<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-14306
INTERCELL CORPORATION
---------------------
(Exact name of small business issuer as specified in its charter)
Colorado 84-0928627
-------- ----------
(State or other jurisdiction (I.R.S. employer identification
of incorporation or organization ) number)
370 Seventeenth Street Suite 3580
Denver Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 592-1010
No Change
(Former name, former address or former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes __ No X.
---
As of December 31, 1997 there were 36,783,266 shares of the registrant's sole
class of common shares outstanding, 5 shares of the registrant's Preferred
Series B stock outstanding, and 167 shares of the registrant's Preferred Series
C stock outstanding.
Transitional Small Business Disclosure Format. Yes X No__
-
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INTERCELL CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
December 31, 1997 1
Condensed Consolidated Statements of Operations
For the Three Months Ended December 31, 1997 and 1996 2
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 1997 and 1996 3
Condensed Consolidated Statements of Changes in Stockholders' Equity
For the Three Months Ended December 31, 1997 4
Notes to Condensed Consolidated Financial Statements
December 31, 1997 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
SIGNATURES 17
</TABLE>
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERCELL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash $ 974,000
Accounts receivable, net of reserves 932,000
Inventories 799,000
Prepaid expenses and other current assets 142,000
Land available for sale 1,424,000
------------
Total current assets 4,271,000
Property, plant and equipment, net of 2,135,000
accumulated depreciation
Other assets:
Investments 285,000
Goodwill and other intangible assets 250,000
------------
Total other assets 535,000
------------
Total assets $ 6,941,000
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, short term 1,648,000
Notes payable, related party 135,000
Accounts payable and accrued liabilities 2,575,000
Contingent liabilities 382,000
Covenant lease payable 96,000
------------
Total current liabilities 4,836,000
Long-term liabilities:
Convertible debenture 1,485,000
Long-term debt, less current portion 16,000
------------
Total long-term liabilities 1,501,000
Stockholders' equity:
Convertible preferred stock; 10,000,000 shares authorized:
Series B; 5 shares issued and outstanding as of
December 31, 1997 40,000
(liquidation preference of $56,250)
Series C; 167 shares issued and outstanding as of
December 31, 1997 1,252,000
(liquidation preference of $1,878,750)
Series D; 1,080 shares issued and outstanding as of
December 31, 1997 2,401,000
(liquidation preference of $2,700,000)
Warrants to acquire common stock 3,075,000
Common stock; no par value; 100,000,000 shares authorized;
31,262,075 shares outstanding as of December 31, 1997 21,093,750
Additional paid in capital 2,996,000
Deferred compensation (3,000)
Accumulated deficit (30,250,750)
------------
Total stockholders' equity 604,000
Total liabilities and stockholders' equity $ 6,941,000
============
</TABLE>
See notes to consolidated financial statements.
1
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INTERCELL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
--------------------------------
1997 1996
<S> <C> <C>
Net sales $ 2,055,000 $ 1,599,000
Cost of goods sold 1,812,000 1,143,000
------------ ------------
Gross profit 243,000 456,000
General and administrative expense 3,218,750 1,534,000
Research and development expense 15,000 374,000
------------ ------------
Loss from operations (2,990,750) (1,452,000)
Other income/ (expense) (8,000) 60,000
------------ ------------
Net loss (2,998,750) (1,392,000)
Deemed preferred stock dividend relating to 221,000
in-the-money conversion terms
Accretion on preferred stock 35,000 139,000
------------ ------------
Net loss applicable to common stockholders ($3,033,750) ($1,752,000)
============ ============
Net loss per common share ($0.10) ($0.11)
============ ============
Weighted average number of common shares outstanding 29,481,871 16,527,588
============ ============
</TABLE>
See notes to consolidated financial statements.
2
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INTERCELL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities
Net loss ($2,998,750) ($1,392,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of ITCO 769,000
Depreciation and amortization 243,000 143,000
Gain on sale of property and equipment (57,000)
Amortization of deferred compensation 77,000
Common stock and warrants issued for services and interest 203,750 43,000
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (198,000) (64,000)
Inventory 183,000 (90,000)
Prepaid expenses and other assets 130,000 (39,000)
Increase in accounts payable and accrued liabilities 216,000 116,000
------------ ------------
Net cash used in operating activities (1,509,000) (1,206,000)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (290,000)
Proceeds from sales and maturities of short-term investments 2,088,000
Acquisition of other assets (13,000)
Proceeds from sale of assets 57,000
------------ ------------
Net cash provided by investing activities 57,000 1,785,000
------------ ------------
Cash flows from financing activities:
Proceeds from convertible debenture 1,500,000
Proceeds from notes payable 1,019,000
Proceeds from issuance of Series C preferred stock and warrants 4,673,000
Repayments of notes payable (55,000) (1,198,000)
Payment of debt issuance costs (145,000)
Repayment of long-term debt (162,000)
------------ ------------
Net cash flows provided by financing 2,319,000 3,313,000
activities ------------ ------------
Net increase in cash 867,000 3,892,000
Cash, beginning 107,000 4,224,000
------------ ------------
Cash, ending $ 974,000 $ 8,116,000
============ ============
</TABLE>
See notes to consolidated financial statements.
3
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INTERCELL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THREE MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Convertible WARRANTS TO
Preferred Stock ACQUIRE COMMON STOCK
-------------------------- --------------------------
Shares AMOUNT COMMON STOCK SHARES AMOUNT
<S> <C> <C> <C> <C> <C>
Balances, October 1, 1997 1,252 $3,658,000 $3,050,000 30,371,075 $21,285,000
Constructive retirement of treasury stock (1,100,000) (385,000)
Shares issued in lieu of interest 1,725,000 168,860
Shares issued for services 266,000 24,890
Warrants issued in connection with convertible debenture 25,000
Accretion on preferred stock 35,000
Net loss
Balances, December 31, 1997 1,252 $3,693,000 $3,075,000 31,262,075 $21,093,750
=========== ========== ========== ========== ===========
<CAPTION>
ADDITIONAL TOTAL
PAID-IN DEFERRED TREASURY ACCUMULATED STOCKHOLDERS'
CAPITAL COMPENSATION STOCK DEFICIT EQUITY
<S> <C> <C> <C> <C> <C>
Balances, October 1, 1997 $2,996,000 ($3,000) ($385,000) ($27,217,000) $ 3,384,000
Constructive retirement of treasury stock 385,000
Shares issued in lieu of interest 168,860
Shares issued for services 24,890
Warrants issued in connection with convertible debenture 15,000
Accretion on preferred stock (35,000) 35,000
Net loss (2,988,750) (3,023,750)
------------ -----------
Balances, December 31, 1997 $2,996,000 ($3,000) $ 0 ($30,240,750) $ 604,000
========== ========= ======== ============ ==========
</TABLE>
See Notes to financial statements.
4
<PAGE>
INTERCELL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include the
accounts of Intercell Corporation and its wholly-owned subsidiaries (the
"Company"). All inter-company transactions have been eliminated.
The consolidated financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position of and operating results for the periods presented. The consolidated
financial statements should be read in conjunction with the September 30, 1997
audited financial statements of Intercell Corporation and the notes thereto.
The results of operations for the three months ended December 31, 1997 are not
necessarily indicative of the results for the entire year ended September 30,
1998, or any future period.
NET LOSS PER SHARE
Net Loss per share of common stock is computed based on the weighted
average number of common shares outstanding during the year. Stock options,
warrants and conversion of Preferred Stock are not considered in the
calculations, as the effect would be to decrease loss per share.
INVENTORIES
Inventories consist of: December 31, 1997
-----------------
Raw materials $641,000
Work in process 80,000
Finished goods 78,000
--------
$799,000
NON-CASH INVESTING AND FINANCING ACTIVITIES
The Company engaged in the following non-cash investing and financing
activities:
<TABLE>
<CAPTION>
Three months ended December
---------------------------
1997 1996
<S> <C> <C>
Series B preferred stock converted to common stock $ 0 $3,930,000
Series C preferred stock converted to common stock $ 0 $ 0
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
In July 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income: This Statement establishes standards for reporting and displaying
comprehensive income and its components in the financial statements. It does
not, however, require a specific format for the
5
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statement, but requires the Company to display an amount representing total
comprehensive income for the period in that financial statement. The Company is
in the process of determining its preferred format. This Statement is effective
for fiscal years beginning after December 15, 1997.
Also, in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information". The Statement establishes
standards for the manner in which public business enterprises report information
about operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in interim
financial reports issued to stockholders. This Statement is effective for
financial statements for periods beginning after December 15,1997, and the
Company is currently evaluating its impact on the reporting of segment
information.
CONVERTIBLE DEBENTURES
In December 1997, the Company issued convertible debentures and attached
warrants for $1,500,000. Of this total, $750,000 is the Series A-1 Debenture
and $750,000 is the Series A-2 Debenture. The convertible debentures were, at
the time of issue, unsecured obligations of the Company.
The $750,000 Series A-1 Debentures requires quarterly interest payments at
9% per annum, beginning March 1, 1998 with the balance due on December 1, 1999.
The debenture may be converted at the option of the holder after 60 days from
the date of issuance at a conversion price per share equal to the lessor of 85%
of the market price as defined, or $0.75. In connection with the convertible
debt, three warrants were issued, each entitling the holder to purchase 200,000
shares of common stock for $0.17. $0.50, and $1.00 respectively. The warrants
expire three years from the date of issuance. The portion of the proceeds
allocable to the warrants was $15,000.
The $750,000 Series A-2 Debentures pays interest quarterly at 9% per annum,
beginning June 1, 1998, with a maturity date, at a conversion price for each
share of common stock at 85% of the market price as defined in the financing
agreement.
At the request of the Company the Series A-2 Debenture was accelerated to
December 31, 1998. As consideration for the acceleration, the Company provided
security to the debenture holders for the entire $1,500,000. The Company has
assigned a first priority secured lien on the assets of Sigma 7 Corporation, a
first deed of trust on property held for resale in Arizona and an assignment of
the $2,200,000 note from Intercell Technologies Corporation to the Company. In
addition, the Company issued 1,000,000 shares of its common stock to the
debenture holders.
In connection with the placement of the convertible debentures, the Company
paid a third-party investment banker a $180,000 commission, and issued that
investment banker warrants to purchase 200,000 shares of common stock at an
exercise price of $0.15 per share. The $180,000 commission and the warrants,
which were valued at $10,000, have been included in general and administrative
expense.
SUBSEQUENT EVENTS
6
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Effective February 6, 1998, the Company entered into a stock purchase
agreement to sell, transfer, assign and deliver all assets, liabilities, rights
and obligations of the Company related to its wholly-owned subsidiary California
Tube Laboratory, Inc. ("CTL") to Jaymark Corporation, in exchange for $2,015,458
in cash and notes. The company recognized a loss of approximately $75,700 from
the disposition.
On February 26, 1998, Intercell Corporation transferred all of the
intellectual property of Particle Interconnect Corporation to Nanopierce
Technologies, Inc. ("Nanopierce"), for 7,250,000 shares of the common stock of
Nanopierce and 100 series A 8% Voting Convertible Cumulative Participating
Preferred shares of Nanopierce. The preferred shares are convertible to
7,250,000 shares of the common stock of Nanopierce. After the transaction,
Intercell Corporation has approximately 74% controlling interest in Nanopierce
on a fully diluted basis.
On June 5, 1998 Intercell Corporation shut down all operations at Sigma 7
Corporation, its San Diego subsidiary, a manufacturer of memory modules ("Sigma
7"). Sigma 7 intends to seek protection for the company under the Federal
Bankruptcy Code.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited consolidated financial statements and notes thereto for the
year ended September 30, 1997. This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 31E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements may be identified by the use of forward-looking terminology such as
"may," "will," "expect," "anticipate," "believe," "continue," "plans," or
similar terms, variations of those terms or the negative of those terms. Actual
results could differ materially from those anticipated in forward-looking
statements.
On February 6, 1998 the Company entered into a stock purchase agreement to
sell, transfer, and deliver all assets, liabilities, rights and obligations of
the Company related to its wholly-owned subsidiary CTL to Jaymark Corporation,
in exchange for $2,015,458 in cash and notes receivable. The company recognized
a loss of approximately $75,700 from the disposition.
On February 26, 1998, the Company transferred all of the intellectual
property of its wholly owned subsidiary, Particle Interconnect Corporation, to
Nanopierce for 7,250,000 shares of common stock of Nanopierce and 100 Series A
8% Voting Convertible Cumulative Participating Preferred shares of Nanopierce.
The preferred shares are convertible into 7,250,000 shares of common stock. On a
fully diluted basis, the Company has an approximate 74% controlling interest in
Nanopierce.
The Company discontinued all operations of its majority owned subsidiary
Sigma 7 Corporation ("Sigma 7"), a manufacturer of memory modules located in San
Diego, California on June 5, 1998. The market for the Sigma 7's main product
line of memory modules experienced significant price erosion on a worldwide
basis. Sigma 7 did not have the capitalization to continue and intends to seek
protection under the Federal Bankruptcy Code.
The Company is currently engaged in the design, development and licensing
of products using its patented Particle Interconnect technology ("PI
Technology"), through Nanopierce, its majority owned subsidiary.
In December 1997, the Company issued convertible debentures and attached
warrants for $1,500,000. Of this total, $750,000 was for the sale of Series A-1
Debenture and $750,000 was for the sale of Series A-2 Debenture. At the time of
issue, the convertible debentures were unsecured obligations of the Company.
The $750,000 Series A-1 Debenture requires quarterly interest payments at
9% per annum, beginning March 1, 1998, with the balance due on December 1, 1999.
After 60 days from the date of issuance, the debenture may be converted at the
option of the holder at a conversion price per share equal to the lessor of 85%
of the market price as defined, or $0.75.
In connection with the Series A-1 Debentures, three warrants were issued,
that each entitle the holder to purchase 200,000 shares of common stock at a per
share price of $0.17,
8
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$0.50, and $1.00, respectively. The warrants expire three years from their date
of issuance. The portion of the proceeds allocable to the warrants was $15,000.
The $750,000 Series A-2 Debenture pays interest quarterly at 9% per annum,
beginning June 1, 1998, with a maturity date of April 1, 1999. The debt may be
converted at the option of the holder any time at the end of six business days
following the maturity date, at a conversion price of 85% of the market price of
common stock as defined in the financing agreement for each share of common
stock converted.
At the request of the Company, purchase and payment for the Series A-2
Debenture was accelerated to December 31, 1998. As consideration for the
acceleration, the Company provided security to the debenture holders for the
entire $1,500,000. The Company assigned a first priority secured lien on the
assets of Sigma 7, a first deed of trust on property held for resale in Arizona,
and a $2,200,000 note to the Company from Intercell Technologies Corporation. In
connection with the placement of the Series A-1 and Series A-2 Debentures, the
Company paid a third-party investment banker a $180,000 commission, and issued
that investment banker warrants to purchase 200,000 shares of common stock at an
exercise price of $0.15 per share. The $180,000 commission and the warrants,
which were valued at $10,000, have been included in general and administrative
expense.
In addition, the Company issued 1,000,000 shares of its common stock to the
debenture holders and recognized $71,000 in general and administrative expense.
The Company also issued 991,000 shares of common stock for services rendered and
in lieu of interest during the quarter ended December 31, 1997, recognizing
$122,750 in general and administrative expense.
RESULTS OF OPERATIONS
REVENUES
Total revenues in the first quarter of 1998 were $2,055,000, which
represents a 29% increase over the $1,599,000 in first quarter revenues for the
prior fiscal year. The main factors that led to this increase in first quarter
revenue were an increase in first quarter sales of electron tube products over
first quarter sales of the prior year of $239,000, and the $288,000 in revenues
generated from the Company's memory manufacturing operations.
In June of 1997, the Company acquired a majority interest in Sigma 7, a
manufacturer of memory modules located in San Diego, California. Results from
the first quarter operations at Sigma 7's memory manufacturing operations have
been consolidated with the Company's in 1998 for the first time.
Sales of electron tube products increased by 23% in the first quarter of
1998, from $1,063,000 in the first quarter of 1997, to $1,302,333 in the first
quarter of 1998. This increase was primarily due to increased sales of new
electron tube products. The Company anticipates that current sales levels of
new electron tube products will continue. The balance of the Company's sales
have remained stable in the first quarter of 1998 compared to the first quarter
sales of the 1997 fiscal year.
9
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GROSS PROFIT
Gross profit was 12% in the first quarter of the 1998 fiscal year, compared
with 29% in the 1997 fiscal year. This decrease in margins was primarily
attributable to negative margins experienced in the memory module market.
Prices for memory modules fell drastically during the period causing the Company
to sell products at negative margins. The margins for electronic components
also decreased from 30% in 1997 to 23% in 1998.
RESEARCH AND DEVELOPMENT
Research and development expenses decreased to $15,000 in the first quarter
of fiscal 1998 compared to $374,000 in the first quarter of 1997. The decrease
was primarily attributable to the suspension of the research and development
activities associated with the Company's PI Technology. Research and
development costs relating to the PI Technology were reduced from $341,000 in
1997 to $0 in 1998. The Company has changed its focus from creating a
manufacturing process and facility, to licensing its technology to companies
that already have a manufacturing process in place.
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased by 110% to $3,218,750 in the
first quarter of the 1998 fiscal year compared to $1,534,000 in the first
quarter of fiscal 1997. This increase was primarily attributable to the
inclusion of general and administrative expenses for the Company's new memory
module operations ($681,000) and 100% of the expenses associated with the
antenna technology operations ($712,000) due to impairment concerns of Intercell
Technologies Corporation to pay it's obligation to the Company. In addition the
Company incurred additional legal costs associated with the Company's
intellectual property rights to the PI Technology.
OTHER INCOME/EXPENSE
The Company earned $117,000 in interest income on its cash and short-term
investments in the first quarter of the 1998 fiscal year while incurring
interest expense of $97,000. In the first quarter of the 1997 fiscal year, the
Company earned $98,000 in interest income and incurred $43,000 of interest
expense.
INCOME TAXES
As of December 31, 1998, the Company had a net operating loss carryover for
federal and California income tax purposes. The benefit of these net operating
loss carryforwards has not been recorded by the Company, as it is uncertain that
the Company will generate sufficient income in future periods to utilize the
loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The independent auditor's report on the Company's financial statements for
the year ended September 30, 1997 included a "going concern" paragraph, which
means that the auditors have expressed substantial doubt about the Company's
ability to continue as a going concern.
10
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The Company has taken several steps regarding future operations. In
February 1998, the Company sold its interest in CTL and A.C. Magnetics, Inc., to
raise additional capital for ongoing operations. The Company has also
discontinued operations at Sigma 7 and Particle Interconnect Corporation during
the second quarter of 1998 and will seek protection under the Federal
Banktruptcy Code for Sigma 7. The intellectual property rights to the PI
Technology have been transferred to Nanopierce in exchange for an ownership
interest in Nanopierce of approximately 74%. In July 1998, Nanopierce secured a
two-year credit facility for up to $8,500,000 to finance its ongoing operation.
The Company has reduced its costs to a bare minimum and is currently seeking its
own financing.
During the three months ended December 31, 1997 the Company's cash and cash
equivalents increased by $867,000. This increase was due primarily to proceeds
from the issuance of $1,500,000 in convertible debentures in December of 1997.
A portion of these proceeds was used to pay off debts at Sigma 7 and of the
Company.
In the 1998 fiscal year, the Company intends to make capital expenditures
of approximately $500,000. These expenditures will complete the new
manufacturing facility in Watsonville, California for CTL and provide for an
office and research and development facility for Nanopierce. In the first
quarter of fiscal 1998, capital expenditures totaled $205,000.
The Company believes that with the current credit facility at Nanopierce
and known future capital resources, adequate funding is available to support
operations for the next twelve months. The Company also believes that sales of
its Nanopierce products and technology licenses will provide sufficient funds to
meet the Company's capital requirements for the next two years. This assumption
is based on the Company's belief that it will be successful in entering into a
licensing, joint venture, co-manufacturing or other similar arrangement with
existing connector manufacturers with respect to the Nanopierce technology. The
failure to secure such a relationship could result in the Company requiring
substantial additional capital and resources to bring Nanopierce products to
market.
To the extent the Company's operations are not sufficient to fund the
Company's capital requirements, the Company may enter into a revolving loan
agreement with a financial institution, or attempt to raise additional capital
through the sale of additional capital stock or through the issuance of debt.
At the present time the Company does not have a revolving loan agreement with
any financial institution nor can the Company provide any assurances that it
will be able to enter into any such agreement in the future or be able to raise
funds through the further issuance of debt or equity in the Company.
11
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PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
The Company made the following unregistered sales of its securities from October
1, 1997 through December 31, 1997.
<TABLE>
<CAPTION>
TITLE OF
DATE OF SALE SECURITIES AMOUNT CONSIDERATION PURCHASER
- -------------------- ---------------------- ---------------- ------------------------- --------------------------
<S> <C> <C> <C> <C>
(1) 11/3/97 Common Stock 240,000 Loan to CTL Barbara J. Drew
(2) 11/3/97 Common Stock 160,000 Loan to CTL Zenith Group, LLC
(3) 12/3/97 Series A-1 2 $750,000 The Augustine Fund
Convertible FT Trading Fund
Debentures
(4) 12/3/97 Attached Warrants 200,000 See (3) Above FT Trading Fund
to Acquire
Common Stock
(5) 12/3/97 Attached Warrants 400,000 See (3) Above The Augustine Fund
to Acquire
Common Stock
(6) 12/3/97 Common Stock 266,000 Corporate Global Public Relations
Communications Services Ltd.
Contract
(7) 12/3/97 Warrant to Acquire 200,000 Consulting Services Hamilton Fund, L.L.C.
Common Stock
(8) 12/11/97 Common Stock 100,000 Loan to Sigma 7 Robert J. Macri
(9) 12/11/97 Common Stock 75,000 Loan to Sigma 7 Sigma Services, Ltd.
(10) 12/11/97 Common Stock 150,000 Loan to Sigma 7 CTI Corporation
(11) 12/31/97 Series A-2 1 $750,000 The Augustine Fund
Convertible Debentures
(12) 12/31/97 Common Stock 1,000,000 Financing The Augustine Fund
</TABLE>
UNDERWRITERS
Other than Global Funding Group LLC ("Global"), no underwriter or selling
or placement agent was involved in any of the transactions described above.
Global was engaged as selling agent in connection with the offer and sale of the
Company's unregistered securities to Augustine Fund, L.P. ("Augustine") and FT
Trading Fund ("FT"). Global received a warrant to acquire 200,000 shares of
Common Stock and a cash commission of $180,000.
12
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EXEMPTION FROM REGISTRATION CLAIMED
The sales by the Company of its unregistered securities to Augustine and FT
were made by the Company in reliance upon Sections 4(2) and 4(6) of the
Securities Act of 1933, as amended (the "Act"). Augustine and FT are accredited
institutional investors and there was no advertising or public solicitation in
connection with the transaction by the Company or anyone acting on behalf of the
Company. The Company filed a Form D on December 3, 1997 in connection with the
offer and sale of the unregistered securities to Augustine and FT. All of the
other sales by the Company of its unregistered securities were made by the
Registrant in reliance upon Section 4(2) of the Act. All of the individuals
and/or entities listed above that purchased the unregistered securities were all
known to the Company and its management, through pre-existing business
relationships, as long standing business associates, friends, employees,
relatives or members of the immediate family of management. All purchasers were
provided access to all material information which they requested and all
information necessary to verify such information and were afforded access to
management of the Company in connection with their purchases. All purchasers of
the unregistered securities acquired such securities for investment and not with
a view toward distribution, acknowledging such intent to the Company. All
certificates or agreements representing such securities that were issued
contained restrictive legends, prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from registration in any further resale or
disposition.
TERMS OF CONVERSION OR EXERCISE
On December 31, 1997 the Company completed a two-stage private placement
financing with Augustine and FT. On December 3, 1997 the Company delivered two
Series A-1 9% Redeemable Convertible Debentures due December 1, 1999 (each a
"Series A-1 Debenture" and collectively the "Series A-1 Debentures") to
Augustine and FT in the principal amounts of $500,000 and $250,000,
respectively. On December 31, 1997, the Company delivered a Series A-2 9%
Redeemable Convertible Debenture due April 1, 1999 (the "Series A-2 Debenture")
to Augustine in the principal amount of $750,000.
Each Series A-1 Debenture is convertible into shares of Common Stock at the
earlier of the date that the Company's Registration Statement on Form S-1,
Registration No. 333-40175 is declared effective by the U.S. Securities and
Exchange Commission (the "SEC") or 60 days after December 3, 1997. The
conversion price for each Series A-1 Debenture is equal to the lesser of (a) 85%
of the Market Price (as defined in the Series A-1 Debentures) of the Common
Stock, or (b) $0.75.
The Series A-2 Debenture is convertible at any time commencing the sixth
business day following April 1, 1999 into shares of Common Stock. The
conversion price for the Series A-2 Debenture is equal to 85% of the Market
Price (as defined in the Series A-2 Debenture) of the Common Stock.
The Company also has the right, but not the obligation, to redeem all or a
portion of each Series A-1 Debenture, provided the Company is not then in
violation of any of its obligations under the Series A-1 Debenture to be
redeemed or the Securities Purchase Agreement (as defined in the Series A-1
Debenture to be redeemed) or any addenda thereto. To redeem any or all of the
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<PAGE>
Series A-1 Debenture, the Company must give the Holder notice (a "Redemption
Notice") at any time prior to conversion, or within 24 hours after delivery of
any Notice of Conversion (as defined in the Series A-1 Debenture to be redeemed)
to the Company by the Holder (as defined in the Series A-1 Debenture to be
redeemed). In the Redemption Notice, the Company must inform the Holder that it
intends to pay the Holder 115% of the face amount of the portion of the Series
A-1 Debenture that have been converted pursuant to the Notice of Conversion
instead of delivering shares issuable upon conversion. The Company must pay the
Holder according to the Holder's written instructions to the Company within 3
business days after delivery of the Redemption Notice with respect to such
Series A-1 Debenture or portion thereof to be redeemed. The amount of the Series
A-1 Debentures to be converted at one time are subject to monthly conversion
limits as provided in the Series A-1 Debentures. The amount of shares and the
conversion price are subject to adjustment as provided in the Series A-1
Debentures.
Subject to the Company's right to redeem all or a portion of each Series A-
1 Debenture, any remaining unconverted portion of a Series A-1 Debenture on
December 1, 1999, plus accrued interest shall be automatically converted into
shares of Common Stock.
The Company also has the right, but not the obligation, to redeem all or a
portion of each Series A-2 Debenture, provided the Company is not then in
violation of any of its obligations under the Series A-2 Debenture to be
redeemed or the Securities Purchase Agreement (as defined in the Series A-2
Debenture to be redeemed) or any addenda thereto. To redeem any or all of the
Series A-2 Debenture, the Company must give the Holder notice (a "Redemption
Notice") at any time prior to conversion, or within 24 hours after delivery of
any Notice of Conversion (as defined in the Series A-2 Debenture to be redeemed)
to the Company by the Holder (as defined in the Series A-2 Debenture to be
redeemed). In the Redemption Notice, the Company must inform the Holder that it
intends to pay the Holder 115% of the face amount of the portion of the Series
A-2 Debenture that have been converted pursuant to the Notice of Conversion
instead of delivering shares issuable upon conversion. The Company must pay the
Holder according to the Holder's written instructions to the Company within 3
business days after delivery of the Redemption Notice with respect to such
Series A-2 Debenture or portion thereof to be redeemed. The amount of the
Series A-2 Debentures to be converted at one time are subject to monthly
conversion limits as provided in the Series A-2 Debentures. The amount of
shares and the conversion price are subject to adjustment as provided in the
Series A-2 Debentures.
In connection with the delivery on December 3, 1997 of the Series A-1
Debentures to Augustine and FT the Company also delivered three (3) warrants
each to Augustine ("Warrants 1, 2, and 3") and FT ("Warrants 4, 5, and 6")
(collectively the "Warrants") to purchase shares of Common Stock. Warrants 1,
2, and 3 entitle Augustine to purchase 133,333 shares of Common Stock per each
Warrant, while Warrants 4, 5 and 6 entitle FT to purchase 66,667 shares of
Common Stock per each Warrant. Each Warrant is exercisable at any time after
December 3, 1997, until December 3, 2000 at 5:00 p.m. Denver, Colorado time.
Warrants 1 and 4 have an exercise price of $0.17 per share, Warrants 2 and 5
have an exercise price of $0.50 per share, and Warrants 3 and 6 have an exercise
price of $1.00 per share. Both the number of shares and the exercise prices are
subject to adjustment as provided in the Warrants.
The Company delivered a warrant to the Hamilton Fund, L.L.C. to purchase
200,000 shares of Common Stock (the "Hamilton Warrant"). The Hamilton Warrant
is exercisable at any time after June 1, 1998, until December 3, 2002 at 5:00
p.m. Denver, Colorado time. The
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Hamilton Warrant has an exercise price of $0.15 per share. Both the number of
shares and the exercise price are subject to adjustment as provided in the
Hamilton Warrant.
15
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS:
Exhibit 4.1: Augustine Series A-1 Debenture
Exhibit 4.2: FT Series A-1 Debenture
Exhibit 4.3: Augustine Warrant No. 1
Exhibit 4.4: Augustine Warrant No. 2
Exhibit 4.5: Augustine Warrant No. 3
Exhibit 4.6: FT Warrant No. 4
Exhibit 4.7: FT Warrant No. 5
Exhibit 4.8: FT Warrant No. 6
Exhibit 4.9: Hamilton Warrant
Exhibit 4.10: Series A-2 Debenture
Exhibit 10.1: Augustine Securities Purchase Agreement
Exhibit 10.2: Amendment to Augustine Securities Purchase Agreement
Exhibit 10.3: FT Securities Purchase Agreement
Exhibit 10.4: Augustine Registration Rights Agreement
Exhibit 10.5: FT Registration Rights Agreement
Exhibit 10.6: Augustine Escrow Agreement
Exhibit 10.7: FT Escrow Agreement
Exhibit 10.8: Security Agreement
Exhibit 11: Statement of Computation of Earnings (Loss) Per Share
Exhibit 27: Financial Data Schedule
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERCELL CORPORATION
(Registrant)
Date: September 17, 1998 By /s/ Paul H. Metzinger
------------------------------------
Paul H. Metzinger, President
and Chief Executive Officer
Date: September 17, 1998 By /s/ Thomas Vander Stel
------------------------------------
Thomas Vander Stel, Secretary
and Principal Financial Officer
17
<PAGE>
LIST OF EXHIBITS
Exhibit 4.1: Augustine Series A-1 Debenture
Exhibit 4.2: FT Series A-1 Debenture
Exhibit 4.3: Augustine Warrant No. 1
Exhibit 4.4: Augustine Warrant No. 2
Exhibit 4.5: Augustine Warrant No. 3
Exhibit 4.6: FT Warrant No. 4
Exhibit 4.7: FT Warrant No. 5
Exhibit 4.8: FT Warrant No. 6
Exhibit 4.9: Hamilton Warrant
Exhibit 4.10: Series A-2 Debenture
Exhibit 10.1: Augustine Securities Purchase Agreement
Exhibit 10.2: Amendment to Augustine Securities Purchase Agreement
Exhibit 10.3: FT Securities Purchase Agreement
Exhibit 10.4: Augustine Registration Rights Agreement
Exhibit 10.5: FT Registration Rights Agreement
Exhibit 10.6: Augustine Escrow Agreement
Exhibit 10.7: FT Escrow Agreement
Exhibit 10.8: Security Agreement
Exhibit 11: Statement of Computation of Earnings Per Share
Exhibit 27: Financial Data Schedule
18
<PAGE>
EXHIBIT 4.1
EXHIBIT A (THE "A-1 DEBENTURE")
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
DATE: DECEMBER 3, 1997
DEBENTURE #1 U.S. $500,000.00
--
INTERCELL CORPORATION
SERIES A-1 NINE PERCENT (9%)
REDEEMABLE CONVERTIBLE DEBENTURE DUE DECEMBER 1, 1999
THIS DEBENTURE is one of a duly authorized issue of debentures (a
"Debenture" or the "Debentures") of Intercell Corporation, a corporation duly
organized and validly existing under the laws of the State of Colorado, U.S.A.
(the "Company") designated as its Series A-1 Nine Percent (9%) Redeemable
Convertible Debenture Due December 1, 1999, in an aggregate principal face value
for all Debentures of this Series A-1 of Seven Hundred Fifty Thousand and
no/100s United States Dollars (US $750,000.00).
FOR VALUE RECEIVED, the Company promises to pay to The Augustine Fund,
L.P., the registered holder hereof and its successors and assigns (the
"Holder"), the principal sum of Five Hundred Thousand and no/100s United States
Dollars ($500,000.00) on December 1, 1999 (the "Maturity Date"), and to pay
interest on the principal sum outstanding, at the rate of nine percent (9%) per
annum due and payable in quarterly installments in arrears, on March 1, June 1,
September 1, and December of each year during the term of this Debenture, with
the first such payment to be made on March 1, 1998. Accrual of interest on the
outstanding principal amount, payable in cash or common stock of the Company at
the Company's option, shall commence on the date hereof and shall continue until
payment in full of the outstanding principal amount has been made or duly
provided for. The interest so payable will be paid to the person in whose name
this Debenture (or one or more predecessor Debentures) is registered on the
records of the
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<PAGE>
Company regarding registration and transfers of the Debenture (the "Debenture
Register"); provided, however, that the Company's obligation to a transferee of
this Debenture arises only if such transfer, sale or other disposition is made
in accordance with the terms and conditions of that Securities Purchase
Agreement of even date herewith between the Company and The Augustine Fund, L.P.
(the "Securities Purchase Agreement").
The principal of, and interest on, this Debenture are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Debenture Register of the Company as designated in writing by the Holder
hereof from time to time. The Company will pay the outstanding principal of and
any and all accrued and unpaid interest due upon this Debenture on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the record
Holder of this Debenture as of the fifth business day (as defined in the
Securities Purchase Agreement) prior to the Maturity Date and addressed to such
Holder at the last address appearing on the Debenture Register. The forwarding
of such funds shall constitute a payment of outstanding principal and interest
hereunder and shall satisfy and discharge the liability for principal and
interest on this Debenture to the extent of the sum represented by such payment
plus any amounts so deducted or withheld. Except as herein provided, this
Debenture may not be prepaid without the prior written consent of the Holder.
This Debenture is subject to the following additional provisions:
1. Debenture Exchangeable. The Debenture is exchangeable commencing
----------------------
thirty (30) days from the date hereof for an equal aggregate principal amount of
Debentures of different authorized denominations, as requested by the Holder
surrendering the same, but not of denominations of less than Fifty Thousand
United States Dollars (US $50,000.00) without the Company's written consent. No
service charge will be made for such registration or transfer or exchange.
2. Withholding. The Company shall be entitled to withhold from all
-----------
payments of principal or interest pursuant to this Debenture any amounts
required to be withheld under the applicable provisions of the United States
income tax or other applicable laws at the time of such payments.
3. Transfer/Exchange of Debenture; Registered Holder; Opinion of Counsel;
----------------------------------------------------------------------
Legend. This Debenture has been issued subject to investment representations of
- ------
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "1933 Act") and
applicable state securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not his Debenture be overdue, and neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
The Holder understands and acknowledges by its acceptance hereof that (i)
except as provided in the Securities Purchase Agreement and in that Registration
Rights Agreement attached as Exhibit F to the Securities Purchase Agreement,
both such documents incorporated herein by reference (the "Registration Rights
Agreement"), this Debenture and the shares of
2
<PAGE>
common stock in the Company issuable upon conversion as herein provided
("Conversion Shares") thereof have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (a) subsequently registered thereunder, or
(b) the Holder shall have delivered to the Company an opinion of counsel,
reasonably satisfactory in form, substance and scope to the Company, to the
effect that the securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration; (ii)
any sale of such securities made in reliance on Rule 144 promulgated under the
1933 Act may be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other regulation and/or exemption under the 1933
Act or the rules and regulations of the United States Securities and Exchange
Commission (the "SEC") thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities under the 1933 Act or
any state securities laws (other than pursuant to the terms of the Securities
Purchase Agreement and the Registration Rights Agreement) or to comply with the
terms and conditions of any exemption thereunder.
Any Conversion Shares issued upon conversion of this Debenture, and if
applicable, any common stock of the Company issued in payment of interest as
herein provided, shall, if and to the extent required by law, bear legends in
similar form to the legends set forth on the first page of this Debenture.
4. Conversion of Debenture into Common Stock; Redemption by the Company.
--------------------------------------------------------------------
(a) The Holder of this Debenture is entitled, at its option, at any time
commencing the earlier of (i) the date on which the Form S-1 (as defined in the
Securities Purchase Agreement, including any amendments as called for in the
Securities Purchase Agreement) is declared effective by the SEC; or (ii) the
date which is sixty (60) days after the date first written at the top of this
Debenture, to convert the original principal face amount of this Debenture into
shares of common stock in the Company, no par value per share (defined
hereinafter as the "Common Stock"), at a conversion price (the "Conversion
Price") for each share of Common Stock equal to THE LESSER OF (i) eighty-five
percent (85%) of the Market Price (as defined below) of the Common Stock, or
(ii) US $.75. For the purposes of this Section 4, the Market Price shall be the
---
average closing bid price of the Common Stock for the five (5) business days
- ----------------------------------------------------------------------------
immediately preceding the Conversion Date (as hereinafter defined), as reported
- -----------------------------------------
on the National Association of Securities Dealers "Over The Counter" Bulletin
Board Quotation System ("OTC: Bulletin Board"). Such conversion shall be
achieved by submitting to the Company the fully completed form of conversion
notice attached hereto as Exhibit I (a "Notice of Conversion"), executed by the
Holder of this Debenture evidencing such Holder's intention to convert this
Debenture or the specified portion (as herein provided) hereof. A Notice of
Conversion may be submitted via facsimile to the Company at the telecopier
number for the Company provided in the Securities Purchase Agreement (or at such
other number as requested in writing by the Company), and if so submitted the
original Notice of Conversion shall be delivered to the Company within one (1)
business day. The Company and the Holder shall each keep records with respect to
the portion of this Debenture then being converted and all portions previously
converted; upon receipt by the Holder of the requisite Conversion Shares, the
outstanding principal amount of the Debenture shall be reduced by the amount
specified in the Notice of Conversion resulting in such
3
<PAGE>
Conversion Shares. The Company may from time to time, but is not required to,
instruct the Holder and the Holder shall surrender this Debenture along with the
Notice of Conversion for the purposes of making a notation thereon as to the
amount of principal being converted, or of canceling this Debenture and issuing
a new Debenture in the same form with the principal amount of such Debenture
reduced by the amount converted. No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. Accrued interest on the
converted portion of the Debenture shall be payable in cash or Common Stock at
the Company's option. The date on which a notice of conversion (the "Conversion
Date") is given shall be deemed to be either the date on which the Company
receives from the Holder an original valid Notice of Conversion duly executed,
or, if earlier, the date set forth in such Notice of Conversion if such Notice
of Conversion is received by the Company within one (1) business day thereafter.
In all cases, the Company shall deliver the Conversion Shares to the Holder
within three (3) business days after the Conversion Date with respect to such
Conversion Shares being delivered, and at the address specified in the Notice of
Conversion.
Subject to the provisions of Paragraph 4(b) hereof, at the Maturity Date,
the remaining portion of this Debenture which remains unconverted, if any, plus
accrued interest shall be automatically converted into shares of Common Stock as
of the Maturity Date, as if the Holder had converted the remaining portion of
this Debenture according to the provisions of this Section 4, with the
Conversion Date being equivalent in such event to the Maturity Date, as if the
Holder had provided the Company with a Notice of Conversion with respect to the
outstanding principal amount of this Debenture on the Maturity Date. Other than
a conversion made on the Maturity Date in accordance with this paragraph,
conversions of this Debenture must be effected in increments of Ten Thousand
U.S. Dollars ($10,000) of principal amount of this Debenture (or such lesser
outstanding principal amount of this Debenture).
(b) Notwithstanding anything herein to the contrary, the Company shall
have the right (but not the obligation) to redeem all or a portion of this
Debenture, provided the Company is not then in violation of any of its
obligations under this Debenture or under the Securities Purchase Agreement or
any addenda thereto, under the following conditions. At any time prior to
conversion, or within twenty-four (24) hours after delivery of any Notice of
Conversion (in this Section 4(b), a "Notice") to the Company by the Holder in
accordance with the terms of this Debenture, the Company shall give to the
Holder notice (a "Redemption Notice") that it intends to pay the Holder the Cash
Redemption Amount (as hereinafter defined) instead of delivering Conversion
Shares to such Holder; provided, however, that the Company may only exercise
this right with respect to all of the Common Stock which would have otherwise
been delivered with respect to the Notice. The "Cash Redemption Amount" shall be
equal to one hundred fifteen percent (115%) of the face amount of the portion of
the Debenture to have been converted pursuant to the Notice, and shall be paid
to the Holder according to the Holder's written instructions to the Company
within three (3) business days after delivery of the Redemption Notice with
respect to such Debenture or portion thereof to be redeemed. If the Company does
not redeem within the time limits herein specified and according to the terms of
this Section 4( b),
then the Holder shall have the right to demand delivery of the Conversion Shares
which would have been delivered pursuant to the applicable Notice, and shall
have the right (but not the obligation) to adjust the Conversion Price as if the
Notice had been sent on the date of such
4
<PAGE>
demand. In such event the Company shall deliver the requisite Conversion Shares
within two (2) business days after such demand has been made.
(c) Notwithstanding anything herein to the contrary, and except as
otherwise stated in this Paragraph 4(c), the Holder shall not convert more than
twenty percent (20%) of the original principal amount (the "Original Face
Amount") of this Debenture (the "Percentage Limit") in any one (1) calendar
month. Except as otherwise stated in this Paragraph 4(c), should the Holder
deliver to the Company a Notice(s) of Conversion purporting to convert a portion
of this Debenture greater than the Percentage Limit in any one (1) calendar
month, the Company at its option may disregard the said Notice(s) of Conversion
to the extent the said Notice(s) of Conversion purports to convert more than the
Percentage Limit in such calendar month. Notwithstanding the above, should the
Holder not convert the full Percentage Limit in any one (1) calendar month, then
the Holder shall be entitled to increase the Percentage Limit in the following
calendar month (and subject to the limitation specified below, succeeding
calendar months until converted) by a percentage of the Original Face Amount
equal to the Percentage Limit less the percentage of Original Face Amount
actually converted in such preceding calendar month. However, in no event shall
the Holder convert a portion of this Debenture greater than forty percent (40%)
of the Original Face Amount in any one (1) calendar month. For example, should
-----------
the Holder not convert any portion of the Original Face Amount in the first
calendar month in which the Holder would be so entitled, then in the next
proceeding calendar month the Holder would be entitled to convert a maximum of
forty percent (40%) [the Percentage Limit for the first month plus {the
Percentage Limit for the second month minus zero percent converted in the second
month} equals forty percent (40%)] of the Original Face Amount. As a further
example, should the Holder not convert any of the Original Face Amount in the
second calendar month in which it would be so entitled, then in the third
calendar month the Holder would be able to convert forty percent (40%) of the
Original Face Amount, and if it converts this full forty percent (40%), the
Holder would likewise be entitled to convert forty percent (40%) of the Original
Face Amount in the fourth calendar month.
5. Obligations of the Company Herein are Unconditional. No provision of
---------------------------------------------------
this Debenture shall alter or impair the obligation of the Company, which
obligation is absolute and unconditional, to repay the principal amount of this
Debenture at the time, place, rate, and in the coin currency, hereinabove
stated. This Debenture and all other debentures now or hereafter issued in
replacement of this Debenture on the same or similar terms are direct
obligations of the Company. This Debenture ranks at least equally with all other
Debentures now or hereafter issued under the terms set forth herein. The
Conversion Price and number of shares of Common Stock issuable upon conversion
shall be subject to adjustment from time to time as provided in Section 6 below.
6. Adjustments.
-----------
(a) In the event the Company should at any time or from time to time,
after the date of this Debenture, fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock (equal to at least ten
percent (10%) or more of the Company's then issued and outstanding shares of
Common Stock) or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly additional shares of Common
Stock (hereinafter referred to as
5
<PAGE>
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the Conversion
Price shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of this Debenture shall be increased in proportion
to such increase in the aggregate number of shares of Common Stock outstanding
and those issuable with respect to such Common Stock Equivalents.
(b) If the number of shares of Common Stock outstanding at any time after
the date of this Debenture is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such
combination, the Conversion Price shall be appropriately increased so that
the number of shares of Common Stock issuable upon conversion of this
Debenture shall be decreased in proportion to such decrease in outstanding
shares.
7. Reservation of Shares. The Company shall at all times reserve and keep
---------------------
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Debenture, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the outstanding principal amount, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of this Debenture, in addition to such other remedies
as shall be available to Holder, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase the number of
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including without limitation, using its best
efforts to obtain the requisite stockholder approval necessary to increase the
number of authorized shares of the Company's Common Stock.
8. Debenture Holder Not Deemed a Stockholder. No Holder, as such, of this
----------------------------------------
Debenture shall be entitled (prior to conversion of this Debenture into Common
Stock, and only then to the extent of such conversion) to vote or receive
dividends or be deemed the holder of shares of the Company for any purpose, nor
shall anything contained in this Debenture be construed to confer upon the
Holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the holder of
this Debenture of the Conversion Shares which he or she is then entitled to
receive upon the due conversion of all or a portion of this Debenture.
Notwithstanding the foregoing, the Company will provide the Holder with copies
of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the
stockholders.
9. No Limitation on Corporate Action. No provisions of this Debenture and
---------------------------------
no right or option granted or conferred hereunder shall in any way limit, affect
or abridge the exercise by the Company of any of its corporate rights or powers
to recapitalize, amend its Certificate of Incorporation, reorganize, consolidate
or merge with or into another corporation, or to transfer all or any part of its
property or assets, or the exercise of any other of its corporate rights and
powers.
6
<PAGE>
10. Representations of Holder. Upon conversion of all or a portion of this
-------------------------
Debenture, the Holder shall confirm in writing, in a form reasonably
satisfactory to the Company, that the Conversion Shares so purchased are being
acquired solely for the Holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale and
that such Holder is an Accredited Investor (as defined in Rule 501(a) of
Regulation D promulgated under the 1933 Act). If such Holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such Holder's conversion of all or a portion of the Debenture that
the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon conversion of the Debenture shall not violate any United States or state
securities laws.
11. Waiver of Demand, Presentment, Etc. The Company hereby expressly
----------------------------------
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.
12. Attorney's Fees. The Company agrees to pay all costs and expenses,
---------------
including without limitation reasonable attorney's fees, which may be incurred
by the Holder in collecting any amount due under this Debenture or in enforcing
any of Holder's conversion rights as described herein.
13. Default. If one or more of the following described "Events of
-------
Default" shall occur:
(a) The Company shall continue in default in the payment of principal or
interest on this Debenture for a period of ten (10) days after a notice of
default is received by the Company with respect to any such payment; or
(b) Any of the representations or warranties made by the Company herein,
in the Securities Purchase Agreement, the Registration Rights Agreement, or
in any certificate or financial or other written statement heretofore or
hereafter furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Securities Purchase
Agreement or the Registration Rights Agreement shall be false or misleading
in any material respect at the time made and the Holder shall have provided
seven (7) days prior written notice to the Company of the alleged
misrepresentation or breach of warranty; or
(c) The Company shall fail to perform or observe, in any material respect,
any other covenant, term, provision, condition, agreement or obligation of
the Company under this Debenture or the Securities Purchase Agreement and
such failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
(d) The Company shall either: (i) become insolvent; (ii) admit in writing
its inability to pay its debts generally or as they become due; (iii) make
an assignment for the benefit of creditors or commence proceedings for its
dissolution; or (iv) apply for, or consent to the appointment of, a
trustee, liquidator, or receiver for its or for a substantial part of its
property or business; or
7
<PAGE>
(e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without the Company's
consent and such appointment is not discharged within sixty (60) days after
such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company
and shall not be dismissed within sixty (60) days thereafter; or
(g) Any money judgment, writ or debenture of attachment, or similar
process in excess of Three Hundred Thousand United States Dollars (US
$300,000.00) in the aggregate shall be entered or filed against the Company
or any of its properties or assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of fifteen (15) days or in any event
later than five (5) days prior to the date of any proposed sale thereunder;
or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed within sixty days
after such institution or the Company shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in, any such
proceeding; or
(i) The Company shall have its Common Stock delisted from the OTC:
Bulletin Board stock exchange or suspended from trading thereon, and shall
not have its Common Stock relisted on the same or another national
securities exchange, or have such suspension lifted, as the case may be,
within ten (10) business days; or
(j) The Company shall have received a notice of default on the payment of
any debt(s) aggregating in excess of Three Hundred Thousand United States
Dollars (US $300,000.00) beyond any applicable grace period;
then, or at any time thereafter, and in any and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
in one instance shall not be deemed to be a waiver in another instance or for
any other prior or subsequent Event of Default) at the option of the Holder and
in the Holder's sole discretion, the Holder may immediately accelerate the
maturity hereof, whereupon all principal and interest hereunder shall be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Company, anything
herein or in any note or other instrument contained to the contrary
notwithstanding, and the Holder may immediately, and upon the expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law or equity.
14. Delivery of Common Stock Upon Conversion. As set forth herein, the
----------------------------------------
Company shall use its best efforts to issue and deliver, within three (3)
business days after the Holder has fulfilled all conditions and submitted all
necessary documents duly executed and in proper form required for conversion
(the "Deadline"), to the Holder or any party receiving a Debenture by transfer
from the Holder (together, a "Holder"), at the address of the Holder on the
Debenture Register, a certificate or certificates for the number of Conversion
Shares to which the Holder
8
<PAGE>
shall be entitled (the "Certificates"). The Company understands and agrees that
a delay in the issuance of the Certificates beyond the Deadline could result in
economic loss and other damages to the Holder. As compensation to the Holder for
such loss, the Company agrees to pay liquidated damages (and not as a penalty)
to the Holder for issuance and delivery of the Certificates after the Deadline,
in accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond seven (7) business days from the
Conversion Date with respect to a Notice of Conversion and the receipt by the
Company of all necessary documentation duly executed and in proper form required
for conversion, including the original Notice of Conversion providing the
principal amount of the Debenture to be converted, all in accordance with the
terms of this Debenture, the Securities Purchase Agreement, the Registration
Rights Agreement and the reasonable and customary requirements of the transfer
agent):
No. Business Days Late Liquidated Damages
---------------------- ------------------
(in US $)
1 $ 500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
11+ $5,000 + $1,000 for
each Business Day Late
beyond 11 days
The Company shall pay the Holder any liquidated damages incurred as called
for under this Section 14 by certified or cashier's check upon the earlier of
(i) issuance of the Certificates to the Holder or (ii) each monthly anniversary
of the receipt by the Company of such Holder's Notice of Conversion. Nothing
herein shall limit the Holder's right to pursue actual damages for the Company's
failure to issue and deliver the Certificates to the Holder in accordance with
the terms of the Debenture or for breach by the Company of the Securities
Purchase Agreement or of the Registration Rights Agreement.
15. Debenture a General Unsecured Obligation of the Company. This
-------------------------------------------------------
Debenture represents a general unsecured obligation of the Company. No recourse
shall be had for the payment of the principal of, or the interest on, this
Debenture, or for any claim based thereon, or otherwise in respect hereof,
against any incorporator, shareholder, officer, director, or agent of the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
9
<PAGE>
16. Enforceability. In case any provision of this Debenture is held by a
--------------
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
17. Entire Agreement. This Debenture and Exhibit I attached hereto, the
----------------
Securities Purchase Agreement and the Exhibits attached thereto and the
Registration Rights Agreement and the Exhibits attached thereto (if any)
constitute the full and entire understanding between the Company and the Holder
with respect to the subject matter hereof and thereof. Neither this Debenture
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the Company and the Holder.
18. Governing Law. This Debenture shall be governed by and construed in
-------------
accordance with the laws of the state of Delaware without giving effect to
applicable principles of conflict of law.
19. Headings. Headings in this Debenture are for convenience only, and
--------
shall not be used in the construction of this Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized, all as of the date first
hereinabove written.
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
------------------------------------------
Mr. Paul H. Metzinger, President & CEO
10
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To Be Executed by the Registered Holder in Order to Convert the Debenture)
The Undersigned hereby irrevocably elects to convert
$_______________________________ of the Series A-1 Nine Percent (9%) Redeemable
Convertible Debenture Due December 1, 1999, No. 1, into shares of Common Stock
-----
of Intercell Corporation (the "Company") according to the terms and conditions
set forth in such Debenture, as of the date written below. If securities are to
be issued to a person other than the Undersigned, the Undersigned agrees to pay
all transfer taxes with respect thereto.
The Undersigned represents that it, as of this date, is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D promulgated by
the SEC under the 1933 Act.
The Undersigned also represents that the Conversion Shares are being
acquired for the Holder's own account and not as a nominee for any other party,
for investment purposes and not with a view toward distribution or resale. The
Undersigned represents and warrants that all offers and sales by the Undersigned
of the Conversion Shares shall be made pursuant to registration of the same
under the 1933 Act, or pursuant to an exemption from registration under the 1933
Act. The Undersigned acknowledges that the Conversion Shares shall if (and only
if) required by law contain the legend contained on page 1 of the Debenture.
Conversion Date:*___________________________
Applicable Conversion Price:____________________
Holder (Print True Legal Name):_________________
_________________________________________________________
(Signature of Duly Authorized Representative of Holder)
Address of Holder:_____________________________________________________
_____________________________________________________
_____________________________________________________
* This original Notice of Conversion must be received by the Company by the
first business day following the Conversion Date.
11
<PAGE>
EXHIBIT 4.2
EXHIBIT A (THE "A-1 DEBENTURE")
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
DATE: DECEMBER 3, 1997
DEBENTURE #2 U.S. $250,000.00
--
INTERCELL CORPORATION
SERIES A-1 NINE PERCENT (9%)
REDEEMABLE CONVERTIBLE DEBENTURE DUE DECEMBER 1, 1999
THIS DEBENTURE is one of a duly authorized issue of debentures (a
"Debenture" or the "Debentures") of Intercell Corporation, a corporation duly
organized and validly existing under the laws of the State of Colorado, U.S.A.
(the "Company") designated as its Series A-1 Nine Percent (9%) Redeemable
Convertible Debenture Due December 1, 1999, in an aggregate principal face value
for all Debentures of this Series A-1 of Seven Hundred Fifty Thousand and
no/100s United States Dollars (US $750,000.00).
FOR VALUE RECEIVED, the Company promises to pay to FT Trading, the
registered holder hereof and its successors and assigns (the "Holder"), the
principal sum of Two Hundred Fifty Thousand and no/100s United States Dollars
($250,000.00) on December 1, 1999 (the "Maturity Date"), and to pay interest on
the principal sum outstanding, at the rate of nine percent (9%) per annum due
and payable in quarterly installments in arrears, on March 1, June 1, September
1, and December of each year during the term of this Debenture, with the first
such payment to be made on March 1, 1998. Accrual of interest on the outstanding
principal amount, payable in cash or common stock of the Company at the
Company's option, shall commence on the date hereof and shall continue until
payment in full of the outstanding principal amount has been made or duly
provided for. The interest so payable will be paid to the person in whose name
this Debenture (or one or more predecessor Debentures) is registered on the
records of the
1
<PAGE>
Company regarding registration and transfers of the Debenture (the "Debenture
Register"); provided, however, that the Company's obligation to a transferee of
this Debenture arises only if such transfer, sale or other disposition is made
in accordance with the terms and conditions of that Securities Purchase
Agreement of even date herewith between the Company FT Trading (the "Securities
Purchase Agreement").
The principal of, and interest on, this Debenture are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Debenture Register of the Company as designated in writing by the Holder
hereof from time to time. The Company will pay the outstanding principal of and
any and all accrued and unpaid interest due upon this Debenture on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the record
Holder of this Debenture as of the fifth business day (as defined in the
Securities Purchase Agreement) prior to the Maturity Date and addressed to such
Holder at the last address appearing on the Debenture Register. The forwarding
of such funds shall constitute a payment of outstanding principal and interest
hereunder and shall satisfy and discharge the liability for principal and
interest on this Debenture to the extent of the sum represented by such payment
plus any amounts so deducted or withheld. Except as herein provided, this
Debenture may not be prepaid without the prior written consent of the Holder.
This Debenture is subject to the following additional provisions:
1. Debenture Exchangeable. The Debenture is exchangeable commencing
----------------------
thirty (30) days from the date hereof for an equal aggregate principal amount of
Debentures of different authorized denominations, as requested by the Holder
surrendering the same, but not of denominations of less than Fifty Thousand
United States Dollars (US $50,000.00) without the Company's written consent. No
service charge will be made for such registration or transfer or exchange.
2. Withholding. The Company shall be entitled to withhold from all
-----------
payments of principal or interest pursuant to this Debenture any amounts
required to be withheld under the applicable provisions of the United States
income tax or other applicable laws at the time of such payments.
3. Transfer/Exchange of Debenture; Registered Holder; Opinion of Counsel;
----------------------------------------------------------------------
Legend. This Debenture has been issued subject to investment representations of
- ------
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "1933 Act") and
applicable state securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not his Debenture be overdue, and neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
The Holder understands and acknowledges by its acceptance hereof that (i)
except as provided in the Securities Purchase Agreement and in that Registration
Rights Agreement
attached as Exhibit F to the Securities Purchase Agreement, both such documents
incorporated herein by reference (the "Registration Rights Agreement"), this
Debenture and the shares of
2
<PAGE>
common stock in the Company issuable upon conversion as herein provided
("Conversion Shares") thereof have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (a) subsequently registered thereunder, or
(b) the Holder shall have delivered to the Company an opinion of counsel,
reasonably satisfactory in form, substance and scope to the Company, to the
effect that the securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration; (ii)
any sale of such securities made in reliance on Rule 144 promulgated under the
1933 Act may be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other regulation and/or exemption under the 1933
Act or the rules and regulations of the United States Securities and Exchange
Commission (the "SEC") thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities under the 1933 Act or
any state securities laws (other than pursuant to the terms of the Securities
Purchase Agreement and the Registration Rights Agreement) or to comply with the
terms and conditions of any exemption thereunder.
Any Conversion Shares issued upon conversion of this Debenture, and if
applicable, any common stock of the Company issued in payment of interest as
herein provided, shall, if and to the extent required by law, bear legends in
similar form to the legends set forth on the first page of this Debenture.
4. Conversion of Debenture into Common Stock; Redemption by the Company.
--------------------------------------------------------------------
(a) The Holder of this Debenture is entitled, at its option, at any time
commencing the earlier of (i) the date on which the Form S-1 (as defined in the
Securities Purchase Agreement, including any amendments as called for in the
Securities Purchase Agreement) is declared effective by the SEC; or (ii) the
date which is sixty (60) days after the date first written at the top of this
Debenture, to convert the original principal face amount of this Debenture into
shares of common stock in the Company, no par value per share (defined
hereinafter as the "Common Stock"), at a conversion price (the "Conversion
Price") for each share of Common Stock equal to THE LESSER OF (i) eighty-five
percent (85%) of the Market Price (as defined below) of the Common Stock, or
(ii) US $.75. For the purposes of this Section 4, the Market Price shall be the
---
average closing bid price of the Common Stock for the five (5) business days
- ----------------------------------------------------------------------------
immediately preceding the Conversion Date (as hereinafter defined), as reported
- -----------------------------------------
on the National Association of Securities Dealers "Over The Counter" Bulletin
Board Quotation System ("OTC: Bulletin Board"). Such conversion shall be
achieved by submitting to the Company the fully completed form of conversion
notice attached hereto as Exhibit I (a "Notice of Conversion"), executed by the
Holder of this Debenture evidencing such Holder's intention to convert this
Debenture or the specified portion (as herein provided) hereof. A Notice of
Conversion may be submitted via facsimile to the Company at the telecopier
number for the Company provided in the Securities Purchase Agreement (or at such
other number as requested in writing by the Company), and if so submitted the
original Notice of Conversion shall be delivered to the Company within one (1)
business day. The Company and the Holder shall each keep records with respect to
the portion of this
Debenture then being converted and all portions previously converted; upon
receipt by the Holder of the requisite Conversion Shares, the outstanding
principal amount of the Debenture shall be reduced by the amount specified in
the Notice of Conversion resulting in such
3
<PAGE>
Conversion Shares. The Company may from time to time, but is not required to,
instruct the Holder and the Holder shall surrender this Debenture along with the
Notice of Conversion for the purposes of making a notation thereon as to the
amount of principal being converted, or of canceling this Debenture and issuing
a new Debenture in the same form with the principal amount of such Debenture
reduced by the amount converted. No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. Accrued interest on the
converted portion of the Debenture shall be payable in cash or Common Stock at
the Company's option. The date on which a notice of conversion (the "Conversion
Date") is given shall be deemed to be either the date on which the Company
receives from the Holder an original valid Notice of Conversion duly executed,
or, if earlier, the date set forth in such Notice of Conversion if such Notice
of Conversion is received by the Company within one (1) business day thereafter.
In all cases, the Company shall deliver the Conversion Shares to the Holder
within three (3) business days after the Conversion Date with respect to such
Conversion Shares being delivered, and at the address specified in the Notice of
Conversion.
Subject to the provisions of Paragraph 4(b) hereof, at the Maturity Date,
the remaining portion of this Debenture which remains unconverted, if any, plus
accrued interest shall be automatically converted into shares of Common Stock as
of the Maturity Date, as if the Holder had converted the remaining portion of
this Debenture according to the provisions of this Section 4, with the
Conversion Date being equivalent in such event to the Maturity Date, as if the
Holder had provided the Company with a Notice of Conversion with respect to the
outstanding principal amount of this Debenture on the Maturity Date. Other than
a conversion made on the Maturity Date in accordance with this paragraph,
conversions of this Debenture must be effected in increments of Ten Thousand
U.S. Dollars ($10,000) of principal amount of this Debenture (or such lesser
outstanding principal amount of this Debenture).
(b) Notwithstanding anything herein to the contrary, the Company shall
have the right (but not the obligation) to redeem all or a portion of this
Debenture, provided the Company is not then in violation of any of its
obligations under this Debenture or under the Securities Purchase Agreement or
any addenda thereto, under the following conditions. At any time prior to
conversion, or within twenty-four (24) hours after delivery of any Notice of
Conversion (in this Section 4(b), a "Notice") to the Company by the Holder in
accordance with the terms of this Debenture, the Company shall give to the
Holder notice (a "Redemption Notice") that it intends to pay the Holder the Cash
Redemption Amount (as hereinafter defined) instead of delivering Conversion
Shares to such Holder; provided, however, that the Company may only exercise
this right with respect to all of the Common Stock which would have otherwise
been delivered with respect to the Notice. The "Cash Redemption Amount" shall be
equal to one hundred fifteen percent (115%) of the face amount of the portion of
the Debenture to have been converted pursuant to the Notice, and shall be paid
to the Holder according to the Holder's written instructions to the Company
within three (3) business days after delivery of the Redemption Notice with
respect to such Debenture or portion thereof to be redeemed. If the Company does
not redeem within the time limits herein specified and according to the terms of
this Section 4(b), then the Holder shall have the right to demand delivery of
the Conversion Shares which would have been delivered pursuant to the applicable
Notice, and shall have the right (but not the obligation) to adjust the
Conversion Price as if the Notice had been sent on the date of such
4
<PAGE>
demand. In such event the Company shall deliver the requisite Conversion Shares
within two (2) business days after such demand has been made.
(c) Notwithstanding anything herein to the contrary, and except as
otherwise stated in this Paragraph 4(c), the Holder shall not convert more than
twenty percent (20%) of the original principal amount (the "Original Face
Amount") of this Debenture (the "Percentage Limit") in any one (1) calendar
month. Except as otherwise stated in this Paragraph 4(c), should the Holder
deliver to the Company a Notice(s) of Conversion purporting to convert a portion
of this Debenture greater than the Percentage Limit in any one (1) calendar
month, the Company at its option may disregard the said Notice(s) of Conversion
to the extent the said Notice(s) of Conversion purports to convert more than the
Percentage Limit in such calendar month. Notwithstanding the above, should the
Holder not convert the full Percentage Limit in any one (1) calendar month, then
the Holder shall be entitled to increase the Percentage Limit in the following
calendar month (and subject to the limitation specified below, succeeding
calendar months until converted) by a percentage of the Original Face Amount
equal to the Percentage Limit less the percentage of Original Face Amount
actually converted in such preceding calendar month. However, in no event shall
the Holder convert a portion of this Debenture greater than forty percent (40%)
of the Original Face Amount in any one (1) calendar month. For example, should
-----------
the Holder not convert any portion of the Original Face Amount in the first
calendar month in which the Holder would be so entitled, then in the next
proceeding calendar month the Holder would be entitled to convert a maximum of
forty percent (40%) [the Percentage Limit for the first month plus {the
Percentage Limit for the second month minus zero percent converted in the second
month} equals forty percent (40%)] of the Original Face Amount. As a further
example, should the Holder not convert any of the Original Face Amount in the
second calendar month in which it would be so entitled, then in the third
calendar month the Holder would be able to convert forty percent (40%) of the
Original Face Amount, and if it converts this full forty percent (40%), the
Holder would likewise be entitled to convert forty percent (40%) of the Original
Face Amount in the fourth calendar month.
5. Obligations of the Company Herein are Unconditional. No provision of
---------------------------------------------------
this Debenture shall alter or impair the obligation of the Company, which
obligation is absolute and unconditional, to repay the principal amount of this
Debenture at the time, place, rate, and in the coin currency, hereinabove
stated. This Debenture and all other debentures now or hereafter issued in
replacement of this Debenture on the same or similar terms are direct
obligations of the Company. This Debenture ranks at least equally with all other
Debentures now or hereafter issued under the terms set forth herein. The
Conversion Price and number of shares of Common Stock issuable upon conversion
shall be subject to adjustment from time to time as provided in Section 6 below.
6. Adjustments.
-----------
(a) In the event the Company should at any time or from time to time,
after the date of this Debenture, fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock (equal to at least ten
percent (10%) or more of the Company's then issued and outstanding shares of
Common Stock) or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly additional shares of Common
Stock (hereinafter referred to as
5
<PAGE>
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the Conversion
Price shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of this Debenture shall be increased in proportion
to such increase in the aggregate number of shares of Common Stock outstanding
and those issuable with respect to such Common Stock Equivalents.
(b) If the number of shares of Common Stock outstanding at any time after the
date of this Debenture is decreased by a combination of the outstanding shares
of Common Stock, then, following the record date of such combination, the
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable upon conversion of this Debenture shall be decreased in
proportion to such decrease in outstanding shares.
7. Reservation of Shares. The Company shall at all times reserve and keep
---------------------
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Debenture, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the outstanding principal amount, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of this Debenture, in addition to such other remedies
as shall be available to Holder, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase the number of
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including without limitation, using its best
efforts to obtain the requisite stockholder approval necessary to increase the
number of authorized shares of the Company's Common Stock.
8. Debenture Holder Not Deemed a Stockholder. No Holder, as such, of this
-----------------------------------------
Debenture shall be entitled (prior to conversion of this Debenture into Common
Stock, and only then to the extent of such conversion) to vote or receive
dividends or be deemed the holder of shares of the Company for any purpose, nor
shall anything contained in this Debenture be construed to confer upon the
Holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the holder of
this Debenture of the Conversion Shares which he or she is then entitled to
receive upon the due conversion of all or a portion of this Debenture.
Notwithstanding the foregoing, the Company will provide the Holder with copies
of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the
stockholders.
9. No Limitation on Corporate Action. No provisions of this Debenture and
---------------------------------
no right or option granted or conferred hereunder shall in any way limit, affect
or abridge the exercise by the Company of any of its corporate rights or powers
to recapitalize, amend its Certificate of Incorporation, reorganize, consolidate
or merge with or into another corporation, or to transfer all or any part of its
property or assets, or the exercise of any other of its corporate rights and
powers.
6
<PAGE>
10. Representations of Holder. Upon conversion of all or a portion of
-------------------------
this Debenture, the Holder shall confirm in writing, in a form reasonably
satisfactory to the Company, that the Conversion Shares so purchased are being
acquired solely for the Holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale and
that such Holder is an Accredited Investor (as defined in Rule 501(a) of
Regulation D promulgated under the 1933 Act). If such Holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such Holder's conversion of all or a portion of the Debenture that
the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon conversion of the Debenture shall not violate any United States or state
securities laws.
11. Waiver of Demand, Presentment, Etc. The Company hereby expressly
----------------------------------
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.
12. Attorney's Fees. The Company agrees to pay all costs and expenses,
---------------
including without limitation reasonable attorney's fees, which may be incurred
by the Holder in collecting any amount due under this Debenture or in enforcing
any of Holder's conversion rights as described herein.
13. Default. If one or more of the following described "Events of
-------
Default" shall occur:
(a) The Company shall continue in default in the payment of principal or
interest on this Debenture for a period of ten (10) days after a notice of
default is received by the Company with respect to any such payment; or
(b) Any of the representations or warranties made by the Company herein,
in the Securities Purchase Agreement, the Registration Rights Agreement, or
in any certificate or financial or other written statement heretofore or
hereafter furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Securities Purchase
Agreement or the Registration Rights Agreement shall be false or misleading
in any material respect at the time made and the Holder shall have provided
seven (7) days prior written notice to the Company of the alleged
misrepresentation or breach of warranty; or
(c) The Company shall fail to perform or observe, in any material respect,
any other covenant, term, provision, condition, agreement or obligation of
the Company under this Debenture or the Securities Purchase Agreement and
such failure shall continue uncured for a period of seven (7) days after
notice from the Holder of such failure; or
(d) The Company shall either: (i) become insolvent; (ii) admit in writing
its inability to pay its debts generally or as they become due; (iii) make
an assignment for the benefit of creditors or commence proceedings for its
dissolution; or (iv) apply for, or consent to the appointment of, a
trustee, liquidator, or receiver for its or for a substantial part of its
property or business; or
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(e) A trustee, liquidator or receiver shall be appointed for the Company
or for a substantial part of its property or business without the Company's
consent and such appointment is not discharged within sixty (60) days after
such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company
and shall not be dismissed within sixty (60) days thereafter; or
(g) Any money judgment, writ or debenture of attachment, or similar
process in excess of Three Hundred Thousand United States Dollars (US
$300,000.00) in the aggregate shall be entered or filed against the Company
or any of its properties or assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of fifteen (15) days or in any event
later than five (5) days prior to the date of any proposed sale thereunder;
or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed within sixty days
after such institution or the Company shall by any action or answer approve
of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in, any such
proceeding; or
(i) The Company shall have its Common Stock delisted from the OTC:
Bulletin Board stock exchange or suspended from trading thereon, and shall
not have its Common Stock relisted on the same or another national
securities exchange, or have such suspension lifted, as the case may be,
within ten (10) business days; or
(j) The Company shall have received a notice of default on the payment of
any debt(s) aggregating in excess of Three Hundred Thousand United States
Dollars (US $300,000.00) beyond any applicable grace period;
then, or at any time thereafter, and in any and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
in one instance shall not be deemed to be a waiver in another instance or for
any other prior or subsequent Event of Default) at the option of the Holder and
in the Holder's sole discretion, the Holder may immediately accelerate the
maturity hereof, whereupon all principal and interest hereunder shall be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Company, anything
herein or in any note or other instrument contained to the contrary
notwithstanding, and the Holder may immediately, and upon the expiration of any
period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law or equity.
14. Delivery of Common Stock Upon Conversion. As set forth herein, the
----------------------------------------
Company shall use its best efforts to issue and deliver, within three (3)
business days after the Holder has fulfilled all conditions and submitted all
necessary documents duly executed and in proper form required for conversion
(the "Deadline"), to the Holder or any party receiving a Debenture by transfer
from the Holder (together, a "Holder"), at the address of the Holder on the
Debenture Register, a certificate or certificates for the number of Conversion
Shares to which the Holder
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shall be entitled (the "Certificates"). The Company understands and agrees that
a delay in the issuance of the Certificates beyond the Deadline could result in
economic loss and other damages to the Holder. As compensation to the Holder for
such loss, the Company agrees to pay liquidated damages (and not as a penalty)
to the Holder for issuance and delivery of the Certificates after the Deadline,
in accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond seven (7) business days from the
Conversion Date with respect to a Notice of Conversion and the receipt by the
Company of all necessary documentation duly executed and in proper form required
for conversion, including the original Notice of Conversion providing the
principal amount of the Debenture to be converted, all in accordance with the
terms of this Debenture, the Securities Purchase Agreement, the Registration
Rights Agreement and the reasonable and customary requirements of the transfer
agent):
No. Business Days Late Liquidated Damages
---------------------- ------------------
(in US $)
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
11+ $5,000 + $1,000 for
each Business Day Late
beyond 11 days
The Company shall pay the Holder any liquidated damages incurred as called
for under this Section 14 by certified or cashier's check upon the earlier of
(i) issuance of the Certificates to the Holder or (ii) each monthly anniversary
of the receipt by the Company of such Holder's Notice of Conversion. Nothing
herein shall limit the Holder's right to pursue actual damages for the Company's
failure to issue and deliver the Certificates to the Holder in accordance with
the terms of the Debenture or for breach by the Company of the Securities
Purchase Agreement or of the Registration Rights Agreement.
15. Debenture a General Unsecured Obligation of the Company. This
-------------------------------------------------------
Debenture represents a general unsecured obligation of the Company. No recourse
shall be had for the payment of the principal of, or the interest on, this
Debenture, or for any claim based thereon, or otherwise in respect hereof,
against any incorporator, shareholder, officer, director, or agent of the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
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16. Enforceability. In case any provision of this Debenture is held by a
--------------
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
17. Entire Agreement. This Debenture and Exhibit I attached hereto, the
----------------
Securities Purchase Agreement and the Exhibits attached thereto and the
Registration Rights Agreement and the Exhibits attached thereto (if any)
constitute the full and entire understanding between the Company and the Holder
with respect to the subject matter hereof and thereof. Neither this Debenture
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the Company and the Holder.
18. Governing Law. This Debenture shall be governed by and construed in
-------------
accordance with the laws of the state of Delaware without giving effect to
applicable principles of conflict of law.
19. Headings. Headings in this Debenture are for convenience only, and
--------
shall not be used in the construction of this Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized, all as of the date first
hereinabove written.
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
----------------------------------------
Paul H. Metzinger, President & CEO
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EXHIBIT I
NOTICE OF CONVERSION
(To Be Executed by the Registered Holder in Order to Convert the Debenture)
The Undersigned hereby irrevocably elects to convert $ of the Series
A-1 Nine Percent (9%) Redeemable Convertible Debenture Due December 1, 1999, No.
---
2, into shares of Common Stock of Intercell Corporation (the "Company")
- -
according to the terms and conditions set forth in such Debenture, as of the
date written below. If securities are to be issued to a person other than the
Undersigned, the Undersigned agrees to pay all transfer taxes with respect
thereto.
The Undersigned represents that it, as of this date, is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D promulgated by
the SEC under the 1933 Act.
The Undersigned also represents that the Conversion Shares are being
acquired for the Holder's own account and not as a nominee for any other party,
for investment purposes and not with a view toward distribution or resale. The
Undersigned represents and warrants that all offers and sales by the Undersigned
of the Conversion Shares shall be made pursuant to registration of the same
under the 1933 Act, or pursuant to an exemption from registration under the 1933
Act. The Undersigned acknowledges that the Conversion Shares shall if (and only
if) required by law contain the legend contained on page 1 of the Debenture.
Conversion Date:*________________________
Applicable Conversion Price:___________________
Holder (Print True Legal Name):________________
_________________________________________________________
(Signature of Duly Authorized Representative of Holder)
Address of Holder: ____________________________________________
____________________________________________
____________________________________________
* This original Notice of Conversion must be received by the Company by the
first business day following the Conversion Date.
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EXHIBIT 4.3
EXHIBIT B (WARRANT #1)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
INTERCELL CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Warrant No.1 Number of Shares: 133,333
Date of Issuance: December 3, 1997
Intercell Corporation, a Colorado corporation (the "Company"), hereby
certifies that, for value received, The Augustine Fund, L.P., and permitted
assigns, the registered holder hereof ("Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time after the date hereof, but not after 5:00 p.m. Denver,
Colorado time on the Expiration Date (as defined herein) One Hundred Thirty-
Three Thousand Three Hundred Thirty-Three (133,333) fully paid and nonassessable
shares of Common Stock (as defined herein) of the Company (each a "Warrant
Share" and collectively the "Warrant Shares") at a purchase price of U.S. $.17
per share (the "Exercise Price") in lawful money of the United States. The
number of Warrant Shares purchasable hereunder and the Exercise Price are
subject to adjustment as provided in Section 9 below.
Section 1.
(a) Definitions. The following words and terms used in this Warrant shall
have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
"Expiration Date" means the date which is three (3) years from the date of
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or
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authorized to be closed in the City of Denver or the State of Colorado (a
"Holiday"), the next preceding date that is not a Holiday.
"Market Price" means the closing bid price on the day prior to the date on
which the Exercise Form is delivered to the Company, as quoted on the National
Association of Securities Dealers' OTC Bulletin Board Market.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement between the holder hereof (or its predecessor in interest) and the
Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).
"Transfer" shall include any disposition of this Warrant or any Warrant
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or
applicable state securities laws.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $.17 per share.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to
the Company shall be deemed to include the Company's successors; and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time .
(ii) When used in this Warrant, unless the otherwise specified in a
particular instance, the words "herein," "hereof," and "hereunder," and words of
similar import, shall refer to this Warrant as a whole and not to any provision
of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00 p.m.
Denver, Colorado Time on the Expiration Date. The rights represented by this
Warrant may be exercised by the Holder, as a whole or from time to time in part
(except that this Warrant shall not be exercisable as to a fractional share) by
(i) delivery of a written notice, in the form of the exercise form attached as
Exhibit I hereto (an "Exercise Form"), of the Holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company of an amount equal to the Warrant
Exercise Price multiplied by the number of Warrant Shares as to which the
Warrant is being exercised (plus any applicable issue or transfer taxes) in
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<PAGE>
immediately available funds (either by wire transfer or a certified or cashier's
check drawn on a United States bank), for the number of Warrant Shares as to
which this Warrant shall have been exercised, and (iii) the surrender of this
Warrant, properly endorsed, at the principal office of the Company (or at such
other agency or office of the Company as the Company may designate by notice to
the Holder).
In addition, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised by presentation and surrender of this
Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price, the Holder shall surrender this
Warrant for, and the Company shall issue in respect thereof, the number of
Warrant Shares determined by multiplying the number of Warrant Shares to which
the Holder would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
The Warrant Shares so purchased shall be deemed to be issued to the Holder
or Holder's designees, as the record owner of such Warrant Shares, as of the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such Warrant Shares as set
forth above.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Holder,
shall be delivered to, or as directed by, the Holder within three (3) business
days after such rights shall have been so exercised.
(b) Unless this Warrant shall have expired or shall have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except (i) it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
the Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised, and (ii) the holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
(c) In the case of any dispute with respect to an exercise, the Company
shall promptly issue such number of Warrant Shares as are not disputed in
accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless Exercise, the Company
shall submit the disputed calculations to an independent accounting firm of
national standing via facsimile within two (2) business days of receipt of the
Exercise Form. The accountant shall audit the calculations and notify the
Company and the Holder of the results no later than two (2) business days from
the date it receives the disputed calculations. The
3
<PAGE>
accountant's calculation shall be deemed conclusive absent manifest error. The
Company shall then issue the appropriate number of shares of Common Stock in
accordance with this Section.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and non-assessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. Notwithstanding the foregoing, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale. If
such holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder's exercise of the Warrant that
the Company receive such other representations as the Company considers
reasonably necessary to
4
<PAGE>
assure the Company that the issuance of its securities upon exercise of the
Warrant shall not violate any United States or state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
(a) The holder of this Warrant understands that (i) this Warrant and the
Warrant Shares have not been and are not being registered under the Securities
Act or any state securities laws (other than as described in the Securities
Purchase Agreement and the Registration Rights Agreement), and may not be
offered for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such registration;
(ii) any sale of such securities made in reliance on Rule 144 promulgated under
the Securities Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement) under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
Section 9. Adjustments.
(a) Reclassification and Reorganization. In case of any reclassification,
capital reorganization or other change of outstanding shares of the Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by exercising this Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 9. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations or mergers. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company acting in
good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall effect a
stock dividend, a stock split, a stock combination, or a reverse stock split of
the Common Stock, the number of Warrant Shares purchasable hereunder and the
Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting in good faith. The number
of shares, as so adjusted, shall be rounded down to the nearest whole number and
the Warrant Exercise Price shall be rounded to the nearest cent.
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Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed. In the event the holder hereof asserts such loss, theft or
destruction of this Warrant, the Company may require such holder to post a bond
issued by a surety reasonably satisfactory to the Company with respect to the
issuance of such new Warrant.
Section 11. Notice. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to Holder, to it at the address set forth below Holder's signature on the
signature page of the Securities Purchase Agreement (Holder is defined therein
as the "Buyer"). Each party shall provide notice to the other party of any
change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Colorado. Headings are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof. This Warrant
shall be binding upon the Company and its successors and assigns and shall inure
to the benefit of the Holder and its successors and assigns. The Holder may not
assign this Warrant except in accordance with applicable federal and state
securities laws. The Holder shall immediately notify the Company with respect to
any permitted assignment of this Warrant.
Section 13. Date. The date of this Warrant is December 3, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO WARRANT # 1 DATED DECEMBER 3, 1997]
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
-----------------------------------------
Mr. Paul H. Metzinger, President & CEO
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EXHIBIT I TO WARRANT
EXERCISE FORM TO BE EXECUTED BY THE REGISTERED HOLDER TO
EXERCISE THIS WARRANT
INTERCELL CORPORATION
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by the Warrant attached hereto as specified below
according to the conditions thereof and herewith makes payment of U.S.
$______________________ (unless effected by a Cashless Exercise in accordance
with the terms of the Warrant), the aggregate Warrant Exercise Price of such
Warrant Shares in full pursuant to the terms and conditions of the Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained upon exercise of the Warrant, except under
circumstances that will not result in a violation of the 1933 Act or applicable
state securities laws.
(ii) The undersigned requests that the stock certificates for the Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the terms of the Warrant in the name of the Holder (or such
other person(s) indicated below) and delivered to the undersigned (or
designee(s)) at the address or addresses set forth below.
Dated:_______,199_.
HOLDER:_______________________________
______________________________________
By____________________________________
Name:_________________________________
Title:________________________________
Address:
______________________________________
______________________________________
______________________________________
Number of Warrant Shares
Being Purchased:__________
8
<PAGE>
EXHIBIT 4.4
EXHIBIT C (WARRANT #2)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
INTERCELL CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Warrant No.2 Number of Shares: 133,333
Date of Issuance: December 3, 1997
Intercell Corporation, a Colorado corporation (the "Company"), hereby
certifies that, for value received, The Augustine Fund, L.P., and permitted
assigns, the registered holder hereof ("Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time after the date hereof, but not after 5:00 p.m. Denver,
Colorado time on the Expiration Date (as defined herein) One Hundred Thirty-
Three Thousand Three Hundred Thirty-Three (133,333) fully paid and nonassessable
shares of Common Stock (as defined herein) of the Company (each a "Warrant
Share" and collectively the "Warrant Shares") at a purchase price of U.S. $.50
per share (the "Exercise Price") in lawful money of the United States. The
number of Warrant Shares purchasable hereunder and the Exercise Price are
subject to adjustment as provided in Section 9 below.
Section 1.
(a) Definitions. The following words and terms used in this Warrant shall
have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
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"Expiration Date" means the date which is three (3) years from the date of
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of Denver or the State
of Colorado (a "Holiday"), the next preceding date that is not a Holiday.
"Market Price" means the closing bid price on the day prior to the date on
which the Exercise Form is delivered to the Company, as quoted on the National
Association of Securities Dealers' OTC Bulletin Board Market.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement between the holder hereof (or its predecessor in interest) and the
Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).
"Transfer" shall include any disposition of this Warrant or any Warrant
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or
applicable state securities laws.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $.50 per share.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to
the Company shall be deemed to include the Company's successors; and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
(ii) When used in this Warrant, unless the otherwise specified in a
particular instance, the words "herein," "hereof," and "hereunder," and words of
similar import, shall refer to this Warrant as a whole and not to any provision
of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00 p.m.
Denver, Colorado Time on the Expiration Date. The rights represented by this
Warrant may be exercised by the Holder, as a whole or from time to time in part
(except that this Warrant shall not be exercisable as to a fractional share) by
(i) delivery of a written notice, in the form of the exercise form attached as
Exhibit I hereto (an "Exercise Form"), of the Holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company
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<PAGE>
of an amount equal to the Warrant Exercise Price multiplied by the number of
Warrant Shares as to which the Warrant is being exercised (plus any applicable
issue or transfer taxes) in immediately available funds (either by wire transfer
or a certified or cashier's check drawn on a United States bank), for the number
of Warrant Shares as to which this Warrant shall have been exercised, and (iii)
the surrender of this Warrant, properly endorsed, at the principal office of the
Company (or at such other agency or office of the Company as the Company may
designate by notice to the Holder).
In addition, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised by presentation and surrender of this
Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price, the Holder shall surrender this
Warrant for, and the Company shall issue in respect thereof, the number of
Warrant Shares determined by multiplying the number of Warrant Shares to which
the Holder would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
The Warrant Shares so purchased shall be deemed to be issued to the Holder
or Holder's designees, as the record owner of such Warrant Shares, as of the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such Warrant Shares as set
forth above.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Holder,
shall be delivered to, or as directed by, the Holder within three (3) business
days after such rights shall have been so exercised.
(b) Unless this Warrant shall have expired or shall have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except (i) it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
the Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised, and (ii) the holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
(c) In the case of any dispute with respect to an exercise, the Company
shall promptly issue such number of Warrant Shares as are not disputed in
accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless Exercise, the Company
shall submit the disputed calculations to an independent accounting firm of
national standing via facsimile within two (2) business days of receipt of the
Exercise Form.
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<PAGE>
The accountant shall audit the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error. The Company shall then issue the appropriate
number of shares of Common Stock in accordance with this Section.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. Notwithstanding the foregoing, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale. If
such holder cannot make such representations because they would be
4
<PAGE>
factually incorrect, it shall be a condition to such holder's exercise of the
Warrant that the Company receive such other representations as the Company
considers reasonably necessary to assure the Company that the issuance of its
securities upon exercise of the Warrant shall not violate any United States or
state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive
Legends.
(a) The holder of this Warrant understands that (i) this Warrant and the
Warrant Shares have not been and are not being registered under the Securities
Act or any state securities laws (other than as described in the Securities
Purchase Agreement and the Registration Rights Agreement), and may not be
offered for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such registration;
(ii) any sale of such securities made in reliance on Rule 144 promulgated under
the Securities Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement) under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
Section 9. Adjustments.
(a) Reclassification and Reorganization. In case of any reclassification,
capital reorganization or other change of outstanding shares of the Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by exercising this Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 9. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations or mergers. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company acting in
good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall effect a
stock dividend, a stock split, a stock combination, or a reverse stock split of
the Common Stock, the number of Warrant Shares purchasable hereunder and the
Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting
5
<PAGE>
in good faith. The number of shares, as so adjusted, shall be rounded down to
the nearest whole number and the Warrant Exercise Price shall be rounded to the
nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed. In the event the holder hereof asserts such loss, theft or
destruction of this Warrant, the Company may require such holder to post a bond
issued by a surety reasonably satisfactory to the Company with respect to the
issuance of such new Warrant.
Section 11. Notice. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to Holder, to it at the address set forth below Holder's signature on the
signature page of the Securities Purchase Agreement (Holder is defined therein
as the "Buyer"). Each party shall provide notice to the other party of any
change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Colorado. Headings are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof. This Warrant
shall be binding upon the Company and its successors and assigns and shall inure
to the benefit of the Holder and its successors and assigns. The Holder may not
assign this Warrant except in accordance with applicable federal and state
securities laws. The Holder shall immediately notify the Company with respect to
any permitted assignment of this Warrant.
Section 13. Date. The date of this Warrant is December 3, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
[SIGNATURE PAGE FOLLOWS]
6
<PAGE>
[SIGNATURE PAGE TO WARRANT # 2 DATED DECEMBER 3, 1997]
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
---------------------------------------
Paul H. Metzinger, President & CEO
7
<PAGE>
EXHIBIT I TO WARRANT
EXERCISE FORM TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
INTERCELL CORPORATION
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by the Warrant attached hereto as specified below
according to the conditions thereof and herewith makes payment of U.S.
$______________________ (unless effected by a Cashless Exercise in accordance
with the terms of the Warrant), the aggregate Warrant Exercise Price of such
Warrant Shares in full pursuant to the terms and conditions of the Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained upon exercise of the Warrant, except under
circumstances that will not result in a violation of the 1933 Act or applicable
state securities laws.
(ii) The undersigned requests that the stock certificates for the Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the terms of the Warrant in the name of the Holder (or such
other person(s) indicated below) and delivered to the undersigned (or
designee(s)) at the address or addresses set forth below.
Dated:______, 199_.
HOLDER:____________________________
By:________________________________
Name:______________________________
Title:_____________________________
Address:
___________________________________
___________________________________
___________________________________
Number of Warrant Shares
Being Purchased:________________
8
<PAGE>
EXHIBIT 4.5
EXHIBIT D (WARRANT #3)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
INTERCELL CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Warrant No.3 Number of Shares: 133,333
Date of Issuance: December 3, 1997
Intercell Corporation, a Colorado corporation (the "Company"), hereby
certifies that, for value received, The Augustine Fund, L.P., and permitted
assigns, the registered holder hereof ("Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time after the date hereof, but not after 5:00 p.m. Denver,
Colorado time on the Expiration Date (as defined herein) One Hundred Thirty-
Three Thousand Three Hundred Thirty-Three (133,333) fully paid and nonassessable
shares of Common Stock (as defined herein) of the Company (each a "Warrant
Share" and collectively the "Warrant Shares") at a purchase price of U.S. $1.00
per share (the "Exercise Price") in lawful money of the United States. The
number of Warrant Shares purchasable hereunder and the Exercise Price are
subject to adjustment as provided in Section 9 below.
***
Section 1.
(a) Definitions. The following words and terms used in this Warrant shall
have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
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"Expiration Date" means the date which is three (3) years from the date of
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of Denver or the State
of Colorado (a "Holiday"), the next preceding date that is not a Holiday.
"Market Price" means the closing bid price on the day prior to the date on
which the Exercise Form is delivered to the Company, as quoted on the National
Association of Securities Dealers' OTC Bulletin Board Market.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement between the holder hereof (or its predecessor in interest) and the
Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).
"Transfer" shall include any disposition of this Warrant or any Warrant
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or
applicable state securities laws.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $1.00 per share.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to
the Company shall be deemed to include the Company's successors; and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
(ii) When used in this Warrant, unless the otherwise specified in a
particular instance, the words "herein," "hereof," and "hereunder," and words of
similar import, shall refer to this Warrant as a whole and not to any provision
of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00 p.m.
Denver, Colorado Time on the Expiration Date. The rights represented by this
Warrant may be exercised by the Holder, as a whole or from time to time in part
(except that this Warrant shall not be exercisable as to a fractional share) by
(i) delivery of a written notice, in the form of the exercise form attached as
Exhibit I hereto (an "Exercise Form"), of the Holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company
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<PAGE>
of an amount equal to the Warrant Exercise Price multiplied by the number of
Warrant Shares as to which the Warrant is being exercised (plus any applicable
issue or transfer taxes) in immediately available funds (either by wire transfer
or a certified or cashier's check drawn on a United States bank), for the number
of Warrant Shares as to which this Warrant shall have been exercised, and (iii)
the surrender of this Warrant, properly endorsed, at the principal office of the
Company (or at such other agency or office of the Company as the Company may
designate by notice to the Holder).
In addition, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised by presentation and surrender of this
Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price, the Holder shall surrender this
Warrant for, and the Company shall issue in respect thereof, the number of
Warrant Shares determined by multiplying the number of Warrant Shares to which
the Holder would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
The Warrant Shares so purchased shall be deemed to be issued to the Holder
or Holder's designees, as the record owner of such Warrant Shares, as of the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such Warrant Shares as set
forth above.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Holder,
shall be delivered to, or as directed by, the Holder within three (3) business
days after such rights shall have been so exercised.
(b) Unless this Warrant shall have expired or shall have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except (i) it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
the Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised, and (ii) the holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
(c) In the case of any dispute with respect to an exercise, the Company
shall promptly issue such number of Warrant Shares as are not disputed in
accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless Exercise, the Company
shall submit the disputed calculations to an independent accounting firm of
national standing via facsimile within two (2) business days of receipt of the
Exercise Form.
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The accountant shall audit the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error. The Company shall then issue the appropriate
number of shares of Common Stock in accordance with this Section.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and non-assessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. Notwithstanding the foregoing, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale. If
such holder cannot make such representations because they would be
4
<PAGE>
factually incorrect, it shall be a condition to such holder's exercise of the
Warrant that the Company receive such other representations as the Company
considers reasonably necessary to assure the Company that the issuance of its
securities upon exercise of the Warrant shall not violate any United States or
state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
(a) The holder of this Warrant understands that (i) this Warrant and the
Warrant Shares have not been and are not being registered under the Securities
Act or any state securities laws (other than as described in the Securities
Purchase Agreement and the Registration Rights Agreement), and may not be
offered for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such registration;
(ii) any sale of such securities made in reliance on Rule 144 promulgated under
the Securities Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) either the Company nor any other person is under any
obligation to register such securities (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement) under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
Section 9. Adjustments.
(a) Reclassification and Reorganization. In case of any reclassification,
capital reorganization or other change of outstanding shares of the Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by exercising this Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 9. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations or mergers. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company acting in
good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall effect
a stock dividend, a stock split, a stock combination, or a reverse stock split
of the Common Stock, the number of Warrant Shares purchasable hereunder and the
Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting
5
<PAGE>
in good faith. The number of shares, as so adjusted, shall be rounded down to
the nearest whole number and the Warrant Exercise Price shall be rounded to the
nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed. In the event the holder hereof asserts such loss, theft or
destruction of this Warrant, the Company may require such holder to post a bond
issued by a surety reasonably satisfactory to the Company with respect to the
issuance of such new Warrant.
Section 11. Notice. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to Holder, to it at the address set forth below Holder's signature on the
signature page of the Securities Purchase Agreement (Holder is defined therein
as the "Buyer"). Each party shall provide notice to the other party of any
change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Colorado. Headings are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof. This Warrant
shall be binding upon the Company and its successors and assigns and shall inure
to the benefit of the Holder and its successors and assigns. The Holder may not
assign this Warrant except in accordance with applicable federal and state
securities laws. The Holder shall immediately notify the Company with respect to
any permitted assignment of this Warrant.
Section 13. Date. The date of this Warrant is December 3, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
[SIGNATURE PAGE FOLLOWS]
6
<PAGE>
[SIGNATURE PAGE TO WARRANT # 2 DATED DECEMBER 3, 1997]
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
--------------------------------------------
Paul H. Metzinger, President & CEO
7
<PAGE>
EXHIBIT I TO WARRANT
EXERCISE FORM TO BE EXECUTED BY THE
REGISTERED HOLDER TO EXERCISE THIS WARRANT
INTERCELL CORPORATION
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by the Warrant attached hereto as specified below
according to the conditions thereof and herewith makes payment of U.S.
$______________________ (unless effected by a Cashless Exercise in accordance
with the terms of the Warrant), the aggregate Warrant Exercise Price of such
Warrant Shares in full pursuant to the terms and conditions of the Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained upon exercise of the Warrant, except under
circumstances that will not result in a violation of the 1933 Act or applicable
state securities laws.
(ii) The undersigned requests that the stock certificates for the Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the terms of the Warrant in the name of the Holder (or such
other person(s) indicated below) and delivered to the undersigned (or
designee(s)) at the address or addresses set forth below.
Dated:_______, 199_.
HOLDER:_________________________
By:_____________________________
Name:___________________________
Title:__________________________
Address:
________________________________
________________________________
________________________________
Number of Warrant Shares
Being Purchased:________________
8
<PAGE>
EXHIBIT 4.6
EXHIBIT B (WARRANT #4)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES
LAWS (COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE LAWS.
INTERCELL CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Warrant No.4 Number of Shares: 66,667
Date of Issuance: December 3, 1997
Intercell Corporation, a Colorado corporation (the "Company"), hereby
certifies that, for value received, FT Trading, and permitted assigns, the
registered holder hereof ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company upon surrender of this Warrant, at any time
after the date hereof, but not after 5:00 p.m. Denver, Colorado time on the
Expiration Date (as defined herein) Sixty-Six Thousand Six Hundred Sixty-Seven
(66,667) fully paid and nonassessable shares of Common Stock (as defined herein)
of the Company (each a "Warrant Share" and collectively the "Warrant Shares") at
a purchase price of U.S. $.17 per share (the "Exercise Price") in lawful money
of the United States. The number of Warrant Shares purchasable hereunder and the
Exercise Price are subject to adjustment as provided in Section 9 below.
Section 1.
(a) Definitions. The following words and terms used in this Warrant shall
have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
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<PAGE>
"Expiration Date" means the date which is three (3) years from the date of
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of Denver or the State
of Colorado (a "Holiday"), the next preceding date that is not a Holiday.
"Market Price" means the closing bid price on the day prior to the date on
which the Exercise Form is delivered to the Company, as quoted on the National
Association of Securities Dealers' OTC Bulletin Board Market.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement between the holder hereof (or its predecessor in interest) and the
Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).
"Transfer" shall include any disposition of this Warrant or any Warrant
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or
applicable state securities laws.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $.17 per share.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to the
Company shall be deemed to include the Company's successors; and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
(ii) When used in this Warrant, unless the otherwise specified in a
particular instance, the words "herein," "hereof," and "hereunder," and words of
similar import, shall refer to this Warrant as a whole and not to any provision
of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00 p.m.
Denver, Colorado Time on the Expiration Date. The rights represented by this
Warrant may be exercised by the Holder, as a whole or from time to time in part
(except that this Warrant shall not be exercisable as to a fractional share) by
(i) delivery of a written notice, in the form of the exercise form attached as
Exhibit I hereto (an "Exercise Form"), of the Holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company
2
<PAGE>
of an amount equal to the Warrant Exercise Price multiplied by the number of
Warrant Shares as to which the Warrant is being exercised (plus any applicable
issue or transfer taxes) in immediately available funds (either by wire transfer
or a certified or cashier's check drawn on a United States bank), for the number
of Warrant Shares as to which this Warrant shall have been exercised, and (iii)
the surrender of this Warrant, properly endorsed, at the principal office of the
Company (or at such other agency or office of the Company as the Company may
designate by notice to the Holder).
In addition, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised by presentation and surrender of this
Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price, the Holder shall surrender this
Warrant for, and the Company shall issue in respect thereof, the number of
Warrant Shares determined by multiplying the number of Warrant Shares to which
the Holder would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
The Warrant Shares so purchased shall be deemed to be issued to the Holder
or Holder's designees, as the record owner of such Warrant Shares, as of the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such Warrant Shares as set
forth above.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Holder,
shall be delivered to, or as directed by, the Holder within three (3) business
days after such rights shall have been so exercised.
(b) Unless this Warrant shall have expired or shall have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except (i) it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
the Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised, and (ii) the holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
(c) In the case of any dispute with respect to an exercise, the Company
shall promptly issue such number of Warrant Shares as are not disputed in
accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless
Exercise, the Company shall submit the disputed calculations to an independent
accounting firm of national standing via facsimile within two (2) business days
of receipt of the Exercise Form.
3
<PAGE>
The accountant shall audit the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error. The Company shall then issue the appropriate
number of shares of Common Stock in accordance with this Section.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and non-assessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. Notwithstanding the foregoing, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale. If
such holder cannot make such representations because they would be
4
<PAGE>
factually incorrect, it shall be a condition to such holder's exercise of the
Warrant that the Company receive such other representations as the Company
considers reasonably necessary to assure the Company that the issuance of its
securities upon exercise of the Warrant shall not violate any United States or
state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
(a) The holder of this Warrant understands that (i) this Warrant and the
Warrant Shares have not been and are not being registered under the Securities
Act or any state securities laws (other than as described in the Securities
Purchase Agreement and the Registration Rights Agreement), and may not be
offered for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such registration;
(ii) any sale of such securities made in reliance on Rule 144 promulgated under
the Securities Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement) under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
Section 9. Adjustments.
(a) Reclassification and Reorganization. In case of any reclassification,
capital reorganization or other change of outstanding shares of the Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by exercising this Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 9. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations or mergers. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company acting in
good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall effect a
stock dividend, a stock split, a stock combination, or a reverse stock split of
the Common Stock, the number of Warrant Shares purchasable hereunder and the
Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting
5
<PAGE>
in good faith. The number of shares, as so adjusted, shall be rounded down to
the nearest whole number and the Warrant Exercise Price shall be rounded to the
nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed. In the event the holder hereof asserts such loss, theft or
destruction of this Warrant, the Company may require such holder to post a bond
issued by a surety reasonably satisfactory to the Company with respect to the
issuance of such new Warrant.
Section 11. Notice. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to Holder, to it at the address set forth below Holder's signature on the
signature page of the Securities Purchase Agreement (Holder is defined therein
as the "Buyer"). Each party shall provide notice to the other party of any
change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Colorado. Headings are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof. This Warrant
shall be binding upon the Company and its successors and assigns and shall inure
to the benefit of the Holder and its successors and assigns. The Holder may not
assign this Warrant except in accordance with applicable federal and state
securities laws. The Holder shall immediately notify the Company with respect to
any permitted assignment of this Warrant.
Section 13. Date. The date of this Warrant is December 3, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
[SIGNATURE PAGE FOLLOWS]
6
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[SIGNATURE PAGE TO WARRANT # 4 DATED DECEMBER 3, 1997]
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
--------------------------------------
Paul H. Metzinger, President & CEO
7
<PAGE>
EXHIBIT I TO WARRANT
EXERCISE FORM TO BE EXECUTED BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
INTERCELL CORPORATION
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by the Warrant attached hereto as specified below
according to the conditions thereof and herewith makes payment of U.S.
$______________________ (unless effected by a Cashless Exercise in accordance
with the terms of the Warrant), the aggregate Warrant Exercise Price of such
Warrant Shares in full pursuant to the terms and conditions of the Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained upon exercise of the Warrant, except under
circumstances that will not result in a violation of the 1933 Act or applicable
state securities laws.
(ii) The undersigned requests that the stock certificates for the Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the terms of the Warrant in the name of the Holder (or such
other person(s) indicated below) and delivered to the undersigned (or
designee(s)) at the address or addresses set forth below.
Dated:______, 199_.
HOLDER:_____________________________
By:_________________________________
Name:_______________________________
Title:______________________________
Address:
____________________________________
____________________________________
____________________________________
Number of Warrant Shares
Being Purchased:__________________
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<PAGE>
EXHIBIT 4.7
EXHIBIT C (WARRANT #5)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
INTERCELL CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Warrant No.5 Number of Shares: 66,667
Date of Issuance: December 3, 1997
Intercell Corporation, a Colorado corporation (the "Company"), hereby
certifies that, for value received, FT Trading, and permitted assigns, the
registered holder hereof ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company upon surrender of this Warrant, at any time
after the date hereof, but not after 5:00 p.m. Denver, Colorado time on the
Expiration Date (as defined herein) Sixty-Six Thousand Six Hundred Sixty-Seven
(66,667) fully paid and nonassessable shares of Common Stock (as defined herein)
of the Company (each a "Warrant Share" and collectively the "Warrant Shares") at
a purchase price of U.S. $.50 per share (the "Exercise Price") in lawful money
of the United States. The number of Warrant Shares purchasable hereunder and the
Exercise Price are subject to adjustment as provided in Section 9 below.
Section 1.
(a) Definitions. The following words and terms used in this Warrant shall
have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
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"Expiration Date" means the date which is three (3) years from the date of
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of Denver or the State
of Colorado (a "Holiday"), the next preceding date that is not a Holiday.
"Market Price" means the closing bid price on the day prior to the date on
which the Exercise Form is delivered to the Company, as quoted on the National
Association of Securities Dealers' OTC Bulletin Board Market.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement between the holder hereof (or its predecessor in interest) and the
Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).
"Transfer" shall include any disposition of this Warrant or any Warrant
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or
applicable state securities laws.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $.50 per share.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to
the Company shall be deemed to include the Company's successors; and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
(ii) When used in this Warrant, unless the otherwise specified in a
particular instance, the words "herein," "hereof," and "hereunder," and words of
similar import, shall refer to this Warrant as a whole and not to any provision
of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00 p.m.
Denver, Colorado Time on the Expiration Date. The rights represented by this
Warrant may be exercised by the Holder, as a whole or from time to time in part
(except that this Warrant shall not be exercisable as to a fractional share) by
(i) delivery of a written notice, in the form of the exercise form attached as
Exhibit I hereto (an "Exercise Form"), of the Holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company
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of an amount equal to the Warrant Exercise Price multiplied by the number of
Warrant Shares as to which the Warrant is being exercised (plus any applicable
issue or transfer taxes) in immediately available funds (either by wire transfer
or a certified or cashier's check drawn on a United States bank), for the number
of Warrant Shares as to which this Warrant shall have been exercised, and (iii)
the surrender of this Warrant, properly endorsed, at the principal office of the
Company (or at such other agency or office of the Company as the Company may
designate by notice to the Holder).
In addition, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised by presentation and surrender of this
Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price, the Holder shall surrender this
Warrant for, and the Company shall issue in respect thereof, the number of
Warrant Shares determined by multiplying the number of Warrant Shares to which
the Holder would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
The Warrant Shares so purchased shall be deemed to be issued to the Holder
or Holder's designees, as the record owner of such Warrant Shares, as of the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such Warrant Shares as set
forth above.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Holder,
shall be delivered to, or as directed by, the Holder within three (3) business
days after such rights shall have been so exercised.
(b) Unless this Warrant shall have expired or shall have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except (i) it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
the Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised, and (ii) the holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
(c) In the case of any dispute with respect to an exercise, the Company
shall promptly issue such number of Warrant Shares as are not disputed in
accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless Exercise, the Company
shall submit the disputed calculations to an independent accounting firm of
national standing via facsimile within two (2) business days of receipt of the
Exercise Form.
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The accountant shall audit the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error. The Company shall then issue the appropriate
number of shares of Common Stock in accordance with this Section.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and non-assessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. Notwithstanding the foregoing, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale. If
such holder cannot make such representations because they would be
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<PAGE>
factually incorrect, it shall be a condition to such holder's exercise of the
Warrant that the Company receive such other representations as the Company
considers reasonably necessary to assure the Company that the issuance of its
securities upon exercise of the Warrant shall not violate any United States or
state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
(a) The holder of this Warrant understands that (i) this Warrant and the
Warrant Shares have not been and are not being registered under the Securities
Act or any state securities laws (other than as described in the Securities
Purchase Agreement and the Registration Rights Agreement), and may not be
offered for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such registration;
(ii) any sale of such securities made in reliance on Rule 144 promulgated under
the Securities Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement) under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
Section 9. Adjustments.
(a) Reclassification and Reorganization. In case of any reclassification,
capital reorganization or other change of outstanding shares of the Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by exercising this Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 9. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations or mergers. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company acting in
good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall effect a
stock dividend, a stock split, a stock combination, or a reverse stock split of
the Common Stock, the number of Warrant Shares purchasable hereunder and the
Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting
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in good faith. The number of shares, as so adjusted, shall be rounded down to
the nearest whole number and the Warrant Exercise Price shall be rounded to the
nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed. In the event the holder hereof asserts such loss, theft or
destruction of this Warrant, the Company may require such holder to post a bond
issued by a surety reasonably satisfactory to the Company with respect to the
issuance of such new Warrant.
Section 11. Notice. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to Holder, to it at the address set forth below Holder's signature on the
signature page of the Securities Purchase Agreement (Holder is defined therein
as the "Buyer"). Each party shall provide notice to the other party of any
change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the laws
of the State of Colorado. Headings are for convenience only and shall not affect
the meaning or construction of any of the provisions hereof. This Warrant shall
be binding upon the Company and its successors and assigns and shall inure to
the benefit of the Holder and its successors and assigns. The Holder may not
assign this Warrant except in accordance with applicable federal and state
securities laws. The Holder shall immediately notify the Company with respect to
any permitted assignment of this Warrant.
Section 13. Date. The date of this Warrant is December 3, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO WARRANT # 5 DATED DECEMBER 3, 1997]
INTERCELL CORPORATION
By: /s/ Paul H. Metzinger
------------------------------------------
Paul H. Metzinger, President & CEO
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EXHIBIT I TO WARRANT
EXERCISE FORM TO BE EXECUTED BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
INTERCELL CORPORATION
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by the Warrant attached hereto as specified below
according to the conditions thereof and herewith makes payment of U.S.
$______________________ (unless effected by a Cashless Exercise in accordance
with the terms of the Warrant), the aggregate Warrant Exercise Price of such
Warrant Shares in full pursuant to the terms and conditions of the Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained upon exercise of the Warrant, except under
circumstances that will not result in a violation of the 1933 Act or applicable
state securities laws.
(ii) The undersigned requests that the stock certificates for the Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the terms of the Warrant in the name of the Holder (or such
other person(s) indicated below) and delivered to the undersigned (or
designee(s)) at the address or addresses set forth below.
Dated:_____, 199_.
HOLDER:____________________________
By:________________________________
Name:______________________________
Title:_____________________________
Address:
___________________________________
___________________________________
___________________________________
Number of Warrant Shares
Being Purchased:_______________
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EXHIBIT 4.8
EXHIBIT D (WARRANT #6)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
INTERCELL CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Warrant No.6 Number of Shares: 66,667
Date of Issuance: December 3, 1997
Intercell Corporation, a Colorado corporation (the "Company"), hereby
certifies that, for value received, FT Trading, and permitted assigns, the
registered holder hereof ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company upon surrender of this Warrant, at any time
after the date hereof, but not after 5:00 p.m. Denver, Colorado time on the
Expiration Date (as defined herein) Sixty-Six Thousand Six Hundred Sixty-Seven
(66,667) fully paid and nonassessable shares of Common Stock (as defined herein)
of the Company (each a "Warrant Share" and collectively the "Warrant Shares") at
a purchase price of U.S. $1.00 per share (the "Exercise Price") in lawful money
of the United States. The number of Warrant Shares purchasable hereunder and the
Exercise Price are subject to adjustment as provided in Section 9 below.
Section 1.
(a) Definitions. The following words and terms used in this Warrant shall
have the following meanings:
"Common Stock" means (a) the Company's common stock and (b) any capital
stock into which such Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the Company which
are convertible into or exchangeable for, directly or indirectly, shares of
Common Stock.
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"Expiration Date" means the date which is three (3) years from the date of
this Warrant or, if such date falls on a Saturday, Sunday or other day on which
banks are required or authorized to be closed in the City of Denver or the State
of Colorado (a "Holiday"), the next preceding date that is not a Holiday.
"Market Price" means the closing bid price on the day prior to the date on
which the Exercise Form is delivered to the Company, as quoted on the National
Association of Securities Dealers' OTC Bulletin Board Market.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement between the holder hereof (or its predecessor in interest) and the
Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).
"Transfer" shall include any disposition of this Warrant or any Warrant
Shares, or of any interest in either thereof which would constitute a sale
thereof within the meaning of the Securities Act of 1933, as amended, or
applicable state securities laws.
"Warrant" shall mean this Warrant and all Warrants issued in exchange,
transfer or replacement of any thereof.
"Warrant Exercise Price" shall be U.S. $1.00 per share.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to
the Company shall be deemed to include the Company's successors; and (B) to any
applicable law defined or referred to herein, shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.
(ii) When used in this Warrant, unless the otherwise specified in a
particular instance, the words "herein," "hereof," and "hereunder," and words of
similar import, shall refer to this Warrant as a whole and not to any provision
of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the context so requires the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder, as a whole or in part, at any time prior to 5:00 p.m.
Denver, Colorado Time on the Expiration Date. The rights represented by this
Warrant may be exercised by the Holder, as a whole or from time to time in part
(except that this Warrant shall not be exercisable as to a fractional share) by
(i) delivery of a written notice, in the form of the exercise form attached as
Exhibit I hereto (an "Exercise Form"), of the Holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company
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of an amount equal to the Warrant Exercise Price multiplied by the number of
Warrant Shares as to which the Warrant is being exercised (plus any applicable
issue or transfer taxes) in immediately available funds (either by wire transfer
or a certified or cashier's check drawn on a United States bank), for the number
of Warrant Shares as to which this Warrant shall have been exercised, and (iii)
the surrender of this Warrant, properly endorsed, at the principal office of the
Company (or at such other agency or office of the Company as the Company may
designate by notice to the Holder).
In addition, and notwithstanding anything to the contrary contained in this
Warrant, this Warrant may be exercised by presentation and surrender of this
Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance
with the terms hereof (a "Cashless Exercise"). In the event of a Cashless
Exercise, in lieu of paying the Exercise Price, the Holder shall surrender this
Warrant for, and the Company shall issue in respect thereof, the number of
Warrant Shares determined by multiplying the number of Warrant Shares to which
the Holder would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator of which shall be the
then current Market Price per share of Common Stock.
The Warrant Shares so purchased shall be deemed to be issued to the Holder
or Holder's designees, as the record owner of such Warrant Shares, as of the
date on which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such Warrant Shares as set
forth above.
In the event of any exercise of the rights represented by this Warrant in
compliance with this Section 2(a), a certificate or certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Holder,
shall be delivered to, or as directed by, the Holder within three (3) business
days after such rights shall have been so exercised.
(b) Unless this Warrant shall have expired or shall have been fully
exercised, the Company shall issue a new Warrant identical in all respects to
the Warrant exercised except (i) it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
the Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant is exercised, and (ii) the holder thereof shall be deemed to have
become the holder of record of such Warrant Shares immediately prior to the
close of business on the date on which the Warrant is surrendered and payment of
the amount due in respect of such exercise and any applicable taxes is made,
irrespective of the date of delivery of such share certificate, except that, if
the date of such surrender and payment is a date when the stock transfer books
of the Company are properly closed, such person shall be deemed to have become
the holder of such Warrant Shares at the opening of business on the next
succeeding date on which the stock transfer books are open.
(c) In the case of any dispute with respect to an exercise, the Company
shall promptly issue such number of Warrant Shares as are not disputed in
accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless Exercise, the Company
shall submit the disputed calculations to an independent accounting firm of
national standing via facsimile within two (2) business days of receipt of the
Exercise Form.
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The accountant shall audit the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it
receives the disputed calculations. The accountant's calculation shall be deemed
conclusive absent manifest error. The Company shall then issue the appropriate
number of shares of Common Stock in accordance with this Section.
Section 3. Covenants as to Common Stock. The Company covenants and agrees
that all Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of Common Stock to provide for the exercise of the rights then
represented by this Warrant and that the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price.
Section 4. Taxes. The Company shall not be required to pay any tax or
taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or upon
any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. No holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. Notwithstanding the foregoing, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. No Limitation on Corporate Action. No provisions of this
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Certificate of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer all or any part of its property or assets, or the exercise of any other
of its corporate rights and powers.
Section 7. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment and not with a view to, or for sale in
connection with, any distribution hereof or of any of the shares of Common Stock
or other securities issuable upon the exercise thereof, and not with any present
intention of distributing any of the same. Upon exercise of this Warrant, the
holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale. If
such holder cannot make such representations because they would be
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<PAGE>
factually incorrect, it shall be a condition to such holder's exercise of the
Warrant that the Company receive such other representations as the Company
considers reasonably necessary to assure the Company that the issuance of its
securities upon exercise of the Warrant shall not violate any United States or
state securities laws.
Section 8. Transfer; Opinions of Counsel; Restrictive Legends.
(a) The holder of this Warrant understands that (i) this Warrant and the
Warrant Shares have not been and are not being registered under the Securities
Act or any state securities laws (other than as described in the Securities
Purchase Agreement and the Registration Rights Agreement), and may not be
offered for sale, sold, assigned or transferred unless (a) subsequently
registered thereunder, or (b) pursuant to an exemption from such registration;
(ii) any sale of such securities made in reliance on Rule 144 promulgated under
the Securities Act may be made only in accordance with the terms of said Rule
and further, if said Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than as described in the
Securities Purchase Agreement and the Registration Rights Agreement) under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
Section 9. Adjustments.
(a) Reclassification and Reorganization. In case of any reclassification,
capital reorganization or other change of outstanding shares of the Common
Stock, or in case of any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock),
the Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by exercising this Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation or merger by a holder of the number of shares of Common Stock that
could have been purchased upon exercise of the Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 9. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations or mergers. If the
consideration received by the holders of Common Stock is other than cash, the
value shall be as determined by the Board of Directors of the Company acting in
good faith.
(b) Dividends and Stock Splits. If and whenever the Company shall effect
a stock dividend, a stock split, a stock combination, or a reverse stock split
of the Common Stock, the number of Warrant Shares purchasable hereunder and the
Warrant Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting
5
<PAGE>
in good faith. The number of shares, as so adjusted, shall be rounded down to
the nearest whole number and the Warrant Exercise Price shall be rounded to the
nearest cent.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen or destroyed, the Company shall, on receipt of an
indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or
destroyed. In the event the holder hereof asserts such loss, theft or
destruction of this Warrant, the Company may require such holder to post a bond
issued by a surety reasonably satisfactory to the Company with respect to the
issuance of such new Warrant.
Section 11. Notice. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by mail or delivered personally or by
courier and shall be effective five days after being placed in the mail, if
mailed, certified or registered, return receipt requested, or upon receipt, if
delivered personally or by courier or by facsimile, in each case properly
addressed to the party to receive the same. The addresses for such
communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to Holder, to it at the address set forth below Holder's signature on the
signature page of the Securities Purchase Agreement (Holder is defined therein
as the "Buyer"). Each party shall provide notice to the other party of any
change in address.
Section 12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Colorado. Headings are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof. This Warrant
shall be binding upon the Company and its successors and assigns and shall inure
to the benefit of the Holder and its successors and assigns. The Holder may not
assign this Warrant except in accordance with applicable federal and state
securities laws. The Holder shall immediately notify the Company with respect to
any permitted assignment of this Warrant.
Section 13. Date. The date of this Warrant is December 3, 1997. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
[SIGNATURE PAGE FOLLOWS]
6
<PAGE>
[SIGNATURE PAGE TO WARRANT # 6 DATED DECEMBER 3, 1997]
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
------------------------------------------
Paul H. Metzinger, President & CEO
7
<PAGE>
EXHIBIT I TO WARRANT
EXERCISE FORM TO BE EXECUTED BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
INTERCELL CORPORATION
The undersigned hereby exercises the right to purchase the number of
Warrant Shares covered by the Warrant attached hereto as specified below
according to the conditions thereof and herewith makes payment of U.S.
$______________________ (unless effected by a Cashless Exercise in accordance
with the terms of the Warrant), the aggregate Warrant Exercise Price of such
Warrant Shares in full pursuant to the terms and conditions of the Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained upon exercise of the Warrant, except under
circumstances that will not result in a violation of the 1933 Act or applicable
state securities laws.
(ii) The undersigned requests that the stock certificates for the Warrant
Shares be issued, and a Warrant representing any unexercised portion hereof be
issued, pursuant to the terms of the Warrant in the name of the Holder (or such
other person(s) indicated below) and delivered to the undersigned (or
designee(s)) at the address or addresses set forth below.
Dated:_______, 199_.
HOLDER:____________________________
By:________________________________
Name:______________________________
Title:_____________________________
Address:
___________________________________
___________________________________
___________________________________
Number of Warrant Shares
Being Purchased:_____________
8
<PAGE>
EXHIBIT 4.9
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
200,000 shares
- -------
WARRANT TO PURCHASE COMMON STOCK
OF
INTERCELL CORPORATION
THIS CERTIFIES that The Hamilton Fund, L.L.C. or any subsequent ("Holder")
hereof, has the right to purchase from INTERCELL CORPORATION, a Colorado
corporation (the "Company"), up to 200,000 fully paid and nonassessable shares
-------
of the Company's Common Stock, no par value ("Common Stock"), subject to
adjustment as provided herein, at a price equal to the Exercise Price as defined
in Section 3 below, at any time beginning on the Date of Issuance and ending at
5:00 p.m., New York, New York time, on December 3, 2002.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
----------------
This Warrant shall be deemed to be issued on December 3, 1997 ("Date of
Issuance").
2. Exercise.
--------
(a) Manner of Exercise. This Warrant may not be exercised prior to June 1,
1998. Thereafter, this Warrant may be exercised as to all or any lesser number
of full shares of Common Stock covered hereby upon surrender of this Warrant,
with the Exercise Form attached hereto duly executed, together with the full
Exercise Price (as defined in Section 3) for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, 370 17th Street,
Suite 3290, Denver, Colorado 80202; Attention: President, Telephone No. (303)
592-1010, Telecopy No. (303) 592-1054, or at such other office or agency as the
Company may designate in writing, by overnight mail, with an advance copy of the
Exercise Form attached as Exhibit A ("Exercise Form") by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
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(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant and Exercise Form
are received by the Company as soon as practicable thereafter. Alternatively,
the Date of Exercise shall be defined as the date the original Exercise Form is
received by the Company, if Holder has not sent advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to have become the
Holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. Payment of Warrant Exercise Price.
---------------------------------
The Exercise Price shall equal the closing bid price on December 3, 1997
($0.15)("Exercise Price").
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) Cash Exercise: cash, certified check or cashiers check or wire
transfer; or
(ii) Cashless Exercise: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes
of this Section 3(ii), the "Market Price" shall be defined as the average
closing price of the Common Stock for the five (5) trading days prior to
the Date of Exercise of this Warrant (the "Average Closing Price"), as
reported by the OTC Bulletin Board, or if the Common Stock is not traded on
the OTC Bulletin Board, the Average Closing Price in the over-the-counter
market; provided, however, that if the Common Stock is listed on a stock
exchange, the Market Price shall be the Average Closing Price on such
exchange. If the Common Stock is/was not traded during the five (5) trading
days prior to the Date of
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<PAGE>
Exercise, then the closing price for the last publicly traded day shall be
deemed to be the closing price for any and all (if applicable) days during
such five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
Notwithstanding anything to the contrary contained herein, this Warrant may not
be exercised in a cashless exercise transaction if, on the Date of Exercise, the
shares of Common Stock to be issued upon exercise of this Warrant would upon
such (x) be then registered pursuant to an effective registration statement
filed pursuant to that certain Registration Rights Agreement dated on or about
December 9, 1996 by and among the Company and certain investors; or (y)
otherwise be registered under the Securities Act of 1933, as amended.
4. Transfer.
--------
(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.
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
3
<PAGE>
increased. The Company shall give the Warrant Holder the same notice it provides
to holders of Common Stock of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute to Holders
of Common Stock cash, evidences of indebtedness or other securities or assets
(other than cash dividends or distributions payable out of earned surplus or net
profits for the current or preceding year) then, in any such case, the Holder of
this Warrant shall be entitled to receive, upon exercise of this Warrant, with
respect to each share of Common Stock issuable upon such Exercise, the amount of
cash or evidences of indebtedness or other securities or assets which such
Holder would have been entitled to receive with respect to each such share of
Common Stock as a result of the happening of such event had this Warrant been
Exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board in its discretion) and the denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be 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; provided, however, that Company may not affect any Corporate Change
unless it first shall have given thirty (30) business days notice to the Holder
hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and thereafter shall mean said price as adjusted from time to
time in accordance with the provisions of said subsection. No such adjustment
under this Section 5 shall be made unless such adjustment would change the
Exercise Price at the time by $.01 or more; provided, however, that all
adjustments not so made shall be deferred and made when the aggregate thereof
would change the Exercise Price at the time by $.01 or more. No adjustment made
pursuant to any provision of this Section 5 shall have the effect of increasing
the Exercise Price. The number of shares of Common Stock subject hereto shall
increase proportionately with each decrease in the Exercise Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
the Holder of this Warrant shall, upon Exercise of this Warrant, become entitled
to receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject
4
<PAGE>
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.
7. Reservation of Shares.
---------------------
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise and
payment of the Exercise Price of this Warrant. The Company covenants and agrees
that upon Exercise of this Warrant, all shares of Common Stock issuable upon
such Exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. Restrictions on Transfer.
------------------------
(a) Registration or Exemption Required. This Warrant has been issued in a
transaction exempt from the registration requirements of the Act by virtue of
Regulation D. The Warrant and the Common Stock issuable upon exercise of the
Warrant may not be sold except pursuant to an effective registration statement
or an exemption to the registration requirements of the Act and applicable state
laws.
(b) Piggyback Registration Rights. During the five (5) year period
commencing December 3, 1997, if the Company proposes to file a registration
statement for a public offering of any of its securities under the Act, it will
give written notice, at least forty-five (45) days prior to the filing of each
such registration statement to the Holders of the Warrant and/or the underlying
securities of its intention to do so. Upon written request from any of the
Holders notifying the Company within twenty (20) days after the giving of such
notice of each such registration statement of their desire to sell the
securities issued or of such notice of each such registration statement of their
desire to sell the securities issued or issuable upon the exercise of this
Warrant, the Company shall afford such Holders of the Warrant and/or underlying
securities registered or qualified under such registration statement. This is
not applicable to a registration statement filed with the Commission of Forms S-
4 or S-8 or any other inappropriate forms, nor is it applicable to the Warrant
once they have expired. The Holders who elect such piggyback registration rights
agree to withdraw such of the registrable securities as shall reasonably be
required by the underwriter in connection with any such offering. Neither the
delivery of such notice by the Company nor the election or request by such
Holders shall in any way obligate the Company to file such registration
statement under this Section 8(b), and the Company may, at any time prior to the
effective date thereof, determine not to offer the securities to which the
registration statement relates, without liability to such Holders. In addition,
each Holder shall, upon the request of the managing underwriter, if any, of such
public offering, agree in writing not to sell, transfer, assign, hypothecate, or
otherwise dispose of the securities issued or issuable
5
<PAGE>
upon the exercise of this Option for a period of 24 months in
such managing underwriter' s discretion.
(c) Demand Registration Rights. During the five (5) year period commencing
December 3, 1997, upon the written request of the Holders of those securities
representing at least a majority of the sum of the Shares issuable upon the
exercise of this Warrant, the Company agrees to prepare and file with the
Commission, no more than once, a post-Effective Amendment, or a registration
statement under the Act, registering or qualifying, as the case may be, this
Option and/or the securities underlying this Option. The Company agrees to use
its best efforts to cause the above filing to become effective. These Demand
Registration Rights are not applicable to the Warrants once they have expired.
(d) Assignment. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
9. Benefits of this Warrant.
------------------------
Nothing in this Warrant shall be construed to confer upon any person other
than the Company and the Holder of this Warrant any legal or equitable right,
remedy or claim under this Warrant and this Warrant shall be for the sole and
exclusive benefit of the Company and the Holder of this Warrant.
10. Applicable Law.
--------------
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Colorado, without giving
effect to conflict of law provisions thereof.
11. Loss of Warrant.
---------------
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
12. Notice or Demands.
-----------------
Notices or demands pursuant to this Warrant to be given or made by the
Holder of this Warrant to or on the Company shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Company, to Attention: President, Intercell Corporation, 370 17th Street, Suite
3290, Denver, Colorado 80202, Attention: President, Telephone No. (303 )592-
1010, Telecopy No. (303) 592-1054. Notices or demands pursuant to this
6
<PAGE>
Warrant to be given or made by the Company to or on the Holder of this Warrant
shall be sufficiently given or made if sent by certified or registered mail,
return receipt requested, postage prepaid, and addressed, to the address of the
Holder set forth in the Company's records, until another address is designated
in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 3rd
day of December 1997.
INTERCELL CORPORATION
By: /s/ Paul H. Metzinger
-------------------------------------
Paul H. Metzinger, President and CEO
7
<PAGE>
EXHIBIT A
EXERCISE FORM
TO: INTERCELL CORPORATION
The undersigned hereby irrevocably exercises the right to purchase
__________ of the shares of Common Stock of INTERCELL CORPORATION, a Colorado
corporation (the "Company"), evidenced by the attached Warrant, and herewith
makes payment of the Exercise Price with respect to such shares in full, all in
accordance with the conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of Common Stock obtained on exercise of the Warrant, except in accordance
with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, and a warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant in the name of the Registered
Holder and delivered to the undersigned at the address set forth below:
Dated:
________________________________________________________________________________
Signature of Registered Holder
________________________________________________________________________________
Registered Holder (Print)
________________________________________________________________________________
Non-U.S. Address
8
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase __________ shares of the Common Stock of INTERCELL CORPORATION
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint ____________________ attorney to transfer the said Warrant on the books
of the Company, with full power of substitution in the premises.
Dated: ________________________________________
Signature
Fill in for new Registration of Warrant:
_______________________________________
Name
_______________________________________
Address
_______________________________________
Please print name and address of assignee
(including zip code number)
________________________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
________________________________________________________________________________
9
<PAGE>
EXHIBIT 4.10
EXHIBIT E (THE "A-2 DEBENTURE")
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
DATE: DECEMBER 31, 1997
DEBENTURE #1 U.S. $750,000.00
--
INTERCELL CORPORATION
SERIES A-2 NINE PERCENT (9%) REDEEMABLE
CONVERTIBLE DEBENTURE DUE APRIL 1, 1999
THIS DEBENTURE is one of a duly authorized issue of debentures (a
"Debenture" or the "Debentures") of Intercell Corporation, a corporation duly
organized and validly existing under the laws of the State of Colorado, U.S.A.
(the "Company") designated as its Series A-2 Nine Percent (9%) Redeemable
Convertible Debenture Due April 1, 1999, in an aggregate principal face value
for all Debentures of this Series A-2 of Seven Hundred Fifty Thousand and no/100
United States Dollars (US $750,000.00).
FOR VALUE RECEIVED, the Company promises to pay to The Augustine Fund,
L.P., the registered holder hereof and its successors and assigns (the
"Holder"), the principal sum of Seven Hundred Fifty Thousand and no/100 United
States Dollars ($750,000.00) on April 1, 1999 (the "Maturity Date"), and to pay
interest on the principal sum outstanding, at the rate of nine percent (9%) per
annum due and payable in quarterly installments in arrears, on March 1, June 1,
September 1, and December 1 of each year during the term of this Debenture, with
the first such payment to be made on June 1, 1998. Accrual of interest on the
outstanding principal amount, payable in cash or common stock of the Company at
the Company's option, shall commence on the date hereof and shall continue until
payment in full of the outstanding principal amount has been made or duly
provided for. The interest so payable will be paid to the person in whose name
this Debenture (or one or more predecessor Debentures) is registered on the
records of the Company regarding registration and transfers of the Debenture
(the "Debenture Register"); provided, however, that the Company's obligation to
a transferee of this Debenture arises only if
1
<PAGE>
such transfer, sale or other disposition is made in accordance with the terms
and conditions of that Securities Purchase Agreement of even date herewith
between the Company and The Augustine Fund, L.P. (the "Securities Purchase
Agreement").
The principal of, and interest on, this Debenture are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Debenture Register of the Company as designated in writing by the Holder
hereof from time to time. The Company will pay the outstanding principal of and
any and all accrued and unpaid interest due upon this Debenture on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the record
Holder of this Debenture as of the fifth business day (as defined in the
Securities Purchase Agreement) prior to the Maturity Date according to the
payment instructions of the Holder, and addressed to the Holder at the last
address appearing on the Debenture Register. The forwarding of such funds shall
constitute a payment of outstanding principal and interest hereunder and shall
satisfy and discharge the liability for principal and interest on this Debenture
to the extent of the sum represented by such payment plus any amounts so
deducted or withheld. This Debenture may be prepaid by the Company in whole or
in part without penalty at any time up to and including the Maturity Date.
This Debenture is subject to the following additional provisions:
1. Debenture Exchangeable. The Debenture is exchangeable commencing
----------------------
thirty (30) days from the date hereof for an equal aggregate principal amount of
Debentures of different authorized denominations, as requested by the Holder
surrendering the same, but not of denominations of less than Fifty Thousand
United States Dollars (US $50,000.00) without the Company's written consent. No
service charge will be made for such registration or transfer or exchange.
2. Withholding. The Company shall be entitled to withhold from all
-----------
payments of principal or interest pursuant to this Debenture any amounts
required to be withheld under the applicable provisions of the United States
income tax or other applicable laws at the time of such payments.
3. Transfer/Exchange of Debenture; Registered Holder; Opinion of Counsel;
----------------------------------------------------------------------
Legend. This Debenture has been issued subject to investment representations of
- ------
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "1933 Act") and
applicable state securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not his Debenture be overdue, and neither the
Company nor any such agent shall be affected or bound by notice to the contrary.
The Holder understands and acknowledges by its acceptance hereof that (i)
except as provided in the Securities Purchase Agreement and in that Registration
Rights Agreement attached as Exhibit F to the Securities Purchase Agreement,
both such documents incorporated herein by reference (the "Registration Rights
Agreement"), this Debenture and the shares of common stock in the Company
issuable upon a conversion as herein provided ("Conversion
2
<PAGE>
Shares") thereof have not been and are not being registered under the 1933 Act
or any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered thereunder, or (b) the Holder
shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, substance and scope to the Company, to the effect that the
securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration; (ii) any sale of
such securities made in reliance on Rule 144 promulgated under the 1933 Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other regulation and/or exemption under the 1933 Act or the rules and
regulations of the United States Securities and Exchange Commission (the "SEC")
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws (other than pursuant to the terms of the Securities Purchase
Agreement and the Registration Rights Agreement) or to comply with the terms and
conditions of any exemption thereunder.
Any Conversion Shares issued upon conversion of this Debenture, and if
applicable, any common stock of the Company issued in payment of interest as
herein provided, shall, if and to the extent required by law, bear legends in
similar form to the legends set forth on the first page of this Debenture.
4. Conversion of Debenture into Common Stock; Redemption by the Company.
--------------------------------------------------------------------
(a) The Holder of this Debenture is entitled, at its option, at any time
commencing the sixth business day following the Maturity Date, to convert the
original principal face amount of this Debenture into shares of common stock in
the Company, no par value per share (defined hereinafter as the "Common Stock"),
at a conversion price (the "Conversion Price") for each share of Common Stock
equal to eighty-five percent (85%) of the Market Price (as defined below) of the
Common Stock. For the purposes of this Section 4, the Market Price shall be the
---
average closing bid price of the Common Stock for the five (5) business days
- ----------------------------------------------------------------------------
immediately preceding the Conversion Date (as hereinafter defined), as reported
- -----------------------------------------
on the National Association of Securities Dealers "Over The Counter" Bulletin
Board Quotation System ("OTC: Bulletin Board"). Such conversion shall be
achieved by submitting to the Company the fully completed form of conversion
notice attached hereto as Exhibit I (a "Notice of Conversion"), executed by the
Holder of this Debenture evidencing such Holder's intention to convert this
Debenture or the specified portion (as herein provided) hereof. A Notice of
Conversion may be submitted via facsimile to the Company at the telecopier
number for the Company provided in the Securities Purchase Agreement (or at such
other number as requested in writing by the Company), and if so submitted the
original Notice of Conversion shall be delivered to the Company within one (1)
business day. The Company and the Holder shall each keep records with respect to
the portion of this Debenture then being converted and all portions previously
converted; upon receipt by the Holder of the requisite Conversion Shares, the
outstanding principal amount of the Debenture shall be reduced by the amount
specified in the Notice of Conversion resulting in such Conversion Shares. The
Company may from time to time, but is not required to, instruct the Holder and
the Holder shall surrender this Debenture along with the Notice of Conversion
for the purposes of making a notation thereon as to the amount of principal
being converted, or of canceling this Debenture and issuing a new Debenture in
the same form with the principal
3
<PAGE>
amount of such Debenture reduced by the amount converted. No fractional shares
or scrip representing fractions of shares will be issued on conversion, but the
number of shares issuable shall be rounded to the nearest whole share. Accrued
interest on the converted portion of the Debenture shall be payable in cash or
Common Stock at the Company's option. The date on which a notice of conversion
(the "Conversion Date:) is given shall be deemed to be either the date on which
the Company receives from the Holder an original valid Notice of Conversion duly
executed, or, if earlier, the date set forth in such Notice of Conversion if
such Notice of Conversion is received by the Company within one (1) business day
thereafter.
In all cases, the Company shall deliver the Conversion Shares to the Holder
within three (3) business days after the Conversion Date with respect to such
Conversion Shares being delivered, and at the address specified in the Notice of
Conversion.
Other than a conversion made on the Maturity Date in accordance with this
paragraph, conversions of this Debenture must be effected in increments of Ten
Thousand U.S. Dollars ($10,000) of principal amount of this Debenture (or such
lesser outstanding principal amount of this Debenture).
(b) Notwithstanding anything herein to the contrary, at any time after the
fifth day following the Maturity Date, the Company shall have the right (but not
the obligation) to redeem all or a portion of this Debenture, provided the
Company is not then in violation of any of its obligations under this Debenture
or under the Securities Purchase Agreement or any addenda thereto, under the
following conditions. Within twenty-four (24) hours after delivery of any Notice
of Conversion (in this Section 4(b), a "Notice") to the Company by the Holder in
accordance with the terms of this Debenture, the Company shall give to the
Holder notice (a "Redemption Notice") that it intends to pay the Holder the Cash
Redemption Amount (as hereinafter defined) instead of delivering Conversion
Shares to such Holder; provided, however, that the Company may only exercise
this right with respect to all of the Common Stock which would have otherwise
been delivered with respect to the Notice. The "Cash Redemption Amount" shall be
equal to one hundred fifteen percent (115%) of the face amount of the portion of
the Debenture to have been converted pursuant to the Notice, and shall be paid
to the Holder according to the Holder's written instructions to the Company
within three (3) business days after delivery of the Redemption Notice with
respect to such Debenture or portion thereof to be redeemed. If the Company does
not redeem within the time limits herein specified and according to the terms of
this Section 4(b), then the Holder shall have the right to demand delivery of
the Conversion Shares which would have been delivered pursuant to the applicable
Notice, and shall have the right (but not the obligation) to adjust the
Conversion Price as if the Notice had been sent on the date of such demand. In
such event the Company shall deliver the requisite Conversion Shares within two
(2) business days after such demand has been made.
5. Obligations of the Company Herein are Unconditional. No provision of
---------------------------------------------------
this Debenture shall alter or impair the obligation of the Company, which
obligation is absolute and unconditional, to repay the principal amount of this
Debenture at the time, place, rate, and in the coin currency, hereinabove
stated. This Debenture and all other debentures now or hereafter issued in
replacement of this Debenture on the same or similar terms are direct
obligations of the Company. This Debenture ranks at least equally with all other
Debentures now or hereafter issued under the terms set forth herein. The
Conversion Price and number of shares of Common
4
<PAGE>
Stock issuable upon conversion shall be subject to adjustment from time to time
as provided in Section 6 below.
6. Adjustments.
-----------
(a) In the event the Company should at any time or from time to time, after
the date of this Debenture, fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock (equal to at least ten percent
(10%) or more of the Company's then issued and outstanding shares of Common
Stock) or other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly additional shares of Common Stock
(hereinafter referred to as "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend, distribution, split or subdivision if no record date
is fixed), the Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of this Debenture shall
be increased in proportion to such increase in the aggregate number of shares of
Common Stock outstanding and those issuable with respect to such Common Stock
Equivalents.
(b) If the number of shares of Common Stock outstanding at any time after
the date of this Debenture is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable upon conversion of this Debenture shall be decreased in
proportion to such decrease in outstanding shares.
7. Reservation of Shares. The Company shall at all times reserve and keep
---------------------
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of this Debenture, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the outstanding principal amount, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of this Debenture, in addition to such other remedies
as shall be available to Holder, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase the number of
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes, including without limitation, using its best
efforts to obtain the requisite stockholder approval necessary to increase the
number of authorized shares of the Company's Common Stock.
8. Debenture Holder Not Deemed a Stockholder. No Holder, as such, of this
-----------------------------------------
Debenture shall be entitled (prior to conversion of this Debenture into Common
Stock, and only then to the extent of such conversion) to vote or receive
dividends or be deemed the holder of shares of the Company for any purpose, nor
shall anything contained in this Debenture be construed to confer upon the
Holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the holder of
this Debenture of the Conversion Shares which he or she is
5
<PAGE>
then entitled to receive upon the due conversion of all or a portion of this
Debenture. Notwithstanding the foregoing, the Company will provide the Holder
with copies of the same notices and other information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the
stockholders.
9. No Limitation on Corporate Action. No provisions of this Debenture
---------------------------------
and no right or option granted or conferred hereunder shall in any way limit,
affect or abridge the exercise by the Company of any of its corporate rights or
powers to recapitalize, amend its Certificate of Incorporation, reorganize,
consolidate or merge with or into another corporation, or to transfer all or any
part of its property or assets, or the exercise of any other of its corporate
rights and powers.
10. Representations of Holder. Upon conversion of all or a portion of
-------------------------
this Debenture, the Holder shall confirm in writing, in a form reasonably
satisfactory to the Company, that the Conversion Shares so purchased are being
acquired solely for the Holder's own account and not as a nominee for any other
party, for investment, and not with a view toward distribution or resale and
that such Holder is an Accredited Investor (as defined in Rule 501(a) of
Regulation D promulgated under the 1933 Act). If such Holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such Holder's conversion of all or a portion of the Debenture that
the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon conversion of the Debenture shall not violate any United States or state
securities laws.
11. Waiver of Demand, Presentment, Etc. The Company hereby expressly
----------------------------------
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.
12. Attorney's Fees. The Company agrees to pay all costs and expenses,
---------------
including without limitation reasonable attorney's fees, which may be incurred
by the Holder in collecting any amount due under this Debenture or in enforcing
any of Holder's conversion rights as described herein.
13. Default. If one or more of the following described "Events of
-------
Default" shall occur:
(a) The Company shall continue in default in the payment of principal or
interest on this Debenture for a period of ten (10) days after a notice of
default is received by the Company with respect to any such payment; or
(b) Any of the representations or warranties made by the Company herein,
in the Securities Purchase Agreement, the Registration Rights Agreement, or in
any certificate or financial or other written statement heretofore or hereafter
furnished by or on behalf of the Company in connection with the execution and
delivery of this Debenture or the Securities Purchase Agreement or the
Registration Rights Agreement shall be false or misleading in any material
respect at the time made and the Holder shall have provided seven (7) days prior
written notice to the Company of the alleged misrepresentation or breach of
warranty; or
6
<PAGE>
(c) The Company shall fail to perform or observe, in any material respect,
any other covenant, term, provision, condition, agreement or obligation of the
Company under this Debenture or the Securities Purchase Agreement and such
failure shall continue uncured for a period of seven (7) days after notice from
the Holder of such failure; or
(d) The Company shall either: (i) become insolvent; (ii) admit in writing
its inability to pay its debts generally or as they become due; (iii) make an
assignment for the benefit of creditors or commence proceedings for its
dissolution; or (iv) apply for, or consent to the appointment of, a trustee,
liquidator, or receiver for its or for a substantial part of its property or
business; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or
for a substantial part of its property or business without the Company's consent
and such appointment is not discharged within sixty (60) days after such
appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the
instance of any governmental agency shall assume custody or control of the whole
or any substantial portion of the properties or assets of the Company and shall
not be dismissed within sixty (60) days thereafter; or
(g) Any money judgment, writ or debenture of attachment, or similar process
in excess of Three Hundred Thousand United States Dollars (US $300,000.00) in
the aggregate shall be entered or filed against the Company or any of its
properties or assets and shall remain unpaid, unvacated, unbonded or unstayed
for a period of fifteen (15) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or
(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty (60) days after such
institution or the Company shall by any action or answer approve of, consent to,
or acquiesce in any such proceedings or admit the material allegations of, or
default in answering a petition filed in, any such proceeding; or
(i) The Company shall have its Common Stock delisted from the OTC: Bulletin
Board stock exchange or suspended from trading thereon, and shall not have its
Common Stock relisted on the same or another national securities exchange, or
have such suspension lifted, as the case may be, within ten (10) business days;
or
(j) The Company shall have received a notice of default on the payment of
any debt(s) aggregating in excess of Three Hundred Thousand United States
Dollars (US $300,000.00) beyond any applicable grace period;
then, or at any time thereafter, and in any and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
in one instance shall not be deemed to be a waiver in another instance or for
any other prior or subsequent Event of Default) at the option of the Holder and
in the Holder's sole discretion, the Holder may immediately accelerate the
maturity hereof, whereupon all principal and interest hereunder shall be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Company, anything
herein or in any note or other instrument contained
7
<PAGE>
to the contrary notwithstanding, and the Holder may immediately, and upon the
expiration of any period of grace, enforce any and all of the Holder's rights
and remedies provided herein or any other rights or remedies afforded by law or
equity.
14. Delivery of Common Stock Upon Conversion. As set forth herein, the
----------------------------------------
Company shall use its best efforts to issue and deliver, within three (3)
business days after the Holder has fulfilled all conditions and submitted all
necessary documents duly executed and in proper form required for conversion
(the "Deadline"), to the Holder or any party receiving a Debenture by transfer
from the Holder (together, a "Holder"), at the address of the Holder on the
Debenture Register, a certificate or certificates for the number of Conversion
Shares to which the Holder shall be entitled (the "Certificates"). The Company
understands and agrees that a delay in the issuance of the Certificates beyond
the Deadline could result in economic loss and other damages to the Holder. As
compensation to the Holder for such loss, the Company agrees to pay liquidated
damages (and not as a penalty) to the Holder for issuance and delivery of the
Certificates after the Deadline, in accordance with the following schedule
(where "No. Business Days Late" is defined as the number of business days beyond
seven (7) business days from the Conversion Date with respect to a Notice of
Conversion and the receipt by the Company of all necessary documentation duly
executed and in proper form required for conversion, including the original
Notice of Conversion providing the principal amount of the Debenture to be
converted, all in accordance with the terms of this Debenture, the Securities
Purchase Agreement, the Registration Rights Agreement and the reasonable and
customary requirements of the transfer agent):
No. Business Days Late Liquidated Damages
---------------------- ------------------
(in US $)
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
11+ $5,000 + $1,000 for
each Business Day Late
beyond 11 days.
The Company shall pay the Holder any liquidated damages incurred as called
for under this Section 14 by certified or cashier's check upon the earlier of
(i) issuance of the Certificates to the Holder or (ii) each monthly anniversary
of the receipt by the Company of such Holder's Notice of Conversion. Nothing
herein shall limit the Holder's right to pursue actual damages for the Company's
failure to issue and deliver the Certificates to the Holder in accordance with
the terms of the Debenture or for breach by the Company of the Securities
Purchase Agreement or of the Registration Rights Agreement.
8
<PAGE>
15. Debenture a General Unsecured Obligation of the Company. This
-------------------------------------------------------
Debenture represents a general unsecured obligation of the Company. No recourse
shall be had for the payment of the principal of, or the interest on, this
Debenture, or for any claim based thereon, or otherwise in respect hereof,
against any incorporator, shareholder, officer, director, or agent of the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
16. Enforceability. In case any provision of this Debenture is held by a
--------------
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
17. Entire Agreement. This Debenture and Exhibit I attached hereto, the
----------------
Securities Purchase Agreement and the Exhibits attached thereto and the
Registration Rights Agreement and the Exhibits attached thereto (if any)
constitute the full and entire understanding between the Company and the Holder
with respect to the subject matter hereof and thereof. Neither this Debenture
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the Company and the Holder.
18. Governing Law. This Debenture shall be governed by and construed in
-------------
accordance with the laws of the state of Delaware without giving effect to
applicable principles of conflict of law.
19. Headings. Headings in this Debenture are for convenience only, and
--------
shall not be used in the construction of this Debenture.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized, all as of the date first
hereinabove written.
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
-------------------------------------------
Mr. Paul H. Metzinger, President & CEO
10
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To Be Executed by the Registered Holder in Order to Convert the Debenture)
The Undersigned hereby irrevocably elects to convert $____________________
of the Series A-2 Nine Percent (9%) Redeemable Convertible Debenture Due April
1, 1999, No. 1, into shares of Common Stock of Intercell Corporation (the
-----
"Company") according to the terms and conditions set forth in such Debenture,
as of the date written below. If securities are to be issued to a person other
than the Undersigned, the Undersigned agrees to pay all transfer taxes with
respect thereto.
The Undersigned represents that it, as of this date, is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D promulgated by
the SEC under the 1933 Act.
The Undersigned also represents that the Conversion Shares are being
acquired for the Holder's own account and not as a nominee for any other party,
for investment purposes and not with a view toward distribution or resale. The
Undersigned represents and warrants that all offers and sales by the Undersigned
of the Conversion Shares shall be made pursuant to registration of the same
under the 1933 Act, or pursuant to an exemption from registration under the 1933
Act. The Undersigned acknowledges that the Conversion Shares shall if (and only
if) required by law contain the legend contained on page 1 of the Debenture.
Conversion Date:*____________________
Applicable Conversion Price:__________________
Holder (Print True Legal Name):_________________________
________________________________________________________
(Signature of Duly Authorized Representative of Holder)
Address of Holder: ______________________________
______________________________
______________________________
* This original Notice of Conversion must be received by the Company by the
first business day following the Conversion Date.
11
<PAGE>
EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), is made as of
December 3, 1997, by and between Intercell Corporation, a corporation organized
under the laws of the State of Colorado, U.S.A., with headquarters located at
370 17th Street, Suite 3290, Denver, Colorado 80202 (the "Company"), and the
buyer set forth on the execution page hereof (the "Buyer").
RECITALS
A. The Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
provisions of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Buyer desires to purchase from the Company, and the Company
desires to sell to the Buyer, for the amounts and upon the terms and conditions
stated in this Agreement, in two (2) separate closings (each a "Closing") as
herein described, certain debentures, warrants and other securities of or owned
by the Company as listed in Sections B(i) and B(ii) immediately below.
(i) At the first Closing (the "First Closing"), (a) the Company's Series
A-1 Nine Percent (9%) Redeemable Convertible Debenture Due December 1,
1999, the form of which is attached hereto as Exhibit A (the "A-1
Debenture"); (b) a warrant ("Warrant #1") in the form attached hereto as
Exhibit B; (c) a warrant ("Warrant #2") in the form attached hereto as
Exhibit C; and (d) a warrant ("Warrant #3") in the form attached hereto as
Exhibit D. Collectively the warrants described in Sections B(i)(b), (c) and
(c) may be referred to herein as the "Warrants," and the securities
receivable upon exercise of the Warrants shall be referred to herein as the
"Warrant Shares."
(ii) At the second Closing (the "Second Closing"), (a) the Company's Series
A-2 Nine Percent (9%) Redeemable Convertible Debenture Due April 1, 1999,
the form of which is attached hereto as Exhibit E (the "A-2 Debenture") [if
the Second Closing does not take place within seven (7) days after the date
specified in Section 1(a)(ii)(x) below, the due date on the A-2 Debenture
will change to reflect a date which is fourteen months from the first day
of the calendar month following the calendar month in which the Second
Closing takes place; if so, Exhibit E will be modified to reflect such
later date]; (b) 666,667 shares of Common Stock (as herein defined) (the
"Stock"); and (c) 33,333 shares of common stock of Sigma 7 Corporation (the
"Sigma Stock").
The A-1 Debenture and the A-2 Debenture may in accordance with their terms
be convertible into shares of the Company's common stock, no par value per share
(the "Common Stock") (as converted, the "Conversion Shares"), and pursuant to
which certain shares of Common Stock may (at the Company's option as described
in the respective Debentures) be issued to the Buyer in payment of interest (the
"Interest Shares"). Collectively the A-1 Debenture and the A-2 Debenture may be
referred to herein as the "Debentures." The Debentures, the
1
<PAGE>
Conversion Shares, the Interest Shares (if any), the Warrants, the Warrant
Shares, the Stock and the Sigma Stock are collectively referred to herein as the
"Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
(the "Registration Rights Agreement") substantially in the form of Exhibit F
attached hereto pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the Company and the Buyer hereby
agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
a. (i) The First Closing. The First Closing shall take place on December
-----------------
3, 1997, in accordance with Sections 1(b) and 1(c) below. At the First Closing
the Company shall issue and sell to the Buyer and the Buyer shall purchase the
A-1 Debenture, Warrant #1, Warrant #2 and Warrant #3 (collectively, the "First
Closing Securities"). The purchase price (the "First Closing Purchase Price")
for the First Closing Securities shall be U.S. $500,000.00.
(ii) The Second Closing. The Second Closing shall take place on the
------------------
later of (x) January 31, 1998, or (y) the date which is fifteen (15) days after
the date on which the Registration Statement (as defined in Section 2(d) below)
is declared effective by the SEC, in accordance with Sections 1(b) and 1(c)
below. At the Second Closing, the Company shall issue (as applicable) and sell
to the Buyer and the Buyer shall purchase the A-2 Debenture, the Stock and the
Sigma Stock (collectively, the "Second Closing Securities"). The purchase price
(the "Second Closing Purchase Price") for the Second Closing Securities shall be
U.S. $500,000.00.
b. The Closings. The date of the First Closing and of the Second Closing
------------
shall be as specified respectively in Sections 1(a)(i) and 1(a)(ii) above, or on
such earlier or later date as is mutually agreed to in advance and in writing by
the Company and the Buyer. The full First Closing Purchase Price and the full
Second Closing Purchase Price (collectively the "Purchase Price") shall be
delivered on the date of the First Closing and the date of the Second Closing
respectively. Time is of the essence with respect to the parties' respective
obligations contained in this Section 1.
c. Form of Payment. The Buyer shall pay the Purchase Price for the
---------------
Securities purchased at each Closing by wire transfer of immediately available
funds in United States Dollars on the applicable Closing date, to be deposited
into the escrow account (the "Escrow Account") identified in that Escrow
Agreement substantially in the form of Exhibit G attached hereto (the "Escrow
Agreement"). At each Closing, the Company shall deliver the applicable
Securities, duly executed on behalf of the Company, to the Escrow Agent (as
defined in the Escrow Agreement) on behalf of the Buyer. The Escrow Agent shall
be responsible for delivery of the Purchase Price to the Company and the
Securities to the Buyer in accordance with the terms of the Escrow Agreement and
with the instructions of the said parties.
2
<PAGE>
2. BUYER'S REPRESENTATIONS AND WARRANTIES. The Buyer understands, agrees
with, and represents and warrants to the Company with respect to its purchase
hereunder, that:
a. Investment Purpose. The Buyer is purchasing the Securities for its own
------------------
account for investment only and not with a view towards, or in connection with,
the public sale or distribution thereof, except pursuant to sales registered
under or exempt from the 1933 Act. The Buyer is not purchasing the Securities
for the purpose of covering short sale positions in the Common Stock established
on or prior to the date of the First Closing. The Buyer agrees to offer, sell or
otherwise transfer the Securities only (i) in accordance with the terms of this
Agreement, the Debentures and the Warrants, as applicable, and (ii) pursuant to
registration under the 1933 Act or to an exemption from registration under the
1933 Act and any other applicable securities laws. The Buyer does not by its
representations contained in this Section 2(a) agree to hold the Securities for
any minimum or other specific term and reserves the right to dispose of the
Securities at any time pursuant to a registration statement or in accordance
with an exemption from registration under the 1933 Act. The Buyer understands
that it shall be a condition to the issuance of the Conversion Shares, the
Interest Shares (if any) and the Warrant Shares that the Conversion Shares, the
Interest Shares (if any) and the Warrant Shares are subject to the
representations set forth in this Section 2(a).
b. Accredited Investor Status. The Buyer is an "accredited investor" as
--------------------------
that term is defined in Rule 501(a) of Regulation D. The Buyer has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Securities and the
Common Stock. The Buyer is aware that it may be required to bear the economic
risk of an investment in the Securities for an indefinite period of time, and is
able to bear such risk for an indefinite period.
c. Reliance on Exemptions. The Buyer understands the Securities are being
----------------------
offered and sold to it in reliance on specific exemptions from the registration
requirements of the applicable United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, acknowledgments,
understandings, agreements and covenants of the Buyer set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Buyer to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been furnished
-----------
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by the Buyer, and specifically (but without limitation) the
Company's Form 10-K as filed with the SEC for the fiscal year ended September
30, 1996, and the Company registration statement on Form S-1, dated and as filed
with the SEC on November 13, 1997, registration statement no. 333-40175 (the
"Registration Statement"). The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. The Buyer understands
that its investment in the Securities involves a high degree of risk, that the
Company is not as of this date profitable, and that no assurance can be given
that the Company will not incur continuing losses or will be profitable. The
Buyer has sought such accounting, legal and tax advice as it has considered
necessary to an informed investment decision with respect to this Agreement and
its acquisition of the Securities.
3
<PAGE>
e. No Governmental Review. The Buyer understands that no United States
----------------------
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities, nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. The Buyer understands that: (i) except as provided
------------------
in the Registration Rights Agreement, the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless either (a) subsequently
registered thereunder or (b) the Buyer shall have delivered to the Company an
opinion of counsel, reasonably satisfactory to the Company in form, scope and
substance, to the effect that the securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from such
registration; (ii) any sale of such securities made in reliance on Rule 144 (as
hereafter defined) may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities (other than as
described herein or pursuant to the Registration Rights Agreement) under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder.
g. Legend. The Buyer understands that the Debentures and the Warrants,
------
and, until such time as the Stock, the Conversion Shares, the Interest Shares
(if any), the Warrant Shares (collectively, the "Registrable Securities") and
the Sigma Stock, have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement (other than the Sigma Stock, which will not be
included in rights offered under the Registration Rights Agreement, but shall
contain registration rights as described in Section 3(p) below) or otherwise may
be sold by the Buyer pursuant to Rule 144 (as amended, or any applicable rule
which operates to replace said Rule) promulgated under the 1933 Act ("Rule
144"), the stock certificates representing the Registrable Securities and the
Sigma Stock shall bear a restrictive legend (the "Legend") in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.
4
<PAGE>
The Legend shall be removed and the Company shall issue certificates
without the Legend to the holder of the applicable Debentures, Warrants or any
Registrable Securities upon which the Legend is stamped, if, unless otherwise
required by state securities laws, (a) the Registrable Securities or the Sigma
Stock are sold pursuant to and in accordance with the registration of same under
the 1933 Act, or (b) in connection with a sale transaction, such holder provides
the Company an opinion of counsel in form, substance and scope reasonably
acceptable to the Company, to the effect that a public sale, assignment or
transfer of the Debentures, the Warrants, the Sigma Stock or such Registrable
Securities may be made without registration under the 1933 Act, or (c) such
holder provides the Company with an opinion of counsel in form, substance and
scope reasonably acceptable to the Company that the Debentures, the Warrants,
the Sigma Stock or such Registrable Securities will be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.
h. Authorization; Enforcement. This Agreement, the Registration Rights
--------------------------
Agreement and the Escrow Agreement have been duly and validly authorized,
executed and delivered by the Buyer and are each and collectively valid and
binding agreements of the Buyer enforceable in accordance with their terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally. Buyer (and Buyer's counsel) has examined this
Agreement and is satisfied in its sole discretion that this Agreement and the
accompanying Exhibits and Addenda are in accordance with Regulation D and are
effective to accomplish the purposes set forth herein and therein.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
understands, agrees with, and represents and warrants to the Buyer that:
a. Organization and Qualification. The Company and its subsidiaries are
------------------------------
corporations duly organized and existing in good standing under the laws of the
respective jurisdictions in which they are incorporated, except, in the case of
any such subsidiaries, as would not have a Material Adverse Effect (as defined
below), and have the requisite corporate power to own their properties and to
carry on their business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary and where the failure so to
qualify would have a Material Adverse Effect. "Material Adverse Effect" means
any material adverse effect on the operations, properties or financial condition
of the Company and its subsidiaries taken as a whole.
b. Authorization; Enforcement. (i) The Company has the requisite
--------------------------
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and the Escrow Agreement, and to issue the
Debentures, the Warrants, the Sigma Stock and the Registrable Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its stockholders is required, (iii) this Agreement, the
Debentures, the Warrants, the Registration Rights Agreement and the Escrow
Agreement have been (or will be on the date of the applicable Closing) duly
executed and delivered by the Company, and (iv) this Agreement, the Debentures,
the Warrants,
5
<PAGE>
the Registration Rights Agreement and the Escrow Agreement constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
c. Capitalization. As of September 30, 1997, the authorized capital stock
--------------
of the Company consists of 100,000,000 shares of Common Stock of which
30,371,075 shares were issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and nonassessable. No shares of
Common Stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances. Except as disclosed in the Registration Statement, as of
the effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries,
(ii) there are no outstanding debt securities, and (iii) there are no agreements
or arrangements under which the Company or any of its subsidiaries is obligated
to register the sale of any of its or their securities under the 1933 Act
(except as provided herein and in the Registration Rights Agreement). If
requested by the Buyer, the Company has furnished to the Buyer, and the Buyer
acknowledges receipt of same by its signature hereafter, true and correct copies
of the Company's Certificate of Incorporation, as amended, as in effect on the
date hereof ("Certificate of Incorporation"), and the Company's Bylaws, as in
effect on the date hereof (the "Bylaws").
d. Issuance of Securities. The Debentures, the Warrants, the Sigma Stock
----------------------
and the Registrable Securities are duly authorized and, upon issuance in
accordance with the terms hereof and thereof, shall be validly issued, fully
paid and non-assessable, and free from all taxes, liens and charges with respect
to the issue thereof.
e. Acknowledgment Regarding Buyer's Purchase of the Securities. The
-----------------------------------------------------------
Company acknowledges and agrees that the Buyer is not acting as financial
advisor to or fiduciary of the Company (or in any similar capacity) with respect
to this Agreement or the transactions contemplated hereby; that this Agreement
and the transactions contemplated hereby, and the relationship between the Buyer
and the Company, are "arm's-length;" and that any statement made by the Buyer,
or any of its representatives or agents, in connection with this Agreement and
the transactions contemplated hereby is not advice or a recommendation, is
merely incidental to the Buyer's purchase of the Securities and has not been
relied upon in any way by the Company, its officers or directors. The Company
further represents to the Buyer that the Company's decision to enter into this
Agreement and the transactions contemplated hereby have been based solely upon
an independent evaluation by the Company, its officers and directors.
f. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances which would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the 1933 Act and specifically in accordance with the
6
<PAGE>
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the 1933 Act, assuming the accuracy of each and
every one of the representations and warranties contained herein of the Buyer.
g. No Conflicts. The execution, delivery and performance of this
------------
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Certificate of
Incorporation or Bylaws (other than as a result of the limit on the number of
authorized shares of Common Stock, in which case the Company will take immediate
steps to increase as necessary the number of such authorized shares) or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). The business of the Company and its subsidiaries is not being
conducted, and shall not be conducted through the Registration Period (as
defined herein), in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which neither singly or in
the aggregate would have a Material Adverse Effect. Except as required under the
1933 Act and any applicable state securities laws, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof.
h. SEC Documents; Financial Statements. Since at least December 1, 1996,
-----------------------------------
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to as
the "SEC Documents"). The Company has delivered to the Buyer as requested by the
Buyer true and complete copies of the SEC Documents, except for such exhibits,
schedules and incorporated documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and
7
<PAGE>
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). No other information provided
by or on behalf of the Company to the Buyer (including the information referred
to in Section 2(d) of this Agreement) contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading.
i. Absence of Certain Changes. Except as disclosed in the Registration
--------------------------
Statement, since December 1, 1996, there has been no material adverse change and
no material adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the Company. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company
have any knowledge that its creditors intend to initiate involuntary bankruptcy
proceedings.
j. Absence of Litigation. Except as set forth in the Registration
---------------------
Statement, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein.
k. Foreign Corrupt Practices. Neither the Company nor any of its
-------------------------
subsidiaries, nor any officer, director or other person acting on behalf of the
Company or any subsidiary has, in the course of his actions for or on behalf of
the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
l. Authorization; Enforcement. This Agreement, the Debentures, the
--------------------------
Warrants, the Registration Rights Agreement and the Escrow Agreement have been
duly and validly authorized, executed and delivered by a duly authorized
representative(s) of the Company and are valid and binding agreements of the
Company enforceable in accordance with their respective terms, subject as to
enforceability only to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally. The Company (and its legal counsel) has examined
this Agreement and is satisfied in its sole discretion that this Agreement and
the accompanying Exhibits and Addenda are in accordance with Regulation D and
are effective to accomplish the purposes set forth herein and therein.
m. No Brokers. The Company has taken no action that would give rise to
----------
any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement and the transactions contemplated hereby.
Notwithstanding the above, the Company represents and the Buyer acknowledges the
Company will use a portion of the proceeds of the transactions contemplated
hereby for the purpose of satisfying certain obligations to the
8
<PAGE>
Company's investment banking firm, the Global Funding Group, for financial
consulting services provided.
n. Eligibility to File Registration Statement. The Company is currently
------------------------------------------
eligible to file a registration statement with the SEC on Form S-3 or another
equivalent registration form.
o. Registration Statement on Form S-1. The Company represents and
----------------------------------
warrants that it filed the Registration Statement on Form S-1 with the SEC on
November 13, 1997 (the Registration Statement may also be referred to
hereinafter as the "Form S-1"). The Company expects (but does not guarantee) the
Form S-1 to be declared effective by the SEC on or before January 15, 1998.
p. Registration Statement with Respect to Sigma 7 Corporation. The
----------------------------------------------------------
Company represents and warrants that it will use its best efforts to cause its
majority owned subsidiary, Sigma 7 Corporation, to file, on or about December
20, 1997, a registration statement with the SEC for an initial public offering
(the "IPO") of the common stock of Sigma 7 Corporation, which IPO the Company
anticipates (but does not guarantee) will take place in March, 1998. The Sigma
Stock will contain "piggyback rights" to be included in the registration
statement filed by Sigma 7 Corporation. The Buyer by its acceptance of the Sigma
Stock acknowledges and agrees that it will comply with the reasonable
requirements of the underwriter with respect to the sales of the Sigma Stock in
connection with such IPO.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely to satisfy
------------
each of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this Agreement.
b. Securities Laws. The Company agrees to timely file a Form D with
---------------
respect to the Securities if and as required under Regulation D and to provide a
copy thereof to the Buyer promptly after such filing. The Company shall, on or
before the date of the First Closing and on or before the date of the Second
Closing, as applicable, take such action as is necessary to sell the Securities
being sold to the Buyer on each such date under applicable securities laws of
the United States, and shall if specifically so requested provide evidence of
any such action so taken to the Buyer on or prior to the First Closing Date or
the Second Closing Date, as applicable.
c. Reporting Status. Until the earlier of (i) the date as of which the
----------------
Buyer may sell all of the Registrable Securities without restriction pursuant to
Rule 144(k) (or successor thereto) promulgated under the 1933 Act, or (ii) the
date on which both (x) the Buyer shall have sold all the Registrable Securities
and (y) none of the Debentures is outstanding (the "Registration Period"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the sale of
---------------
the Securities to pay off certain outstanding obligations of the Company and for
the Company's internal working capital purposes, including costs and expenses of
the Company's business operations, and to the extent advisable by the Company,
for the purchase of new technologies by
9
<PAGE>
the Company and its subsidiaries, and for the purchase of additional
subsidiaries and the development and marketing of their technologies.
e. Financial Information. At the request of the Buyer, the Company agrees
---------------------
to send the following reports to the Buyer during the Registration Period: (i)
after filing with the SEC, a copy of each of its Annual Reports on Form 10-K,
its quarterly Reports on Form 10-Q, and any reports filed on Form 8-K; and (ii)
as soon as practicable after release thereof, copies of all press releases
issued by the Company or any of its subsidiaries.
f. Reservation of Shares. The Company shall at all times have authorized,
---------------------
and reserved for the purpose of issuance, a sufficient number of shares of
Common Stock to provide for the issuance of all of the Conversion Shares, the
Warrant Shares and the Interest Shares (if any). Prior to complete conversion of
the Debentures and the complete exercise or expiration of the Warrants, the
Company shall not reduce the number of shares reserved for issuance hereunder
without the written consent of the Buyer except for a reduction proportionate to
a reverse stock split effected for a business purpose other than affecting the
requirements of this Section, which reverse stock split affects all shares of
Common Stock equally.
g. Listing. The Company shall promptly secure the listing of the
-------
Registrable Securities upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Registrable Securities from time to time issuable under the terms of this
Agreement and the Registration Rights Agreement.
h. Registration Statement on Form S-1. The Company will, on or before
----------------------------------
January 15, 1998, amend the Form S-1 to include the Registrable Securities, to
the extent permitted by law. To the extent the Registrable Securities are
included in the Form S-1, they will not be included in the registration
statement filed in accordance with the Registration Rights Agreement. Should all
of the Registrable Securities be included in the Form S-1, then (notwithstanding
anything herein or in the Registration Rights Agreement to the contrary) the
Company shall not be required to file a registration statement as contemplated
in the Registration Rights Agreement. The Form S-1 shall be kept current and
effective until the earlier of the following: (x) the date on which all of the
Registrable Securities are registered with the SEC, or (y) the date which is two
(2) years from the date the Form S-1 is declared effective by the SEC. During
the period of time in which the Form S-1 is effective, the Company shall amend
the Form S-1 from time to time as necessary to include any Registrable
Securities which were not previously registered pursuant to the Form S-1.
i. Prospectus Delivery Requirement. The Buyer understands that the 1933
-------------------------------
Act may require delivery of a prospectus relating to the Common Stock in
connection with any sale thereof pursuant to a registration statement under the
1933 Act covering any resale by the Buyer of the Common Stock being sold, and
the Buyer shall use its reasonable best efforts to comply with any applicable
prospectus delivery requirements of the 1933 Act in connection with any such
sale.
10
<PAGE>
j. Intentional Acts or Omissions. Neither party shall intentionally
-----------------------------
perform any act which if performed, or omit to perform any act which if omitted
to be performed, would prevent or excuse the performance of this Agreement or
any of the transactions contemplated hereby.
k. No Shorting. The Buyer represents that it has not as of the date
-----------
hereof, and covenants on behalf of itself and its affiliates that neither Buyer
nor any affiliate of Buyer will at any time in which the Buyer or any affiliate
of the Buyer beneficially owns any of the Securities, engage in any short sales
of, or hedging or arbitrage transactions with respect to, the Common Stock, or
sell "put" options or similar instruments with respect to the Common Stock.
5. LEGEND AND TRANSFER INSTRUCTIONS.
a. Transfer Agent Instructions. The Company shall instruct its transfer
---------------------------
agent to issue certificates, registered in the name of the Buyer or its nominee,
for the Conversion Shares, the Interest Shares (if any) and the Warrant Shares
in accordance with the terms of the Debentures and the Warrants and in such
amounts as specified from time to time by the Buyer to the Company. All such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement unless otherwise permitted by applicable law and specified herein or
in the Debentures, the Warrants or the Registration Rights Agreement. The
Company warrants that no instruction other than such instructions referred to in
this Section 5, and stop transfer instructions to give effect to Section 2(f)
hereof in the case of the Registrable Securities prior to the registration of
same under the 1933 Act, will be given by the Company to its transfer agent and
that the Registrable Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent permitted by applicable
law and provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Registrable Securities. If the Buyer (x) provides the Company with an opinion of
counsel, reasonably satisfactory in form, substance and scope to the Company,
that registration of a resale by the Buyer of the Debentures or the Registrable
Securities is not required under the 1933 Act, or (y) transfers Securities to an
affiliate which is an accredited investor (in accordance with the provisions of
this Agreement) or pursuant to Rule 144, then in either instance the Company
shall permit the said transfer, and if applicable promptly instruct its transfer
agent to issue one or more certificates in such name and in such denominations
as specified by the Buyer.
b. Removal of Legends. The Legend shall be removed and the Company shall
------------------
issue a certificate without such Legend to the holder of any Security upon which
it is stamped, and a certificate for a security shall be originally issued
without the Legend, if, unless otherwise required by state securities laws, (x)
the sale of such Security is registered under the 1933 Act, or (y) such holder
provides the Company with an opinion of counsel, in form, substance and scope
reasonably satisfactory to the Company, to the effect that a public sale or
transfer of such Security may be made without registration under the 1933 Act or
(z) such holder provides the Company with assurances reasonably satisfactory to
the Company that such Security can be sold pursuant to Rule 144. The Buyer
agrees to sell all Securities, including those represented by a certificate(s)
from which the Legend has been removed, or which were originally issued without
the Legend, pursuant to an effective registration statement (and to deliver a
prospectus in connection with such sale) or in compliance with an exemption from
the registration requirements of the 1933 Act. In the event the Legend is
removed from any Security or any Security is issued without the Legend and
thereafter the effectiveness of a registration statement
11
<PAGE>
covering the sales of such Security is suspended or the Company determines that
a supplement or amendment thereto is required by applicable securities laws,
then upon reasonable advance notice to the holder of such Security, the Company
may require that the Legend be placed upon any such Security which can not then
be sold pursuant to an effective registration statement or Rule 144 or with
respect to which the opinion referred to in clause (y) next above has not been
rendered, which Legend shall be removed when such Security may be sold pursuant
to an effective registration statement or Rule 144 or such holder provides the
opinion with respect thereto described in clause (y) next above.
c. Injunctive Relief for Breach. The Company acknowledges that the remedy
----------------------------
at law for a breach of its obligations under Sections 5(a) and 5(b) above will
cause irreparable harm to the Buyer by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly the Company agrees that the remedy
at law for a breach of its obligations under such Sections would be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of such Sections, the Buyer shall be entitled, in addition to all
other remedies at law or in equity, to an injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the
Company hereunder to sell the Debentures, the Warrants, the Stock and the Sigma
Stock at the applicable Closing is subject to the satisfaction, at or before the
date of the applicable Closing as described herein, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. The parties shall have executed this Agreement, the Registration Rights
Agreement and the Escrow Agreement, and the parties shall have delivered the
respective documents or signature pages thereof (via facsimile or otherwise as
permitted in the Escrow Agreement) to the Escrow Agent on behalf of each other.
b. The Buyer shall have delivered to the Escrow Agent on behalf of the
Company the First Closing Purchase Price for the First Closing, or the Second
Closing Purchase Price for the Second Closing, as applicable, by wire transfer
of immediately available funds pursuant to the wiring instructions provided by
the Escrow Agent.
c. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date made and as of the date of the
applicable Closing as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the date of the applicable Closing.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of
the Buyer to purchase the Debentures, the Warrants, the Stock and the Sigma
Stock is subject to the satisfaction, at or before the date of the applicable
Closing, of each of the following conditions, provided that these conditions are
for the sole benefit of the Buyer and may be waived by the Buyer at any time in
its sole discretion:
12
<PAGE>
a. The parties shall have executed this Agreement, the Registration Rights
Agreement and the Escrow Agreement, and the parties shall have delivered the
respective documents or signature pages thereof (via facsimile or otherwise as
permitted in the Escrow Agreement) to the Escrow Agent on behalf of each other.
b. The representations and warranties of the Company shall be true and
correct in all material respects as of the date made and as of the date of the
applicable Closing as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the date of the applicable
Closing. The Buyer may require a certificate, executed by the Chief Executive
Officer of the Company, dated as of the date of such Closing, to the foregoing
effect and as to such other matters as may be reasonably requested by the Buyer.
c. With respect to each Closing called for herein, the Company shall have
executed and delivered to the Escrow Agent on behalf of the Buyer the
Debentures, the Warrants, the Stock and/or the Sigma Stock, as applicable, being
sold at such Closing (via facsimile or otherwise as permitted in the Escrow
Agreement, provided that a facsimile of such documents shall be followed with
physical delivery to the Escrow Agent of the original instrument or security
within one (1) business day after facsimile of same to the Escrow Agent).
d. The Common Stock shall be authorized for quotation on the OTC Bulletin
Board Market (or other national securities market including but not limited to
the NASDAQ Small Cap Market) and trading in the Common Stock on such market
shall not have been suspended by the SEC or other relevant regulatory agency.
e. The Company shall not have received, as of the date of the applicable
Closing, from NASDAQ or the National Association of Securities Dealers, Inc.,
any written or oral communication as to its actual or potential ineligibility
for continued listing of the Common Stock on the OTC Bulletin Board Market, the
substance of which shall not have been publicly disclosed.
13
<PAGE>
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws. In the event of any litigation regarding the
interpretation or application of this Agreement, the parties consent to the
nonexclusive jurisdiction in any of the federal courts located in the State of
Colorado and waive their rights to object to venue in any such court, regardless
of the convenience or inconvenience thereof to any party. Service of process in
any civil action relating to or arising out of this Agreement (including also
all Exhibits or Addenda hereto) or the transaction(s) contemplated herein may be
accomplished via certified mail, return receipt requested, and the parties
hereby irrevocably acknowledge and agree that such service of process by
certified mail at the parties' respective addresses as noted in Section 8(f)
below (or such other address as the party being served shall have provided as
required in Section 8(f)) shall be sufficient to subject the party being served
thereby to personal jurisdiction in the state of Colorado, U.S.A.
b. Counterparts. This Agreement may be executed in two or more identical
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
signature pages from such counterparts have been delivered to the Escrow Agent
on behalf of the other party. In the event any signature page is delivered by
facsimile transmission (which the parties agree is an acceptable form of
delivery), the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to the
Escrow Agent on behalf of the other party within two (2) business days of the
execution and delivery hereof.
c. Headings; Gender; Etc. The headings of this Agreement are for
---------------------
convenience of reference and shall not form part a of, or affect the
interpretation of, this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls upon a Saturday, Sunday or public or legal holiday, the date shall
be construed to mean the next business day following such Saturday, Sunday or
public or legal holiday. For purposes of this Agreement, a "business day" is any
day other than a Saturday, Sunday or public or legal holiday.
d. Severability. If any provision of this Agreement shall be invalid or
------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
----------------------------
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
14
<PAGE>
f. Notices. Any notices required or permitted to be given under the terms
-------
of this Agreement shall be sent by U.S. mail or delivered personally or by
courier or via facsimile (if via facsimile, to be followed within three (3)
business days by an original of the notice document via U.S. mail or courier)
and shall be effective five (5) days after being placed in the mail, if mailed,
certified or registered, return receipt requested, or upon receipt, if delivered
personally or by courier or by facsimile, in each case properly addressed to the
party to receive the same. The addresses for such communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to the Buyer, at the address on the signature page of this Agreement.
Each party shall provide written notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties and their respective successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other (which
consent shall not be unreasonably withheld), and in any event any assignee of
the Buyer shall be an accredited investor (as defined in Regulation D).
Notwithstanding the foregoing, if applicable, any of the entities constituting
the Buyer (if greater than one (1) entity) may assign its rights hereunder to
any of its "affiliates," as that term is defined under the 1934 Act, without the
consent of the Company; provided, however, that any such assignment shall not
release such assigning entity from its obligations hereunder unless such
obligations are assumed by such affiliate and the Company has prior to such
assignment and assumption consented in writing to the same; and no such
assignment shall be made unless it is made in accordance with any applicable
securities laws of any applicable jurisdiction. Any request for an assignment
made hereunder by the Buyer shall be accompanied by an opinion of counsel that
such assignment is proper under applicable law.
h. No Third Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. Unless this Agreement is terminated under Section 8(l), the
--------
representations and warranties of the Company and the Buyer contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5,
8(g), 8(h) and 8(k), and this subsection shall survive the closing.
j. Publicity. The Company and the Buyer shall have the right to approve
---------
before issuance any press releases or any other public statements with respect
to the transactions contemplated hereby; provided, however, that the Company
shall be entitled, without the prior approval of the Buyer, to make any press
release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall be
15
<PAGE>
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the First Closing shall not have
-----------
occurred on or before ten (10) business days from the date hereof, this
Agreement shall terminate at the close of business on such date, and the party
responsible for the non-occurrence of such Closing shall be liable to the other
party for its damages incurred as a result of such non-occurrence. Neither party
may terminate this Agreement after the First Closing and prior to the Second
Closing for any reason other than a material breach of this Agreement by the
non-terminating party.
m. Remedies. No provision of this Agreement providing for any specific
--------
remedy to a party shall be construed to limit such party to the specific remedy
described, and any other remedy which would otherwise be available to such party
at law or in equity shall be so available. Nothing in this Agreement shall limit
any rights a party may have with any applicable federal or state securities laws
with respect to the transactions contemplated hereby.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
[SIGNATURE PAGE FOLLOWS]
16
<PAGE>
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT DATED
DECEMBER 3, 1997]
COMPANY:
INTERCELL CORPORATION
By: /s/ Paul H. Metzinger
---------------------------------------------
Mr. Paul H. Metzinger, President and CEO
BUYER:
THE AUGUSTINE FUND, L.P.
By: Augustine Capital Management, Inc.,
General Partner
By: /s/ Thomas F. Duszinski
----------------------------------------
(Signature of authorized officer)
COO
--------------------------------------------
(Print name and title)
BUYER'S ADDRESS:
141 West Jackson Blvd., Suite 1792
Chicago, Illinois 60604
Telephone: 312-427-5457
Facsimile: 312-427-5396
17
<PAGE>
EXHIBIT 10.2
AMENDMENT TO SECURITIES PURCHASE AGREEMENT
THIS AMENDMENT ("Amendment") is made as of the 31st day of December 1997,
to that Securities Purchase Agreement dated as of December 3, 1997, by and
between Intercell Corporation, a corporation organized under the laws of the
state of Colorado, U.S.A., with headquarters at 370 17th Street, Suite 3290,
Denver, Colorado 80202 (the "Company"), and the buyer set forth on the signature
page hereof (the "Buyer") (including all Exhibits, Addenda and Amendments
thereto, the "Securities Purchase Agreement").
RECITALS
A. The Securities Purchase Agreement contemplated a private placement of
certain securities of or owned by the Company, to be purchased and sold in two
separate closings to have taken place on distinct dates as specified in the
Securities Purchase Agreement, and the First Closing has been completed in
accordance with the terms thereof.
B. The Company has requested that the Buyer accelerate the date of the
Second Closing to December 31, 1997, and in consideration of such acceleration
has offered additional consideration to the Buyer as set forth below, to which
the Buyer has agreed subject to the terms of this Amendment.
C. Capitalized terms used in this Amendment and not otherwise defined
shall have the meanings set forth in the Securities Purchase Agreement.
AGREEMENTS
NOW THEREFORE, for a valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties, the Company and the Buyer agree to amend
the Securities Purchase Agreement as follows:
1. Acceleration of Date of Second Closing. The Second Closing shall take
--------------------------------------
place on December 31, 1997, changing such date from that previously described in
Section 1(a)(ii) of the Securities Purchase Agreement.
2. Additional Consideration Provided to the Buyer. In consideration for
----------------------------------------------
the acceleration of the Second Closing, the Company agrees to the following
additional consideration:
The Company will grant, assign and pledge to the Buyer a first lien
security interest, whether by assignment or otherwise as reasonably
requested by the Buyer, in the following assets of the Company
(collectively, the "Collateral"):
all interests of Intercell as creditor of Sigma 7 Corporation and
BMI Acquisition Group pursuant to the following: (x) Secured Corporate
Promissory Note dated December 31, 1997, in the original principal
amount of $3,057,774.13, and (y) Security Agreement dated April 30,
1997, secured by those assets of
1
<PAGE>
Sigma 7 Corporation listed under UCC-1 Financing Statements, Nos.
9725260676 and 9725260687, recorded on September 5, 1997 at 8:00 AM in
the Office of the Secretary of State of the state of California;
that parcel of real property, located in Pinal County, Arizona,
which parcel of real property is more fully described in that General
Warranty Deed dated April 18, 1996, and recorded in the office of the
Pinal County Recorder in Deed Book 1996, Page 022505;
all interests of Intercell as creditor of Intercell Technologies
Corporation pursuant to the following: (x) Promissory Note dated July
18, 1997, in the original principal amount of $2,200,000, and (y)
Stock Pledge and Security Agreement dated July 18, 1997; and
all proceeds of any and all of the Collateral (including, without
limitation, cash proceeds) and, to the extent not otherwise included,
all payments under insurance (whether or not the Buyer is the loss
payee thereof) or under any indemnity, warranty or guaranty, payable
by reason of loss or damage or otherwise with respect to any of the
Collateral.
The Company will deliver to the Escrow Agent on behalf of the Buyer,
on the date of the Second Closing, and in addition to the Sigma Stock
referred to in the Securities Purchase Agreement, fifty thousand shares of
common stock of Sigma 7 Corporation.
The Buyer shall have the right but not the obligation to require the
Company to pre-pay all or any unconverted portion of the outstanding
principal amount of either the A-1 Debenture or the A-2 Debenture (or both)
within ten (10) business days after completion of the contemplated initial
public offering of Sigma 7 Corporation (the "IPO") (or as soon thereafter
as the proceeds from the IPO become available to the Company), along with
all interest then due on such pre-paid portions thereof. Such pre-payment
shall be in cash and shall not subject the Company to any pre-payment
penalty or other additional charge as a result of such pre-payment. The
Buyer specifically agrees and acknowledges that the provisions of this
Section 2(c) are subject to the reasonable requirements and conditions of
the underwriter for the IPO, and the underwriter's reasonable objection in
writing to such pre-payment, stating its good faith business reasons for
such objection, shall operate to modify this Section 2(c) to the extent of
such objection. The Company agrees to use its reasonable best efforts to
obtain the underwriter's approval of the pre-payment option described in
this Section 2(c).
3. Miscellaneous. The Company and the Buyer each agree to provide and/or
-------------
execute such further documents and things as the other party may reasonably
request to effect the purposes of this Amendment, including without limitation
those documents and things referred to in Section 4 of that Security Agreement
between the Company and the Buyer of even date herewith. Each party hereto
acknowledges and agrees that, as of the date hereof, neither party is in breach
of the Securities Purchase Agreement. This Amendment is hereby incorporated into
and made a part of the Securities Purchase Agreement by reference. Except as
specifically stated herein, each of the terms and conditions, and all of the
respective covenants, warranties and
2
<PAGE>
representations of the parties, shall remain in effect as set forth in the
Securities Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment to Securities
Purchase Agreement as of the date first hereinabove written.
[SIGNATURE PAGE FOLLOWS]
3
<PAGE>
[SIGNATURE PAGE TO AMENDMENT TO
SECURITIES PURCHASE AGREEMENT DATED DECEMBER 31, 1997]
COMPANY:
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
------------------------------------------
Mr. Paul H. Metzinger, President and CEO
BUYER:
THE AUGUSTINE FUND, L.P.
By: Augustine Capital Management, Inc.,
General Partner
By /s/ John T. Porter
------------------------------------------
(Signature of authorized officer)
_____________________________________________
(Print name and title)
BUYER'S ADDRESS:
141 West Jackson Blvd., Suite 1792
Chicago, Illinois 60604
Telephone: 312-427-5457
Facsimile: 312-427-5396
4
<PAGE>
EXHIBIT 10.3
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), is made as of
December 3, 1997, by and between Intercell Corporation, a corporation organized
under the laws of the State of Colorado, U.S.A., with headquarters located at
370 17th Street, Suite 3290, Denver, Colorado 80202 (the "Company"), and the
buyer set forth on the execution page hereof (the "Buyer").
RECITALS
A. The Company and the Buyer are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
provisions of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Buyer desires to purchase from the Company, and the Company desires
to sell to the Buyer, for the amounts and upon the terms and conditions stated
in this Agreement, in two (2) separate closings (each a "Closing") as herein
described, certain debentures, warrants and other securities of or owned by the
Company as listed in Sections B(i) and B(ii) immediately below.
i. At the first Closing (the "First Closing"), (a) the Company's
Series A-1(b) Nine Percent (9%) Redeemable Convertible Debenture Due
December 1, 1999, the form of which is attached hereto as Exhibit A (the
"A-1 Debenture"); (b) a warrant ("Warrant #4") in the form attached hereto
as Exhibit B; (c) a warrant ("Warrant #5") in the form attached hereto as
Exhibit C; and (d) a warrant ("Warrant #6") in the form attached hereto as
Exhibit D. Collectively the warrants described in Sections B(i)(b), (c) and
(c) may be referred to herein as the "Warrants," and the securities
receivable upon exercise of the Warrants shall be referred to herein as the
"Warrant Shares."
ii. At the second Closing (the "Second Closing"), (a) the Company's
Series A-2(b) Nine Percent (9%) Redeemable Convertible Debenture Due April
1, 1999, the form of which is attached hereto as Exhibit E (the "A-2
Debenture") [if the Second Closing does not take place within seven (7)
days after the date specified in Section 1(a)(ii)(x) below, the due date on
the A-2 Debenture will change to reflect a date which is fourteen months
from the first day of the calendar month following the calendar month in
which the Second Closing takes place; if so, Exhibit E will be modified to
reflect such later date]; (b) three hundred thirty-three thousand three
hundred thirty-three (333,333) shares of Common Stock (as herein defined)
(the "Stock"); and (c) 16,667 shares of common stock of Sigma 7 Corporation
(the "Sigma Stock").
The A-1 Debenture and the A-2 Debenture may in accordance with their terms
be convertible into shares of the Company's common stock, no par value per share
(the "Common Stock") (as converted, the "Conversion Shares"), and pursuant to
which certain shares of
1
<PAGE>
Common Stock may (at the Company's option as described in the respective
Debentures) be issued to the Buyer in payment of interest (the "Interest
Shares"). Collectively the A-1 Debenture and the A-2 Debenture may be referred
to herein as the "Debentures." The Debentures, the Conversion Shares, the
Interest Shares (if any), the Warrants, the Warrant Shares, the Stock and the
Sigma Stock are collectively referred to herein as the "Securities."
C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
(the "Registration Rights Agreement") substantially in the form of Exhibit F
attached hereto pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the Company and the Buyer hereby
agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
a. i. The First Closing. The First Closing shall take place on December
-----------------
3, 1997, in accordance with Sections 1(b) and 1(c) below. At the First Closing
the Company shall issue and sell to the Buyer and the Buyer shall purchase the
A-1 Debenture, Warrant #4, Warrant #5 and Warrant #6 (collectively, the "First
Closing Securities"). The purchase price (the "First Closing Purchase Price")
for the First Closing Securities shall be U.S. $250,000.00.
ii. The Second Closing. The Second Closing shall take place on the
------------------
later of (x) January 31, 1998, or (y) the date which is fifteen (15) days
after the date on which the Registration Statement (as defined in Section
2(d) below) is declared effective by the SEC, in accordance with Sections
1(b) and 1(c) below. At the Second Closing, the Company shall issue (as
applicable) and sell to the Buyer and the Buyer shall purchase the A-2
Debenture, the Stock and the Sigma Stock (collectively, the "Second Closing
Securities"). The purchase price (the "Second Closing Purchase Price") for
the Second Closing Securities shall be U.S. $250,000.00.
b. The Closings. The date of the First Closing and of the Second Closing
------------
shall be as specified respectively in Sections 1(a)(i) and 1(a)(ii) above, or on
such earlier or later date as is mutually agreed to in advance and in writing by
the Company and the Buyer. The full First Closing Purchase Price and the full
Second Closing Purchase Price (collectively the "Purchase Price") shall be
delivered on the date of the First Closing and the date of the Second Closing
respectively. Time is of the essence with respect to the parties' respective
obligations contained in this Section 1.
c. Form of Payment. The Buyer shall pay the Purchase Price for the
---------------
Securities purchased at each Closing by wire transfer of immediately available
funds in United States Dollars on the applicable Closing date, to be deposited
into the escrow account (the "Escrow Account") identified in that Escrow
Agreement substantially in the form of Exhibit G attached hereto (the
"Escrow Agreement"). At each Closing, the Company shall deliver the applicable
Securities, duly executed on behalf of the Company, to the Escrow Agent (as
defined in the
2
<PAGE>
Escrow Agreement) on behalf of the Buyer. The Escrow Agent shall be responsible
for delivery of the Purchase Price to the Company and the Securities to the
Buyer in accordance with the terms of the Escrow Agreement and with the
instructions of the said parties.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer understands, agrees with, and represents and warrants to the
Company with respect to its purchase hereunder, that:
a. Investment Purpose. The Buyer is purchasing the Securities for its own
------------------
account for investment only and not with a view towards, or in connection with,
the public sale or distribution thereof, except pursuant to sales registered
under or exempt from the 1933 Act. The Buyer is not purchasing the Securities
for the purpose of covering short sale positions in the Common Stock established
on or prior to the date of the First Closing. The Buyer agrees to offer, sell or
otherwise transfer the Securities only (i) in accordance with the terms of this
Agreement, the Debentures and the Warrants, as applicable, and (ii) pursuant to
registration under the 1933 Act or to an exemption from registration under the
1933 Act and any other applicable securities laws. The Buyer does not by its
representations contained in this Section 2(a) agree to hold the Securities for
any minimum or other specific term and reserves the right to dispose of the
Securities at any time pursuant to a registration statement or in accordance
with an exemption from registration under the 1933 Act. The Buyer understands
that it shall be a condition to the issuance of the Conversion Shares, the
Interest Shares (if any) and the Warrant Shares that the Conversion Shares, the
Interest Shares (if any) and the Warrant Shares are subject to the
representations set forth in this Section 2(a).
b. Accredited Investor Status. The Buyer is an "accredited investor" as
--------------------------
that term is defined in Rule 501(a) of Regulation D. The Buyer has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Securities and the
Common Stock. The Buyer is aware that it may be required to bear the economic
risk of an investment in the Securities for an indefinite period of time, and is
able to bear such risk for an indefinite period.
c. Reliance on Exemptions. The Buyer understands the Securities are being
----------------------
offered and sold to it in reliance on specific exemptions from the registration
requirements of the applicable United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, acknowledgments,
understandings, agreements and covenants of the Buyer set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Buyer to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been furnished
-----------
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by the Buyer, and specifically (but without limitation) the
Company's Form 10-K as filed with the SEC for the fiscal year ended September
30, 1996, and the Company registration statement on Form S-1, dated and as filed
with the SEC on November 13, 1997, registration statement no. 333-40175 (the
"Registration Statement"). The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any
3
<PAGE>
such inquiries. The Buyer understands that its investment in the Securities
involves a high degree of risk, that the Company is not as of this date
profitable, and that no assurance can be given that the Company will not incur
continuing losses or will be profitable. The Buyer has sought such accounting,
legal and tax advice as it has considered necessary to an informed investment
decision with respect to this Agreement and its acquisition of the Securities.
e. No Governmental Review. The Buyer understands that no United States
----------------------
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities, nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. The Buyer understands that: (i) except as provided
------------------
in the Registration Rights Agreement, the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless either (a) subsequently
registered thereunder or (b) the Buyer shall have delivered to the Company an
opinion of counsel, reasonably satisfactory to the Company in form, scope and
substance, to the effect that the securities to be sold, assigned or transferred
may be sold, assigned or transferred pursuant to an exemption from such
registration; (ii) any sale of such securities made in reliance on Rule 144 (as
hereafter defined) may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities (other than as
described herein or pursuant to the Registration Rights Agreement) under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder.
g. Legend. The Buyer understands that the Debentures and the Warrants,
------
and, until such time as the Stock, the Conversion Shares, the Interest Shares
(if any), the Warrant Shares (collectively, the "Registrable Securities") and
the Sigma Stock, have been registered under the 1933 Act as contemplated by the
Registration Rights Agreement (other than the Sigma Stock, which will not be
included in rights offered under the Registration Rights Agreement, but shall
contain registration rights as described in Section 3(p) below) or otherwise may
be sold by the Buyer pursuant to Rule 144 (as amended, or any applicable rule
which operates to replace said Rule) promulgated under the 1933 Act ("Rule
144"), the stock certificates representing the Registrable Securities and the
Sigma Stock shall bear a restrictive legend (the "Legend") in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
LAWS, OR (II) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER IN FORM, SUBSTANCE
AND
4
<PAGE>
SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER THE LAWS DUE TO AN AVAILABLE EXCEPTION TO OR EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE LAWS.
The Legend shall be removed and the Company shall issue certificates
without the Legend to the holder of the applicable Debentures, Warrants or any
Registrable Securities upon which the Legend is stamped, if, unless otherwise
required by state securities laws, (a) the Registrable Securities or the Sigma
Stock are sold pursuant to and in accordance with the registration of same under
the 1933 Act, or (b) in connection with a sale transaction, such holder provides
the Company an opinion of counsel in form, substance and scope reasonably
acceptable to the Company, to the effect that a public sale, assignment or
transfer of the Debentures, the Warrants, the Sigma Stock or such Registrable
Securities may be made without registration under the 1933 Act, or (c) such
holder provides the Company with an opinion of counsel in form, substance and
scope reasonably acceptable to the Company that the Debentures, the Warrants,
the Sigma Stock or such Registrable Securities will be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.
h. Authorization; Enforcement. This Agreement, the Registration Rights
--------------------------
Agreement and the Escrow Agreement have been duly and validly authorized,
executed and delivered by the Buyer and are each and collectively valid and
binding agreements of the Buyer enforceable in accordance with their terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally. Buyer (and Buyer's counsel) has examined this
Agreement and is satisfied in its sole discretion that this Agreement and the
accompanying Exhibits and Addenda are in accordance with Regulation D and are
effective to accomplish the purposes set forth herein and therein.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
understands, agrees with, and represents and warrants to the Buyer that:
a. Organization and Qualification. The Company and its subsidiaries are
------------------------------
corporations duly organized and existing in good standing under the laws of the
respective jurisdictions in which they are incorporated, except, in the case of
any such subsidiaries, as would not have a Material Adverse Effect (as defined
below), and have the requisite corporate power to own their properties and to
carry on their business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary and where the failure so to
qualify would have a Material Adverse Effect. "Material Adverse Effect" means
any material adverse effect on the operations, properties or financial condition
of the Company and its subsidiaries taken as a whole.
b. Authorization; Enforcement. (i) The Company has the requisite
--------------------------
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and the Escrow Agreement, and to issue the
Debentures, the Warrants, the Sigma Stock and the Registrable Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement by the Company and the consummation by it of the transactions
5
<PAGE>
contemplated hereby have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its stockholders is required, (iii) this Agreement, the
Debentures, the Warrants, the Registration Rights Agreement and the Escrow
Agreement have been (or will be on the date of the applicable Closing) duly
executed and delivered by the Company, and (iv) this Agreement, the Debentures,
the Warrants, the Registration Rights Agreement and the Escrow Agreement
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
c. Capitalization. As of September 30, 1997, the authorized capital stock
--------------
of the Company consists of 100,000,000 shares of Common Stock of which
30,371,075 shares were issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and nonassessable. No shares of
Common Stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances. Except as disclosed in the Registration Statement, as of
the effective date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries,
(ii) there are no outstanding debt securities, and (iii) there are no agreements
or arrangements under which the Company or any of its subsidiaries is obligated
to register the sale of any of its or their securities under the 1933 Act
(except as provided herein and in the Registration Rights Agreement). If
requested by the Buyer, the Company has furnished to the Buyer, and the Buyer
acknowledges receipt of same by its signature hereafter, true and correct copies
of the Company's Certificate of Incorporation, as amended, as in effect on the
date hereof ("Certificate of Incorporation"), and the Company's Bylaws, as in
effect on the date hereof (the "Bylaws").
d. Issuance of Securities. The Debentures, the Warrants, the Sigma Stock
----------------------
and the Registrable Securities are duly authorized and, upon issuance in
accordance with the terms hereof and thereof, shall be validly issued, fully
paid and non-assessable, and free from all taxes, liens and charges with respect
to the issue thereof.
e. Acknowledgment Regarding Buyer's Purchase of the Securities. The
-----------------------------------------------------------
Company acknowledges and agrees that the Buyer is not acting as financial
advisor to or fiduciary of the Company (or in any similar capacity) with respect
to this Agreement or the transactions contemplated hereby; that this Agreement
and the transactions contemplated hereby, and the relationship between the Buyer
and the Company, are "arm's-length"; and that any statement made by the Buyer,
or any of its representatives or agents, in connection with this Agreement and
the transactions contemplated hereby is not advice or a recommendation, is
merely incidental to the Buyer's purchase of the Securities and has not been
relied upon in any way by the Company, its officers or directors. The Company
further represents to the Buyer that the Company's decision to enter into this
Agreement and the transactions contemplated hereby have been based solely upon
an independent evaluation by the Company, its officers and directors.
6
<PAGE>
f. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances which would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the 1933 Act and specifically in accordance with the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the registration requirements of the 1933 Act, assuming the accuracy of each and
every one of the representations and warranties contained herein of the Buyer.
g. No Conflicts. The execution, delivery and performance of this
------------
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Certificate of
Incorporation or Bylaws (other than as a result of the limit on the number of
authorized shares of Common Stock, in which case the Company will take immediate
steps to increase as necessary the number of such authorized shares) or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations) applicable
to the Company or any of its subsidiaries or by which any property or asset of
the Company or any of its subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). The business of the Company and its subsidiaries is not being
conducted, and shall not be conducted through the Registration Period (as
defined herein), in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations which neither singly or in
the aggregate would have a Material Adverse Effect. Except as required under the
1933 Act and any applicable state securities laws, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof.
h. SEC Documents; Financial Statements. Since at least December 1, 1996,
-----------------------------------
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to as
the "SEC Documents"). The Company has delivered to the Buyer as requested by the
Buyer true and complete copies of the SEC Documents, except for such exhibits,
schedules and incorporated documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in
7
<PAGE>
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer (including the
information referred to in Section 2(d) of this Agreement) contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading.
i. Absence of Certain Changes. Except as disclosed in the Registration
--------------------------
Statement, since December 1, 1996, there has been no material adverse change and
no material adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the Company. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company
have any knowledge that its creditors intend to initiate involuntary bankruptcy
proceedings.
j. Absence of Litigation. Except as set forth in the Registration
---------------------
Statement, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein.
k. Foreign Corrupt Practices. Neither the Company nor any of its
-------------------------
subsidiaries, nor any officer, director or other person acting on behalf of the
Company or any subsidiary has, in the course of his actions for or on behalf of
the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
l. Authorization; Enforcement. This Agreement, the Debentures, the
--------------------------
Warrants, the Registration Rights Agreement and the Escrow Agreement have been
duly and validly authorized, executed and delivered by a duly authorized
representative(s) of the Company and are valid and binding agreements of the
Company enforceable in accordance with their respective terms, subject as to
enforceability only to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally. The Company (and its legal counsel) has examined
this Agreement and is satisfied in its sole discretion that this Agreement and
the accompanying Exhibits and Addenda are in accordance with Regulation D and
are effective to accomplish the purposes set forth herein and therein.
8
<PAGE>
m. No Brokers. The Company has taken no action that would give rise to
----------
any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement and the transactions contemplated hereby.
Notwithstanding the above, the Company represents and the Buyer acknowledges the
Company will use a portion of the proceeds of the transactions contemplated
hereby for the purpose of satisfying certain obligations to the Company's
investment banking firm, the Global Funding Group, for financial consulting
services provided.
n. Eligibility to File Registration Statement. The Company is currently
------------------------------------------
eligible to file a registration statement with the SEC on Form S-3 or another
equivalent registration form.
o. Registration Statement on Form S-1. The Company represents and
----------------------------------
warrants that it filed the Registration Statement with the SEC on November 13,
1997 (the Registration Statement may also be referred to hereinafter as the
"Form S-1"). The Company expects (but does not guarantee) the Form S-1 to be
declared effective by the SEC on or before January 15, 1998.
p. Registration Statement with Respect to Sigma 7 Corporation. The
----------------------------------------------------------
Company represents and warrants that it will use its best efforts to cause its
majority owned subsidiary, Sigma 7 Corporation, to file, on or about December
20, 1997, a registration statement with the SEC for an initial public offering
(the "IPO") of the common stock of Sigma 7 Corporation, which IPO the Company
anticipates (but does not guarantee) will take place in March, 1998. The Sigma
Stock will contain "piggyback rights" to be included in the registration
statement filed by Sigma 7 Corporation. The Buyer by its acceptance of the Sigma
Stock acknowledges and agrees that it will comply with the reasonable
requirements of the underwriter with respect to the sales of the Sigma Stock in
connection with such IPO.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts timely to satisfy
------------
each of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this Agreement.
b. Securities Laws. The Company agrees to timely file a Form D with
---------------
respect to the Securities if and as required under Regulation D and to provide a
copy thereof to the Buyer promptly after such filing. The Company shall, on or
before the date of the First Closing and on or before the date of the Second
Closing, as applicable, take such action as is necessary to sell the Securities
being sold to the Buyer on each such date under applicable securities laws of
the United States, and shall if specifically so requested provide evidence of
any such action so taken to the Buyer on or prior to the First Closing Date or
the Second Closing Date, as applicable.
c. Reporting Status. Until the earlier of (i) the date as of which the
----------------
Buyer may sell all of the Registrable Securities without restriction pursuant to
Rule 144(k) (or successor thereto) promulgated under the 1933 Act, or (ii) the
date on which both (x) the Buyer shall have sold all the Registrable Securities
and (y) none of the Debentures is outstanding (the "Registration Period"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.
9
<PAGE>
d. Use of Proceeds. The Company will use the proceeds from the sale of
---------------
the Securities to pay off certain outstanding obligations of the Company and for
the Company's internal working capital purposes, including costs and expenses of
the Company's business operations, and to the extent advisable by the Company,
for the purchase of new technologies by the Company and its subsidiaries, and
for the purchase of additional subsidiaries and the development and marketing of
their technologies.
e. Financial Information. At the request of the Buyer, the Company agrees
---------------------
to send the following reports to the Buyer during the Registration Period: (i)
after filing with the SEC, a copy of each of its Annual Reports on Form 10-K,
its quarterly Reports on Form 10-Q, and any reports filed on Form 8-K; and (ii)
as soon as practicable after release thereof, copies of all press releases
issued by the Company or any of its subsidiaries.
f. Reservation of Shares. The Company shall at all times have authorized,
---------------------
and reserved for the purpose of issuance, a sufficient number of shares of
Common Stock to provide for the issuance of all of the Conversion Shares, the
Warrant Shares and the Interest Shares (if any). Prior to complete conversion of
the Debentures and the complete exercise or expiration of the Warrants, the
Company shall not reduce the number of shares reserved for issuance hereunder
without the written consent of the Buyer except for a reduction proportionate to
a reverse stock split effected for a business purpose other than affecting the
requirements of this Section, which reverse stock split affects all shares of
Common Stock equally.
g. Listing. The Company shall promptly secure the listing of the
-------
Registrable Securities upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all shares of
Registrable Securities from time to time issuable under the terms of this
Agreement and the Registration Rights Agreement.
h. Registration Statement on Form S-1. The Company will, on or before
----------------------------------
January 15, 1998, amend the Form S-1 to include the Registrable Securities, to
the extent permitted by law. To the extent the Registrable Securities are
included in the Form S-1, they will not be included in the registration
statement filed in accordance with the Registration Rights Agreement. Should all
of the Registrable Securities be included in the Form S-1, then (notwithstanding
anything herein or in the Registration Rights Agreement to the contrary) the
Company shall not be required to file a registration statement as contemplated
in the Registration Rights Agreement. The Form S-1 shall be kept current and
effective until the earlier of the following: (x) the date on which all of the
Registrable Securities are registered with the SEC, or (y) the date which is two
(2) years from the date the Form S-1 is declared effective by the SEC. During
the period of time in which the Form S-1 is effective, the Company shall amend
the Form S-1 from time to time as necessary to include any Registrable
Securities which were not previously registered pursuant to the Form S-1.
i. Prospectus Delivery Requirement. The Buyer understands that the 1933
-------------------------------
Act may require delivery of a prospectus relating to the Common Stock in
connection with any sale thereof pursuant to a registration statement under the
1933 Act covering any resale by the Buyer of the Common Stock being sold, and
the Buyer shall use its reasonable best efforts to comply
10
<PAGE>
with any applicable prospectus delivery requirements of the 1933 Act in
connection with any such sale.
j. Intentional Acts or Omissions. Neither party shall intentionally
-----------------------------
perform any act which if performed, or omit to perform any act which if omitted
to be performed, would prevent or excuse the performance of this Agreement or
any of the transactions contemplated hereby.
k. No Shorting. The Buyer represents that it has not as of the date
-----------
hereof, and covenants on behalf of itself and its affiliates that neither Buyer
nor any affiliate of Buyer will at any time in which the Buyer or any affiliate
of the Buyer beneficially owns any of the Securities, engage in any short sales
of, or hedging or arbitrage transactions with respect to, the Common Stock, or
sell "put" options or similar instruments with respect to the Common Stock.
5. LEGEND AND TRANSFER INSTRUCTIONS.
a. Transfer Agent Instructions. The Company shall instruct its transfer
---------------------------
agent to issue certificates, registered in the name of the Buyer or its nominee,
for the Conversion Shares, the Interest Shares (if any) and the Warrant Shares
in accordance with the terms of the Debentures and the Warrants and in such
amounts as specified from time to time by the Buyer to the Company. All such
certificates shall bear the restrictive legend specified in Section 2(g) of this
Agreement unless otherwise permitted by applicable law and specified herein or
in the Debentures, the Warrants or the Registration Rights Agreement. The
Company warrants that no instruction other than such instructions referred to in
this Section 5, and stop transfer instructions to give effect to Section 2(f)
hereof in the case of the Registrable Securities prior to the registration of
same under the 1933 Act, will be given by the Company to its transfer agent and
that the Registrable Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent permitted by applicable
law and provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Registrable Securities. If the Buyer (x) provides the Company with an opinion of
counsel, reasonably satisfactory in form, substance and scope to the Company,
that registration of a resale by the Buyer of the Debentures or the Registrable
Securities is not required under the 1933 Act, or (y) transfers Securities to an
affiliate which is an accredited investor (in accordance with the provisions of
this Agreement) or pursuant to Rule 144, then in either instance the Company
shall permit the said transfer, and if applicable promptly instruct its transfer
agent to issue one or more certificates in such name and in such denominations
as specified by the Buyer.
b. Removal of Legends. The Legend shall be removed and the Company shall
------------------
issue a certificate without such Legend to the holder of any Security upon which
it is stamped, and a certificate for a security shall be originally issued
without the Legend, if, unless otherwise required by state securities laws, (x)
the sale of such Security is registered under the 1933 Act, or (y) such holder
provides the Company with an opinion of counsel, in form, substance and scope
reasonably satisfactory to the Company, to the effect that a public sale or
transfer of such Security may be made without registration under the 1933 Act or
(z) such holder provides the Company with assurances reasonably satisfactory to
the Company that such Security can be sold pursuant to Rule 144. The Buyer
agrees to sell all Securities, including those represented by a certificate(s)
from which the Legend has been removed, or which were originally issued without
the Legend, pursuant to an effective registration statement (and to deliver a
prospectus in
11
<PAGE>
connection with such sale) or in compliance with an exemption from the
registration requirements of the 1933 Act. In the event the Legend is removed
from any Security or any Security is issued without the Legend and thereafter
the effectiveness of a registration statement covering the sales of such
Security is suspended or the Company determines that a supplement or amendment
thereto is required by applicable securities laws, then upon reasonable advance
notice to the holder of such Security, the Company may require that the Legend
be placed upon any such Security which can not then be sold pursuant to an
effective registration statement or Rule 144 or with respect to which the
opinion referred to in clause (y) next above has not been rendered, which Legend
shall be removed when such Security may be sold pursuant to an effective
registration statement or Rule 144 or such holder provides the opinion with
respect thereto described in clause (y) next above.
c. Injunctive Relief for Breach. The Company acknowledges that the remedy
----------------------------
at law for a breach of its obligations under Sections 5(a) and 5(b) above will
cause irreparable harm to the Buyer by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly the Company agrees that the remedy
at law for a breach of its obligations under such Sections would be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of such Sections, the Buyer shall be entitled, in addition to all
other remedies at law or in equity, to an injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the
Company hereunder to sell the Debentures, the Warrants, the Stock and the Sigma
Stock at the applicable Closing is subject to the satisfaction, at or before the
date of the applicable Closing as described herein, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. The parties shall have executed this Agreement, the Registration Rights
Agreement and the Escrow Agreement, and the parties shall have delivered the
respective documents or signature pages thereof (via facsimile or otherwise as
permitted in the Escrow Agreement) to the Escrow Agent on behalf of each other.
b. The Buyer shall have delivered to the Escrow Agent on behalf of the
Company the First Closing Purchase Price for the First Closing, or the Second
Closing Purchase Price for the Second Closing, as applicable, by wire transfer
of immediately available funds pursuant to the wiring instructions provided by
the Escrow Agent.
c. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date made and as of the date of the
applicable Closing as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the date of the applicable Closing.
7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of
the Buyer to purchase the Debentures, the Warrants, the Stock and the Sigma
Stock
12
<PAGE>
is subject to the satisfaction, at or before the date of the applicable Closing,
of each of the following conditions, provided that these conditions are for the
sole benefit of the Buyer and may be waived by the Buyer at any time in its sole
discretion:
a. The parties shall have executed this Agreement, the Registration Rights
Agreement and the Escrow Agreement, and the parties shall have delivered the
respective documents or signature pages thereof (via facsimile or otherwise as
permitted in the Escrow Agreement) to the Escrow Agent on behalf of each other.
b. The representations and warranties of the Company shall be true and
correct in all material respects as of the date made and as of the date of the
applicable Closing as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the date of the applicable
Closing. The Buyer may require a certificate, executed by the Chief Executive
Officer of the Company, dated as of the date of such Closing, to the foregoing
effect and as to such other matters as may be reasonably requested by the Buyer.
c. With respect to each Closing called for herein, the Company shall have
executed and delivered to the Escrow Agent on behalf of the Buyer the
Debentures, the Warrants, the Stock and/or the Sigma Stock, as applicable, being
sold at such Closing (via facsimile or otherwise as permitted in the Escrow
Agreement, provided that a facsimile of such documents shall be followed with
physical delivery to the Escrow Agent of the original instrument or security
within one (1) business day after facsimile of same to the Escrow Agent).
d. The Common Stock shall be authorized for quotation on the OTC Bulletin
Board Market (or other national securities market including but not limited to
the NASDAQ Small Cap Market) and trading in the Common Stock on such market
shall not have been suspended by the SEC or other relevant regulatory agency.
e. The Company shall not have received, as of the date of the applicable
Closing, from NASDAQ or the National Association of Securities Dealers, Inc.,
any written or oral communication as to its actual or potential ineligibility
for continued listing of the Common Stock on the OTC Bulletin Board Market, the
substance of which shall not have been publicly disclosed.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws. In the event of any litigation regarding the
interpretation or application of this Agreement, the parties consent to the
nonexclusive jurisdiction in any of the federal courts located in the State of
Colorado and waive their rights to object to venue in any such court, regardless
of the convenience or inconvenience thereof to any party. Service of process in
any civil action relating to or arising out of this Agreement (including also
all Exhibits or Addenda hereto) or the transaction(s) contemplated herein may be
accomplished via certified mail, return receipt requested, and the parties
hereby irrevocably acknowledge and agree that such service of process by
certified mail at the parties' respective addresses as noted in Section 8(f)
below (or such other
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<PAGE>
address as the party being served shall have provided as required in Section
8(f)) shall be sufficient to subject the party being served thereby to personal
jurisdiction in the state of Colorado, U.S.A.
b. Counterparts. This Agreement may be executed in two or more identical
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
signature pages from such counterparts have been delivered to the Escrow Agent
on behalf of the other party. In the event any signature page is delivered by
facsimile transmission (which the parties agree is an acceptable form of
delivery), the party using such means of delivery shall cause four (4)
additional original executed signature pages to be physically delivered to the
Escrow Agent on behalf of the other party within two (2) business days of the
execution and delivery hereof.
c. Headings; Gender; Etc. The headings of this Agreement are for
---------------------
convenience of reference and shall not form part a of, or affect the
interpretation of, this Agreement. As used herein, the masculine shall refer to
the feminine and neuter, the feminine to the masculine and neuter, and the
neuter to the masculine and feminine, as the context may require. As used
herein, unless the context clearly requires otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to
the Section or paragraph in which such word appears. If any date specified
herein falls upon a Saturday, Sunday or public or legal holiday, the date shall
be construed to mean the next business day following such Saturday, Sunday or
public or legal holiday. For purposes of this Agreement, a "business day" is any
day other than a Saturday, Sunday or public or legal holiday.
d. Severability. If any provision of this Agreement shall be invalid or
------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
----------------------------
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notices required or permitted to be given under the terms
-------
of this Agreement shall be sent by U.S. mail or delivered personally or by
courier or via facsimile (if via facsimile, to be followed within three (3)
business days by an original of the notice document via U.S. mail or courier)
and shall be effective five (5) days after being placed in the mail, if mailed,
certified or registered, return receipt requested, or upon receipt, if delivered
personally or by courier or by facsimile, in each case properly addressed to the
party to receive the same. The addresses for such communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
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<PAGE>
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to the Buyer, at the address on the signature page of this Agreement.
Each party shall provide written notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties and their respective successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other (which
consent shall not be unreasonably withheld), and in any event any assignee of
the Buyer shall be an accredited investor (as defined in Regulation D).
Notwithstanding the foregoing, if applicable, any of the entities constituting
the Buyer (if greater than one (1) entity) may assign its rights hereunder to
any of its "affiliates," as that term is defined under the 1934 Act, without the
consent of the Company; provided, however, that any such assignment shall not
release such assigning entity from its obligations hereunder unless such
obligations are assumed by such affiliate and the Company has prior to such
assignment and assumption consented in writing to the same; and no such
assignment shall be made unless it is made in accordance with any applicable
securities laws of any applicable jurisdiction. Any request for an assignment
made hereunder by the Buyer shall be accompanied by an opinion of counsel that
such assignment is proper under applicable law.
h. No Third Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. Unless this Agreement is terminated under Section 8(l), the
--------
representations and warranties of the Company and the Buyer contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5,
8(g), 8(h) and 8(k), and this subsection shall survive the closing.
j. Publicity. The Company and the Buyer shall have the right to approve
---------
before issuance any press releases or any other public statements with respect
to the transactions contemplated hereby; provided, however, that the Company
shall be entitled, without the prior approval of the Buyer, to make any press
release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the First Closing shall not have
-----------
occurred on or before ten (10) business days from the date hereof, this
Agreement shall terminate at the close of business on such date, and the party
responsible for the non-occurrence of such Closing shall be liable to the other
party for its damages incurred as a result of such non-occurrence. Neither party
15
<PAGE>
may terminate this Agreement after the First Closing and prior to the Second
Closing for any reason other than a material breach of this Agreement by the
non-terminating party.
m. Remedies. No provision of this Agreement providing for any specific
--------
remedy to a party shall be construed to limit such party to the specific remedy
described, and any other remedy which would otherwise be available to such party
at law or in equity shall be so available. Nothing in this Agreement shall limit
any rights a party may have with any applicable federal or state securities laws
with respect to the transactions contemplated hereby.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
[SIGNATURE PAGE FOLLOWS]
16
<PAGE>
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT
DATED DECEMBER 3, 1997]
COMPANY:
INTERCELL CORPORATION
By: /s/ Paul H. Metzinger
-------------------------------------------------
Mr. Paul H. Metzinger, President and CEO
BUYER:
FT TRADING
By: /s/ Thomas F. Duszinski
-------------------------------------------------
(Signature of authorized officer)
___________________________________________________
(Print name and title)
BUYER'S ADDRESS:
FT Trading
c/o Griffin Trading
78 Cannon Street
London, England
EC4N6HH
Telephone: 011-441719199199
Facsimile: 011-441719291646
17
<PAGE>
EXHIBIT 10.4
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December
3, 1997, by and between Rentech, Inc., a corporation organized under the laws of
the State of Colorado, U.S.A., with headquarters located at 1331 17th Street,
Suite 720, Denver, Colorado 80202 (the "Company"), and the buyer set forth on
the execution page hereof (the "Buyer").
RECITALS
A. In connection with the Securities Purchase Agreement by and between
the parties of even date herewith (the "Securities Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyer (i) a number of
shares of the Company's Series 1997-B Convertible Preferred Stock of Rentech,
Inc. (the "Series B Shares") and (ii) a number of shares of the Company's Series
1997-C Convertible Preferred Stock of Rentech, Inc. (the "Series C Shares"). The
Series B Shares and the Series C Shares (collectively, the "Preferred Shares")
are each convertible in accordance with the terms of the Articles of Amendment
(as defined in the Securities Purchase Agreement) into common stock of the
Company, no par value per share ("Common Stock"). The Common Stock into which
the Preferred Shares are convertible may be referred to herein as the
"Conversion Shares." In accordance with the terms of the Articles of Amendment,
shares of Common Stock may be issued in payment of dividends ("Dividend
Shares").
B. To induce the Buyer to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by all parties hereto, the Company
and the Buyer hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the
following meanings:
i. "Investor" or "Investors" means the Buyer and any permitted
transferee(s) or assignee(s) thereof to whom the Buyer assigns this
Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
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<PAGE>
ii. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement
or Statements in compliance with the 1933 Act and pursuant to Rule 415
under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission (the "SEC").
iii. "Registrable Securities" means the Conversion Shares and the
Dividend Shares (if any), and any shares of capital stock issued or
issuable, from time to time (with any adjustments) on or in exchange
for or otherwise with respect to either of the foregoing (including
without limitation any shares issued pursuant to Section 2(b)
hereinafter).
iv. "Registration Statement" or "Registration Statements" means a
registration statement or statements of the Company filed under the 1933
Act.
b. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall use its best efforts to
----------------------
prepare, and, on or before sixty (60) days after the date of the First Closing,
file with the SEC a Registration Statement or Registration Statements (as
necessary) on Form S-3 (or, if such form is unavailable for such a registration,
on such other form as is available for such a registration of all of the
Registrable Securities) (any of which may contain a combined prospectus with
other registrations by the Company), covering the resale of all of the
Registrable Securities, which Registration Statement(s), to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including without
limitation Rule 416), shall state that such Registration Statement(s) also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon conversion of the Preferred Shares to prevent dilution
resulting from stock splits, stock dividends or similar transactions. A copy of
the Registration Statement(s) (and each amendment or supplement thereto, and
each request for acceleration of effectiveness thereof) shall be provided to
(and subject to the approval of the Buyer, which approval shall not be
unreasonably withheld or denied) the Buyer and its counsel prior to its filing
or other submission.
b. Liquidated Damages. The Company shall use its best efforts to obtain
------------------
effectiveness of the Registration Statement as soon as practicable. If (i) the
Registration Statement(s) covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not declared effective
by the SEC within ninety (90) days after the date of the First Closing (other
than by reason of any act or failure to act in a timely manner by the Investors
or their counsel) (the "Registration Deadline") or if, after the Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to the Registration Statement (by reason of stop order, the Company's failure to
update the Registration Statement, or any other reason outside the control of
the Investors), or (ii) the Common Stock is not listed or included for quotation
on the National Association of Securities Dealers Automated Quotation system
Small Cap Market ("NASDAQ Small Cap"), or another United States national
exchange,
2
<PAGE>
then the Company will make payments to the Investors, as liquidated damages and
in such amounts and at such times as shall be determined pursuant to this
Section 2(b) as partial relief for the damages to the Investors by reason of any
such delay in or reduction of their ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law or
in equity), an amount to be determined as follows. The Company shall pay to the
Investor an amount equal to the purchase price for the Series B Shares purchased
at the First Closing (including, without limitation, any Preferred Shares that
have been converted into Conversion Shares then held by such Investors) (the
"Aggregate Share Price") multiplied by two and one-half hundredths (.025) times
the sum of: (i) the number of months (prorated for partial months) beginning the
day after the Registration Deadline and ending on the date the Registration
Statement is declared effective by the SEC, provided, however, that there shall
be excluded from such period any delays which are solely attributable to changes
required by the Investors in the Registration Statement with respect to
information relating to the Investors, including, without limitation, changes to
the plan of distribution, or to the failure of the Investors to conduct their
review of the registration statement pursuant to Section 2(a) above in a
reasonably prompt manner; (ii) the number of months (prorated for partial
months) that sales cannot be made pursuant to the Registration Statement after
the Registration Statement has been declared effective; and (iii) the number of
months (prorated for partial months) that the Common Stock is not listed or
included for quotation on the NASDAQ Small Cap or another United States
national exchange after the Registration Statement has been declared effective.
For example, if the Registration Statement becomes effective one (1) month
-----------
after the end of such ninety (90) day period, the Company would pay US $12,500
for each US $500,000 of Aggregate Share Price and would continue to pay US
$12,500 for each US $500,000 of Aggregate Share Price until the Registration
Statement becomes effective.
Such amounts shall be paid in cash or, at the Investor's option such
amounts may be convertible into Common Stock at the "Conversion Price" for the
Series B Shares, as defined in the Articles of Amendment. Any shares of Common
Stock issued upon conversion of such amounts shall be Registrable Securities. If
the Investor desires to convert the amounts due hereunder into Registrable
Securities it shall so notify the Company in writing within two (2) business
days of the date on which such amounts are first payable in cash and such
amounts shall be so convertible (pursuant to the mechanics set forth in the
Debentures), beginning on the last day upon which the cash amount would
otherwise be due in accordance with the following sentence. Payments of cash
pursuant hereto shall be made within five (5) days after the end of each period
that gives rise to such obligation, provided that, if any such period extends
for more than thirty (30) days, interim payments shall be made for the full
amount owed up to the date of such interim payment at the end of each thirty
(30) day period.
c. Piggy-Back Registrations. If the Company has previously filed
------------------------
(previous to the date of this Agreement), or at any time prior to the expiration
of the Registration Period (as hereinafter defined) the Company shall file with
the SEC a Registration Statement relating to an offering for its own account or
the account of others under the 1933 Act of any of its equity securities (other
than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans) the Company shall send to the Investor written
notice of such determination and, if within twenty (20) days after receipt of
such notice, such Investor shall so request in writing, the Company
3
<PAGE>
shall include in such Registration Statement all or any part of the Registrable
Securities such Investor requests to be registered, except that if, in
connection with any underwritten public offering for the account of the Company
the managing underwriter(s) thereof shall impose a limitation on the number of
shares of Common Stock which may be included in the Registration Statement
because, in such underwriter(s)' reasonable good faith judgment, marketing or
other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities
with respect to which such Investor has requested inclusion hereunder; provided
that no portion of the equity securities which the Company is offering for its
own account shall be excluded; provided, further that the Company shall be
entitled to exclude Registrable Securities to the extent necessary to avoid
breaching obligations existing prior to the date hereof to other stockholders of
the Company.
Any exclusion of Registrable Securities shall be made pro rata among the
Investors seeking to include Registrable Securities, in proportion to the number
of Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such Registration Statement
or are not entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights or whose registration rights existed prior
to the date hereof. No right to registration of Registrable Securities under
this Section 2(c) shall be construed to limit any registration required under
Section 2(a) hereof. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten offering,
then each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IF THE REGISTRABLE
SECURITIES ARE INCLUDED IN AND REGISTERED UNDER FORM S-1 NO. 333-40175, FILED
WITH THE SEC ON NOVEMBER 13, 1997 (THE "FORM S-1"), THEN TO THE EXTENT OF SUCH
INCLUSION AND REGISTRATION, NO REGISTRATION STATEMENT NEED BE FILED WITH RESPECT
TO SUCH REGISTRABLE SECURITIES INCLUDED IN AND REGISTERED UNDER THE FORM S-1,
AND THIS REGISTRATION RIGHTS AGREEMENT SHALL BE VOID WITH RESPECT TO SUCH
REGISTRABLE SECURITIES INCLUDED IN AND REGISTERED UNDER THE FORM S-1. THEREFORE,
IF ALL OF THE REGISTRABLE SECURITIES ARE INCLUDED IN AND REGISTERED UNDER THE
FORM S-1, NO REGISTRATION STATEMENT NEED BE FILED HEREUNDER.
d. Eligibility for Form S-3. The Company represents and warrants that it
------------------------
meets the requirements for the use of Form S-3 for registration of the sale by
the Buyer and any other Investor of the Registrable Securities and the Company
shall file all reports required to be filed by the Company with the SEC in a
timely manner so as to maintain such eligibility for the use of Form S-3. In the
event that Form S-3 is not available for registration of the Registrable
Securities, the Company shall register the securities on another appropriate
form.
4
<PAGE>
3. RELATED OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Company shall have the following obligations:
a. The Company shall use its best efforts to cause such Registration
Statement(s) relating to Registrable Securities to become effective as soon as
possible after such filing, but in no event later than the Registration
Deadline, and keep the Registration Statement(s) effective pursuant to Rule 415
at all times until the earlier of (i) the date on which all of the Registrable
Securities have been sold (and no further Registrable Securities may be issued
in the future), (ii) the date as of which the Investors may immediately sell all
of the Registrable Securities without restriction pursuant to Rule 144
promulgated under the 1933 Act (or successor thereto) or otherwise, or (iii) the
date on which none of the Preferred Shares is outstanding (the "Registration
Period"), which Registration Statement(s) (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company covered by the Registration Statement until such time
as all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement. In the event the number of shares available
under a Registration Statement filed pursuant to this Agreement is insufficient
to cover all of the Registrable Securities issued or issuable upon conversion of
the Preferred Shares, the Company shall amend the Registration Statement, or
file a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover all of the Registrable Securities, in each
case, as soon as practicable, but in any event within fifteen (15) days after
the necessity therefor arises (based on the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to rely). The
Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof.
c. The Company shall furnish to each Investor whose Registrable Securities
are included in the Registration Statement(s) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, (i) one copy of the Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto in each case relating to such Registration Statement (other than any
portion thereof which contains information for which the Company has sought
confidential treatment) and, in the case of the Registration Statement referred
to in Section 2(a), each letter written by or on behalf of the Company to the
SEC or the staff of the SEC, and each item of correspondence from the SEC or the
staff of the SEC, in each case relating to such Registration Statement; and (ii)
such number of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto and such other documents as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned (or to be owned) by such Investor.
5
<PAGE>
d. The Company shall use reasonable efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement(s) under such
other securities or "blue sky" laws of such jurisdictions in the United States
as each Investor who holds (or has the right to hold) Registrable Securities
being offered reasonably requests, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause more than nominal expense
or burden to the Company, or (e) make any change in its charter or bylaws, which
in each case the Board of Directors of the Company determines to be contrary to
the best interests of the Company and its stockholders.
e. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to each Investor as such Investor may reasonably
request.
f. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof.
g. [Intentionally omitted.]
h. At the request of the Investor, but no more than two (2) times in any
one ninety (90) day period, the Company shall furnish, on the date of
effectiveness of the Registration Statement and thereafter from time to time on
such dates as the Investor may reasonably request (i) if required by an
underwriter, a letter, dated such date, from the Company's independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Investor; and (ii) an opinion,
dated as of such requested date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters and the Investors.
i. The Company shall make available for inspection by (i) any Investor,
(ii) any underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of
6
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attorneys and one firm of accountants or other agents retained by the Investors,
and (iv) one firm of attorneys retained by all such underwriters (collectively,
the "Inspectors") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the "Records"),
as shall be reasonably deemed necessary by each Inspector to enable each
Inspector to exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
that each Inspector shall hold in strict confidence and shall not make any
disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement. The Company shall not be required to disclose any
confidential information in such Records to any Inspector until and unless such
Inspector shall have entered into confidentiality agreements (in form and
substance reasonably satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(i). Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential.
j. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final, non-
appealable order from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the public other than
by disclosure in violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor and
allow such Investor, at the Investor's expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information.
k. The Company shall use its best efforts either to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on each
national securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by the Registration Statement on the NASDAQ Small Cap or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure the
inclusion for quotation on the OTC Bulletin Board for such Registrable
Securities.
l. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, any managing underwriter
or underwriters, to
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facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing underwriter or
underwriters, if any, or, if there is no managing underwriter or underwriters,
the Investors may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or the Investors may request. Not
later than the date on which any Registration Statement registering the resale
of Registrable Securities is declared effective, the Company shall deliver (at
its expense) to its transfer agent instructions, accompanied by any required
opinion of counsel, that permit sales of unlegended securities in a timely
fashion that complies with then mandated securities settlement procedures for
regular way market transactions.
m. The Company shall provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
n. The Company shall comply with all applicable laws relating to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including without limitation the 1933 Act and the Securities Exchange Act of
1934, as amended, and all the rules and regulations promulgated by the SEC).
n. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to a Registration Statement.
4. OTHER OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
a. At least fifteen (15) days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor's Registrable Securities included in the
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement(s) hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority of the Registrable Securities
being registered determine to engage the services of an underwriter, each
Investor agrees to enter into and perform such Investor's obligations under an
underwriting agreement, in usual and
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customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless such Investor
notifies the Company in writing of such Investor's election to exclude all of
such Investor's Registrable Securities from the Registration Statement(s).
d. Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e) or 3(f),
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) or 3(f) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements approved by the Investors
entitled hereunder to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION. The Company agrees to pay all reasonable
expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend each Investor who holds such Registrable Securities, the
directors, officers and each person who controls any Investor within the meaning
of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), if any and any underwriter (as defined in the 1933 Act) for the
Investors, and the directors and the officers of, and each person, if any, who
controls, any such underwriter within the meaning of the 1933 Act or the 1934
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) (collectively, "Claims") to which any
of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or the omission or alleged omission to state a material
fact therein required to be stated or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
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prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(d) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of the material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such prospectus
was timely made available by the Company pursuant to Section 3(c) hereof; (iii)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company; and (iv) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement or to the
extent such Claim is based upon any violation or alleged violation by the
Investor of the 1933 Act, 1934 Act or any other law; and such Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement
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of any Claim if such settlement is effected without the prior written consent of
such Investor, which consent shall not be unreasonably withheld; provided,
further, however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
c. The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The Company shall pay reasonable fees for only one separate legal
counsel for the Investors, and such legal counsel shall be selected by the
Investors holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates; provided, that legal
fees of such firm shall be reasonable. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend
such action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as such expense, loss, damage or liability is incurred and is due
and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent
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misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit the investors
to sell securities of the Company to the public without registration ("Rule
144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assignable by the Investors to any transferee of all or any
portion of Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws,
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein, (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement, (vi) such transferee shall be an "accredited
investor" as that term defined in Rule 501 of Regulation D promulgated under the
1933 Act; and (vii) in the event the assignment occurs subsequent to the date of
effectiveness of the Registration Statement required to be filed pursuant to
Section 2(a), the transferee agrees to pay all reasonable expenses of amending
or supplementing such Registration Statement to reflect such assignment.
Notwithstanding anything herein to the contrary, no assignment of the rights
represented by this Agreement shall be effective unless in compliance with any
applicable securities laws of any applicable jurisdiction.
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10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by registered or certified mail, return receipt
requested, or delivered personally or by courier and shall be effective five
days after being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier or facsimile, in each case properly addressed to the
party to receive such notice. The addresses for such communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to the Buyer, at the address on the signature page of the Securities
Purchase Agreement. Each party shall provide written notice to the other party
of any change in address.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware without regard to the principles of conflict
of laws. If any provision of this Agreement shall be invalid of unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. Service of process in any civil action
relating to or arising out of this Agreement (including also all Exhibits or
Addenda hereto) or the transaction(s) contemplated herein may be accomplished
via certified mail, return receipt requested, and the parties hereby irrevocably
acknowledge and agree that such service of process by certified mail at the
parties' respective addresses as noted in Section 11(b) above (or such other
address as the party being served shall have provided as required in Section
11(b)) shall be sufficient to subject the party being served thereby to personal
jurisdiction in the state of Colorado, U.S.A.
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e. This Agreement, the Debentures, the Warrants, the Escrow Agreement and
the Securities Purchase Agreement (including all exhibits and addenda thereto)
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of the signature
page of this Agreement bearing the signature of the party so delivering this
Agreement to the Escrow Agent, with the original executed Agreement to be
delivered to the Escrow Agent via overnight delivery.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
DATED DECEMBER 3, 1997]
COMPANY:
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
-----------------------------------------
Paul H. Metzinger, President & CEO
BUYER:
THE AUGUSTINE FUND. L.P.
By: Augustine Capital Management, Inc.
By /s/ Thomas F. Duszinski
-----------------------------------------
(Signature of authorized officer)
(Print name and title)
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EXHIBIT 10.5
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December
3, 1997, by and between Intercell Corporation, a corporation organized under the
laws of the State of Colorado, U.S.A., with headquarters located at 370 17th
Street, Suite 3290, Denver, Colorado 80202 (the "Company"), and the buyer set
forth on the execution page hereof (the "Buyer").
RECITALS:
A. In connection with the Securities Purchase Agreement by and among the
parties of even date herewith (the "Securities Purchase Agreement"), the Company
has agreed, upon the terms and subject to the conditions of the Securities
Purchase Agreement to issue and sell to the Buyer, in two separate closings as
described in the Securities Purchase Agreement: (i) the Company's Series A-1(b)
and A-2(b) Nine Percent (9%) Redeemable Convertible Debentures Due December 1,
1999, and April 1, 1999, respectively (singly a "Debenture" and collectively,
the "Debentures"), which will be convertible into shares of the Company's common
stock, no par value per share ("Common Stock," and as converted, the "Conversion
Shares"), and pursuant to which Debentures certain shares of Common Stock may be
issued to the Buyer in payment of interest (the "Interest Shares"); (ii) the
Stock (as defined in the Securities Purchase Agreement); and (iii) the Warrants
(as defined in the Securities Purchase Agreement), which are exercisable in
accordance with their respective terms into Warrant Shares (as defined in the
Securities Purchase Agreement); and
B. To induce the Buyer to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by all parties hereto, the Company
and the Buyer hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the following
meanings:
i. "Investor" or "Investors" means the Buyer and any permitted
transferee(s) or assignee(s) thereof to whom the Buyer assigns this
Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
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ii. "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under
the 1933 Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
iii. "Registrable Securities" means the Conversion Shares, the Warrant
Shares, the Stock and the Interest Shares (if any), and any shares of
capital stock issued or issuable as a dividend on or in exchange for or
otherwise with respect to either of the foregoing (including without
limitation any shares issued pursuant to Section 2(b) hereinafter).
iv. "Registration Statement" or "Registration Statements" means a
registration statement or statements of the Company filed under the 1933
Act.
b. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
a. Mandatory Registration. The Company shall use its best efforts to
----------------------
prepare, and, on or before sixty (60) days after the First Closing Date and
payment to the Company of the First Closing Purchase Price by the Buyer as
stated in Section 1(a)(i) of the Securities Purchase Agreement, file with the
SEC a Registration Statement or Registration Statements (as is necessary) on
Form S-3 (or, if such form is unavailable for such a registration, on such other
form as is available for such a registration) (any of which may contain a
combined prospectus with other registrations by the Company), covering the
resale of the Registrable Securities, which Registration Statement(s) shall
state that, in accordance with Rule 416 promulgated under the 1933 Act, such
Registration Statement(s) also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Debentures
or exercise of the Warrants to prevent dilution resulting from stock splits,
stock dividends or similar transactions. A copy of the Registration Statement(s)
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to the Buyer and its counsel prior to
its filing or other submission. So long as the Company uses its best efforts to
meet the time requirements contained in this Section 2(a), its inability to do
so shall not of itself constitute a default hereunder.
b. Liquidated Damages. The Company shall use its best efforts to obtain
------------------
effectiveness of the Registration Statement as soon as practicable. If (i) the
Registration Statement(s) covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not declared effective
by the SEC within ninety (90) days after the First Closing Date of the sale of
the Debentures (other than by reason of any act or failure to act in a timely
manner by the Investors or their counsel) or if, after the Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to the Registration Statement (by reason of stop order, or the Company's failure
to update the Registration Statement), or (ii) the Common Stock is not listed or
included for quotation on the National Association of Securities Dealers Over
the Counter Bulletin Board Market ("OTC: Bulletin Board"), or another United
States national exchange, then the Company will make payments to the Investors,
as liquidated
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damages and in such amounts and at such times as shall be determined pursuant to
this Section 2(b) as partial relief for the damages to the Investors by reason
of any such delay in or reduction of their ability to sell the Registrable
Securities (which remedy shall not be exclusive of any other remedies available
at law or in equity), an amount to be determined as follows. The Company shall
pay to the Investor an amount equal to the aggregate First Closing Purchase
Price (as defined in Section 1(a)(i) of the Securities Purchase Agreement) of
the Debentures (or successor Debentures, in the case of a partial conversion of
a Debenture and issuance of a successor Debenture (a "Successor Debenture") by
the Company (including, without limitation, any portion of a Debenture or a
Successor Debenture that has been converted into Conversion Shares then held by
such Investors) (the "Aggregate Share Price") multiplied by two and one-half
hundredths (.025) times the sum of: (i) the number of months (prorated for
partial months) after the end of such ninety (90) day period and prior to the
date the Registration Statement is declared effective by the SEC, provided,
however, that there shall be excluded from such period any delays which are
solely attributable to changes required by the Investors in the Registration
Statement with respect to information relating to the Investors, including,
without limitation, changes to the plan of distribution, or to the failure of
the Investors to conduct their review of the registration statement pursuant to
Section 2(a) above in a reasonably prompt manner; (ii) the number of months
(prorated for partial months) that sales cannot be made pursuant to the
Registration Statement after the Registration Statement has been declared
effective; and (iii) the number of months (prorated for partial months) that the
Common Stock is not listed or included for quotation on OTC Bulletin Board or
another United States national exchange after the Registration Statement has
been declared effective.
For example, if the Registration Statement becomes effective one (1) month
-----------
after the end of such ninety (90) day period, the Company would pay US $18,750
for each US $750,000 of Aggregate Share Price and would continue to pay US
$18,750 for each US $750,000 of Aggregate Share Price until the Registration
Statement becomes effective.
Such amounts shall be paid in cash or, at the Company's option may be
convertible into Common Stock at the "Market Price" as defined in the A-2
Debenture. Any shares of Common Stock issued upon conversion of such amounts
shall be Registrable Securities. If the Company desires to convert the amounts
due hereunder into Registrable Securities it shall so notify the affected
Investor in writing within two (2) business days of the date on which such
amounts are first payable in cash and such amounts shall be so convertible
(pursuant to the mechanics set forth in the Debentures), beginning on the last
day upon which the cash amount would otherwise be due in accordance with the
following sentence. Payments of cash pursuant hereto shall be made within ten
(10) days after the end of each period that gives rise to such obligation,
provided that, if any such period extends for more than thirty (30) days,
interim payments shall be made for each thirty (30) day period. Upon agreement
of both the Buyer and the Company, any liquidated damages due under the
provisions of this subparagraph may be paid in common stock of the Company,
registered as if such stock were common stock being issued at conversion under
this Agreement, and valued at the Conversion Price, at such term is defined in
the Debentures.
c. Piggy-Back Registrations. If at any time prior to the expiration of
------------------------
the Registration Period (as hereinafter defined) the Company shall file with the
SEC a Registration Statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents relating to equity securities
to be issued solely in connection with any acquisition of any entity or
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business or equity securities issuable in connection with stock option or other
employee benefit plans) the Company shall send to the Investor(s) written notice
of such determination and, if within twenty (20) days after receipt of such
notice, such Investor shall so request in writing, the Company shall include in
such Registration Statement all or any part of the Registrable Securities such
Investor requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' reasonable good faith judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder; provided that no portion of the
equity securities which the Company is offering for its own account shall be
excluded; provided, further that the Company shall be entitled to exclude
Registrable Securities to the extent necessary to avoid breaching obligations
existing prior to the date hereof to other stockholders of the Company.
Any exclusion of Registrable Securities shall be made pro rata among the
Investors seeking to include Registrable Securities, in proportion to the number
of Registrable Securities sought to be included by such Investors; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such Registration Statement
or are not entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights or whose registration rights existed prior
to the date hereof. No right to registration of Registrable Securities under
this Section 2(c) shall be construed to limit any registration required under
Section 2(a) hereof. The obligations of the Company under this Section 2(c) may
be waived by Investors holding a majority of the Registrable Securities. If an
offering in connection with which an Investor is entitled to registration under
this Section 2(c) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in
an underwritten offering using the same underwriter or underwriters and, subject
to the provisions of this Agreement, on the same terms and conditions as other
shares of Common Stock included in such underwritten offering.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IF THE REGISTRABLE
SECURITIES ARE INCLUDED IN AND REGISTERED UNDER FORM S-1 NO. 333-40175, FILED
WITH THE SEC ON NOVEMBER 13, 1997 (THE "FORM S-1"), THEN TO THE EXTENT OF SUCH
INCLUSION AND REGISTRATION, NO REGISTRATION STATEMENT NEED BE FILED WITH RESPECT
TO SUCH REGISTRABLE SECURITIES INCLUDED IN AND REGISTERED UNDER THE FORM S-1,
AND THIS REGISTRATION RIGHTS AGREEMENT SHALL BE VOID WITH RESPECT TO SUCH
REGISTRABLE SECURITIES INCLUDED IN AND REGISTERED UNDER THE FORM S-1. THEREFORE,
IF ALL OF THE REGISTRABLE SECURITIES ARE INCLUDED IN AND REGISTERED UNDER THE
FORM S-1, NO REGISTRATION STATEMENT NEED BE FILED HEREUNDER.
d. Eligibility for Form S-3. The Company represents and warrants that it
------------------------
meets the requirements for the use of Form S-3 (or equivalent form) for
registration of the sale by the
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Buyer and any other Investor of the Registrable Securities and the Company shall
file all reports required to be filed by the Company with the SEC in a timely
manner so as to maintain such eligibility for the use of Form S-3. In the event
that Form S-3 is not available for registration of the Registrable Securities,
the Company shall register the securities on another appropriate form.
3. RELATED OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Company shall have the following obligations:
a. The Company shall use its best efforts to cause such Registration
Statement(s) relating to Registrable Securities to become effective as soon as
possible after such filing, and keep the Registration Statement(s) effective
pursuant to Rule 415 at all times until the earlier of (i) the date as of which
the Investors may sell all of the Registrable Securities without restriction
pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto),
or (ii) the date on which none of the Debentures or any Successor Debenture is
outstanding (the "Registration Period"), which Registration Statement(s)
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement(s) and the prospectus(es) used in connection with the Registration
Statement(s) as may be necessary to keep the Registration Statement(s) effective
at all times during the Registration Period, and, during such period, comply
with the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement(s)
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in the Registration Statement(s). In the event the
number of shares available under a Registration Statement filed pursuant to this
Agreement is insufficient to cover all of the Registrable Securities issued or
issuable upon conversion of the Debentures, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefore, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within fifteen (15) days after the necessity therefor arises (based on the
market price of the Common Stock and other relevant factors on which the Company
reasonably elects to rely). The Company shall use its best efforts to cause such
amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
c. The Company shall furnish to each Investor whose Registrable Securities
are included in the Registration Statement(s) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of the Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or supplement thereto
in each case relating to such Registration Statement (other than any portion
thereof which contains information for which the Company has sought confidential
treatment), and (ii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor.
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<PAGE>
d. The Company shall use reasonable efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement(s) under such
other securities or "blue sky" laws of such jurisdictions in the United States
as the Investors who hold forty percent or more of the Registrable Securities
being offered reasonably request (but in no event in more than five states of
the United States), (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause more than nominal expense or burden to the
Company, or (e) make any change in its charter or bylaws, which in each case the
Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.
e. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement to correct such
untrue statement or omission, and deliver such number of copies of such
supplement or amendment to each Investor as such Investor may reasonably
request.
f. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof.
g. [Intentionally omitted.]
h. At the request of the Investors who hold a majority of the Registrable
Securities being sold, the Company shall furnish, on the date that Registrable
Securities are delivered to an underwriter, if any, for sale in connection with
the Registration Statement (i) if required by an underwriter, a letter, dated
such date, from the Company's independent certified public accountants in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, and (ii) an opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering,
addressed to the underwriters and the Investors.
i. The Company shall make available for inspection by (i) any Investor,
(ii) any underwriter participating in any disposition pursuant to a Registration
Statement, (iii) one firm of
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attorneys and one firm of accountants or other agents retained by the Investors,
and (iv) one firm of attorneys retained by all such underwriters (collectively,
the "Inspectors") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the "Records"),
as shall be reasonably deemed necessary by each Inspector to enable each
Inspector to exercise its due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
that each Inspector shall hold in strict confidence and shall not make any
disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (b) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
or any other agreement. The Company shall not be required to disclose any
confidential information in such Records to any Inspector until and unless such
Inspector shall have entered into confidentiality agreements (in form and
substance reasonably satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(i). Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential.
j. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final, non-
appealable order from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the public other than
by disclosure in violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor and
allow such Investor, at the Investor's expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information.
k. The Company shall use its best efforts either to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on each
national securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by the Registration Statement on the OTC Bulletin Board or, if, despite the
Company's best efforts to satisfy the preceding clause (i) or (ii), the Company
is unsuccessful in satisfying the preceding clause (i) or (ii), to secure the
inclusion for quotation on the OTC Bulletin Board for such Registrable
Securities.
l. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, any managing underwriter
or underwriters, to
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<PAGE>
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the managing underwriter or
underwriters, if any, or, if there is no managing underwriter or underwriters,
the Investors may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or the Investors may request. Not
later than the date on which any Registration Statement registering the resale
of Registrable Securities is declared effective, the Company shall deliver to
its transfer agent instructions, accompanied by any reasonably required opinion
of counsel, that permit sales of unlegended securities in a timely fashion that
complies with then mandated securities settlement procedures for regular way
market transactions.
m. The Company shall provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
n. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to a Registration Statement.
4. OTHER OBLIGATIONS. In connection with the registration of the
Registrable Securities, the Investors shall have the following obligations:
a. At least five (5) days prior to the first anticipated filing date of
the Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor's Registrable Securities included in the
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.
b. Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement(s) hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority of the Registrable Securities
being registered determine to engage the services of an underwriter, each
Investor agrees to enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor notifies the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement(s).
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d. Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e) or 3(f),
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) or 3(f) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements approved by the Investors
entitled hereunder to approve such arrangements, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION. The Company agrees to pay all reasonable
expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend each Investor who holds such Registrable Securities, the
directors, officers and each person who controls any Investor within the meaning
of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), if any and any underwriter (as defined in the 1933 Act) for the
Investors, and the directors and the officers of, and each person, if any, who
controls, any such underwriter within the meaning of the 1933 Act or the 1934
Act (each, an "Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) (collectively, "Claims") to which any
of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or the omission or alleged omission to state a material
fact therein required to be stated or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or
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sale of the Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(d) with
respect to the number of legal counsel, the Company shall reimburse the
Investors and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by any Indemnified Person or underwriter for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof; (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of the material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such prospectus
was timely made available by the Company pursuant to Section 3(c) hereof; (iii)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company; and (iv) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter within the
meaning of the 1933 Act or the 1934 Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement or to the
extent such Claim is based upon any violation or alleged violation by the
Investor of the 1933 Act, 1934 Act or any other law; and such Investor will
reimburse any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim as does not
exceed the net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such Indemnified Party and shall survive the transfer of the
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Registrable Securities by the Investors pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
c. The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in any distribution, to the same extent as provided above, with
respect to information such persons so furnished in writing by such persons
expressly for inclusion in the Registration Statement.
d. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The Company shall pay reasonable fees for only one separate legal
counsel for the Investors, and such legal counsel shall be selected by the
Investors holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates; provided, that legal
fees of such firm shall be reasonable. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of fraudulent misrepresentation, and (iii) contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
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8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit the investors
to sell securities of the Company to the public without registration ("Rule
144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assignable by the Investors to any transferee of all or any
portion of Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the 1933 Act and applicable state securities laws,
(iv) at or before the time the Company receives the written notice contemplated
by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein, (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement, (vi) such transferee shall be an "accredited
investor" as that term defined in Rule 501 of Regulation D promulgated under the
1933 Act; and (vii) in the event the assignment occurs subsequent to the date of
effectiveness of the Registration Statement required to be filed pursuant to
Section 2(a), the transferee agrees to pay all reasonable expenses of amending
or supplementing such Registration Statement to reflect such assignment.
Notwithstanding anything herein to the contrary, no assignment of the rights
represented by this Agreement shall be effective unless in compliance with any
applicable securities laws of any applicable jurisdiction.
10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a majority of the
Registrable Securities. Any amendment or waiver
12
<PAGE>
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
b. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by registered or certified mail, return receipt
requested, or delivered personally or by courier and shall be effective five
days after being placed in the mail, if mailed, or upon receipt, if delivered
personally or by courier or facsimile, in each case properly addressed to the
party to receive such notice. The addresses for such communications shall be:
If to the Company: Intercell Corporation
370 17th Street, Suite 3290
Denver, Colorado 80202
Telephone: 303-592-1010
Facsimile: 303-592-1054
Attention: Mr. Paul H. Metzinger, President & CEO
If to the Buyer, at the address on the signature page of the Securities
Purchase Agreement. Each party shall provide written notice to the other party
of any change in address.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
d. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware without regard to the principles of conflict
of laws. If any provision of this Agreement shall be invalid of unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. Service of process in any civil action
relating to or arising out of this Agreement (including also all Exhibits or
Addenda hereto) or the transaction(s) contemplated herein may be accomplished
via certified mail, return receipt requested, and the parties hereby irrevocably
acknowledge and agree that such service of process by certified mail at the
parties' respective addresses as noted in Section 11(b) above (or such other
address as the party being served shall have provided as required in Section
11(b)) shall be sufficient to subject the party being served thereby to personal
jurisdiction in the state of Colorado, U.S.A.
e. This Agreement, the Debentures, the Warrants, the Escrow Agreement and
the Securities Purchase Agreement (including all exhibits and addenda thereto)
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Securities Purchase Agreement supersede all
prior
13
<PAGE>
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more identical counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of the signature
page of this Agreement bearing the signature of the party so delivering this
Agreement to the Escrow Agent, with the original executed Agreement to be
delivered to the Escrow Agent via overnight delivery.
i. Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
[SIGNATURE PAGE FOLLOWS]
14
<PAGE>
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
DATED DECEMBER 3, 1997]
COMPANY:
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
---------------------------------------------
Mr. Paul H. Metzinger, President & CEO
BUYER:
FT TRADING
By /s/ Anthony Ardizzone
---------------------------------------------
(Signature of authorized officer)
(Print name and title)
15
<PAGE>
EXHIBIT 10.6
EXHIBIT G
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is dated as of December 3, 1997,
by and among the undersigned Buyer (the "Buyer"), INTERCELL CORPORATION, a
corporation organized under the laws of the State of Colorado, U.S.A. (the
"Company"), and H. GLENN BAGWELL, JR., a duly licensed attorney who practices
law in the State of North Carolina, U.S.A., as Escrow Agent (the "Escrow
Agent").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth in that Securities Purchase Agreement between the Company
and the Buyer dated as of December 3, 1997 (the "Securities Purchase
Agreement").
W I T N E S S E T H:
WHEREAS, the Buyer and the Company have entered into the Securities
Purchase Agreement, pursuant to which the Company has agreed to sell, and the
Buyer has agreed to purchase, in two (2) separate closings as described in the
Securities Purchase Agreement, at the First Closing, the A-1 Debenture and the
Warrants (the "First Closing Securities"); and at the Second Closing, the A-2
Debenture, the Stock and the Sigma Stock (all of which as defined in the
Securities Purchase Agreement) (the "Second Closing Securities," and
collectively with the First Closing Securities, the "Securities"); and
WHEREAS, the Buyer and the Company have agreed to effectuate the Closings
utilizing an escrow arrangement as described in this Agreement; and
WHEREAS, it is a condition of the Company's obligation to sell, and the
Buyer's obligation to purchase, the Securities, that this Agreement be executed
and delivered; and
WHEREAS, the Escrow Agent is willing to act hereunder on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth below, the parties hereto hereby agree as follows:
1. ESCROW ACCOUNT.
1.1 Deposit. On the date of the First Closing, Buyer shall deposit the
-------
First Closing Purchase Price, and on the date of the Second Closing, Buyer shall
deposit the Second Closing Purchase Price (collectively, the "Escrow") with the
Escrow Agent, to be held by the Escrow Agent in a separate non-interest bearing
account (the "Escrow Account"), established at Wachovia Bank of North Carolina,
N.A., (the "Bank"), subject to the terms and provisions contained herein. At the
request of the Company the Escrow Agent shall provide the Company with all Bank
statements, notices and other writings which it receives from the Bank in
connection with the Escrow Account.
1
<PAGE>
1.2 Transfer of Escrow Account. The Company may at any time hereafter
--------------------------
request by notice to the Escrow Agent that the Escrow Account be transferred to
another banking institution. In such event, the Escrow Agent shall, within two
(2) business days after receiving such notice, transfer the remaining Escrow as
the Company may instruct, whereupon the transferee banking institution shall
become the "Bank" for purposes of this Agreement and the account into which the
remaining Escrow is deposited shall become the "Escrow Account", in all cases
subject to this Agreement.
2. DISBURSEMENT OF ESCROW/SECURITIES.
2.1 Disbursement. At each Closing, upon receipt by the Escrow Agent of
------------
all of the moneys, documents, and things from the respective parties with
respect to such Closing as described in the Securities Purchase Agreement and as
further described in Sections 2.1(a) and 2.1(b) below, the Escrow Agent shall
deliver to each party via facsimile the documents and things (or if requested by
the parties, only the signature pages thereto) to have been delivered by the
other party in accordance with the Securities Purchase Agreement and this
Agreement. The Escrow Agent shall promptly wire transfer to the Company the full
Escrow then held, less any charges and fees agreed to be paid by the Company.
The Escrow Agent shall, upon receipt thereof, deliver (via overnight delivery
service) to the Company originals of all other documents and things listed in
Section 2.1(b) below. The Escrow Agent shall, upon receipt thereof, deliver (via
overnight delivery service) originals of all of the documents and things listed
in Section 2.1(a) below to the Buyer at the address provided in writing by the
Buyer to the Escrow Agent.
The Closings may take place via facsimile. This shall be accomplished in
the following manner. Each party shall deliver via facsimile to the Escrow
Agent, at the telecopier number provided on the signature page to this
Agreement, the first page and the fully executed signature page to each of the
documents and things to be executed by such party at the applicable Closing. If
stock certificates are to be delivered, each such certificate shall be delivered
via facsimile to the Escrow Agent. Upon receipt of the requisite documents and
things via facsimile from each party, the Escrow Agent shall in turn send to
each party the documents and things received from the other party, and shall
wire transfer the Escrow (less any charges and fees agreed to be paid by the
Company). Each party closing the transactions contemplated herein via facsimile
shall deliver via overnight courier service to the Escrow Agent complete
originals of all documents and things (as called for in Sections 2.1(a) and
2.1(b) below) within one (1) business day after such delivery via facsimile.
Each party hereby agrees that a facsimile of each document and thing to be
delivered hereunder, once delivered to the Escrow Agent, shall be binding upon
such party in the same manner as would an original to the full extent allowed by
applicable law.
(a). Items to be Delivered by the Company to the Escrow Agent.
--------------------------------------------------------
(i) At the First Closing. On the date of the First Closing, the Company
--------------------
shall deliver to the Escrow Agent on behalf of the Buyer, unless otherwise
stated, two (2) fully executed (by the authorized officer(s) of the Company)
originals of each of the following documents: (I) the Securities Purchase
Agreement, (II) the Registration Rights Agreement of even date herewith between
the Company and the Buyer, (III) the fully executed A-1 Debenture along with one
(1) copy of the fully executed A-1 Debenture; (IV) the fully executed Warrant #1
along with one (1) copy of Warrant #1; (V) the fully executed Warrant #2 along
with one (1) copy of Warrant #2;
2
<PAGE>
(VI) the fully executed Warrant #3 along with one (1) copy of Warrant #3; and
(VII) this Agreement.
(ii) At the Second Closing. On the date of the Second Closing, the Company
---------------------
shall deliver to the Escrow Agent on behalf of the Buyer, one (1) fully executed
(by the authorized officer(s) of the Company) original and one (1) copy of each
of the following documents: (I) the fully executed A-1 Debenture; (II) a
certificate or certificates representing the Sigma Stock; and (III) a
certificate or certificates representing the Stock.
(a) Items to be Delivered by the Buyer to the Escrow Agent.
------------------------------------------------------
(i) At the First Closing. On the date of the First Closing, the Buyer
--------------------
shall deliver to the Escrow Agent on behalf of the Company, unless otherwise
stated, two (2) fully executed originals of each of the following documents: (I)
the Securities Purchase Agreement, (II) the Registration Rights Agreement of
even date herewith between the Company and the Buyer, (III) this Agreement; and
(IV) the First Closing Purchase Price via wire transfer to the Escrow Account.
(ii) At the Second Closing. On the date of the Second Closing, the Buyer
---------------------
shall deliver to the Escrow Agent the Second Closing Purchase Price via wire
transfer to the Escrow Account.
2.2 Controversies. If any controversy arises between two or more of the
-------------
parties hereto, or between any of the parties hereto and any person not a party
hereto, as to whether or not or to whom the Escrow Agent shall deliver the
Escrow or any portion thereof or as to any other matter arising out of or
relating to this Escrow Agreement, the Escrow Agent shall not be required to
determine the same and need not make any delivery of the Escrow concerned or any
portion thereof but may retain the same until the rights of the parties to the
dispute shall have been finally determined by agreement or by final judgment of
a court of competent jurisdiction after all appeals have been finally determined
(or the time for further appeals has expired without an appeal having been
made). The Escrow Agent shall deliver that portion of the Escrow concerned
covered by such agreement or final order within five (5) days after the Escrow
Agent receives a copy thereof. The Escrow Agent shall assume that no such
controversy has arisen unless and until it receives written notice from the
Buyer or the Company that such controversy has arisen, which refers specifically
to this Agreement and identifies the adverse claimants to the controversy.
2.3 No Other Disbursements. No portion of the Escrow monies shall be
----------------------
disbursed or otherwise transferred except in accordance with this Section 2,
Section 4 or Section 5.1(b). Without limiting the foregoing, neither Escrow
Agent nor the Buyer shall be entitled to any right of offset against the Escrow
or otherwise entitled to receive any portion of the Escrow.
3. ESCROW AGENT. The acceptance by the Escrow Agent of his duties
hereunder is subject to the following terms and conditions, which the parties to
this Agreement hereby agree shall govern and control with respect to the rights,
duties, liabilities and immunities of the Escrow Agent:
3
<PAGE>
3.1 The Escrow Agent shall not be responsible or liable in any manner
whatever for the sufficiency, correctness, genuineness or validity of any cash,
investments or other amounts deposited with or held by it.
3.2 The Escrow Agent shall be protected in acting upon any written notice,
certificate, instruction, request or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or parties.
3.3 The Escrow Agent shall not be liable for any act done hereunder except
in the case of its gross negligence, willful misconduct or bad faith.
3.4 The Escrow Agent shall not be obligated or permitted to investigate
the correctness or accuracy of any document or to determine whether or not the
signatures contained in said documents are genuine or to require documentation
or evidence substantiating any such document or signature.
3.5 The Escrow Agent shall have no duties as Escrow Agent except those
which are expressly set forth herein, and in any modification or amendment
hereof; provided, however, that no such modification or amendment hereof shall
affect its duties unless it shall have given its written consent thereto. The
Escrow Agent shall not be prohibited from owning an equitable interest in the
Company, any of its subsidiaries or any third party that is in any way
affiliated with or conducts business with the Company.
3.6 The Company and the Buyer specifically acknowledge that the Escrow
Agent is an officer and shareholder in the Global Funding Group, a North
Carolina investment banking firm under contract with the Company with respect to
the transactions contemplated herein and in the Securities Purchase Agreement,
and which has worked with affiliates of the Buyer (along with the Escrow Agent)
on other unrelated transactions, and that they and each of them has specifically
requested that the Escrow Agent draft the documentation for the said
transactions and act as Escrow Agent with respect to the said transactions.
Each party represents that it has retained legal and other counsel of its
choosing with respect to the transactions contemplated herein and in the
Securities Purchase Agreement, and is satisfied in its sole discretion with the
form and content of the documentation drafted by the Escrow Agent. The said
parties hereby waive any objection to the Escrow Agent so acting based upon
conflict of interest or lack of impartiality. The Escrow Agent agrees to act
impartially and in accordance with the terms of this Agreement and with the
parties' respective instructions, so long as they are not in conflict with the
terms of this Agreement.
4. TERMINATION. This Agreement shall terminate on the earlier of (a) the
date on which the Escrow and all other escrowed documents and things described
herein shall have been fully disbursed in accordance with the terms and
conditions of this Agreement, and (b) any other date agreed to by the Buyer and
the Company, in which event the Escrow shall be disbursed in full to the
Company.
4
<PAGE>
5. MISCELLANEOUS.
5.1 Indemnification of Escrow Agent.
-------------------------------
(a) The Company and the Buyer each agree, jointly and severally, to
indemnify the Escrow Agent for, and to hold him harmless against, any loss
incurred without gross negligence, willful misconduct or bad faith on the Escrow
Agent's part, arising out of or in connection with the administration of this
Agreement, including the costs and expenses of defending himself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. This indemnification shall not apply to a party with
respect to a direct claim against the Escrow Agent by such party alleging in
good faith a breach of this Agreement, which claim results in a final non-
appealable judgment against the Escrow Agent with respect to such claim.
(b) In the event of any dispute as to the nature of the rights or
obligations of the Buyer, the Company or the Escrow Agent hereunder, the Escrow
Agent may at any time or from time to time interplead, deposit and/or pay all or
any part of the Escrow Funds with or to a court of competent jurisdiction
sitting in Wake County, North Carolina or in any appropriate federal court, in
accordance with the procedural rules thereof. The Escrow Agent shall give notice
of such action to the Company and the Buyer. Upon such interpleader, deposit or
payment, the Escrow Agent shall immediately and automatically be relieved and
discharged from all further obligations and responsibilities hereunder,
including the decision to interplead, deposit or pay such funds.
5.2 Amendments. This Agreement may be modified or amended only by a
----------
written instrument executed by each of the parties hereto.
5.3 Notices. All communications required or permitted to be given under
-------
this Agreement to any party hereto shall be sent by first class mail or
facsimile to such party at the address, except in the case of the Escrow Agent,
of such party set forth in the Securities Purchase Agreement and, in the case of
the Escrow Agent, at 3005 Anderson Drive, Suite 204, Raleigh, North Carolina
U.S.A. 27609.
5.5 Successors and Assigns. This Agreement shall bind and inure to the
----------------------
benefit of the parties hereto and their respective successors and assigns;
provided, however, that the Escrow Agent shall not assign its duties under this
Agreement.
5.6 Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of North Carolina.
5.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
[SIGNATURE PAGE FOLLOWS]
5
<PAGE>
[SIGNATURE PAGE TO ESCROW AGREEMENT DATED DECEMBER 3, 1997]
THE COMPANY:
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
-----------------------------------------
Mr. Paul H. Metzinger, President & CEO
THE BUYER:
THE AUGUSTINE FUND, L.P.
By: Augustine Capital Management, Inc.
By /s/ Thomas F. Duszinski
-------------------------
Thomas F. Duszinski, Chief Operating
Officer
ESCROW AGENT:
/s/ H. Glenn Bagwell, Jr.
---------------------------
H. Glenn Bagwell, Jr., Esq.
Address:
3005 Anderson Drive, Suite 204
Raleigh, North Carolina USA 27609
Telephone: 919-785-3113
Telecopier: 919-785-3116
6
<PAGE>
EXHIBIT 10.7
EXHIBIT G
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is dated as of December 3, 1997,
by and among the undersigned Buyer (the "Buyer"), INTERCELL CORPORATION, a
corporation organized under the laws of the State of Colorado, U.S.A. (the
"Company"), and H. GLENN BAGWELL, JR., a duly licensed attorney who practices
law in the State of North Carolina, U.S.A., as Escrow Agent (the "Escrow
Agent").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth in that Securities Purchase Agreement between the Company
and the Buyer dated as of December 3, 1997 (the "Securities Purchase
Agreement").
W I T N E S S E T H:
WHEREAS, the Buyer and the Company have entered into the Securities
Purchase Agreement, pursuant to which the Company has agreed to sell, and the
Buyer has agreed to purchase, in two (2) separate closings as described in the
Securities Purchase Agreement, at the First Closing, the A-1 Debenture and the
Warrants (the "First Closing Securities"); and at the Second Closing, the A-2
Debenture, the Stock and the Sigma Stock (all of which as defined in the
Securities Purchase Agreement) (the "Second Closing Securities," and
collectively with the First Closing Securities, the "Securities"); and
WHEREAS, the Buyer and the Company have agreed to effectuate the Closings
utilizing an escrow arrangement as described in this Agreement; and
WHEREAS, it is a condition of the Company's obligation to sell, and the
Buyer's obligation to purchase, the Securities, that this Agreement be executed
and delivered; and
WHEREAS, the Escrow Agent is willing to act hereunder on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth below, the parties hereto hereby agree as follows:
1. ESCROW ACCOUNT.
1.1 Deposit. On the date of the First Closing, Buyer shall deposit the
-------
First Closing Purchase Price, and on the date of the Second Closing, Buyer shall
deposit the Second Closing Purchase Price (collectively, the "Escrow") with the
Escrow Agent, to be held by the Escrow Agent in a separate non-interest bearing
account (the "Escrow Account"), established at Wachovia Bank of North Carolina,
N.A., (the "Bank"), subject to the terms and provisions contained herein. At the
request of the Company the Escrow Agent shall provide the Company with all Bank
statements, notices and other writings which it receives from the Bank in
connection with the Escrow Account.
1
<PAGE>
1.2 Transfer of Escrow Account. The Company may at any time hereafter
--------------------------
request by notice to the Escrow Agent that the Escrow Account be transferred to
another banking institution. In such event, the Escrow Agent shall, within two
(2) business days after receiving such notice, transfer the remaining Escrow as
the Company may instruct, whereupon the transferee banking institution shall
become the "Bank" for purposes of this Agreement and the account into which the
remaining Escrow is deposited shall become the "Escrow Account", in all cases
subject to this Agreement.
2. DISBURSEMENT OF ESCROW/SECURITIES.
2.1 Disbursement. At each Closing, upon receipt by the Escrow Agent of
------------
all of the moneys, documents, and things from the respective parties with
respect to such Closing as described in the Securities Purchase Agreement and as
further described in Sections 2.1(a) and 2.1(b) below, the Escrow Agent shall
deliver to each party via facsimile the documents and things (or if requested by
the parties, only the signature pages thereto) to have been delivered by the
other party in accordance with the Securities Purchase Agreement and this
Agreement. The Escrow Agent shall promptly wire transfer to the Company the full
Escrow then held, less any charges and fees agreed to be paid by the Company.
The Escrow Agent shall, upon receipt thereof, deliver (via overnight delivery
service) to the Company originals of all other documents and things listed in
Section 2.1(b) below. The Escrow Agent shall, upon receipt thereof, deliver (via
overnight delivery service) originals of all of the documents and things listed
in Section 2.1(a) below to the Buyer at the address provided in writing by the
Buyer to the Escrow Agent.
The Closings may take place via facsimile. This shall be accomplished in
the following manner. Each party shall deliver via facsimile to the Escrow
Agent, at the telecopier number provided on the signature page to this
Agreement, the first page and the fully executed signature page to each of the
documents and things to be executed by such party at the applicable Closing. If
stock certificates are to be delivered, each such certificate shall be delivered
via facsimile to the Escrow Agent. Upon receipt of the requisite documents and
things via facsimile from each party, the Escrow Agent shall in turn send to
each party the documents and things received from the other party, and shall
wire transfer the Escrow (less any charges and fees agreed to be paid by the
Company). Each party closing the transactions contemplated herein via facsimile
shall deliver via overnight courier service to the Escrow Agent complete
originals of all documents and things (as called for in Sections 2.1(a) and
2.1(b) below) within one (1) business day after such delivery via facsimile.
Each party hereby agrees that a facsimile of each document and thing to be
delivered hereunder, once delivered to the Escrow Agent, shall be binding upon
such party in the same manner as would an original to the full extent allowed by
applicable law.
(a). Items to be Delivered by the Company to the Escrow Agent.
--------------------------------------------------------
(i) At the First Closing. On the date of the First Closing, the Company
--------------------
shall deliver to the Escrow Agent on behalf of the Buyer, unless otherwise
stated, two (2) fully executed (by the authorized officer(s) of the Company)
originals of each of the following documents: (I) the Securities Purchase
Agreement, (II) the Registration Rights Agreement of even date herewith between
the Company and the Buyer, (III) the fully executed A-1 Debenture along with one
(1) copy of the fully executed A-1 Debenture; (IV) the fully executed Warrant #4
along with one (1) copy of Warrant #4; (V) the fully executed Warrant #5 along
with one (1) copy of Warrant #5;
2
<PAGE>
(VI) the fully executed Warrant #6 along with one (1) copy of Warrant #6; and
(VII) this Agreement.
(ii) At the Second Closing. On the date of the Second Closing, the Company
---------------------
shall deliver to the Escrow Agent on behalf of the Buyer, one (1) fully executed
(by the authorized officer(s) of the Company) original and one (1) copy of each
of the following documents: (I) the fully executed A-1 Debenture; (II) a
certificate or certificates representing the Sigma Stock; and (III) a
certificate or certificates representing the Stock.
Items to be Delivered by the Buyer to the Escrow Agent.
-------------------------------------------------------
(i) At the First Closing. On the date of the First Closing, the Buyer
--------------------
shall deliver to the Escrow Agent on behalf of the Company, unless otherwise
stated, two (2) fully executed originals of each of the following documents: (I)
the Securities Purchase Agreement, (II) the Registration Rights Agreement of
even date herewith between the Company and the Buyer, (III) this Agreement; and
(IV) the First Closing Purchase Price via wire transfer to the Escrow Account.
(ii) At the Second Closing. On the date of the Second Closing, the
---------------------
Buyer shall deliver to the Escrow Agent the Second Closing Purchase Price via
wire transfer to the Escrow Account.
2.2 Controversies. If any controversy arises between two or more of the
-------------
parties hereto, or between any of the parties hereto and any person not a party
hereto, as to whether or not or to whom the Escrow Agent shall deliver the
Escrow or any portion thereof or as to any other matter arising out of or
relating to this Escrow Agreement, the Escrow Agent shall not be required to
determine the same and need not make any delivery of the Escrow concerned or any
portion thereof but may retain the same until the rights of the parties to the
dispute shall have been finally determined by agreement or by final judgment of
a court of competent jurisdiction after all appeals have been finally determined
(or the time for further appeals has expired without an appeal having been
made). The Escrow Agent shall deliver that portion of the Escrow concerned
covered by such agreement or final order within five (5) days after the Escrow
Agent receives a copy thereof. The Escrow Agent shall assume that no such
controversy has arisen unless and until it receives written notice from the
Buyer or the Company that such controversy has arisen, which refers specifically
to this Agreement and identifies the adverse claimants to the controversy.
2.3 No Other Disbursements. No portion of the Escrow monies shall be
----------------------
disbursed or otherwise transferred except in accordance with this Section 2,
Section 4 or Section 5.1(b). Without limiting the foregoing, neither Escrow
Agent nor the Buyer shall be entitled to any right of offset against the Escrow
or otherwise entitled to receive any portion of the Escrow.
3. ESCROW AGENT. The acceptance by the Escrow Agent of his duties
hereunder is subject to the following terms and conditions, which the parties to
this Agreement hereby agree shall govern and control with respect to the rights,
duties, liabilities and immunities of the Escrow Agent:
3
<PAGE>
3.1 The Escrow Agent shall not be responsible or liable in any manner
whatever for the sufficiency, correctness, genuineness or validity of any cash,
investments or other amounts deposited with or held by it.
3.2 The Escrow Agent shall be protected in acting upon any written notice,
certificate, instruction, request or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or parties.
3.3 The Escrow Agent shall not be liable for any act done hereunder except
in the case of its gross negligence, willful misconduct or bad faith.
3.4 The Escrow Agent shall not be obligated or permitted to investigate
the correctness or accuracy of any document or to determine whether or not the
signatures contained in said documents are genuine or to require documentation
or evidence substantiating any such document or signature.
3.5 The Escrow Agent shall have no duties as Escrow Agent except those
which are expressly set forth herein, and in any modification or amendment
hereof; provided, however, that no such modification or amendment hereof shall
affect its duties unless it shall have given its written consent thereto. The
Escrow Agent shall not be prohibited from owning an equitable interest in the
Company, any of its subsidiaries or any third party that is in any way
affiliated with or conducts business with the Company.
3.6 The Company and the Buyer specifically acknowledge that the Escrow
Agent is an officer and shareholder in the Global Funding Group, a North
Carolina investment banking firm under contract with the Company with respect to
the transactions contemplated herein and in the Securities Purchase Agreement,
and which has worked with affiliates of the Buyer (along with the Escrow Agent)
on other unrelated transactions, and that they and each of them has specifically
requested that the Escrow Agent draft the documentation for the said
transactions and act as Escrow Agent with respect to the said transactions.
Each party represents that it has retained legal and other counsel of its
choosing with respect to the transactions contemplated herein and in the
Securities Purchase Agreement, and is satisfied in its sole discretion with the
form and content of the documentation drafted by the Escrow Agent. The said
parties hereby waive any objection to the Escrow Agent so acting based upon
conflict of interest or lack of impartiality. The Escrow Agent agrees to act
impartially and in accordance with the terms of this Agreement and with the
parties' respective instructions, so long as they are not in conflict with the
terms of this Agreement.
4. TERMINATION. This Agreement shall terminate on the earlier of (a) the
date on which the Escrow and all other escrowed documents and things described
herein shall have been fully disbursed in accordance with the terms and
conditions of this Agreement, and (b) any other date agreed to by the Buyer and
the Company, in which event the Escrow shall be disbursed in full to the
Company.
4
<PAGE>
5. MISCELLANEOUS.
5.1 Indemnification of Escrow Agent.
-------------------------------
(a) The Company and the Buyer each agree, jointly and severally, to
indemnify the Escrow Agent for, and to hold him harmless against, any loss
incurred without gross negligence, willful misconduct or bad faith on the Escrow
Agent's part, arising out of or in connection with the administration of this
Agreement, including the costs and expenses of defending himself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. This indemnification shall not apply to a party with
respect to a direct claim against the Escrow Agent by such party alleging in
good faith a breach of this Agreement, which claim results in a final non-
appealable judgment against the Escrow Agent with respect to such claim.
(b) In the event of any dispute as to the nature of the rights or
obligations of the Buyer, the Company or the Escrow Agent hereunder, the Escrow
Agent may at any time or from time to time interplead, deposit and/or pay all or
any part of the Escrow Funds with or to a court of competent jurisdiction
sitting in Wake County, North Carolina or in any appropriate federal court, in
accordance with the procedural rules thereof. The Escrow Agent shall give notice
of such action to the Company and the Buyer. Upon such interpleader, deposit or
payment, the Escrow Agent shall immediately and automatically be relieved and
discharged from all further obligations and responsibilities hereunder,
including the decision to interplead, deposit or pay such funds.
5.2 Amendments. This Agreement may be modified or amended only by a
----------
written instrument executed by each of the parties hereto.
5.3 Notices. All communications required or permitted to be given under
-------
this Agreement to any party hereto shall be sent by first class mail or
facsimile to such party at the address, except in the case of the Escrow Agent,
of such party set forth in the Securities Purchase Agreement and, in the case of
the Escrow Agent, at 3005 Anderson Drive, Suite 204, Raleigh, North Carolina
U.S.A. 27609.
5.5 Successors and Assigns. This Agreement shall bind and inure to the
----------------------
benefit of the parties hereto and their respective successors and assigns;
provided, however, that the Escrow Agent shall not assign its duties under this
Agreement.
5.6 Governing Law. This Agreement shall be governed by and construed and
-------------
interpreted in accordance with the laws of the State of North Carolina.
5.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
[SIGNATURE PAGE FOLLOWS]
5
<PAGE>
[SIGNATURE PAGE TO ESCROW AGREEMENT DATED DECEMBER 3, 1997]
THE COMPANY:
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
-----------------------
Mr. Paul H. Metzinger, President & CEO
THE BUYER:
FT TRADING
By /s/ Anthony Ardizzone
-----------------------
Anthony Ardizzone, Vice President
ESCROW AGENT:
H. Glenn Bagwell, Jr., Esq.
Address:
3005 Anderson Drive, Suite 204
Raleigh, North Carolina USA 27609
Telephone 919-785-3113
Telecopier 919-785-3116
6
<PAGE>
EXHIBIT 10.8
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") dated as of December 31, 1997 is
entered into by and between INTERCELL CORPORATION, a Colorado corporation
("Intercell"), and AUGUSTINE FUND, L.P. (the "Secured Party").
W I T N E S S E T H:
WHEREAS, Intercell and Secured Party are parties to that certain Securities
Purchase Agreement dated as of December 3, 1997, which agreement is proposed to
be amended contemporaneously with the date of this Agreement (as so amended, the
"Purchase Agreement"); and
WHEREAS, it is a condition precedent to Secured Party's willingness to make
the additional investments in Intercell contemplated by the Purchase Agreement
that the obligations of Intercell thereunder and under all agreements and
instruments heretofore or hereafter executed and delivered in connection
therewith (the "Obligations") be secured by certain assets;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Grant of Security Interest. Intercell hereby conveys,
--------------------------
transfers, grants, assigns and pledges to the Secured Party a security interest
in and security title to (together with a right of setoff) the following assets
of Intercell (collectively, the "Collateral"):
(a) all interests (the "Sigma/BMI Interests") of Intercell as creditor
of Sigma 7 Corporation and BMI Acquisition Group pursuant to the following
documents: (i) Secured Promissory Note dated December 31, 1997 in the
original principal amount of $3,057,774.13, and (ii) Security Agreement
dated April 30, 1997.
(b) all interests (the "ITC Interests") of Intercell as creditor of
Intercell Technologies Corporation pursuant to the following documents: (i)
Promissory Note dated July 18, 1997 in the original principal amount of
$2,200,000 and (ii) Stock Pledge and Security Agreement dated July 18, 1997
(the "ITC Pledge Agreement"); and
(c) all proceeds of any and all of the Collateral (including, without
limitation, cash proceeds) and, to the extent not otherwise included, all
payments under insurance (whether or not the Secured Party is the loss
payee thereof) or under any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
Collateral.
(The documents evidencing the Sigma/BMI Interests and the ITC Interests are
sometimes referred to hereafter as the "Underlying Documents.")
Section 2. Security for Obligations. This Agreement secures the
------------------------
performance of the Obligations, whether now or hereafter existing.
1
<PAGE>
Section 3. Intercell Remains Liable. Anything herein to the contrary
------------------------
notwithstanding, (a) Intercell shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of the duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Secured Party of any of
the rights hereunder shall not release Intercell from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) the Secured Party shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall the Secured Party be obligated to perform any of the obligations or
duties of Intercell thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
Section 4. Closing Deliveries. Contemporaneously with the execution of
------------------
this Agreement, Intercell will deliver to the Secured Party the following
documents and instruments:
(a) The original note underlying the Sigma/BMI Interests, together
with a fully executed Allonge to such note in the form attached hereto as
Exhibit A.
(b) The original note underlying the ITC Interests, together with a
fully executed Allonge to such note in the form attached hereto as Exhibit
B.
(c) The stock certificate representing the shares of Cellular
Magnetics, Inc. pledged to Intercell pursuant to the ITC Pledge Agreement,
together with an accompanying blank stock power.
(d) A notice of assignment showing the Secured Party, as assignee, to
be filed with the California Secretary of State as to filings 9725260687
and 9725260676, which are filings representing Intercell's perfected
security interest in the Sigma/BMI Interests.
(e) A UCC-1 financing statement listing Intercell, as debtor, and the
Secured Party, as secured party, to be filed with the Colorado Secretary of
State, covering the Collateral.
Section 5. Representations and Warranties. Intercell represents and
------------------------------
warrants that, and covenants with Secured Party as follows:
(a) This Agreement creates a valid security interest in the
Collateral, securing the performance of the Obligations, and, to the best
of Intercell's knowledge, all filings and other actions necessary or
desirable to perfect and protect such security interest will have been duly
taken upon the filing of the notices described in Sections 4(d) and (e),
above.
(b) There currently exist no defaults under the Underlying Documents.
(c) The Underlying Documents have not been and will not be amended
without Secured Party's written consent thereto, and Intercell has not
released any debtor or guarantor thereunder, either in whole or in part,
from any obligations under the Underlying Documents.
2
<PAGE>
(d) Intercell's security interests in the Sigma/BMI Interests and the
ITC Interests have been properly perfected under applicable law and by
virtue thereof Seller possesses a valid first security interest in the
collateral referred to in the Underlying Documents.
(e) Intercell has done and will do nothing to discharge the
liabilities of any debtor or guarantor under the Underlying Documents or
hinder collection, and the full amount of such liabilities is due without
offset or defense.
(f) Intercell will not create or permit to exist any lien, security
interest, option or other charge or encumbrance upon or with respect to any
of the Collateral.
Section 6. Further Assurances.
------------------
(a) Intercell agrees that from time to time, at its expense,
Intercell will promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or that the
Secured Party may request in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
foregoing: (i) if Intercell receives any additional or replacement note or
other instrument relating to the Sigma/BMI Interests or the ITC Interests,
Intercell will promptly deliver and pledge to the Secured Party such note
or instrument duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Secured Party; (ii) Intercell will execute and file such financing or
continuation statements or amendments thereto and such other instruments or
notices as may be necessary or as the Secured Party may reasonably request
in order to perfect and preserve the security interest granted or purported
to be granted hereby; and (iii) if Intercell receives additional stock
certificates pursuant to Section 2 of the ITC Pledge Agreement, Intercell
will promptly deliver and pledge to the Secured Party such certificate
accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to the Secured Party.
(b) Intercell hereby authorizes the Secured Party and appoints
the Secured Party its attorney-in-fact to file one or more financing or
continuation statements and amendments thereto relating to all or any part
of the Collateral without the signature of Intercell where permitted by
law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient
as a financing statement where permitted by law.
(c) Intercell covenants and agrees that it shall not change its
chief place of business and chief executive office unless written notice
thereof is given to the Secured Party at least thirty (30) calendar days
prior to the creation of any new address.
Section 7. Secured Party Appointed Attorney-in-Fact. Intercell hereby
----------------------------------------
irrevocably appoints the Secured Party its attorney-in-fact, with full authority
in the place and stead of Intercell and in the name of Intercell or otherwise,
at such time as any default has occurred in Intercell's obligations hereunder or
under the Purchase Agreement (a "Default"), to take any action and to execute
any instrument which the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
3
<PAGE>
(a) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection therewith; and
(c) to file any claims or take any action or institute any proceedings
which the Secured Party may deem necessary or desirable for the collection
of any of the Collateral or otherwise to enforce the rights of the Secured
Party with respect to any of the Collateral.
Section 8. Secured Party's Duties. The powers conferred on the Secured
----------------------
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of any Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Secured Party accords
its own property.
Section 9. Remedies. If any Default shall have occurred and until such
--------
Default is waived in writing in accordance with the Purchase Agreement:
(a) The Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the State of Illinois at that time or
any other applicable jurisdiction.
(b) The Secured Party may notify the obligors under the Underlying
Documents and direct any or all of them to make payments directly to the
Secured Party.
(c) Any cash held by the Secured Party as Collateral and all cash
proceeds received by the Secured Party in respect of any sale of,
collection from or other realization upon all or any part of the Collateral
may, in the discretion of the Secured Party, be held by the Secured Party
as collateral for, and/or then or at any time thereafter be applied in
whole or in part by the Secured Party against, all or any part of the
Obligations. Any surplus of such cash or cash proceeds held by the Secured
Party and remaining after satisfaction in full of all the Obligations shall
be paid over to Intercell or to whomsoever may be lawfully entitled to
receive such surplus.
Section 10. Remedies Cumulative. Each right, power and remedy of the
-------------------
Secured Party as provided for in this Agreement or now or hereafter existing at
law or in equity or by statute or otherwise shall be cumulative and concurrent
and shall be in addition to every other right, power or remedy provided for in
this Agreement or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by the Secured Party of
any one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by the Secured Party of any or all such other
rights, powers, or remedies.
4
<PAGE>
Section 11. Expenses. Intercell will upon demand pay to the Secured Party
--------
the amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Party
may incur in connection with the administration of this Agreement, the custody,
preservation, use, operation or sale of, collection from, or other realization
upon any of the Collateral, the exercise or enforcement of any of the rights of
the Secured Party hereunder or the failure by Intercell to perform or observe
any of the provisions hereof.
Section 12. Amendments; Etc. No waiver of any provision of this Agreement
---------------
shall in any event be effective unless the same shall be in writing and signed
by the Secured Party, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No
amendment of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the Secured Party and Intercell.
Section 13. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be given in the form and manner and delivered (a)
to the Secured Party at 141 West Jackson Blvd., Suite 1792, Chicago, Illinois
60604, or (b) to Intercell at 370 17th Street, Suite 3290, Denver, Colorado or,
(c) as to either party, at such other address as shall be designated by such
party in a written notice to the other party.
Section 14. Continuing Security Interest: Assignments under Purchase
--------------------------------------------------------
Agreement. This Agreement shall create a continuing security interest in the
- ---------
Collateral and shall (a) remain in full force and effect until the performance
in full of the Obligations, (b) be binding upon Intercell and its successors and
assigns, and (c) inure to the benefit of and be enforceable by the Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c) and to the extent permitted under the Purchase
Agreement, upon any assignment by Secured Party to any other person of all or
any portion of its rights and obligations under the Purchase Agreement, such
other person shall thereupon become vested with all the benefits in respect
thereof granted to Secured Party herein or otherwise. Upon the performance in
full of the Obligations and all other amounts payable under this Agreement, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to Intercell. No transfer or renewal, extension,
assignment or termination of this Agreement, the Purchase Agreement or any other
instrument or document executed and delivered by Intercell to the Secured Party,
nor any additional investments or loans made by the Secured Party, nor the
taking of further security, nor the retaking or redelivery of the Collateral to
Intercell by the Secured Party, nor any other act of the Secured Party, shall
release Intercell from any obligation hereunder, except upon a release or
discharge executed in writing by the Secured Party with respect to such
obligation or upon payment of such obligation or upon full satisfaction of all
the Obligations. The Secured Party shall not, by any act, delay, omission or
otherwise, be deemed to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by the Secured Party and then only
to the extent therein set forth. A waiver by the Secured Party of any right or
remedy on any occasion shall not be construed as a bar to the exercise of any
such right or remedy which the Secured Party has or would otherwise have had on
any other occasion.
Section 15. Governing Law; Terms. This Agreement shall be governed by and
--------------------
construed in accordance with the laws of the State of Illinois without reference
to the conflict or choice of law principles thereof, except to the extent that
the validity or perfection of the security interest hereunder, or the remedies
hereunder, in respect of any particular Collateral are governed by the
5
<PAGE>
laws of a jurisdiction other than the State of Illinois. Any terms used herein
which are used in the Uniform Commercial Code of the State of Illinois shall
have the same meanings herein as such terms have in said Uniform Commercial
Code.
Section 16. Miscellaneous.
-------------
(a) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such separate
counterparts shall together constitute but one and the same instrument.
(b) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of
such prohibition or unenforceability in such jurisdiction without
invalidating the remaining provisions hereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
6
<PAGE>
IN WITNESS WHEREOF, Intercell and the Secured Party have caused this
Agreement to be duly executed and delivered as of the date first above written.
INTERCELL CORPORATION
By /s/ Paul H. Metzinger
------------------------------------------
Paul H. Metzinger, President and CEO
AUGUSTINE FUND, L.P.
By Augustine Capital Management, Inc., its
General Partner
By /s/ John Porter
------------------------------------------
Name:________________________________________
Title:_______________________________________
7
<PAGE>
EXHIBIT A
(TO SECURITY AGREEMENT)
ALLONGE TO SECURED PROMISSORY NOTE DATED DECEMBER 31, 1997
MADE BY SIGMA 7 CORPORATION AND
BMI ACQUISITION GROUP, INC. (JOINTLY AND SEVERALLY)
PAYABLE TO INTERCELL CORPORATION
INTERCELL CORPORATION, the payee under the Secured Promissory Note dated
December 31, 1997 in the original principal amount of $3,057,774.13 (the "Note")
made by Sigma 7 Corporation and BMI Acquisition Group, Inc. (jointly and
severally) hereby indorses said Note to the order of AUGUSTINE FUND, L.P.
DATED: December 31, 1997 INTERCELL CORPORATION
By /s/ Paul H. Metzinger
---------------------------------------
Paul H. Metzinger, President and CEO
8
<PAGE>
EXHIBIT B
(TO SECURITY AGREEMENT)
ALLONGE TO SECURED CORPORATE PROMISSORY NOTE DATED JULY 18, 1997
MADE BY INTERCELL TECHNOLOGIES CORPORATION
PAYABLE TO INTERCELL CORPORATION
INTERCELL CORPORATION, the payee under the Secured Corporate Promissory
Note dated July 18, 1997 in the original principal amount of $2,200,000 (the
"Note") made by Intercell Technologies Corporation hereby indorses said Note to
the order of AUGUSTINE FUND, L.P.
DATED: December 31, 997 INTERCELL CORPORATION
By /s/ Paul H. Metzinger
----------------------------------------
Paul H. Metzinger, President and CEO
9
<PAGE>
EXHIBIT 11
COMPUTATION OF EARNINGS (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
December 31
-----------
1997 1996
---- ----
<S> <C> <C>
Net loss $(2,998,750) $(1,392,000)
Deemed Preferred Stock Dividend relating 221,000
to in-the-money conversion terms
Accretion on Preferred Stock 35,000 139,000
----------- -----------
Net loss applicable to common stockholders $(3,033,750) $(1,752,000)
=========== ===========
Weighted average number of common shares 29,481,871 16,527,588
outstanding
Net loss per share $( 0.10) $( 0.11)
=========== ===========
</TABLE>
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERCELL
CORPORATION'S FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997 AND FOR THE THREE
MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 974,000
<SECURITIES> 0
<RECEIVABLES> 1,179,000
<ALLOWANCES> 247,000
<INVENTORY> 799,000
<CURRENT-ASSETS> 4,271,000
<PP&E> 2,690,601
<DEPRECIATION> 555,601
<TOTAL-ASSETS> 6,941,000
<CURRENT-LIABILITIES> 4,836,000
<BONDS> 1,501,000
0
3,693,750
<COMMON> 21,093,750
<OTHER-SE> (24,182,750)
<TOTAL-LIABILITY-AND-EQUITY> 6,941,000
<SALES> 2,055,000
<TOTAL-REVENUES> 2,055,000
<CGS> 1,812,000
<TOTAL-COSTS> 5,030,750
<OTHER-EXPENSES> 23,000
<LOSS-PROVISION> 247,000
<INTEREST-EXPENSE> 97,000
<INCOME-PRETAX> (2,998,750)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,998,750)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,998,750)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
