<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

                                       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
                                 ----------------------------------------
                                       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.
                                                                             ---
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.

                                       11