or consenting to any of the foregoing
or the filing of a petition to take advantage of any debtor's act or making
a general assignment for the benefit of creditors, or admitting in writing
its inability to pay their debts as they mature.
Upon the occurrence of any such Event of Default the entire unpaid
principal balance, together with all accrued interest and "Other Sums" shall,
upon 10 days' written notice to Maker, become immediately due and payable; and
the balance of principal together with all accrued interest and "Other Sums"
shall bear interest from the time of such Event of Default until paid at the
rate of Fifteen percent (15%) per annum (the "Default Rate") from the date of
default ("Default Interest").
6. COLLATERAL. Maker's obligations under this Note are additionally secured
by the property described in a Stock Pledge and Security Agreement dated as of
the date hereof (the "Security Agreement") executed and delivered by Maker
contemporaneously with the execution and delivery of this Note. Maker agrees to
perform and comply with all covenants and conditions contained in the Security
Agreement.
7. ARIZONA SAVINGS CLAUSE.
(a) The "Contracted for Rate of Interest" as that term is defined
under the laws of the State of Arizona, under this Promissory Note,
included all fees, charges, goods, things in action or other sums or things
of value (collectively, the "Other Sums") and all interest collected
pursuant to the Stated Interest Rate. The phrase "Other Sums"
2
<PAGE>
also includes filing fees, insurance premiums and all other fees or
charges collected or incurred pursuant to the Security Agreement.
(b) Maker agrees that this lending transaction complies with the usury
laws of the State of Arizona. If any interest or other charge in connection
with this lending transaction, however, is determined to exceed the maximum
amount permitted by law, then Maker agrees that (i) the amount of interest
or other charge incurred in this lending transaction shall be reduced to
the maximum amount permitted by law; and (ii) any amount in excess of the
legal amount which has been collected from Maker and which exceeded the
maximum amount permitted by law, shall be credited against the outstanding
principal balance. If the principal balance has been paid in full, then the
excess amount paid will be refunded to Maker within 15 days after receipt
of written demand.
8. WAIVERS. Except as set forth in this Note or in the Security Agreement,
to the extent permitted by applicable law, Maker waives and agrees not to assert
as a defense its rights to demand, diligence, grace, presentment for payment,
protest, nonperformance, extension, dishonor, maturity, protest and default.
Holder may extend the time for payment of, or renew this Note, release
collateral as security for the Note or release any party from liability. Any
extension, renewal, release or other indulgence shall neither alter nor diminish
the liability of Maker except to the extent expressly set forth in a writing
evidencing or the extension, renewal, release or other indulgence.
HOLDER, BY ACCEPTING THIS NOTE, AND MAKER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR SECURITY
AGREEMENT. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM HOLDER WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY MAKER AGAINST HOLDER OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
NOTE OR SECURITY AGREEMENT. THE WAIVER BY MAKER OF ANY RIGHT IT MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR SECURITY AGREEMENT HAS BEEN
NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
9. ATTORNEYS' FEES. If either party finds it necessary to employ legal
counsel or to bring an action at law, at equity, or other proceeding against the
other party to enforce or interpret any of the terms, covenants or conditions,
the prevailing party shall be paid its costs
3
<PAGE>
and actual attorney's fees by the losing party, including all costs incurred in
mediation or arbitration. If judgment is secured by the prevailing party, then
all costs and fees shall be included in that judgment which judgment shall bear
interest at twelve percent per annum until paid in full.
10. RIGHTS AND REMEDIES ARE CUMULATIVE/NO WAIVER BY HOLDER. The rights or
remedies of the Holder as provided in this Note and the Security Agreement, as
well as any other remedy provided at law or in equity shall be cumulative and
concurrent and may be pursued singly, successfully, or together against the
Maker, the property described in and encumbered by the Security Agreement, and
any other funds, property or security held by the Holder for the payment hereof
or otherwise at the sole discretion of the Holder. No delay or failure of Holder
in exercising any right hereunder shall affect such right, nor shall any single
or partial exercise of any right preclude further exercise.
11. GOVERNING LAW. This Note shall be construed, governed by and enforced
in accordance with and governed by the laws of the State of Arizona.
12. TIME OF ESSENCE. Time is of the essence of this Note.
13. SEVERABILITY. If any provision of this Note is invalid or
unenforceable, then the other provisions shall remain in full force and effect
and shall be liberally construed in favor of Holder.
14. BINDING NATURE. The provisions of this Note bind Maker and its
successors and assigns and inure to the benefit of Holder and any subsequent
holder of all or any portion of this Note, and their respective successors and
assigns. Holder may from time to time transfer all or any part of its interest
in this Note and the Security Agreement, but shall provide notice to Maker of
the transfer.
15. NOTICES. All notices, consents, approvals, waivers or other items given
or required to be given by one party to the other shall be in writing; these
"Notices" shall be delivered by one of these methods:
(a) if personally delivered, then notice is effective on the next
business day after receipt;
(b) if delivered by mail, Notice is deemed given and delivered 72
hours after being deposited in any duly authorized United States mail
depository, postage prepaid, registered or certified, return receipt
requested;
(c) if sent by a reputable overnight courier service (e.g., Federal
Express), addressed as set forth below, the Notice shall be deemed
effective on the next business day after receipt, as evidenced by the
receipt obtained by the courier service; or
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<PAGE>
(d) if sent by telecopier to the phone number listed below, then
Notice shall be deemed delivered on the next business day after receipt, as
evidenced by a successful transmission report.
All Notices shall be addressed as indicated below:
If to Holder: Intercell Corporation
c/o Paul H. Metzinger, Esq.
370 Seventeenth Street, Suite 3290
Denver, CO 80202
Telecopier: (303) 592-1054
If to Maker: Intercell Technologies Corporation
c/o Terry Neild
7201 E. Camelback, Suite 250
Scottsdale, AZ 85251
Telecopier: (602) 970-5501
16. CONSTRUCTION. This Note shall be construed as a whole, in accordance
with its fair meaning, and without regard to or taking into account any
presumption or other rule of law requiring construction against the party
preparing this Note.
17. COMMERCIAL PURPOSE. The Maker hereby represents that the proceeds of
the loan evidenced by this Note will be used for a commercial or business
purpose.
IN WITNESS WHEREOF, Maker executed this Note to be legally binding as of
the Loan Date.
MAKER:
INTERCELL TECHNOLOGIES CORPORATION,
a Colorado corporation
By /s/ Terry W. Neild
------------------------------------------------
Name: Terry W. Neild
---------------------------------------------
Title: President and Chief Executive Officer
--------------------------------------------
7201 E. Camelback, Suite 250
Scottsdale, AZ 85251
5
EXHIBIT 10.05
STOCK PLEDGE AND SECURITY AGREEMENT
This Stock Pledge and Security Agreement ("Agreement") is made and entered
into as of the 18th day of July, 1997, by and among Intercell Technologies
Corporation, a Colorado corporation, formerly known both as "Secure Luggage
Systems, Inc." and "Emulation Products, Inc." ("Pledgor"), 7201 East Camelback
Road, Suite #250, Scottsdale, Arizona 85251, Intercell Corporation, a Colorado
corporation ("Pledgee"), 370 Seventeenth Street, Suite #3290, Denver, Colorado
80202, and Cellular Magnetics, Inc., doing business as M.C. Davis Company, an
Arizona corporation (the "Company").
RECITALS
WHEREAS, Pledgor has executed and delivered that certain promissory note,
dated July 18, 1997 (the "Note"), in the principal amount of $2,200,000 and
bearing interest at the rate of ten percent (10%) per annum, payable by Pledgor,
as the maker thereof, to Pledgee, as the holder thereof, according to the
amortization schedule attached thereto but in no event later than the maturity
date thereof on May 1, 2007, and secured by all 100 shares (the "Shares") of the
common stock, no par value per share, of the Company, purchased, acquired and
received by Pledgor pursuant to that certain Stock Purchase Agreement dated July
18, 1997 (the "Stock Purchase Agreement"), between Pledgor and Pledgee, which
Stock Purchase Agreement is incorporated herein by this reference; and
WHEREAS, in consideration for the Note and to induce Pledgee to enter into
the Stock Purchase Agreement, Pledgor has agreed to grant to Pledgee a security
interest in the Collateral (as defined below).
NOW, THEREFORE, in consideration of the Recitals above that constitute a
substantive part of this Agreement, and the mutual covenants, promises and
agreements hereinafter set forth, the parties intending to be legally bound,
hereto do hereby covenant, promise and agree as follows:
1. DEFINITIONS. As used herein:
"COLLATERAL" shall have the meaning ascribed thereto in Section 2 hereof.
"EVENT OF DEFAULT" shall mean any of the following events:
(a) Any default by Pledgor in the punctual payment of any amount due
under the Note, when and as the same shall become due and payable;
<PAGE>
(b) Any default by Pledgor under, or breach by Pledgor in the
performance of, any covenant, agreement, warranty, representation or
condition contained in the Stock Purchase Agreement, the Note or this
Agreement;
(c) If Pledgor or the Company shall:
(i) apply for, or consent in writing to, the appointment of a
receiver, trustee, or liquidator of Pledgor or Company, or to a sale
or transfer of all or substantially all assets of Pledgor or Company ;
(ii) file or be served with any petition for relief under the
Bankruptcy Code or any similar federal or state law or admit in
writing its inability to pay its debts as they become due;
(iii) make a general assignment for the benefit of creditors
outside the ordinary course of business;
(iv) file a petition or an answer seeking a reorganization in any
bankruptcy, reorganization or insolvency proceeding;
(d) If (i) any execution or attachment shall be levied against any
assets of Pledgor and shall not be dismissed within forty-five (45) days;
or (ii) any pleading shall be filed in any court or other forum seeking the
adjudication of Pledgor or the Company as a bankrupt or insolvent, the
appointment of a receiver, trustee, or liquidator of Pledgor or the Company
or of all or substantially all of the assets of Pledgor or the Company,
which pleading shall not be dismissed within ninety (90) days;
(e) The filing of any tax lien respecting any of the assets of Pledgor
or the Company;
(f) The creation, placing or filing of a security interest, lien or
other encumbrance against any or all of the Collateral or seizure or taking
of any Collateral by any third party, without the prior consent of Pledgee;
(g) Any warranty, information, representation or statement by Pledgor
made or furnished to Pledgee by or on behalf of Pledgor in connection with
the Collateral, this Agreement, the Note or the Stock Purchase Agreement,
is determined by any court or other authority of competent jurisdiction to
be untrue or misleading in any material respect; or
(h) Pledgor or the Company shall conceal, remove or permit to be
concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of them, or shall take or suffer a
transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law.
2
<PAGE>
"PERSON" shall mean an individual, corporation, limited liability company,
general or limited partnership, joint venture partner or other business
organization.
2. GRANT OF SECURITY INTEREST AND PLEDGE. As collateral security for the
prompt payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Note and the performance by Pledgor of all of the covenants,
agreements, warranties, representations and conditions contained in the Stock
Purchase Agreement, the Note and this Agreement, Pledgor hereby pledges and
grants to Pledgee a security interest in all of Pledgor's right, title and
interest in the following property, whether now owned by Pledgor or hereafter
acquired and whether now existing or hereafter coming into existence (all being
collectively referred to herein as "Collateral"):
(a) the shares of common stock of the Company evidenced by the
certificates attached hereto as Exhibit A under the name of Pledgor
("Pledged Stock");
(b) all shares, securities, moneys or property representing a dividend
on any of the Pledged Stock or representing a distribution or return of
capital upon or in respect of the Pledged Stock, or resulting from a
split-up, revision, reclassification or other like change of the Pledged
Stock or otherwise received in exchange therefor, and any subscription
warrants, rights or options issued to the holders of, or otherwise in
respect of, the Pledged Stock;
(c) in the event of any consolidation or merger in which the Company
is not the surviving corporation, all shares of each class of the capital
stock or other consideration of the successor corporation formed by or
resulting from such consolidation or merger; and
(d) all proceeds of and to any of the property of Pledgor described in
Section 2(a) through (c) herein, and, to the extent related to any property
described in said clauses or such proceeds, all books, correspondence,
credit files, records, invoices and other papers.
3. REPRESENTATIONS AND WARRANTIES. Company and Pledgor, as the case may be
represent and warrant to Pledgee that:
(a) This Agreement has been duly and validly executed and delivered by
Company and constitutes its legal, valid and binding obligations,
enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement, nor the consummation
of the transactions herein contemplated, nor compliance with the terms and
provisions hereof will conflict with or result in a breach of, or require
any consent under, any applicable law or regulation, or any order, writ,
injunction or decree of any court or government authority or agency, or any
agreement or instrument to which Company is
3
<PAGE>
a party or by which Company is bound or to which Company is subject,
or constitute a default under any such agreement or instrument, or result
in the creation or imposition of any lien upon Company's earnings or assets
pursuant to the terms of any such agreement or instrument.
(c) No authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by Company of this
Agreement or for the validity or enforceability hereof.
(d) Company has filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by Pledgor
and has paid all taxes due pursuant to such returns or pursuant to any
assessment received by Pledgor with respect to the Pledged Stock.
(e) Pledgor is the sole beneficial owner of the Collateral in which
Pledgor grants a security interest pursuant to Section 2 herein and no
lien, encumbrance, or security interest exists or will exist upon such
Collateral at any time (and no right or option to acquire the same exists
in favor of any other person or entity), except for the pledge and security
interest in favor of Pledgee created or provided for herein, which pledge
and security interest constitute a first priority perfected pledge and
security interest in and to all of such Collateral.
(f) The Pledged Stock is duly authorized, validly existing, fully paid
and non-assessable and none of such Pledged Stock is or will be subject to
any contractual restriction, or any restriction under the charter or bylaws
of Pledgor upon the transfer of such Pledged Stock.
4. OTHER FINANCING STATEMENTS AND LIENS. Without the prior written consent
of Pledgee, Pledgor shall not file or suffer to be on file, or authorize or
permit to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Collateral in which Pledgee is
not named as the sole secured party.
5. PRESERVATION OF RIGHTS. Pledgee shall not be required to take steps
necessary to preserve any rights against prior parties to any of the Collateral.
6. STOCK COLLATERAL.
(a) So long as no Event of Default shall have occurred and be
continuing, Pledgor shall have the right to exercise all voting,
consensual, and other powers of ownership pertaining to the Collateral for
all purposes not inconsistent with the terms of this Agreement; provided,
however, that Pledgor agrees that it will not vote the Collateral in any
manner that is inconsistent with the terms of this Agreement, the Note or
the Stock Purchase Agreement; and Pledgee shall execute and deliver to
Pledgor or
4
<PAGE>
cause to be executed and delivered to Pledgor all such proxies, powers
of attorney, dividend and other orders, and all such instruments, without
recourse, as Pledgor may reasonably request for the purpose of enabling
Pledgor to exercise the rights and powers which it is entitled to exercise
pursuant to this Section 6.
(b) Unless and until an Event of Default has occurred and is
continuing, Pledgor shall be entitled to receive and retain any dividends
on the Collateral paid in cash out of earned surplus, subject to the
provisions of this Agreement and the Stock Purchase Agreement.
(c) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not Pledgee exercises any
available right to declare the amount due under the Note due and payable or
seeks or pursues any other relief or remedy available under applicable law
or under this Agreement, all dividends and other distributions on the
Collateral shall be paid directly to Pledgee and retained by Pledgee as
part of the Collateral, subject to the terms of this Agreement, and, if
Pledgee shall so request in writing, Pledgor agrees to execute and deliver
to Pledgee appropriate additional dividend, distribution and other orders
and documents to that end, provided that if such Event of Default is timely
cured, any such dividend or distribution theretofore paid to Pledgee, upon
request of Pledgor (except to the extent theretofore applied to the
obligations secured by the Note), shall be returned to Pledgor.
7. REMEDIES UPON DEFAULT. During the period during which an Event of
Default shall have occurred and be continuing:
(a) Pledgee shall have all of the rights and remedies with respect to
the Collateral of a secured party under the Uniform Commercial Code as in
effect from time to time in the State of Colorado and such additional
rights and remedies to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights and remedies hereunder may be
asserted, including, without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if Pledgee were the sole and
absolute owner thereof (and Pledgor agrees to take all such action as may
be appropriate to give effect to such right), as well as the right to sell
or otherwise dispose of all or any part of the Collateral.
(b) Pledgee, at Pledgee's option and in Pledgee's sole discretion, may
declare the unpaid obligations of the Note immediately due and payable as
fully and as completely as if said aggregate sums were originally agreed to
be paid at such time, all without notice or demand, which are hereby
expressly waived by Pledgor.
(c) Pledgee, upon five (5) business days' prior to notice to Pledgor
of the time and place, with respect to the Collateral or any part thereof
which is in the possession of Pledgee, may sell, lease, assign or otherwise
dispose of all or any part of such
5
<PAGE>
Collateral, at such place or places as Pledgee deems best, and for
cash or for credit or for future delivery at public or private sale,
without demand of performance or notice of intention to effect any such
disposition or of the time or place thereof except such notice as is
required above or by applicable statute and cannot be waived), and Pledgee
or anyone else may be the purchaser, lessee, assignee or recipient of any
or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the same
absolutely free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise) of Pledgor, any such
demand, notice and right or equity being hereby expressly waived and
released.
Pledgor recognizes that, by reason of certain prohibitions contained
in the Securities Act of 1933, as amended, and applicable state securities
laws, Pledgee may be compelled, with respect to any sale of all or any part
of the Collateral, to limit purchasers to those who will agree, among other
things, to acquire the Collateral for their own account, for investment and
not with a view to the distribution or resale thereof. Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to
Pledgee than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that Pledgee shall have no obligation to engage in public sales
and no obligation to delay the sale of any Collateral for the period of
time necessary to permit the issuer thereof to register it for public sale.
8. ATTORNEY-IN-FACT. Without limiting any rights or powers granted by this
Agreement to Pledgee while no Event of Default has occurred and is continuing,
upon the occurrence and during the continuance of any Event of Default, Pledgee
is hereby appointed the attorney-in-fact of Pledgor for the purpose of carrying
out the provisions of Section 7 of this Agreement and taking any action and
executing any instruments which Pledgee may deem necessary or advisable to
accomplish the purposes thereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest.
9. PERFECTION. Prior to or concurrently with the execution and delivery of
this Agreement, Pledgor shall deliver to Pledgee the certificates representing
the Pledged Stock, accompanied by all undated stock powers, duly executed in
blank with signatures Medallion Guaranteed, accompanied by appropriate certified
corporate resolutions and certified Certificates of Incumbency relating to the
persons signing such instruments.
10. FULL PAYMENT AND PERFORMANCE. Upon the full and punctual payment by
Pledgor of the obligations due under the Note, the performance by Pledgor of all
of the covenants, agreements, warranties, representations or conditions
contained in the Stock Purchase Agreement, the Note and this Agreement, Pledgee
shall thereupon transfer to Pledgor all of the Collateral and, to that end,
shall execute any and all instruments and documents that Pledgor
6
<PAGE>
reasonably shall deem necessary or proper to revest title and record ownership
thereof in and to Pledgor.
11. ASSIGNMENT. This Agreement and the security interest granted herein
shall inure to the benefit of Pledgee and Pledgee's respective heirs, personal
or legal representatives, and assigns, and shall bind Pledgor and its successors
and assigns; provided, however, that Pledgor shall not assign its obligations
hereunder without the prior written consent of Pledgee.
12. INVALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect or impair the validity of any
other provision hereof.
13. AMENDMENTS. This Agreement shall not be amended, modified, altered or
changed except by an agreement in writing, signed by the party against whom
enforcement of the amendment, modification, alteration, or change shall be
sought.
14. WAIVERS. Waivers by Pledgee of any of the covenants, agreements,
warranties, representations, rights, remedies, or conditions herein shall not
operate as a future waiver thereof or of any other covenant, agreement,
warranty, representation, right, remedy or condition hereof.
15. GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the laws of the State of Colorado without regard to its
conflicts of law provisions.
16. NOTICES. All notices, request, consents and demands hereunder shall be
in writing and telecopied or delivered to the intended recipient at such party's
address or number specified beneath such party's signature hereto, or at such
other number or address as shall be designated by any party in a notice to each
other party, and shall be deemed to have been given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
deposit in the U.S. mail, by certified or registered mail, postage prepaid, in
each case given or addressed as aforesaid.
17. CONFLICT. In the event of any conflicts between this Agreement and the
Stock Purchase Agreement or the Note, this Agreement shall control.
18. PREVAILING PARTY. In the event of any litigation arising out of this
Agreement, the court SHALL award to the prevailing party all reasonable costs
and expenses, including without limitation, attorneys' fees.
19. SURVIVAL. All representations, warranties and other provisions hereof,
are true and correct at the time of execution of this Agreement and shall
survive the execution, delivery, and performance of this Agreement.
20. ENTIRE AGREEMENT. This Agreement includes Exhibits A and B.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
day and year first above written.
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
----------------------------------------------
Paul H. Metzinger, President and Chief
Executive Officer
Address for Notices:
370 Seventeenth Street, Suite 3290
Denver, Colorado 80202
Attn: Paul H. Metzinger, President and
Chief Executive Officer
INTERCELL TECHNOLOGIES CORPORATION
By /s/ Terry W. Neild
----------------------------------------------
Terry W. Neild, President
Address for Notices:
7201 East Camelback Road, Suite #250
Scottsdale, Arizona 85251
Attn: Terry W. Neild
CELLULAR MAGNETICS, INC.
By /s/ Jerry W. Tooley
----------------------------------------------
Jerry W. Tooley, President
Address for Notices:
7201 East Camelback Road, Suite #250
Scottsdale, Arizona 85251
Attn: Jerry W. Tooley
8
<PAGE>
EXHIBIT A
TO
STOCK PLEDGE AND SECURITY AGREEMENT
CERTIFICATE NO. NO. SHARES NAME ON CERTIFICATE
--------------- ---------- -------------------
2 100 Intercell Technologies Corporation
A-1
<PAGE>
EXHIBIT B
TO
STOCK PLEDGE AND SECURITY AGREEMENT
In addition to the covenants set forth in the Stock Pledge and Security
Agreement (the "Agreement"), Pledgor and the Company agree as follows:
ARTICLE I
NEGATIVE COVENANTS
So long as the Note shall remain unpaid, Pledgor and the Company agree
that:
Section 1.01. LIENS. The Company will not create, incur or suffer to exist
any mortgage, deed of trust, pledge, lien, security interest, assignment or
transfer upon or of any of the assets, now owned or hereafter acquired by the
Company (the "Assets"), to secure any indebtedness; excluding however, from the
operation of the foregoing the security interests granted to Pledgee hereunder.
Section 1.02. INDEBTEDNESS. The Company will not incur, create, assume or
permit to exist any indebtedness or liability on account of deposits or advances
or any indebtedness for borrowed money, or any other indebtedness or liability
evidenced by notes, bonds, debentures or similar obligations, except
indebtedness under the Note.
Section 1.03. GUARANTIES. The Company will not assume, guarantee, endorse
or otherwise become directly or contingently liable in connection with any
obligations of any other Person.
Section 1.04. INVESTMENTS AND SUBSIDIARIES. The Company will not purchase
or hold beneficially any stock or other securities or evidences of indebtedness
of; make or permit to exist any loans or advances to, or make any investment or
acquire any interest whatsoever in, any other corporation, limited partnership,
general partnership, limited liability company or similar entity (collectively a
"Person"), including specifically but without limitation any partnership or
joint venture.
Section 1.05. DIVIDENDS. The Company will not declare or pay on any class
of its stock or make any payment on account of the purchase, redemption or other
retirement of any shares of such stock or make any distribution in respect
thereof, either directly or indirectly.
Section 1.06. SALE OF TRANSFER OF ASSETS, SUSPENSION OF BUSINESS
OPERATIONS. The Company will not sell, lease, assign, transfer or otherwise
dispose of (a) the stock of any subsidiary permitted hereunder, (b) all or
substantially all of its assets, or (c) any Assets or any interest therein
(whether in one transaction or in a series of transactions) to any other Person
B-1
<PAGE>
other than the sale of inventory in the ordinary course of business and will not
liquidate, dissolve or suspend business operations. The Company will not in any
manner transfer any property without prior or present receipt of full and
adequate consideration.
Section 1.07. CONSOLIDATION AND MERGER; ASSET ACQUISITIONS. The Company
will not consolidate with or merge into, any Person, or permit any other Person
to merge into it, or acquire (in a transaction analogous in purpose or effect to
a consolidation or merger) all or substantially all the assets of any other
Person.
Section 1.08. SALE AND LEASEBACK. The Company will not enter into any
arrangement, directly or indirectly, with any other Person whereby the Company
shall sell or transfer any real or personal property, whether now owned or
hereafter acquired, and then or thereafter rent or lease as lessee such property
or any part thereof or any other property which the Company intends to use for
substantially the same purpose or purposes as the property being sold or
transferred.
Section 1.09. RESTRICTIONS ON NATURE OF BUSINESS. The Company will not
engage in any line of business materially different from that presently engaged
in by the Company and will not purchase, lease or otherwise acquire assets not
related to its business.
Section 1.10. ISSUANCE OF ADDITIONAL CAPITAL STOCK. The Company shall not
issue, sell, or deliver, or otherwise increase the amount of, shares of its
capital stock or options, warrants, or rights to acquire any such capital stock
or securities convertible into or exchangeable for such capital stock.
Section 1.11. OTHER DEFAULTS. The Company will not permit any breach,
default or event of default to occur under any note, loan agreement, indenture,
lease, mortgage, contract, deed, security agreement or other contractual
obligation binding upon the Company.
ARTICLE II
AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid, the Company and Pledgor will
comply with the following requirements, unless Pledgee shall otherwise consent
in writing:
Section 2.01. REPORTING REQUIREMENTS. The Company will deliver, or cause to
be delivered, to Pledgee each of the following, which shall be in form and
detail acceptable to the pledgee:
(a) immediately after the commencement thereof, notice in writing of
all litigation and of all proceedings before any governmental or regulatory
agency affecting the Company or which seek a monetary recovery against the
Company in excess of $25,000;
B-2
<PAGE>
(b) as promptly as practicable (but in any event not later than five
(5) business days) after an officer of the Company obtains knowledge of the
occurrence of any breach, default or event of default hereunder, notice of
such occurrence, together with a detailed statement by a responsible
officer of the Company of the steps being taken by the Company to cure the
effect of such breach, default, or event;
(c) promptly upon knowledge thereof, notice of (i) any disputes or
claims by customers of the Company in excess of $2,500 individually or in
excess of $10,000 in the aggregate; (ii) any change in the persons
constituting the officers and directors of the Company; and (iii) any
change in the compensation paid to officers, directors, affiliates,
advisors, consultants or independent contracts from what exists as of the
date hereof;
(d) promptly upon knowledge thereof, notice of any loss or material
damage to any Assets or of any substantial adverse change in any Assets or
such other Assets or the prospect of payment thereof;
(e) promptly upon knowledge thereof, notice of any loss of any
material customer or supplier;
(f) promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Company shall have sent
to its stockholders, its commercial lending institutions or any other
person;
(g) promptly upon knowledge thereof, notice of the violation by the
Company of any law, rule or regulation, the non-compliance with which could
materially and adversely affect its business or its financial condition.
Section 2.02. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge, when due, (a) all taxes, assessments and governmental charges levied
or imposed upon it or upon its income or profits, upon any properties belonging
to it (including, without limitation, the Assets) or upon or against the
creation, perfection or continuance of the security interests granted hereunder,
prior to the date on which penalties attach thereto, (b) all federal, state and
local taxes required to be withheld by it, and (c) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon any properties of the Company; provided, that the Company shall not be
required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 2.03. MAINTENANCE OF PROPERTIES.
(a) The Company will keep and maintain the Assets and all of its other
properties necessary or useful in its business in good condition, repair
and working order (normal wear and tear excepted) and will from time to
time replace or repair any worn, defective or broken parts.
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(b) The Company will defend the Assets against all claims or demands
of all persons (other than Pledgee) claiming the Assets or any interest
therein.
(c) The Company will keep all Assets free and clear of all security
interests, liens and encumbrances except the security interests permitted
by Section 1.01 hereof.
Section 2.04. INSURANCE. The Company will obtain and at all times maintain
insurance with insurers believed by the Company to be responsible and reputable,
in such amounts and against such risks as may from time to time be required by
Pledgee, but in all events in such amounts and against such risks as is usually
carded by companies engaged in similar business and owing similar properties in
the same general areas in which the Company operates. All policies of liability
insurance required hereunder shall name Pledgee as an additional insured.
Section 2.05. PRESERVATION OF CORPORATE EXISTENCE; ISSUANCE OF STOCK. The
Company will preserve and maintain its corporate existence and all of its
rights, privileges and franchises necessary or desirable in the normal conduct
of its business and shall conduct its business in an orderly, efficient and
regular manner.
Section 2.06. COMPLIANCE WITH LAWS; ENVIRONMENTAL INDEMNITY. The Company
will (a) comply with the requirements of applicable laws and regulations, the
non-compliance with which would materially and adversely affect its business or
its financial condition, (b) comply with all applicable environmental laws and
obtain any permits, licenses or similar approvals required by any such
environmental laws, and (c) use and keep the Assets, and will require that
others use and keep the Assets, only for lawful purposes, without violation of
any federal, state or local law, statute or ordinance.
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