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
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the U.S. Securities and Exchange Commission
(the "SEC") under the Securities Act
---
of 1933, as amended (the "1933 Act");
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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
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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
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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
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Thousand Dollars ($750,000) (the "Purchase
Price") in the respective amounts set
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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
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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
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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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2
<PAGE>
Each Buyer
represents and warrants, severally and not jointly, that:
(a)
Investment Purpose.
Each Buyer is acquiring the
Convertible
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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
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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
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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.
3
<PAGE>
(f)
Transfer or
Resale. Each Buyer understands that except as
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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
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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.
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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
5
<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
--------------
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
7
<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 misleading.
(g)
10(b)-5. The
SEC
