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SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of March
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10, 2005, by and among INTREPID TECHNOLOGY & RESOURCES,
INC., an Idaho
corporation, with headquarters located at 501 West Broadway,
Suite 200, Idaho
Falls, ID 83402 (the "Company"), and the Buyers listed on
Schedule I attached
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hereto (individually, a "Buyer" or collectively "Buyers").
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WITNESSETH:
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WHEREAS, the Company and the Buyer(s) are executing and
delivering this
Agreement in reliance upon an exemption from securities
registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D ("Regulation D") as
promulgated by
------------
the U.S. Securities and Exchange Commission (the "SEC") under
the Securities Act
---
of 1933, as amended (the "1933 Act");
---------
WHEREAS, the parties desire that, upon the terms and subject to
the
conditions contained herein, the Company shall issue and sell to
the Buyer(s),
as provided herein, and the Buyer(s) shall purchase up to Seven
Hundred Fifty
Thousand Dollars ($750,000) of secured convertible debentures
(the "Convertible
-----------
Debentures"), which shall be convertible into shares of the
Company's common
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stock, par value $0.005 (the "Common Stock") (as converted, the
"Conversion
------------ ----------
Shares"), of which Seven Hundred Fifty Thousand Dollars
($750,000) has been
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funded (the "Closing"), for a total purchase price of Seven
Hundred Fifty
-------
Thousand Dollars ($750,000) (the "Purchase Price") in the
respective amounts set
--------------
forth opposite each Buyer(s) name on Schedule I (the
"Subscription Amount"); and
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WHEREAS, contemporaneously with the execution and delivery of
this
Agreement, the parties hereto are executing and delivering an
Investor a
Registration Rights Agreement substantially in the form attached
hereto as
Exhibit A (the "Investor Registration Rights Agreement")
pursuant to which the
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Company has agreed to provide certain registration rights under
the 1933 Act and
the rules and regulations promulgated there under, and
applicable state
securities laws; and
WHEREAS, the aggregate proceeds of the sale of the Convertible
Debentures
contemplated hereby shall be held in escrow pursuant to the
terms of an escrow
agreement substantially in the form of the Escrow Agreement
attached hereto as
Exhibit B.
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WHEREAS, contemporaneously with the execution and delivery of
this
Agreement, the parties hereto are executing and delivering
Irrevocable Transfer
Agent Instructions substantially in the form attached hereto as
Exhibit C (the
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"Irrevocable Transfer Agent Instructions").
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WHEREAS, contemporaneously with the execution and delivery of
this
Agreement, the parties hereto are executing and delivering a
Security Agreement
substantially in the form attached hereto as Exhibit D (the
"Security
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Agreement") pursuant to which the Company has agreed to provide
the Buyer a
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security interest in Pledged Collateral (as this term is defined
in the Security
Agreement dated the date hereof) to secure Company's obligations
under this
Agreement, the Convertible Debenture, the Investor Registration
Rights
Agreement, the
<PAGE>
Irrevocable Transfer Agent Instructions, the Security Agreement
or any other
obligations of the Company to the Investor; and
NOW, THEREFORE, in consideration of the mutual covenants and
other
agreements contained in this Agreement the Company and the
Buyer(s) hereby agree
as follows:
1. PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.
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(a) Purchase of Convertible Debentures. Subject to the
-------------------------------------
satisfaction (or waiver) of the terms and conditions of this
Agreement, each
Buyer agrees, severally and not jointly, to purchase at Closing
(as defined
herein below) and the Company agrees to sell and issue to each
Buyer, severally
and not jointly, at Closing, Convertible Debentures in amounts
corresponding
with the Subscription Amount set forth opposite each Buyer's
name on Schedule I
hereto. Upon execution hereof by a Buyer, the Buyer shall wire
transfer the
Subscription Amount set forth opposite his name on Schedule I in
same-day funds
or a check payable to "David Gonzalez, Esq., as Escrow Agent for
Intrepid
Technology & Resources, Inc. /Cornell Capital Partners, LP",
which Subscription
Amount shall be held in escrow pursuant to the terms of the
Escrow Agreement (as
hereinafter defined) and disbursed in accordance therewith.
Notwithstanding the
foregoing, a Buyer may withdraw his Subscription Amount and
terminate this
Agreement as to such Buyer at any time after the execution
hereof and prior to
Closing (as hereinafter defined). The parties acknowledge that
these
Subscription Amounts have already been funded.
(b) Closing Date. The Closing of the purchase and sale of
the
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Convertible Debentures shall take place on or before the fifth
(5th) business
day following the date hereof, subject to notification of
satisfaction of the
conditions to the Closing set forth herein and in Sections 6 and
7 below (or
such later date as is mutually agreed to by the Company and the
Buyer(s))(the
"Closing Date") The Closing shall occur at the offices of
Yorkville Advisors,
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LLC, 101 Hudson Street, Suite 3700, Jersey City, New Jersey
07302 (or such other
place as is mutually agreed to by the Company and the
Buyer(s)).
(c) Escrow Arrangements; Form of Payment. Upon execution
hereof
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by Buyer(s) and pending the Closing, the aggregate proceeds of
the sale of the
Convertible Debentures to Buyer(s) pursuant hereto shall be
deposited in a
non-interest bearing escrow account with David Gonzalez, Esq.,
as escrow agent
(the "Escrow Agent"), pursuant to the terms of the Escrow
Agreement. Subject to
------------
the satisfaction of the terms and conditions of this Agreement,
on the Closing
Date, (i) the Escrow Agent shall deliver to the Company in
accordance with the
terms of the Escrow Agreement such aggregate proceeds for the
Convertible
Debentures to be issued and sold to such Buyer(s), minus the
fees pursuant to
Section 4(g) hereof, which shall be paid directly from the gross
proceeds of the
Closing held in escrow by wire transfer of immediately available
funds in
accordance with the Company's written wire instructions, and
(ii) the Company
shall deliver to each Buyer, Convertible Debentures which such
Buyer(s) is
purchasing in amounts indicated opposite such Buyer's name on
Schedule I, duly
executed on behalf of the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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<PAGE>
Each Buyer represents and warrants, severally and not jointly,
that:
(a) Investment Purpose. Each Buyer is acquiring the
Convertible
-------------------
Debentures and, upon conversion of Convertible Debentures, the
Buyer will
acquire the Conversion Shares then issuable, for its own account
for investment
only and not with a view towards, or for resale in connection
with, the public
sale or distribution thereof, except pursuant to sales
registered or exempted
under the 1933 Act; provided, however, that by making the
representations
herein, such Buyer reserves the right to dispose of the
Conversion Shares at any
time in accordance with or pursuant to an effective registration
statement
covering such Conversion Shares or an available exemption under
the 1933 Act.
(b) Accredited Investor Status. Each Buyer is an "Accredited
---------------------------- ----------
Investor" as that term is defined in Rule 501(a)(3) of
Regulation D.
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(c) Reliance on Exemptions. Each Buyer understands that the
------------------------
Convertible Debentures are being offered and sold to it in
reliance on specific
exemptions from the registration requirements of United States
federal and state
securities laws and that the Company is relying in part upon the
truth and
accuracy of, and such Buyer's compliance with, the
representations, warranties,
agreements, acknowledgments and understandings of such Buyer set
forth herein in
order to determine the availability of such exemptions and the
eligibility of
such Buyer to acquire such securities.
(d) Information. Each Buyer and its advisors (and his or,
its
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counsel), if any, have been furnished with all materials
relating to the
business, finances and operations of the Company and information
he deemed
material to making an informed investment decision regarding his
purchase of the
Convertible Debentures and the Conversion Shares, which have
been requested by
such Buyer. Each Buyer and its advisors, if any, have been
afforded the
opportunity to ask questions of the Company and its management.
Neither such
inquiries nor any other due diligence investigations conducted
by such Buyer or
its advisors, if any, or its representatives shall modify, amend
or affect such
Buyer's right to rely on the Company's representations and
warranties contained
in Section 3 below. Each Buyer understands that its investment
in the
Convertible Debentures and the Conversion Shares involves a high
degree of risk.
Each Buyer is in a position regarding the Company, which, based
upon employment,
family relationship or economic bargaining power, enabled and
enables such Buyer
to obtain information from the Company in order to evaluate the
merits and risks
of this investment. Each Buyer has sought such accounting, legal
and tax
advice, as it has considered necessary to make an informed
investment decision
with respect to its acquisition of the Convertible Debentures
and the Conversion
Shares.
(e) No Governmental Review. Each Buyer understands that no
United
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States federal or state agency or any other government or
governmental agency
has passed on or made any recommendation or endorsement of the
Convertible
Debentures or the Conversion Shares, or the fairness or
suitability of the
investment in the Convertible Debentures or the Conversion
Shares, nor have such
authorities passed upon or endorsed the merits of the offering
of the
Convertible Debentures or the Conversion Shares.
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<PAGE>
(f) Transfer or Resale. Each Buyer understands that except
as
--------------------
provided in the Investor Registration Rights Agreement: (i) the
Convertible
Debentures 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) such Buyer
shall have delivered to the Company an opinion of counsel, in a
generally
acceptable form, to the effect that such securities to be sold,
assigned or
transferred may be sold, assigned or transferred pursuant to an
exemption from
such registration requirements; (ii) any sale of such securities
made in
reliance on Rule 144 under the 1933 Act (or a successor rule
thereto) ("Rule
----
144") 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 under
the 1933 Act or
any state securities laws or to comply with the terms and
conditions of any
exemption thereunder. The Company reserves the right to place
stop transfer
instructions against the shares and certificates for the
Conversion Shares.
(g) Legends. Each Buyer understands that the certificates or
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other instruments representing the Convertible Debentures and or
the Conversion
Shares shall bear a restrictive legend in substantially the
following form (and
a stop -transfer order may be placed against transfer of such
stock
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company
within two (2)
business days shall issue a certificate without such legend to
the holder of the
Conversion Shares upon which it is stamped, if, unless otherwise
required by
state securities laws, (i) in connection with a sale
transaction, provided the
Conversion Shares are registered under the 1933 Act or (ii) in
connection with a
sale transaction, after such holder provides the Company with an
opinion of
counsel, which opinion shall be in form, substance and scope
customary for
opinions of counsel in comparable transactions, to the effect
that a public
sale, assignment or transfer of the Conversion Shares may be
made without
registration under the 1933 Act.
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<PAGE>
(h) Authorization, Enforcement. This Agreement has been duly
and
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validly authorized, executed and delivered on behalf of such
Buyer and is a
valid and binding agreement of such Buyer enforceable in
accordance with its
terms, except as such enforceability may be limited by general
principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium,
liquidation and other similar laws relating to, or affecting
generally, the
enforcement of applicable creditors' rights and remedies.
(i) Receipt of Documents. Each Buyer and his or its counsel
has
----------------------
received and read in their entirety: (i) this Agreement and each
representation,
warranty and covenant set forth herein, the Security Agreement,
the Investor
Registration Rights Agreement, the Escrow Agreement, and the
Irrevocable
transfer Agent Instructions; (ii) all due diligence and other
information
necessary to verify the accuracy and completeness of such
representations,
warranties and covenants; (iii) the Company's Form 10-KSB for
the fiscal year
ended June 30, 2003 (iv) the Company's Form 10-QSB for the
fiscal quarter ended
March 31, 2004 and (v) answers to all questions each Buyer
submitted to the
Company regarding an investment in the Company; and each Buyer
has relied on the
information contained therein and has not been furnished any
other documents,
literature, memorandum or prospectus.
(j) Due Formation of Corporate and Other Buyers. If the
Buyer(s)
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is a corporation, trust, partnership or other entity that is not
an individual
person, it has been formed and validly exists and has not been
organized for the
specific purpose of purchasing the Convertible Debentures and is
not prohibited
from doing so.
(k) No Legal Advice From the Company. Each Buyer
acknowledges,
-----------------------------------
that it had the opportunity to review this Agreement and the
transactions
contemplated by this Agreement with his or its own legal counsel
and investment
and tax advisors. Each Buyer is relying solely on such counsel
and advisors and
not on any statements or representations of the Company or any
of its
representatives or agents for legal, tax or investment advice
with respect to
this investment, the transactions contemplated by this Agreement
or the
securities laws of any jurisdiction.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
--------------------------------------------------
The Company represents and warrants to each of the Buyers that,
except as
set forth in the SEC Documents (as defined herein):
(a) Organization and Qualification. The Company and its
--------------------------------
subsidiaries are corporations duly organized and validly
existing in good
standing under the laws of the jurisdiction in which they are
incorporated, 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, except to the extent that the
failure to be so
qualified or be in good standing would not have a material
adverse effect on the
Company and its subsidiaries taken as a whole.
(b) Authorization, Enforcement, Compliance with Other
Instruments.
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(i) The Company has the requisite corporate power and authority
to enter into
and perform this
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<PAGE>
Agreement, the Security Agreement, the Investor Registration
Rights Agreement,
the Escrow Agreement, the Irrevocable Transfer Agent
Instructions, and any
related agreements, and to issue the Convertible Debentures and
the Conversion
Shares in accordance with the terms hereof and thereof, (ii) the
execution and
delivery of this Agreement, the Security Agreement, the Investor
Registration
Rights Agreement, the Escrow Agreement, the Irrevocable Transfer
Agent
Instructions (as defined herein) and any related agreements by
the Company and
the consummation by it of the transactions contemplated hereby
and thereby,
including, without limitation, the issuance of the Convertible
Debentures, the
Conversion Shares and the reservation for issuance and the
issuance of the
Conversion Shares issuable upon conversion or exercise thereof,
have been duly
authorized by the Company's Board of Directors and no further
consent or
authorization is required by the Company, its Board of Directors
or its
stockholders, (iii) this Agreement, the Security Agreement, the
Investor
Registration Rights Agreement, the Escrow Agreement, the
Irrevocable Transfer
Agent Instructions and any related agreements have been duly
executed and
delivered by the Company, (iv) this Agreement, the Security
Agreement, the
Investor Registration Rights Agreement, the Escrow Agreement,
the Irrevocable
Transfer Agent Instructions and any related agreements
constitute the valid and
binding obligations of the Company enforceable against the
Company in accordance
with their terms, except as such enforceability may be limited
by general
principles of equity or applicable bankruptcy, insolvency,
reorganization,
moratorium, liquidation or similar laws relating to, or
affecting generally, the
enforcement of creditors' rights and remedies. The authorized
officer of the
Company executing this Agreement, the Security Agreement, the
Investor
Registration Rights Agreement, the Escrow Agreement, the
Irrevocable Transfer
Agent Instructions and any related agreements knows of no reason
why the Company
cannot file the registration statement as required under the
Investor
Registration Rights Agreement or perform any of the Company's
other obligations
under such documents.
(c) Capitalization. The authorized capital stock of the
Company
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consists of 185,000,000 shares of Common Stock, par value $0.005
per share and
no shares of Preferred Stock. As of the date hereof, the Company
has
118,384,169 shares of Common Stock issued and outstanding. All
of such
outstanding shares have been validly issued and are fully paid
and
nonassessable. Except as disclosed in the SEC Documents (as
defined in Section
3(f)), no shares of Common Stock are subject to preemptive
rights or any other
similar rights or any liens or encumbrances suffered or
permitted by the
Company. Except as disclosed in the SEC Documents, as of the
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 contracts, commitments,
understandings 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 or 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, (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 their securities
under the 1933 Act
(except pursuant to the Registration Rights Agreement) and (iv)
there are no
outstanding registration statements and there are no outstanding
comment letters
from the SEC or any other regulatory agency. There are no
securities or
instruments containing anti-dilution or similar provisions that
will be
triggered by the issuance of the Convertible Debentures as
described in this
6
<PAGE>
Agreement. The Company has furnished to the Buyer true and
correct copies of
the Company's Articles of Incorporation, as amended and as in
effect on the date
hereof (the "Articles of Incorporation"), and the Company's
By-laws, as in
---------------------------
effect on the date hereof (the "By-laws"), and the terms of all
securities
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convertible into or exercisable for Common Stock and the
material rights of the
holders thereof in respect thereto other than stock options
issued to employees
and consultants.
(d) Issuance of Securities. The Convertible Debentures are
duly
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authorized and, upon issuance in accordance with the terms
hereof, shall be duly
issued, fully paid and nonassessable, are free from all taxes,
liens and charges
with respect to the issue thereof. The Conversion Shares
issuable upon
conversion of the Convertible Debentures have been duly
authorized and reserved
for issuance. Upon conversion or exercise in accordance with the
Convertible
Debentures the Conversion Shares will be duly issued, fully paid
and
nonassessable.
(e) No Conflicts. Except as disclosed in the SEC Documents,
the
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execution, delivery and performance of this Agreement, the
Security Agreement,
the Investors Registration Rights Agreement, the Escrow
Agreement and the
Irrevocable Transfer Agent Instructions by the Company and the
consummation by
the Company of the transactions contemplated hereby will not (i)
result in a
violation of the Articles of Incorporation, any certificate of
designations of
any outstanding series of preferred stock of the Company or the
By-laws 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 and the
rules and regulations of The National Association of Securities
Dealers Inc.'s
OTC Bulletin Board on which the Common Stock is quoted)
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
as disclosed in
the SEC Documents, neither the Company nor its subsidiaries is
in violation of
any term of or in default under its Articles of Incorporation or
By-laws or
their organizational charter or by-laws, respectively, or any
material contract,
agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or
order or any statute, rule or regulation applicable to the
Company or its
subsidiaries. The business of the Company and its subsidiaries
is not being
conducted, and shall not be conducted in violation of any
material law,
ordinance, or regulation of any governmental entity. Except as
specifically
contemplated by this Agreement and 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 or contemplated by this Agreement or
the Registration
Rights Agreement in accordance with the terms hereof or thereof.
Except as
disclosed in the SEC Documents, all consents, authorizations,
orders, filings
and registrations which the Company is required to obtain
pursuant to the
preceding sentence have been obtained or effected on or prior to
the date
hereof. The Company and its subsidiaries are unaware of any
facts or
circumstance, which might give rise to any of the foregoing.
(f) SEC Documents: Financial Statements. Since January 1,
2003,
-------------------------------------
the Company has filed all reports, schedules, forms, statements
and other
documents required to be
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<PAGE>
filed by it with the SEC under of the Securities Exchange Act of
1934, as
amended (the "1934 Act") (all of the foregoing filed prior to
the date hereof or
--------
amended after the date hereof and all exhibits included therein
and financial
statements and schedules thereto and documents incorporated by
reference
therein, being hereinafter referred to as the "SEC Documents").
The Company has
-------------
delivered to the Buyers or their representatives, or made
available through the
SEC's website at http://www.sec.gov., true and complete copies
of the SEC
Documents. As of their respective dates, the financial
statements of the Company
disclosed in the SEC Documents (the "Financial Statements")
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 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 which is not included in the SEC Documents, including,
without
limitation, information referred to in 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
circumstances under
which they were made, not mislead
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