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WARRANT
THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT 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 FORM REASONABLY SATISFACTORY TO
THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SAID ACT.
INTREPID TECHNOLOGY AND RESOURCES, INC.
Warrant To Purchase Common Stock
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Warrant
No.: IESV-03-03
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Number
of Shares:
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1,400,000
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Warrant
Exercise Price:
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$0.035
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Expiration
Date:
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March
28, 2013
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Date
of Issuance: March 28, 2008
Intrepid Technology and Resources, Inc.
, an Idaho corporation (the “
Company ”),
hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
YA Global Investments, L.P. (the
“
Holder ”),
the registered holder hereof or its permitted assigns, is entitled,
subject to the terms set forth below, to purchase from the Company
upon surrender of this Warrant, at any time or times on or after
the date hereof, but not after 11:59 P.M. Eastern Time on the
Expiration Date (as defined herein) up to One Million Four Hundred
Thousand (1,400,000) fully paid and nonassessable shares of Common
Stock (as defined herein) of the Company (the “
Warrant Shares ”)
at the exercise price per share provided in Section 1(b) below
or as subsequently adjusted; provided, however, that in no event
shall the holder be entitled to exercise this Warrant for a number
of Warrant Shares in excess of that number of Warrant Shares which,
upon giving effect to such exercise, would cause the aggregate
number of shares of Common Stock beneficially owned by the holder
and its affiliates to exceed 4.99% of the outstanding shares of the
Common Stock following such exercise, except within sixty (60) days
of the Expiration Date (however, such restriction may be waived by
Holder (but only as to itself and not to any other holder) upon not
less than sixty-five (65) days prior notice to the Company). For
purposes of the foregoing proviso, the aggregate number of shares
of Common Stock beneficially owned by the holder and its affiliates
shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of
such proviso is being made, but shall exclude shares of Common
Stock which would be issuable upon (i) exercise of the
remaining, unexercised Warrants beneficially owned by the holder
and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company beneficially owned by the holder and its affiliates
(including, without limitation, any convertible notes or preferred
stock) subject to a limitation on conversion or exercise analogous
to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended. For purposes of
this Warrant, in determining the number of outstanding shares of
Common Stock a holder may rely on the number of outstanding shares
of Common Stock as reflected in (1) the Company’s most recent
Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent
public announcement by the Company or (3) any other notice by the
Company or its transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written request of any holder,
the Company shall promptly, but in no event later than one (1)
Business Day following the receipt of such notice, confirm in
writing to any such holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
exercise of Warrants (as defined below) by such holder and its
affiliates since the date as of which such number of outstanding
shares of Common Stock was reported.
Section
1.
(a)
This
Warrant is issued pursuant to the Securities Purchase
Agreement (“
Securities Purchase Agreement ”)
dated the date hereof between the Company and the Buyers listed on
Schedule I thereto or issued in exchange or substitution thereafter
or replacement thereof. Each Capitalized term used, and not
otherwise defined herein, shall have the meaning ascribed thereto
in the Securities Purchase Agreement.
(b)
Definitions .
The following words and terms as used in this Warrant shall have
the following meanings:
(i)
“
Approved Stock Plan ”
means a stock option plan that has been approved by the Board of
Directors of the Company prior to the date of the Securities
Purchase Agreement, pursuant to which the Company’s
securities may be issued only to any employee, officer or director
for services provided to the Company.
(ii)
“
Business Day ”
means any day other than Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required
by law to remain closed.
(iii)
“
Closing Bid Price ”
means the closing bid price of Common Stock as quoted on the
Principal Market (as reported by Bloomberg Financial Markets
(“
Bloomberg ”)
through its “Volume at Price” function).
(iv)
“
Common Stock ”
means (i) the Company’s common stock, par value $0.005
per share, and (ii) any capital stock into which such Common
Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
(v)
“
Event of Default ”
means an event of default under the Securities Purchase Agreement
or the Convertible Debentures issued in connection
therewith.
(vi)
“
Excluded Securities ”
means, (a) shares issued or deemed to have been issued by the
Company pursuant to an Approved Stock Plan, (b) shares of Common
Stock issued or deemed to be issued by the Company upon the
conversion, exchange or exercise of any right, option, obligation
or security outstanding on the date prior to date of the Securities
Purchase Agreement, provided that the terms of such right, option,
obligation or security are not amended or otherwise modified on or
after the date of the Securities Purchase Agreement, and provided
that the conversion price, exchange price, exercise price or other
purchase price is not reduced, adjusted or otherwise modified and
the number of shares of Common Stock issued or issuable is not
increased (whether by operation of, or in accordance with, the
relevant governing documents or otherwise) on or after the date of
the Securities Purchase Agreement, and (c) the shares of
Common Stock issued or deemed to be issued by the Company upon
conversion of the Convertible Debentures or exercise of the
Warrants.
(vii)
“
Expiration Date ”
means March
28 ,
2013.
(viii)
“
Issuance Date ”
means the date hereof.
(ix)
“
Options ”
means any rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.
(x)
“
Person ”
means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency
thereof.
(xi)
“
Primary Market ”
means on any of (a) the American Stock Exchange, (b) New York Stock
Exchange, (c) the Nasdaq Global Select Market, (d) the Nasdaq
Global Market, (e) the Nasdaq Capital Market, or (e) the
Over-the-Counter Bulletin Board (“
OTCBB ”)
(xii)
“
Securities Act ”
means the Securities Act of 1933, as amended.
(xiii)
“
Warrant ”
means this Warrant and all Warrants issued in exchange, transfer or
replacement thereof.
(xiv)
“
Warrant Exercise Price ”
shall be $0.035 or as subsequently adjusted as provided in
Section 8 hereof.
(c)
Other
Definitional Provisions.
(i)
Except
as otherwise specified herein, all references herein
(A) to the Company shall be deemed to include the
Company’s successors and (B) to any applicable law
defined or referred to herein shall be deemed references to
such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii)
When
used in this Warrant, the words “
herein ”,
“
hereof ”,
and “
hereunder
” and
words of similar import, shall refer to this Warrant as a whole and
not to any provision of this Warrant, and the words “
Section ”,
“
Schedule ”,
and “
Exhibit ”
shall refer to Sections of, and Schedules and Exhibits to, this
Warrant unless otherwise specified.
(iii)
Whenever
the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the
plural, and vice versa.
Section
2.
Exercise of Warrant .
(a)
Subject
to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of
the Company, pro rata as hereinafter provided, at any time on
any Business Day on or after the opening of business on such
Business Day, commencing with the first day after the date
hereof, and prior to 11:59 P.M. Eastern Time on the
Expiration Date (i) by delivery of a written notice, in the
form of the subscription notice attached as
Exhibit A hereto
(the “
Exercise Notice ”),
of such holder’s election to exercise this Warrant, which
notice shall specify the number of Warrant Shares to be
purchased, payment to the Company of an amount equal to the
Warrant Exercise Price(s) applicable to the Warrant Shares being
purchased, multiplied by the number of Warrant Shares (at the
applicable Warrant Exercise Price) as to which this Warrant is
being exercised (plus any applicable issue or transfer taxes)
(the “
Aggregate Exercise Price ”)
in cash or wire transfer of immediately available funds and the
surrender of this Warrant (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft or
destruction) to a common carrier for overnight delivery to the
Company as soon as practicable following such date (“
Cash Basis ”)
or (ii) if at the time of exercise, the Warrant Shares are not
subject to an effective registration statement or if an Event of
Default has occurred, by delivering an Exercise Notice and in lieu
of making payment of the Aggregate Exercise Price in cash or wire
transfer, elect instead to receive upon such exercise the
“Net Number” of shares of Common Stock determined
according to the following formula (the “
Cashless Exercise ”):
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Net
Number =
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(A x B) - (A x C)
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B
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For
purposes of the foregoing formula:
A
= the total number of Warrant Shares with respect to which
this Warrant is then being exercised.
B
= the Closing Bid Price of the Common Stock on the date of
exercise of the Warrant.
C
= the Warrant Exercise Price then in effect for the applicable
Warrant Shares at the time of such exercise.
In
the event of any exercise of the rights represented by this
Warrant in compliance with this Section 2, the Company shall
on or before the fifth (5th) Business Day following the
date of receipt of the Exercise Notice, the Aggregate Exercise
Price and this Warrant (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft or
destruction) and the receipt of the representations of the
holder specified in Section 6 hereof, if requested by the
Company (the “
Exercise Delivery Documents ”),
and if the Common Stock is DTC eligible, credit such aggregate
number of shares of Common Stock to which the holder shall be
entitled to the holder’s or its designee’s balance
account with The Depository Trust Company; provided, however, if
the holder who submitted the Exercise Notice requested physical
delivery of any or all of the Warrant Shares, or, if the Common
Stock is not DTC eligible then the Company shall, on or before the
fifth (5
th )
Business Day following receipt of the Exercise Delivery Documents,
issue and surrender to a common carrier for overnight delivery to
the address specified in the Exercise Notice, a certificate,
registered in the name of the holder, for the number of shares of
Common Stock to which the holder shall be entitled pursuant to such
request. Upon delivery of the Exercise Notice and Aggregate
Exercise Price referred to in clause (i) or (ii) above the
holder of this Warrant shall be deemed for all corporate purposes
to have become the holder of record of the Warrant Shares with
respect to which this Warrant has been exercised. In the case of a
dispute as to the determination of the Warrant Exercise Price, the
Closing Bid Price or the arithmetic calculation of the Warrant
Shares, the Company shall promptly issue to the holder the number
of Warrant Shares that is not disputed and shall submit the
disputed determinations or arithmetic calculations to the holder
via facsimile within one (1) Business Day of receipt of the
holder’s Exercise Notice.
(b)
If
the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic
calculation of the Warrant Shares within one (1) day of such
disputed determination or arithmetic calculation being
submitted to the holder, then the Company shall immediately
submit via facsimile (i) the disputed determination of the
Warrant Exercise Price or the Closing Bid Price to an
independent, reputable investment banking firm or (ii) the
disputed arithmetic calculation of the Warrant Shares to its
independent, outside accountant. The Company shall cause the
investment banking firm or the accountant, as the case may be,
to perform the determinations or calculations and notify the
Company and the holder of the results no later than
forty-eight (48) hours from the time it receives the disputed
determinations or calculations. Such investment banking
firm’s or accountant’s determination or
calculation, as the case may be, shall be deemed conclusive
absent manifest error.
(c)
Unless
the rights represented by this Warrant shall have expired or
shall have been fully exercised, the Company shall, as soon as
practicable and in no event later than five (5) Business Days
after any exercise and at its own expense, issue a new Warrant
identical in all respects to this Warrant exercised except it
shall represent rights to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under
this Warrant exercised, less the number of Warrant Shares with
respect to which such Warrant is exercised.
(d)
No
fractional Warrant Shares are to be issued upon any pro rata
exercise of this Warrant, but rather the number of Warrant
Shares issued upon such exercise of this Warrant shall be
rounded up or down to the nearest whole number.
(e)
If
the Company or its Transfer Agent shall fail for any reason or
for no reason to issue to the holder within ten (10) days
of receipt of the Exercise Delivery Documents, a certificate
for the number of Warrant Shares to which the holder is
entitled or to credit the holder’s balance account with
The Depository Trust Company for such number of Warrant Shares
to which the holder is entitled upon the holder’s
exercise of this Warrant, the Company shall, in addition to
any other remedies under this Warrant or otherwise available
to such holder, pay as additional damages in cash to such
holder on each day the issuance of such certificate for
Warrant Shares is not timely effected an amount equal to
0.025% of the product of (A) the sum of the number of Warrant
Shares not issued to the holder on a timely basis and to which
the holder is entitled, and (B) the Closing Bid Price of the
Common Stock for the trading day immediately preceding the
last possible date which the Company could have issued such
Common Stock to the holder without violating this
Section 2.
(f)
If
within ten (10) days after the Company’s receipt of the
Exercise Delivery Documents, the Company fails to deliver a
new Warrant to the holder for the number of Warrant Shares to
which such holder is entitled pursuant to Section 2 hereof,
then, in addition to any other available remedies under this
Warrant, or otherwise available to such holder, the Company
shall pay as additional damages in cash to such holder on each
day after such tenth (10
th )
day that such delivery of such new Warrant is not timely effected
in an amount equal to 0.25% of the product of (A) the number
of Warrant Shares represented by the portion of this Warrant which
is not being exercised and (B) the Closing Bid Price of the
Common Stock for the trading day immediately preceding the last
possible date which the Company could have issued such Warrant to
the holder without violating this Section 2.
Section
3.
Covenants as to Common Stock .
The Company hereby covenants and agrees as follows:
(a)
This
Warrant is, and any Warrants issued in substitution for or
replacement of this Warrant will upon issuance be, duly
authorized and validly issued.
(b)
All
Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue
thereof.
(c)
During
the period within which the rights represented by this Warrant
may be exercised, the Company will at all times have
authorized and reserved at least one hundred percent (100%) of
the number of shares of Common Stock needed to provide for the
exercise of the rights then represented by this Warrant and
the par value of said shares will at all times be less than or
equal to the applicable Warrant Exercise Price. If at any time
the Company does not have a sufficient number of shares of
Common Stock authorized and available, then the Company shall
call and hold a special meeting of its stockholders within
sixty (60) days of that time for the sole purpose of
increasing the number of authorized shares of Common
Stock.
(d)
If
at any time after the date hereof the Company shall file a
registration statement, the Company shall include the Warrant
Shares issuable to the holder, pursuant to the terms of this
Warrant and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Warrant
Shares from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case
may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of
this Warrant if and so long as any shares of the same class
shall be listed on such national securities exchange or
automated quotation system.
(e)
The
Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times
in good faith assist in the carrying out of all the provisions
of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order
to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with
the tenor and purpose of this Warrant. The Company will not
increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Warrant
Exercise Price then in effect, and (ii) will take all
such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this
Warrant.
(f)
This
Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation or acquisition of all or
substantially all of the Company’s assets.
Section
4.
Taxes .
The Company shall pay any and all taxes, except any applicable
withholding, which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this
Warrant.
Section
5.
Warrant Holder Not Deemed a Stockholder .
Except as otherwise specifically provided herein, no holder, as
s
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