SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [xx]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
INTREPID TECHNOLOGY & RESOURCES, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[xx] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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1
INTREPID TECHNOLOGY & RESOURCES INC.
501 BROADWAY, SUITE 200
208-529-5337
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME 10:00 a.m. Mountain Standard Time on
Friday, December 12, 2003
PLACE Company's Corporate Headquarters
501 W. Broadway, Suite 200
Idaho Falls, Idaho 83402
ITEMS OF BUSINESS / PROPOSALS (1) To elect five directors of the
Board of Directors to serve a one
(1) year term.
(2) To approve 5,000,000 shares of
Series A Redeemable Convertible
4.25% Preferred Stock par value,
$1.00 per share
(3) To amend the Company's Restated
Certificate of Incorporation to
increase authorized common stock
from 135,000,000 to 185,000,000
shares
(4) To approve the Company's
divestiture of all Mining and
Mineral Rights
(5) To ratify the selection of
Balukoff Lindstrom & Co., P.A. as
the Company's independent auditors
for the Company's fiscal year
ending June 30, 2004
(6) To transact other business as may
properly come before the meeting
or any adjournments or
postponements thereof.
RECORD DATE You are entitled to vote if you were a
stockholder at the close of business on
October 15, 2003. A list of shareholders
will be available for inspection for a
period of 10 days prior to the meeting at
the Company's principal office identified
above and will also be available for
inspection at the meeting.
VOTING BY PROXY Please submit a proxy as soon as possible
so that your shares can be voted at the
meeting in accordance with your
instructions. For specific instructions on
voting, please refer to the instructions on
the proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
Idaho Falls, Idaho DR. DENNIS D. KEISER
October 15, 2003 Chairman of the Board, Chief Executive
Officer and President
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (POSTAGE IS PREPAID IF MAILED
IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR
PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING AND REVOKE YOUR
PROXY. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU WILL NOT BE
PERMITTED TO VOTE IN PERSON AT THE MEETING UNLESS YOU FIRST OBTAIN A PROXY
ISSUED IN YOUR NAME FROM THE RECORD HOLDER.
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INTREPID TECHNOLOGY & RESOURCES INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 12, 2003
PROXY STATEMENT
This Proxy Statement relates to the Annual Meeting of Stockholders of Intrepid
Technology & Resources, Inc., and Subsidiaries, (the "Company"), an Idaho
corporation, to be held on December 12, 2003, at 10:00 a.m., at the Company's
Corporate Headquarters 501 W. Broadway, Suite 200, Idaho Falls, Idaho 83402,
including any adjournments or postponements thereof (the "Meeting"). This Proxy
Statement, the accompanying proxy card and the Company's Annual Report are first
being mailed to stockholders of the Company on or about November 12, 2003. THEY
ARE FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE COMPANY OF PROXIES FROM
THE HOLDERS OF THE COMPANY'S COMMON STOCK, PAR VALUE $.005 PER SHARE ("COMMON
STOCK"), FOR USE AT THE MEETING.
The principal solicitation of proxies is being made by mail; however, additional
solicitation may be made by telephone, facsimile or personal visits by
directors, officers and regular employees of the Company and its subsidiaries,
who will not receive additional compensation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
soliciting material.
All shares represented by duly executed proxies in the accompanying form
received prior to the Meeting will be voted in the manner specified therein. Any
stockholder granting a proxy may revoke it at any time before it is voted by
filing with the Secretary of the Company either an instrument revoking the proxy
or a duly executed proxy bearing a later date. Any stockholder present at the
Meeting who expresses a desire to vote their shares in person may also revoke
their proxy. As to any matter for which no choice has been specified in a duly
executed proxy, the shares represented thereby will be voted FOR each proposal
listed herein and in the discretion of the persons named in the proxy in any
other business that may properly come before the Meeting.
STOCKHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING, TO
COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
The Company's Annual Report to Stockholders for the fiscal year ended June 30,
2003 is being furnished with this Proxy Statement to stockholders of record on
October 15, 2003. The Annual Report to Stockholders does not constitute a part
of the proxy solicitation material except as otherwise provided by the rules of
the Securities and Exchange Commission, or as expressly provided for herein.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company fixed October 15, 2003 as the record
date ("Record Date") for the determination of stockholders entitled to notice of
and to vote at the Meeting. On the Record Date, there were 98,670,584 shares of
common stock issued, outstanding and entitled to vote. The Company has no other
voting securities outstanding. Each stockholder of record is entitled to one
vote per share held on all matters submitted to a vote of stockholders, except
that in electing directors, each stockholder is entitled to cumulate his or her
votes and give any one candidate an aggregate number of votes equal to the
number of directors to be elected (five) multiplied by the number of his or her
shares, or to distribute such aggregate number of votes among as many candidates
as he or she chooses. For a stockholder to exercise cumulative voting rights,
the stockholder must give notice of his or her intention to cumulatively vote
prior to the Meeting, or at the Meeting in person, prior to voting. If any
stockholder has given such notice, all stockholders may cumulatively vote. The
holders of proxies will have authority to cumulatively vote and allocate such
votes in their discretion to one or more of the director nominees. The holders
of the proxies solicited hereby do not, at this time, intend to cumulatively
vote the shares they represent, unless a stockholder indicates his intent to do
so, in which instance the proxy holders intend to cumulatively vote all the
shares they hold by proxy in favor of some or all of the director nominees
identified herein.
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The holders of a majority of the outstanding shares of common stock on the
Record Date present at the Meeting in person or by proxy will constitute a
quorum for the transaction of business at the meeting. An affirmative vote of a
majority of the shares present and voting at the Meeting is required for
approval of all matters. Abstentions and broker non-votes are each included in
the determination of the number of shares present. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, and thus,
have the effect of voting against a proposal, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
DIRECTORS.
At the Meeting, five directors are to be elected to hold office until the next
Annual Meeting of Stockholders or until the election and qualification of his or
her respective successor. It is the intention of the persons named in the proxy
to vote the proxies that are not marked to the contrary for the election as
directors of the persons named below as nominees. If any such nominee refuses or
is unable to serve as a director, the persons named as proxies may in their
discretion vote for any or all other persons who may be nominated. The five
nominees receiving the greatest number of votes cast will be elected directors,
if each nominee receives at least a majority of the votes cast.
The Board of Directors appointed three outside directors, Mr. Michael LaFleur,
Mr. William Myers, and D. Lynn Smith to stand for election. The Board of
Directors has nominated Dr. Dennis D. Keiser and Dr. Jacob D. Dustin, both
officers and directors to stand for election.
Director nominees standing for election to serve until the Annual Meeting in
2004 are:
DIRECTOR
NAME AGE POSITION WITH COMPANY RESIDENCE SINCE
---- --- --------------------- --------- -----
Dennis D. Keiser 64 President and CEO Idaho Falls, ID 2001
Jacob D. Dustin 55 Vice President, Secretary and
Treasurer Idaho Falls, ID 2001
Michael F. LaFleur 63 Director Baton Rouge, LA 2002
William R.Myers 61 Director Las Cruses, NM 2002
D. Lynn Smith 53 Director Idaho Falls, ID 2002
JACOB D. DUSTIN
Jacob D. Dustin, Ph.D., P.E., has thirty years of documented success in
increasingly responsible operational, academic and engineering leadership
positions. He has extensive experience in managing large, diverse groups of
engineers, scientists and technicians; controlling annual budgets in excess of
$100,000,000.00; and establishing professional working relationships with both
domestic and foreign government agencies, design/construction groups and
architectural/engineering firms. He retired from the United States Air Force
with the rank of Colonel and has a doctorate in Environmental Engineering.
DENNIS D. KEISER
Dr. Keiser has over 36 years experience managing Engineering and Science
operations mostly with a Fortune 300 company that managed a major Laboratory for
the U S Department of Energy in Idaho. Dr. Keiser's last position at this
Laboratory was as the Manager of the Science and Technology Department, which
contained over 700 Engineers and Scientists mostly working on Energy and
Environmental R&D issues. A major component of this R&D was related to
Alternative and Renewable Energy, which is a major focus for future development
of Intrepid Technology and Resources. In addition to his role as the
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R&D manger, he was involved with the parent Corporation in mergers and
acquisitions of Technology companies, many of which have contributed
significantly to the Corporation bottom line. Dr. Keiser has a PhD in Mining
Engineering and Metallurgy from the University of Idaho and has sat on numerous
boards and committees at national and state levels. Dr. Keiser has been actively
involved in national and State of Idaho political activities.
MICHAEL F. LaFLEUR
Mr. LaFleur, during his 40 year professional career, has served in a number of
executive capacities, including Partner in the firm BDO Seidman from 1969 to
1975; Vice President, Chief Financial Officer and Director of Cominco American
Inc. from 1975 to 1988; President, Chief Operating Officer and Director of
Solv-Ex Corporation from 1983 to 1988; Chairman, Chief Executive Officer and
Director of Gold Express Corporation, from 1990 to 1993, and since 1988 Managing
Director of Paloma Resources Group, consultants to the natural resources
industry.
WILLIAM R. MYERS
Mr. Myers, during his 36 year professional career, has served in numerous
management and executive positions up to and including corporate president and
currently serves as President of Myers Associates International, Inc. which
provides technical and management consulting focused on strategic planning,
business development and construction management for domestic and international
firms or divisions in startup and transition experiencing rapid growth.
D. LYNN SMITH
Mr. D. Lynn Smith, a Principal with the Accounting Firm of Galusha, Higgins &
Galusha, P.C., is a Certified Public Accountant and Certified Valuation Analyst
with 30 years of experience in the accounting field, of which 20 years has been
in the role of manager for Galusha, Higgins & Galusha, Idaho Falls, Idaho
office. Mr. Smith also serves on the Board of Directors for Galusha, Higgins &
Galusha.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES.
During the year ended June 30, 2003, the Board of Directors held four meetings,
and three telephone conference meetings, which resulted in resolution by written
consent. All of the directors attended at least 75% of the meetings of the
Board. The members of the Board of Directors serve as the Executive Committee,
Nominating Committee. The Compensation Committee and Audit Committee, members
are Mssrs. D. Lynn Smith, William R. Myers, and Michael F. LaFleur.
The Committees of the Board of Directors during 2003 were the Executive,
Compensation, Nominating, and Audit Committees.
The Nominating Committee met once during 2003, recommending the five directors
stand for election at the annual shareholders meeting in 2003.
The Executive Committee conducted no specific business during fiscal year 2003.
5
The members of the Audit Committee are currently Messrs. Smith, LaFleur, Myers,
and Mr. D. Lynn Smith was appointed as chairman of the Audit Committee in
September 2002. The Audit Committee reviews the proposed plan and scope of the
Company's annual audit as well as the results when it is completed. The
Committee reviews the services provided by the Company's independent auditors
and their fees. The Committee meets with the Company's financial officers to
assure the adequacy of the Company's accounting principles, financial controls
and policies. The Committee is also charged with reviewing transactions that may
present a conflict of interest on the part of management or directors. The Audit
Committee meets at least quarterly to review the financial results, discuss the
financial statements and make recommendations to the Board. Other items of
discussion include the independent auditors' recommendations for internal
controls, adequacy of staff, and management's performance concerning audit and
financial controls. The Audit Committee met two times in 2003.
The Compensation Committee met once in 2002, for the December 20, 2002, approval
and issuance of stock options to Company employees and Board members. This stock
option issuance is accounted for as fiscal year 2003, ending June 30, 2003.
AUDITOR FEES
The aggregate fees billed by Balukoff, Lindstrom & Co., P.A., for professional
services rendered for the audit of the Company's 2003, annual financial
statements and the reviews of the financial statements including in the
Company's quarterly reports on Form 10-QSB, for the fiscal year ended June 30,
2003, were $43,490.
ALL OTHER FEES
The aggregate fees billed for services rendered by Balukoff, Lindstrom & Co.,
P.A., other than the fees disclosed above, during the fiscal year ended June 30,
2003, were $0.
DIRECTORS' COMPENSATION.
During fiscal year 2003, from July 1, 2002, until June 30, 2003, no fees were
accrued or paid to those individuals on the Intrepid Technology & Resources,
Inc., Board of Directors.
PROPOSAL NO. 2
APPROVE SERIES "A" REDEEMABLE CONVERTIBLE PREFERRED STOCK
You are being asked to approve 5,000,000 shares of Series A Redeemable
Convertible Preferred Stock par value, $1.00 per share. The preferred will pay
quarterly dividends at 4.25%. The purchaser must hold the preferred for a
three-year period from the date of purchase and may then convert the preferred
stock for warrants. Each preferred share would convert to 7 warrants that may be
converted to common shares. The preferred stock agreement will be used to issue
preferred shares to raise additional working capital. The preferred stock is
later redeemable and convertible for the Company's common stock. The Board of
Directors believes that the preferred stock is an important part of bringing
investors to the Company to raise additional working capital. The working
capital will be used for the efforts directed towards new and ongoing
alternative energy projects.
A "Purchaser" as defined in the Series A Redeemable Convertible Preferred Stock
Agreement is acquiring the Securities for his own beneficial account, for
investment purposes, and not with any view to, or for resale in connection with,
any distribution of any such Securities. The Purchaser understands that the
Securities have not been registered under the Securities Act of 1933, as amended
(the "Act"), or any state securities laws, by reason of specific exemptions
under the provisions thereof which depend in part upon the investment intent of
such Purchaser and upon the accuracy of the other representations made by such
Purchaser in the Agreement
6
The Preferred Stock agreement will become effective immediately upon shareholder
approval. A copy of the Series A Redeemable Convertible Preferred Stock is
attached as Exhibit A.
SHAREHOLDER APPROVAL
The affirmative vote of a majority of the shares voting is required to approve
the Series A Redeemable Convertible Preferred Stock. However the number of
shares voting affirmatively must be greater than twenty-five percent (25%) of
the outstanding shares, to approve the Series A Redeemable Convertible Preferred
Stock.
RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
UNDER PROPOSAL 2 ON THE PROXY CARD.
PROPOSAL NUMBER 3 IS A PREREQUISITE TO PROPOSAL 2
IN AS MUCH AS THE
ADDITIONAL AUTHORIZATION OF COMMON STOCK WOULD BE
NECESSARY FOR CONVERSION RIGHTS
PROPOSAL NO. 3
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE
AUTHORIZED COMMON STOCK
On September 17, 2003, the Board of Directors adopted a resolution approving and
submitting to a vote of the stockholders an amendment to Articles of the
Company's Restated Certificate of Incorporation ("Certificate") to increase its
authorized common stock from 135,000,000 to 185,000,000 shares. The text
proposed to amend Article V (fifth), to the Articles of Incorporation is as
follows:
"The total number of shares which the corporation shall have authority to issue
is: one hundred ninety million (190,000,000), of which stock one hundred
eighty-five million (185,000,000) shares at the par value of $.005 each shall be
designated common stock and of which five million (5,000,000) shares at the par
value of one dollar each ($1.00) shall be designated preferred stock.
Shares of preferred stock may be issued from time to time in one or more series,
each of such series to have distinctive serial designations which may be by
distinguishing number, letter, or title as shall hereafter be determined
together with such voting powers, rights of redemption, dividends and
liquidation preferences all of which shall hereafter be determined in the
resolution or resolutions providing for the issue of such preferred stock from
time to time adopted by the Board of Directors of the Company, pursuant to
authority so to do which is hereby conferred upon and invested in the Board of
Directors."
The proposed increase in the authorized common stock is recommended by the Board
of Directors to ensure the availability of an adequate supply of authorized
unissued shares for the exercise of existing warrants and stock options and the
Board of Directors may decide on other corporate purposes. The Company has, as
of October 15, 2003, 97,930,584 shares of common stock outstanding and stock
options exercisable for 11,615,000 shares of common stock. If proposal 2,
herein, is approved for the issuance of Series A Preferred Stock, and all
preferred shares are issued and later converted to common stock that would
require an additional 35,000,000 common shares to convert. If all options are
exercised, the Company would have 109,545,584 shares of common stock
outstanding, and if the preferred stock is later converted there would be
144,545,584 common shares outstanding. Presently, the Company has no plans,
commitments or other understanding with regard to the additional shares proposed
for authorization. Actual issuance of additional shares requires approval of the
Board of Directors.
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RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
UNDER PROPOSAL 3 ON THE PROXY CARD.
PROPOSAL NO. 4
DIVESTITURE OF ALL MINING AND MINERAL RIGHTS
The Company entered into an agreement dated August 23, 2001 and Addendum dated
September 24, 2001 with Cordoba Corporation and Garnet Mining Corporation,
whereby in exchange for the issuance of 16,367,280 shares of the common stock of
the Company (subject to later adjustment depending on the share value of the
free-trading shares of the Company) it acquired the rights to in situ gold
reserves explored, defined and reported by Pegasus Gold Corporation and located
in Western Montana approximately fifty miles northeast of Missoula, Montana. The
defined reserve consists of 455,000 ounces of recoverable gold. Over twenty of
the 180 drill holes intersected high-grade ore zones, but it must be assumed
that the bulk of the deposit is of low grade. The Company has the opportunity
either to further define and mine the high-grade deposits or consider a mining
operation to extract the entire deposit, but, at the present time, the reserves
are undeveloped.
In addition, the Company acquired the option to purchase the fee simple title to
further patented mining claims in the immediate area surrounding the defined
reserves, which both contain stockpiled ores and recoverable mine tailings
amenable to near-term processing. The Company allowed this option to expire
without action on June 30, 2002 since the Company determined developing the site
was not feasible.
The Company also holds "Diatomaceous Earth Mining Rights" for which there is a
continuing annual maintenance obligation. In May 2000, the Company entered into
an agreement with American Diatomite, L.L.C., an Idaho limited liability company
("American") wherein the Company acquired the right to develop and mine
forty-two unpatented mining claims located in Gooding County, Idaho that contain
diatomite. The agreement also includes an option to purchase said claims at a
future date.
The Company's holdings in mining and mineral rights and those related business
operations are not compatible with Company goals, strengths or objectives, and
the Board of Directors believes the Company should divest itself of all such
properties and interests, provided such divestiture can be made without negative
impact to the Company's asset base.
The Company has been investigating options and opportunities for such
divestitures. In the case of the diatomaceous earth, the Company has determined
that the available supply of already developed diatomite deposits exceeds the
current demand and has been unable to find a viable market for the diatomite in
question. For that reason, the Company saw little to no opportunity or benefit
associated with continuing to maintain either the development and mining rights
or the future purchase option with their attendant annual obligations.
Consequently, the Company entered into an agreement effective October 14, 2003
with American to return the development and mining rights to American and forego
the purchase option in return for forgiveness of any accrued financial
obligations and cancellation the original May 2000 agreement. The Company
believes that execution of this agreement will have no negative impact on the
Company.
With respect to the precious metals properties in Montana, the Company feels
that for any divestiture offer to be acceptable, such offer should maintain, and
preferably improve, the Company's current asset base. While initial discussions
have been held with a variety of potentially interested parties and tentative
offers entertained, none thus far have met that acceptability criterion. The
Company will continue to explore opportunities within the afore-described
guideline and requests shareholder approval of authority to enter into a binding
agreement should the proper opportunity to divest of these properties present
itself.
In the event the Company does divest of the current holdings of mining and
mineral rights, there is a going forward plan. Proceeds of such divestiture
would be focused towards further growth in the Company where it has an
expertise. The Company's primary source of current revenue is the sale of
engineering services to a variety of clients, it is posturing itself for a
primary business purpose of developing, constructing, and operating a portfolio
of projects in the Renewable and Alternative Energy sector, with a special
emphasis on production of biofuels - particularly, biogas (methane), ethanol
and, eventually, hydrogen. The Company's strategy is to provide the overall
technical and integrated management for planning, coordinating, developing,
operating and implementing such projects. The initial emphasis is on
establishing several geographically dispersed complexes in the Southern Idaho
region and then expanding to other locations within Idaho and the Western United
States. The Company believes that it is well postured to handle such renewable
and alternative resource projects, with its specific detailed plans, and the
proper technical expertise including experienced licensed and registered
engineers. The Company's profits are dependent on successful bidding and
completion of engineering and technology contracts; preparation, permitting and
construction of biofuels production facilities; and production and marketing of
biofuels. The Company intends to continuing moving in these directions rather
than holding mining or mineral rights.
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RECOMMENDATION OF THE BOARD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF
DIVESTITURE OF ALL MINING AND MINERAL RIGHTS
UNDER PROPOSAL 4 ON THE PROXY CARD.
PROPOSAL NO. 5
SELECTION OF AUDITORS
The Board of Directors has selected Balukoff, Lindstrom & Co., P.A. ("Balukoff,
Lindstrom"), as independent auditors for the Company's 2004 fiscal year.
Balukoff, Lindstrom has examined the financial statements of the Company for the
fiscal year ending June 30, 2002 and 2003. Representatives of Balukoff,
Lindstrom may be present at the Annual Meeting and may be available to make a
statement or respond to questions.
Stockholder ratification of the selection of Balukoff, Lindstrom & Co., P.A. as
the Company's independent accountants is not required by the Company's Articles,
Bylaws or otherwise. However, the Board is submitting the selection of Balukoff,
Lindstrom to the stockholders for ratification as a matter of good corporate
practice and recommends that the stockholders vote for approval. If the
stockholders fail to ratify the selection the Board and the Audit Committee may
reconsider whether or not to retain that firm. Even if the selection is
ratified, the Board and the Audit Committee in their discretion may direct the
appointment of a different independent accounting firm at any time during the
year if they determine that such a change would be in the best interests of the
Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting is requested
to ratify the selection of Balukoff, Lindstrom & Co., P.A. Abstentions will be
counted toward the tabulation of votes cast on this Proposal No. 5 and will have
the same effect as negative votes. Broker non-votes are counted towards a quorum
but are not counted for any purpose in determining whether this matter has been
ratified.
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EXECUTIVE OFFICERS
NAME AND PRINCIPAL POSITION AGE CITY/STATE DIRECTOR/OFFICER
--------------------------- --- ---------- ----------------
Dr. Dennis D. Keiser 64 Idaho Falls, Idaho 2001
Chairman, Chief Executive
Officer and President
Dr. Jacob D. Dustin 55 Idaho Falls, Idaho 2001
Vice President Secretary and
Treasurer
DENNIS D. KEISER
Dennis D. Keiser, Ph.D., most recently served as Chief Executive Officer of
Western Technology And Management, Inc. when the company was merged with
Intrepid Engineering Services, Inc. in March 2002. Dr. Keiser has thirty years
experience managing and directing scientific and engineering research programs,
organizations and associated facilities and has a doctorate in Mining
Engineering. Dr. Keiser was ask by the board to assume the responsibilities of
President and Chief Executive Officer at the time of the merger.
JACOB D. DUSTIN
Jacob D. Dustin, Ph.D., P.E., has extensive experience in managing large,
diverse groups of engineers, scientists and technicians and was asked by the
board to assume the responsibilities of Vice President at the time of the
merger. In July 2002, the board of directors approved a reorganization of the
executive offices of the Company to accommodate a streamlining of
responsibilities among the Company's executives and to enhance the Company's
overall efficiency by focusing its human resources growth and overhead
allocation on the production side of the business. Dr. Keiser then appointed Dr.
Dustin, Vice President, to serve as his deputy as part of this reorganization
and then as Secretary and Treasurer.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16 of the Securities Exchange Act of 1934 ("Section 16") requires that
reports of beneficial ownership of common stock and preferred stock and changes
in such ownership be filed with the Securities and Exchange Commission by
Section 16 "reporting persons" including directors, certain officers, holders of
more than 10% of the outstanding common stock or preferred stock, and certain
trusts of which reporting persons are trustees. The Company is required to
disclose in this proxy statement each reporting person whom it knows has failed
to file any required reports under Section 16 on a timely basis. Based solely
upon a review of copies of Section 16 reports furnished to the Company for the
year ended June 30, 2003 and written statements confirming that no other reports
were required, to the Company's knowledge, all Section 16 reporting requirements
applicable to known reporting persons were made timely throughout the year
except for the late filing by Dr. Dennis D. Keiser, Dr. Jacob D. Dustin, Mr.
Michael F. LaFleur, Mr. William R. Myers, and Mr. D. Lynn Smith of their annual
reports on Form 5. These reports on Form 5 were subsequently filed by all of the
officers and directors on October 1, 2003.
EXECUTIVE COMPENSATION
The following table shows, for each of the three years ended, compensation
awarded or paid to, or earned by the Company's Chief Executive Officer and its
other four most highly compensated management employees at June 30, 2003 and the
prior two years in all capacities.
10
SUMMARY COMPENSATION TABLE
All Other
Deferred Compensation(2)
Annual Compensation(1) Compensation ---------------
---------------------- ------------ Number Market
Name and Principal Position Year Salary Bonus Salary of shares Value
- --------------------------- ---- ------ ----- ------ --------- -----
Dr. Dennis D. Keiser(3) 2003 $ 93,538 -0- -0- 1,050,000 $11,300
Chairman, Chief Executive 2002 $ 81,200 -0- $93,135* 7,481,114 $15,000
Officer and President 2001 -0- -0- -0- -0- -0-
Dr. Jacob D. Dustin(4) 2003 $ 81,120 -0- -0- 1,030,000 $10,900
Vice President, Secretary, 2002 $ 10,395 -0- $46,025 3,938,501 $15,000
and Treasurer 2001 $ 28,600 -0- -0- -0- -0-
Gary D. Mecham(5) 2003 $110,185 -0- -0- 1,340,000 $14,200
Chief Engineer 2002 $ 93,460 -0- -0- -0- -0-
The Company has a stock option plan in fiscal year 2003 for the issuance of
options. The officers did not elect to take deferred compensation but were paid
a portion of deferred compensation in common stock under S-8 registration and
filing during fiscal year 2003.
The Company, on a discretionary basis, may grant options to its executive
officers, and key employees under the 2003 Stock Option Plan. As of June 30,
2003, options to purchase 11,615,000 shares were outstanding with 13,410,000
shares remaining available for grant. The following table provides information
concerning fiscal year 2003, stock option grants to the Company's executive
officers and key employees.
- ------------------------
(1) Due to the Company's cash flow situation post-merger with Intrepid
Engineering and Western Engineering the Company elected to pay a percentage in
salary and defer the balance of the salary and wages as shown in the table above
for deferred compensation in 2002 without interest.
(2) Other Compensation was used in exchange for common shares of equal value and
for the merger and engineering evaluation
(3) Dennis D. Keiser received Other Compensation as a result of the Iron Mask
Mining Company merger with Intrepid and Western Engineering, for 7,293,614
common shares in exchange for shares of equal value from the merging company
Iron Mask Mining Company on April 29, 2002, and 187,500 common shares for an
engineering evaluation for a market value of $15,000. In fiscal year 2003, he
received 1,000,000 common stock options on December 20, 2002, and 50,000 shares
of S-8 common stock. *Note: Dennis D. Keiser voluntarily accepted an annual
salary in fiscal year 2003 of $150,000 but only received $93,538.
(4) Jacob D. Dustin received Other Compensation as a result of the Iron Mask
Mining Company merger with Intrepid and Western Engineering, for 3,751,001
common shares in exchange for shares of equal value from the merging company
Iron Mask Mining Company on April 16, 2002, and 187,500 common shares for an
engineering evaluation for a market value of $15,000. In fiscal year 2003, he
received 1,000,000 common stock options on December 20, 2002, and 30,000 shares
of S-8 common stock.
(5) Gary D. Mecham is not an executive officer but is disclosed herein by
(17CFR229.402,a,3,iii). In fiscal year 2003, he received 1,290,000 common stock
options on December 20, 2002, and 50,000 shares of S-8 common stock.
11
Fiscal Year 2003 Option Grants
Individual
Grants Potential Realizable Value at Assumed
Number of Percent of all Annual Rates of Stock Price
Securities Options Appreciation for Option Term
Underlying Granted to Exercise -------------------------------------
Name Options(6) Employees Price Expires 0% 5% 10%
---- ---------- --------- ----- ------- -- -- ---
D. Keiser 1,000,000 .086 .01 12/20/2007 $2,763 $6,105
J. Dustin 1,000,000 .086 .01 12/20/2007 $2,763 $6,105
G. Mecham 1,290,000 .110 .01 12/20/2007 $3,564 $7,876
D. Keynoyer 1,000,000 .086 .01 12/20/2007 $2,763 $6,105
B. Frazee 1,200,000 .103 .01 12/20/2007 $3,315 $7,326
The following table provides information concerning executive officers' and key
employees stock options exercised in 2003, and those remaining outstanding at
the end of 2003.
Number of Shares Underlying Value of Unexercised In-the
Shares Unexercised Options Money(7) Options at FYE
Acquired on Value --------------------------- -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
D. Keiser -0- -0- 1,000,000 -0- -0- -0-
J. Dustin -0- -0- 1,000,000 -0- -0- -0-
G. Mecham -0- -0- 1,290,000 -0- -0- -0-
D. Keynoyer -0- -0- 1,000,000 -0- -0- -0-
B. Frazee -0- -0- 1,200,000 -0- -0- -0-
- ------------------------
(6) All options granted were exercisable as of the option grant date, which was
December 20, 2002.
(7) A stock option is considered to be "in-the-money" if the price of the
related stock is higher than the exercise price of the option. The closing
market price of the Company's common stock was $.006 per share on the Bulletin
Board Market at the close of business on June 30, 2003.
12
COMPENSATION COMMITTEE REPORT.
The Compensation Committee members are Mssrs. Lynn Smith, William Myers, and
Michael LaFleur, and are responsible for developing and making decisions with
respect to the Company's executive compensation policies. For the upcoming
fiscal year 2004, the Committee also intends to review and approve the Company's
compensation and benefit plans and administer the key employee and executive
officer 2003 Stock Option Plan.
The Company believes that executive compensation should reflect value created
for stockholders in furtherance of the Company's strategic goals. The following
objectives are among those utilized by the Compensation Committee:
1. Executive compensation should be meaningfully related to long-term and
short-term value created for stockholders.
2. Executive compensation programs should support the long-term and short-term
strategic goals and objectives of the Company.
3. Executive compensation programs should reflect and promote the Company's
overall value, business growth and reward individuals for outstanding
contributions to the Company.
4. Short and long term executive compensation are critical factors in attracting
and retaining well-qualified executives.
BASE SALARY -- The Compensation Committee, in determining the appropriate base
salaries of its executive officers, generally considers the level of executive
compensation in similar companies in the industry. The Compensation Committee
also considers (i) the performance of the Company and contributing roles of the
individual executive officers, (ii) the particular executive officer's specific
experience and responsibilities, and (iii) the performance of each executive
officer, and (iv) it should be noted as indicated in the Summary Compensation
Table above that the executive officers received a portion of their salary and
the balance was deferred. The base salaries for 2003, were established by the
Committee at levels believed to be at or somewhat below competitive amounts paid
to executives of companies in the environmental industry with comparable
qualifications, experience and responsibilities. During 2003, Dr. Dennis D.
Keiser, the Chief Executive Officer of the Company, received a base salary of
$93,538, which the Committee believes to be below average for the base salary of
chief executive officers with comparable qualifications, experience and
responsibilities of other companies in the engineering and mining industry. The
base salary of Dr. Jacob D. Dustin was $81,120 and is also below the industry
average for his appointment as Vice President, Secretary and Treasurer. The
executive officers, Dr. Keiser and Dr. Dustin, both voluntarily deferred 45% and
35% of their base salaries respectively for the entire fiscal year 2003, and
then forgave the same in an effort to assist the Company meet its cash flow
requirements and to help reduce the Company liabilities.
RETIREMENT PLAN, PENSION PLAN, AND 401(k) PLAN - The Company has not approved,
and does not provide for any such retirement, pension, or 401(k) plan for any
employees.
ANNUAL INCENTIVES -- The bonus program provided for no bonuses in 2003. The
Compensation Committee has not yet approved a management bonus plan for 2004.
LONG-TERM INCENTIVES -- The stock option program is the Company's long-term
incentive plan for executive officers and key employees. The objectives of the
stock option program are to align executive officer compensation and shareholder
return, and to enable executive officers to develop and maintain a significant,
long-term stock ownership position in the Company's common stock. In addition,
grants of stock options to executive officers and others are intended to retain
and motivate executives to improve long-term corporate and stock market
performance. Stock options are to be generally granted at no less than market
values on the grant date, and will only have value if the Company's stock price
increases above the grant price.
13
AUDIT COMMITTEE REPORT, CHARTER, INDEPENDENCE
The Audit Committee has included all of the members of the Board of Directors.
In August 2002, the Board of Directors elected D. Lynn Smith as the Chairman of
the Audit Committee for fiscal year 2004 with only two other independent
members, Mr William Myers, and Mr. Michael LaFleur. For 2003, Mr. Smith reviewed
and discussed the Company's audited financial statements with management. The
Audit Committee has discussed with Balukoff, Lindstrom & Co., P.A., the
Company's independent auditors, the matters required to be discussed by
Statement on Auditing Standards 61, which includes, among other items, matters
related to the conduct of the audit of the Company's financial statements.
The Audit Committee has received written disclosures and the letter from the
auditors required by Independence Standards Board Standard No. 1, which relates
to the auditor's independence from the Company and its related entities, and has
discussed with the auditors the auditor's independence from the Company. The
Audit Committee has considered whether the provision of services by the
auditors, other than audit services and review of Forms 10-QSB is compatible
with maintaining the auditor's independence.
Based on the review and discussions of the Company's audited financial
statements with management and discussion with the independent auditors, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 2003.
The Audit Committee of the Company's Board of Directors respectfully submits
this report:
D. Lynn Smith, Audit Committee Chairman
Michael F. LaFleur, Director
William R. Myers, Director
AUDIT COMMITTEE CHARTER
The Board of Directors has not yet adopted a written charter for the Audit
Committee.
AUDIT COMMITTEE INDEPENDENCE
The Board of Directors has determined that Mr. D. Lynn Smith, Audit Committee
Chairman, meets the requirements for independence according to Rule 4200(a)(15)
of the NASD's Listing Standards. Furthermore, a majority of the Board Of
Directors who are on the Audit Committee meet the independence rules set forth
by Rule 4200, for 2003 and all members meet the independence rules for fiscal
year 2004.
14
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of October 15, 2003, the beneficial
ownership (as defined in the rules of the Securities and Exchange Commission) of
the Company's common stock by (a) beneficial owners of more than five percent;
and (b) beneficial ownership of management. Unless otherwise noted, each
beneficial owner identified has sole voting and investment power with respect to
the shares indicated.
(a) BENEFICIAL OWNERS
Name and Address Number of Shares Percent of
of Beneficial Owner Beneficially Owned Class
------------------- ------------------ -----
Cordoba Corporation................................. 15,615,402 15.89%
c/o David Rodli Law Offices 2001 S. Russell
Missoula, MT 59801
Intrepid Technology & Resources, Inc(8)............. 6,000,000 6.10%
501 W. Broadway #200
Idaho Falls, Idaho 83402
Dr. Dennis D. Keiser(9)............................. 8,968,614 9.03%
501 W. Broadway #200
Idaho Falls, Idaho 83402
Dr. Jacob D. Dustin(10)............................. 5,878,135 5.93%
501 W. Broadway #200
Idaho Falls, Idaho 83402
Donald J. Kenoyer(11)............................... 6,001,001 6.04%
5395 Marbrisa Lane
Idaho Falls, Idaho 83404
C. Bentley Roth(12)................................. 5,935,519 6.03%
805 West Idaho, Suite 200
Boise, Idaho 83702
- ------------------------
(8) On March 5, 1999, the Company acquired 100% of the Stock of Yellow Pine
Resources, Inc. in exchange for 6,000,000 common shares of the Company's stock.
(9) Dr. Keiser's beneficial shares include 7,059,522 shares of common stock
owned by he and his wife and 909,092 owned by his children, and 1,000,000
derivative shares owned as common stock options
(10) Dr. Dustin's beneficial shares include 3,406,001 shares of common stock
owned by he and his wife and 1,472,134 owned by his children, and 1,000,000
derivative shares owned as common stock options
(11) Mr. Kenoyer's beneficial shares include 5,001,001 shares of common stock
and 1,000,000 derivative shares owned as common stock options
(12) Mr. Roth a former officer of the Company has beneficial shares of 5,626,502
shares of common stock owned by him and 309,017 owned by his wife and children
15
(b) DIRECTORS AND EXECUTIVE OFFICERS
Amount And Nature Of Beneficial
Name Of Beneficial Owner Ownership Percent Of Class
------------------------ ---------- ----------------
DIRECTORS
Dr. Dennis D. Keiser, (Director and Officer) 8,968,614 9.03
Dr. Jacob D. Dustin, (Director and Officer) 5,878,135 5.93
Michael F. LaFleur, (Director) 1,644,470 1.67
William R. Myers, (Director) 999,463 1.01
D. Lynn Smith, (Director) 300,000 *
All directors and executive officers as a group 17,790,682 17.69
* indicates less than 1%
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2003 the Company had no relationships or related transactions with its
officers, directors or securities holders of more than five percent that would
require disclosure under Securities and Exchange Commission Regulation S-K, Item
404.
STOCKHOLDER PROPOSALS AT THE NEXT
ANNUAL MEETING OF STOCKHOLDERS
The Company must receive stockholder proposals submitted for inclusion in the
Company's 2004 proxy materials and consideration at the annual meeting of
stockholders in 2004 no later than June 15, 2004. Stockholder proposals should
be submitted to the Secretary of Intrepid Technology & Resources, Inc., 501 W.
Broadway, Suite 200, Idaho Falls, Idaho 83402. Any such proposal should comply
with the Securities and Exchange Commission rules governing stockholder
proposals submitted for inclusion in proxy materials.
16
OTHER MATTERS
The management and Board of Directors of the Company know of no other matters
that may come before the Meeting. However, if any matters other than those
referred to above should properly come before the Meeting, it is the intention
of the persons named in the enclosed proxy to vote all proxies in accordance
with their best judgment.
A copy of the Company's Annual report on Form 10-KSB for the fiscal year ended
June 30, 2003, as filed with the SEC, excluding exhibits, may be obtained by
stockholders without charge by written request addressed to Investor Relations,
501 W. Broadway Suite 200, Idaho Falls, Idaho 83402.
By Order of The Board of Directors
/s/ Dr. Dennis D. Keiser
Dr. Dennis D. Keiser
President and Chief Executive Officer
October 15, 2003
17
EXHIBIT A
SERIES "A" PREFERRED STOCK
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is dated and effective as of ____________,
2003, and is entered into by and among (i) Intrepid Technology & Resources Inc.,
an Idaho corporation (the "Company"), (ii) those individuals to be named through
private placement (iii) being herein referred to collectively as "Purchasers"
and severally as "Purchaser").
In consideration of the agreements and undertakings of the parties hereinafter
set forth, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. PURCHASE AND SALE OF SECURITIES. Subject to the terms and conditions set
forth in this Agreement the Company will issue and sell to each Purchaser on the
date of each agreement and each Purchaser will purchase from the Company on the
date of each agreement the number of shares of Series A Preferred Stock (as
hereinafter defined) specified on Schedule 1 and (b) the number of Warrants (as
hereinafter defined) specified on Schedule 1 of the Company (collectively the
Series A Preferred Stock, the Warrants and any common stock issued in respect of
the foregoing are sometimes referred to as the "Securities"). The aggregate
purchase price of each (i) one share of Series A Preferred Stock and (ii) seven
Warrants shall be $1.00, which shall be paid to the Company in cash. The
obligations of the respective Purchasers to purchase shares of Series A
Preferred Stock and Warrants pursuant to this Agreement are several, and not
joint. The purchase and sale of the shares of Series A Preferred Stock and
Warrants shall occur at the offices of Intrepid Technology and Resources, Inc.,
501 West Broadway, Suite 200, Idaho Falls, Idaho 82304, not later than the close
of business on the date hereof, or at such other time and place as may be agreed
to by all of the parties to this Agreement. As used in this Purchase Agreement,
the term "Series A Preferred Stock" means a series of preferred stock of the
Company established by the Certificate of Designation, Preferences and Rights of
Series A Redeemable Convertible Preferred Stock of Intrepid Technology &
Resources, Inc. (the "Certificate of Designation") attached hereto as Exhibit A.
As used in this Agreement, the term "Warrant" means a warrant to purchase common
stock of the Company in the form attached hereto as Exhibit B.
2. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants to each
Purchaser as follows:
2.1 The Company has all requisite corporate power and authority to enter into
this Agreement and to perform all the obligations required to be performed by
the Company under this Agreement.
2.2 This Agreement has been duly executed and delivered by the Company, and,
upon execution and delivery by the Purchasers, this Agreement will be the valid
and legally binding obligation of the Company, enforceable as to the Company in
accordance with its terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and equitable
remedies.
2.3 All shares of Series A Preferred Stock being issued shall be, all Warrants
being issued shall be, and all shares of common Stock issuable pursuant to such
Warrants ("Underlying Common Shares") shall be upon issuance of such Underlying
Common Shares, duly authorized, validly issued, fully paid and nonassessable and
issued without violation of and not subject to any preemptive right; and a
number of shares of authorized and unissued Common Stock of the Company equal to
the number of such Underlying Common Shares shall have been reserved for
issuance on or before June 15, 2003.
3. REPRESENTATIONS OF PURCHASERS. Each Purchaser, severally and not jointly,
represents and warrants to the Company as to himself as follows:
18
3.1. Such Purchaser has all requisite authority to enter into this Agreement and
to perform all the obligations required to be performed by such Purchaser under
this Agreement. This Agreement has been duly executed and delivered by such
Purchaser, and, upon execution and delivery by the Company and the other
Purchasers, this Agreement will be the valid and legally binding obligation of
such Purchaser, enforceable as to such Purchaser in accordance with its terms
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or affecting
enforcement of creditors' rights and equitable remedies.
3.2. Neither the Company nor any person acting or purporting to act on behalf of
the Company has offered or sold any of the Securities to such Purchaser by means
of any form of general solicitation or general advertising. Such Purchaser is
acquiring the Securities to be purchased by such Purchaser under this Agreement
solely for his own beneficial account, for investment purposes, and not with any
view to, or for resale in connection with, any distribution of any such
Securities. Such Purchaser understands that the Securities have not been
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities laws, by reason of specific exemptions under the provisions
thereof which depend in part upon the investment intent of such Purchaser and
upon the accuracy of the other representations made by such Purchaser in this
Agreement. Such Purchaser understands that the Company is relying upon the
representations and agreements contained in this Agreement for the purpose of
determining that the transactions contemplated by this Agreement meet the
requirements for such exemptions. Such Purchaser is a director of the Company
and an "accredited investor" as defined in Regulation D pursuant to the Act.
4. RESTRICTIVE LEGENDS.
4.1. Each certificate or other document representing any of the Securities
issued pursuant to this Agreement shall be stamped or otherwise imprinted with a
restrictive legend in the form set forth on the form of the Warrant attached
hereto as an exhibit (or, in the case of shares of Series A Preferred Stock or
shares of common stock issuable upon conversion thereof or exercise of the
Warrants, an equivalent legend appropriately modified to refer to such
Securities). In the event of any transfer or reissuance of any such Security,
the certificates or other instruments representing such Securities shall
continue to bear such legends.
4.2. The Company hereby agrees that it will promptly deliver or cause to be
delivered a new certificate or certificates or instrument or instruments for any
Securities, which certificate or certificates or instrument or instruments will
not bear the legends referred to above, upon determination by the Company that
such Securities have been held beneficially by the holder for at least three
years and that such holder is not and has not been within the preceding three
months an affiliate of the Company. All determinations pursuant to the preceding
sentence shall be made in accordance with Rule 144(k) under the Act or any
applicable successor rule. In the event that a period shorter than specified
above is permitted by reason of the amendment or replacement of such Rule
144(k), then the Company shall impose no greater restriction than the
restriction imposed as the result of such amendment or replacement.
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS. The obligations of each
Purchaser to purchase the Securities to be purchased by such Purchaser under
this Agreement are subject to the satisfaction or waiver by such Purchaser of
the following conditions:
5.1. The Company shall, against receipt of payment therefore as provided herein,
deliver to the Purchaser the certificates or other instruments evidencing such
Securities in the form contemplated by this Agreement; and
5.2. The representations of the Company set forth in Section 2 of the Agreement
shall be true and correct in all material respects at the time of such purchase
and sale of such Securities.
6. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the Company
to issue and sell the Securities to be issued and sold by the Company under this
Agreement are subject to the satisfaction or waiver by the Company of the
following conditions:
19
6.1. Each Purchaser shall have delivered payment as provided herein against
delivery to such Purchaser of the certificates or other instruments evidencing
such Securities in the form contemplated by this Agreement; and
6.2. The representations of each Purchaser set forth in Section 3 of this
Agreement shall be true and correct in all material respects at the time of such
purchase and sale of such Securities; and
6.3. The Company shall have received such consents, waivers and agreements from
its secured bank lender as shall be required, in the judgment of the Company, to
permit the issuance and sale of such Securities with the result that, upon
consummation of such issuance and sale, the Company shall not be in default (or
shall be subject to a forbearance agreement reasonably satisfactory to the
Company with respect to any such default) under the provisions of any agreement
or instrument governing or evidencing any obligations of the Company to its
secured bank lender.
7. REGISTRATION RIGHTS.
7.1. As used in this Section 7:
(a) The terms "register," "registered" and "registration" refer to a
registration effective by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
(b) The term "Registrable Securities" means: (i) any common stock of the Company
("Common Stock") issued, or issuable, upon the conversion of any Series A
Preferred Stock regardless of whether such conversion has taken place at any
time; (ii) any Common Stock issued, or issuable upon the conversion or exercise
of any Warrant, regardless of whether such exercise has taken place at any time,
or any warrant, right or other security which is issued as a dividend or other
distribution with respect to, or in exchange for or in replacement of, any
Series A Preferred Stock or any Warrant; and (iii) any Common Stock issued as a
dividend on any Series A Preferred Stock; excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which his rights
under this Section 7 are not assigned.
(c) The term "Holder" means any holder of Registrable Securities who acquired
such Registrable Securities in a transaction or series of transactions not
involving any public offering or any sale pursuant to Rule 144 under the Act.
7.2. The Company hereby agrees that:
(a) If at any time or from time to time, the Company determines to register any
of its securities, either for its own account or the account of a security
holder or holders, (other than a registration solely to implement an employee
benefit plan or a registration on Form S-4 or a Rights Offering as such term is
defined in the Certificate of Designation), the Company will:
(i) promptly give to each Holder written notice thereof (which will include a
list of the jurisdictions in which the Company intends to attempt to qualify
such securities under the applicable blue sky law or other state securities
laws); and
(ii) include in such registration (and any related qualification under blue sky
laws or other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in any written request or requests by any
Holder received by the Company within twenty days after such written notice is
given and make its best efforts to qualify all the Registrable Securities
specified in such request under the blue sky or other securities laws of any
jurisdiction which said Holders may reasonably request.
(b) If the registration of which the Company gives notice is for a registered
public offering involving an underwriting, the Company will so advise the
Holders as a part of the written notice given pursuant to Section 7.2(a)(i)
above. In such event, the right of any Holder to registration pursuant to this
Section 7.2 will be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
Registrable Securities through such underwriting (together with the Company and
the other shareholders distributing their securities through such underwriting)
will enter into an underwriting
20
agreement in customary form, satisfactory to the Company, with the underwriter
or underwriters selected for such underwriting by the Company. Notwithstanding
any other provision of this Section 7.2, if the managing underwriter determines
in good faith that marketing factors require a limitation of the number of
shares to be underwritten for the accounts of Holders of Registrable Securities
and other securities of the Company entitled to registration pursuant to
agreements with the Company, the managing underwriter may limit the number of
Registrable Securities and other securities of the Company entitled to
registration pursuant to agreements with the Company to be included in the
registration. The Company will so advise all Holders of Registrable Securities
and all shareholders owning securities of the Company entitled to registration
pursuant to agreements with the Company and participating in such registration,
and the number of shares of Registrable Securities and such other securities
that may be included in the registration and underwriting will be allocated
among all Holders and other shareholders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and such other
securities entitled to such registration held by such Holders and other
shareholders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation will be included in such registration. If any Holder
disapproves of the terms of the underwriting, he may elect to withdraw therefrom
by written notice to the Company and the managing underwriter. The Registrable
Securities so withdrawn will also be withdrawn from registration; provided,
however, that, if by the withdrawal of such Registrable Securities or any other
securities entitled to registration pursuant to agreements with the Company a
greater number of Registrable Securities held by Holders may be included in such
registration (up to the maximum of any limitation imposed by the managing
underwriter) then the Company will offer to all Holders and other shareholders
who have included Registrable Securities and such other securities in the
registration the right to include additional Registrable Securities or other
securities in portion to the amounts of their Registrable Securities and such
other securities so included.
(c) The Company shall cooperate and communicate with all Holders wishing to
participate in any registration pursuant to this Section 7.2 so as to permit
them a reasonable and effective opportunity to participate, including providing
prompt notice of any stop orders and copies of all registration statements and
prospectuses filed with the Securities and Exchange Commission, including any
amendments, and any such other materials and information that is provided to
other participating securities holders. The Company will bear all expenses of
any registration, including filing fees, blue sky fees and expenses, accounting
and legal fees and expenses, printing and mailing costs and other similar
expenses, but will not bear any expenses (including fees of legal counsel)
incurred by participating Holders and will not bear any underwriting discount or
concession or similar sale costs with respect to Registrable Securities offered
and sold by or for participating Holders. The Company and the participating
Holders will agree to indemnify each other or to contribute to one another on
reasonable and customary terms.
8. SELECTION OF SHARES TO BE REDEEMED OR CONVERTED. If less than all the Series
A Preferred Stock is required to be redeemed or converted pursuant to
Subsections 5(a) or 6(a) of the Certificate of Designation, the shares to be
redeemed or converted shall be determined by written agreement of the Purchasers
or, if the Purchasers fail to tender a written agreement to the Company prior to
the time for redemption or conversion, the shares to be redeemed or converted
shall be determined as follows:
8.1. The first 100,000 shares of Series A Preferred Stock redeemed pursuant to
Subsection 5(a) of the Certificate of Designation shall be redeemed from those
shares purchased by the first purchasers of the first 100,000 shares of Series A
Preferred Stock and any remaining shares redeemed shall be redeemed ratably
pursuant to Subsection 5(b) of the Certificate of Designation.
8.2. Any Series A Preferred Stock converted pursuant to Subsection 6(a) of the
Certification of Designation shall come ratably from the Series A Preferred
Stock purchased by each Purchaser pursuant to Subsection 5(b) of the Certificate
of Designation.
8.3. Should either or both Purchasers transfer all or any part of their Series A
Preferred Stock, the shares transferred shall be treated for purposes of the
computations in this Section 8 as still owned by the transferring Purchaser and
a pro rata portion of any shares required to be redeemed or converted from the
shares originally purchased by the Purchaser shall be converted or redeemed from
those transferred. The Purchasers shall notify each transferee of the
restrictions in this Agreement and shall require that each transferee notify any
transferee from it of such restrictions.
21
9. MISCELLANEOUS.
9.1. Remedies Not Exclusive. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. The election of any one or more remedies by any party
hereto shall not constitute a waiver of the right to pursue other available
remedies.
9.2. Parties Bound. Except to the extent otherwise expressly provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, representatives, administrators, guardians,
successors and assigns; and no other person shall have any right, benefit or
obligation hereunder.
9.3. Notices. All notices, reports records or other communications that are
required or permitted to be given to the parties under this Agreement shall be
sufficient in all respects if given in writing and delivered in person, by
telecopy, by overnight courier or by registered or certified mail, postage
prepaid, return receipt requested, to the receiving party at the following
address:
If to a Purchaser, to him at the most recent address furnished by him to the
Company;
If to the Company, to the Company's main office;
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 9.3. Notice shall be deemed given on the date of
delivery, in the case of personal delivery or telecopy, or on the delivery or
refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
9.4. Choice of Law. This Agreement shall be construed, interpreted, and the
rights of the parties determined in accordance with, the laws of the State of
Idaho, without giving effect to any conflicts of laws principles.
9.5. Entire Agreement; Amendments and Waivers; Assignment. This Agreement,
together with all exhibits and schedules hereto, constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. Except as
set forth herein, there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof. No supplement,
modification or waiver of this Agreement shall be binding unless it shall be
specifically designated to be a supplement, modification or wavier of this
Agreement and shall be executed in writing by each party to be bound thereby. No
wavier of any of the provisions of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. In the event
of any permitted transfer of any Securities, any rights of the holder thereof
pursuant to Section 7 shall be transferred automatically. Except as set forth in
the preceding sentence and except as provided in Section 8 hereof, this
Agreement may not be assigned by operation of law or otherwise.
9.6. Further Assurances. From time to time hereafter and without further
consideration, each of the parties hereto shall execute and deliver such
additional or further instruments of conveyance, assignment and transfer and
take such actions as any of the other parties hereto may reasonably request in
order to more effectively consummate the transactions contemplated by this
Agreement or as shall be reasonably necessary or appropriate in connection with
the carrying out of the parties' respective obligations hereunder or the
purposes of this Agreement.
9.7. Multiple Counterparts. This Agreement may be executed in or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.8. Headings. The headings of the several Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
22
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of ___________, 2003.
INTREPID TECHNOLOGY & RESOURCES, INC.
By: /s/ Dr. Dennis D. Keiser
----------------------------------
Dennis D. Keiser
Chairman & CEO
SCHEDULE 1
Aggregate Purchase
Price of Series A
Number of Shares Preferred Stock
of Series A Number of Shares and Warrants
Purchaser Preferred Stock Warrants to be Purchased
- --------- ---------------- --------- -------------------
23
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF SERIES A
REDEEMABLE CONVERTIBLE PREFERRED STOCK
OF
INTREPID TECHNOLOGY & RESOURCES, INC.
Intrepid Technology & Resources Inc., a corporation organized and existing under
the Idaho General Corporation Law, (the "Corporation") DOES HEREBY CERTIFY:
That, effective June 15, 2003, pursuant to the authority conferred upon the
Board of Directors by the Amended and Restated Certificate of Incorporation of
the Corporation and pursuant to the provisions of Section 151(a) and other
applicable provisions of the Idaho General Corporation Law, the Board of
Directors (or, as and to the extent authorized pursuant to applicable law, a
committee acting with the authority of the Board of Directors) duly adopted, by
all necessary action on the part of the Corporation, the following resolution
creating a series of 5,000,000 shares of preferred stock designated as Series A
Redeemable Convertible Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of its Amended and Restated
Certificate of Incorporation, a series of preferred stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK.
1. DESIGNATION. The series shall be designated as the "Series A Redeemable
Convertible Preferred Stock" (the "Series A Preferred Stock").
2. NUMBER. The number of shares of the Series A Preferred Stock authorized to be
issued is 5,000,000.
3. DIVIDENDS.
(a) The Corporation shall pay to the holders of the Series A Preferred Stock, a
mandatory quarterly dividend at an annual rate of 4.25% of the Stated Amount (as
such term is defined in Section 4 below) payable solely in the form of Common
Stock of the Corporation, subject only to the Corporation being able to lawfully
pay such dividend in accordance with applicable law. Dividends on the Series A
Preferred Stock shall commence to accrue and are cumulative (whether or not
declared) from the date on which such shares shall have been issued until the
date on which such shares are redeemed, converted or exchanged. Such dividends
shall be mandatorily payable as stated above, in Common Stock of the Corporation
at its Current Market Price (as defined below) on the date of payment, in equal
quarterly payments in arrears on the last day of each fiscal quarter of the
Corporation of each year or such earlier date on which a share of Series A
Preferred Stock is redeemed, converted or exchanged (each such date being
referred to herein as a "Dividend Payment Date"), commencing with a pro rata
payment on the first quarter end following the purchase, or if not paid on such
Dividend Payment Date by reason of a prohibition against such payment pursuant
to the first sentence of this Subsection (a) (a "Payment Prohibition"), then
promptly when and to the extent no such Payment Prohibition continues to apply;
provided, however, that the dividend payable in respect of the quarter ended on
the first dividend payment date after the date on which such shares shall have
been issued and in respect of any other quarter in which some or all of the
Series A Preferred Stock was not outstanding for the entire quarter shall be
reduced in proportion to the portion of such quarterly period in which such
shares were not outstanding; and provided further, however, that if and to the
extent that, at any dividend payment date, the Corporation shall fail to make
any quarterly dividend payment on the Series A Preferred Stock (which failure
shall only be permitted to the extent a Payment Prohibition applies), such
unpaid dividend amount shall accumulate without interest until paid. Such
dividends shall be paid to the Series A Preferred Stock stockholders of record
on the last business day immediately preceding the date of payment. All partial
dividends paid with respect to shares of the Series A Preferred Stock shall
24
be paid pro rata to the holders entitled thereto in proportion to the total
amount of dividends to which each is entitled. The "Current Market Price" of the
Corporation's Common Stock on any given day shall be: (i) if the Common Stock is
listed or admitted to unlisted trading privileges on any exchange registered
with the Securities and Exchange Commission as a "national securities exchange"
under the Securities Exchange Act of 1934 (a "National Securities Exchange"),
the arithmetic average of the last sales price of the shares of Common Stock on
the National Securities Exchange in or nearest the City of New York on which the
shares of Common Stock shall be listed or admitted to unlisted trading
privileges (or the quoted closing bid if there be no sales on such National
Securities Exchange including Over the Counter Bulletin Board Exchange) on the
ten most recently completed trading days prior to such day; or (ii) if the
Common Stock is not so listed or admitted, the arithmetic average of the closing
sales price of a share of Common Stock as quoted in The Nasdaq Stock Market, or
bulletin board, on the ten most recently completed trading days prior to the day
in question; or (iii) if the Common Stock is not so quoted, the arithmetic
average of the mean between the high and low bid prices of a share of Common
Stock in the over-the-counter market on the ten most recently completed trading
days prior to the day in question as reported by National Quotation Bureau
Incorporated or a similar organization.
(b) So long as any shares of the Series A Preferred Stock are outstanding,
unless all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(i) pay or declare any dividends, or make any other distributions, on any shares
of stock ranking junior to the Series A Preferred Stock in respect of dividends
or distribution of assets upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation");
(ii) pay or declare any dividends, or make any other distributions, on any
shares of stock ranking on a parity to the Series A Preferred Stock in respect
of dividends or distribution of assets upon Liquidation, except dividends paid
ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for consideration shares of any
stock ranking junior to the Series A Preferred Stock in respect of dividends or
distribution of assets upon Liquidation, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the Corporation raking junior to the
Series A Preferred Stock in respect of dividends or distribution of assets upon
Liquidation.
Except as otherwise provided in this Subsection (b), the Board of Directors may
declare and the Corporation may pay or set apart for payment dividends and other
distributions on the common stock (the "Common Stock") and the preferred stock
(the "Preferred Stock") of the Corporation ranking junior to or on a parity with
the Series A Preferred Stock in respect of dividends or distributions of assets
upon Liquidation, and may redeem, purchase, retire or otherwise acquire for
consideration shares of Common Stock or Preferred Stock ranking junior to or on
a parity with the Series A Preferred Stock in respect of dividends or
distributions of assets upon Liquidation, and the holders of the Series A
Preferred Stock shall not be entitled to share therein.
(c) In the event the Corporation, not being in violation of the provisions of
the preceding paragraph, shall distribute to all holders of its Common Stock (x)
evidences of indebtedness or assets and property other than cash, (y) capital
stock of the Corporation other than Common Stock, or (z) rights to purchase only
units consisting of shares of Common Stock and warrants to purchase shares of
Common Stock (all of such distributions collectively hereinafter called ("Shared
Distributions"), then the holders of the Series A Preferred Stock shall
participate in such Shared Distributions as if immediately prior to the record
date for determination of stockholders entitled to receive such Shared
Distribution such holders had converted their shares of the Series A Preferred
Stock in to shares of Common Stock.
4. LIQUIDATION RIGHTS. In the event of the Liquidation of the Corporation, the
holders of the Series A Preferred Stock shall be entitled to have paid to them
out of the assets of the Corporation, before any distribution is made to or set
apart for the holders of Common Stock or of any other class or series of stock
25
of the Corporation ranking junior to the Series A Preferred Stock in respect of
distribution of assets upon Liquidation, an amount equal to $1.00 per share (the
" Stated Amount"), plus unpaid dividends and Shared Distributions which have
accrued but have not been paid on or prior to the date of final distribution to
holders of the Series A Preferred Stock, and no more. The liquidation payment
with respect to each outstanding fractional share of the Series A Preferred
Stock shall be equal to a ratably proportionate amount of the liquidation
payment with respect to each outstanding share of the Series A Preferred Stock.
If upon any Liquidation of the Corporation the assets of the Corporation or
proceeds thereof distributable among the holders of shares of the Series A
Preferred Stock and the holders of any stock on a parity with the Series A
Preferred Stock shall be insufficient to pay in full the preferential amounts
payable to such holders, then such assets or the proceeds thereof shall be
distributed among such holders ratably in accordance with the respective amounts
that would be payable on such shares if all amounts payable thereon were paid in
full.
For purposes of this Section 4, the voluntary sale, lease, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation to, or a
consolidation or merger of the Corporation with, one or more corporations shall
not be deemed to be a Liquidation.
5. REDEMPTION.
(a) Shares of the Series A Preferred Stock shall be redeemed by the Corporation
on the first business day (the "Redemption Date") following a holding period by
the purchaser of three years from the date of purchase.
(b) Subject to the provisions for adjustment hereinafter set forth, shares of
Series A Preferred Stock will be converted on the Redemption Date, after three
years from the date of purchase into fully paid and nonassessable whole shares
of Common Stock at rate of 7 shares of Common Stock for each share of the Series
A Preferred Stock duly surrendered on the Redemption Date. Dividends accrued to
the Date of Redemption or Conversion (as defined below) shall be paid pursuant
to Subsection 1 (a) on the Series A Preferred Stock converted or redeemed.
The Corporation shall not issue any shares of Common Stock in addition to these
outstanding on _______________, 2003.
6. CONVERSION RIGHTS.
(a) If after one year from the date of purchase, a purchaser of one share of
Series A Preferred Stock shall have the right to convert each share of Series A
Preferred Stock into 7 shares of fully paid and nonassessable Common Stock for
each 7 shares or portion thereof of Common Stock. If less than all of the Series
A Preferred Stock is converted, the Series A Preferred Stock to be converted
shall be determined pursuant to the agreement for the initial purchase of the
Series A Preferred Stock. Any Series A Preferred Stock required to be converted
pursuant to this Subsection 6(a) but not tendered for conversion shall be deemed
cancelled after three years from the date of purchase ("Mandatory Conversion
Date") and shall no longer be treated as outstanding. Dividends accrued to the
Mandatory Conversion Date shall be paid pursuant to Subsection l (a) on the
Series A Preferred Stock converted but no dividends or Shared Distributions
thereon shall be paid in regard to the period on and after the Mandatory
Conversion Date. For all purposes the holders of record of the Series A
Preferred Stock required to be converted on the Mandatory Conversion Date shall
be deemed to have become the record holder or holders of the Common Stock in to
which such Series A Preferred Stock is convertible on the Mandatory Conversion
Date.
(b) Subject to the provisions for adjustment hereinafter set forth, shares of
Series A Preferred Stock may be converted, at the option of the holder thereof,
at any time or from time to time after one year from the date of purchase into
fully paid and nonassessable whole shares of Common Stock at rate of 7 shares of
Common Stock for each share of the Series A Preferred Stock duly surrendered for
conversion. Dividends accrued to the Date of Conversion (as defined below),
shall be paid pursuant to Subsection 1 (a) on the Series A Preferred Stock
converted.
26
(c) Each holder of the Series A Preferred Stock desiring to exercise such
holder's right of conversion pursuant to Subsection 6(b) shall deliver written
notice of election to convert, stating the names and addresses of the persons to
whom the Common Stock is to be issued, and shall surrender the certificate or
certificates for the shares of Series A Preferred Stock to be converted, duly
endorsed or accompanied by proper instruments of transfer (unless such
endorsement or instruments are waived by the Corporation) to the Corporation
during usual business hours at the office of the transfer agent of the
Corporation for the transfer of its Common Stock in Couer d' Alene, Idaho (or
such other place as may be designated by the Corporation upon written notice to
all holders of the Series A Preferred Stock). Upon receipt by the Corporation of
any such notice of election to convert shares of the Series A Preferred Stock,
and upon surrender of the certificate or certificates therefor, the Corporation
shall execute and deliver, as soon as practicable, to the converting holder, or
to such holder's nominee or nominees, a certificate or certificates for the
number of shares of Common Stock resulting from such conversion, together with
any cash adjustment in lieu of fractional shares as provided in Subsection (e).
For all purposes, the rights of a converting holder, as such, shall cease, and
the person or persons in whose name or names the certificate or certificates for
Common Stock issuable upon such conversion are to be issued shall be deemed to
have become the record holder or holders of such Common Stock at the close of
business on the day (the "Date of Conversion") on which delivery of such notice
or the surrender of the certificate or certificates for such shares (whichever
shall later occur) shall be made.
(d) The Corporation shall pay all issue costs, if any, incurred in respect to
the Common Stock delivered on conversion; provided, however, that the
Corporation shall not be required to pay transfer or other taxes, if any,
incurred by reason of the issuance or delivery of such Common Stock in names
other than those in which the shares surrendered for conversion are registered,
and no delivery of certificates for such Common Stock shall be made unless and
until there has been paid to the Corporation the amount of any such taxes, or
there shall have been established to the satisfaction of the Corporation that
such taxes have been or are not required to be paid. The Corporation shall not
close its books against the transfer of Series A Preferred Stock or of Common
Stock issued or issuable upon conversion of Series A Preferred Stock in any
manner which interferes with the timely conversion of Series A Preferred Stock.
The Corporation shall assist and cooperate with any holder of shares of Series A
Preferred Stock required to make any required governmental filings or obtain any
governmental approval prior to or in connection with any conversion of such
shares hereunder (including, without limitation, making any filings required to
be made by the Corporation). All shares of Common Stock which are so issuable
shall, when issued, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Corporation shall take all such
actions as may be necessary to assure that all such shares of Common Stock may
be so issued without violation of any applicable law or governmental regulation
or any requirements of any domestic securities exchange upon which shares of
Common Stock may be listed (except for official notice of issuance which shall
be immediately delivered by the Corporation upon each such issuance).
(e) The Corporation shall not be required to issue fractional shares of Common
Stock upon conversion of shares of the Series A Preferred Stock. If more than
one share of the Series A Preferred Stock shall be surrendered for conversion at
one time by the same holder, the number of full shares of Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares so surrendered. If any fractional interest in a share of Common Stock
would be deliverable upon the conversion of any shares, the Corporation shall,
in lieu of delivering such fractional share, make a cash payment, as an
adjustment in respect of such undelivered fraction of a share, in an amount
equal to the same fraction of the Current Market Price of one share of the
Common Stock on the last business day before the Date of Conversion.
(f) The number of shares of Common Stock into which each share of the Series A
Preferred Stock is convertible (the "Conversion Rate") shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall (A) pay a dividend in or make a distribution
of Common Stock on outstanding Common Stock, (B) subdivide outstanding Common
Stock into a larger number of shares of Common Stock by reclassification or
otherwise, or (C) combine outstanding Common Stock into a smaller number of
shares of Common Stock by reclassification or otherwise, the Conversion Rate in
effect immediately prior thereto shall be adjusted proportionately so that the
holder of a share of the Series A Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of
27
Common Stock that such holder would have owned after the happening of any of the
events described above had such share been converted immediately prior to the
happening of such event. An adjustment made pursuant to this subparagraph (i)
shall become effective retroactively to immediately after the record date in the
case of a share dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or combination.
(ii) In case of any capital reorganization or reclassification of the shares of
Common Stock (except as provided in subparagraph (i) above), or in case of any
consolidation or merger to which the Corporation is a party (other than a merger
in which the Corporation is the surviving corporation and which does not result
in any capital reorganization or reclassification of Common Stock), or in case
of any sale or conveyance to another corporation of all or substantially all of
the property and assets of the Corporation, and if, in connection with any such
consolidation, merger, sale or conveyance, shares or other securities or
property shall be issuable or deliverable in exchange for shares of Common
Stock, provision shall be made as part of the terms of such capital
reorganization or reclassification, consolidation, merger, sale or conveyance
that the holder of each share of the Series A Preferred Stock thereafter
surrendered for conversion shall have the right to convert such share into the
same kind and amount of stock and other securities and property as would have
been receivable upon such capital reorganization or reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock into which such share might have been converted immediately prior
thereto. In any such case, appropriate provision (as determined to be equitable
in the business judgment of the Board of Directors) shall be made for the
application of Section 6 with respect to the rights and interest thereafter of
the holders of the Series A Preferred Stock to the end that such Section
(including adjustments of the Conversion Rate) shall be reflected thereafter, as
nearly as reasonably practicable, in all subsequent conversions of the Series A
Preferred Stock. The Corporation shall not effect any such consolidation, merger
or sale, unless prior to the consummation thereof, the successor corporation (if
other than the Corporation) resulting from consolidation or merger or the
corporation purchasing such assets assumes by written instrument (in a manner
determined to be equitable in the business judgment of the Board of Directors to
the holders of the Series A Preferred Stock then outstanding), the obligation to
deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
(iii) In case the Corporation shall issue, other than pursuant to a Rights
Offering, pro rata to the holders of shares of its Common Stock rights or
warrants entitling them, during a period not exceeding 30 days after the record
date mentioned below, to subscribe for or purchase only shares of its Common
Stock at a price per share less than the average of the Current Market Price (as
defined above) of the Common Stock determined as of such record date, the number
of shares of its Common Stock into which each share of the Series A Preferred
Stock shall be convertible thereafter shall be determined by multiplying the
number of shares of Common Stock into which each such share was convertible
theretofore by a fraction, of which the numerator shall be the number of shares
of Common Stock outstanding immediately prior to such record date plus the
number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of Common
Stock outstanding immediately prior to such record date plus the number of
shares of Common Stock which the aggregate offering price of the total number of
shares being offered would purchase at such Current Market Price. Such
adjustment shall be made whenever such rights or warrants are issued and shall
become retroactively effective immediately after the record date for the
determination of the stockholders entitled to receive such rights or warrants.
To the extent that shares of Common Stock are not delivered after the expiration
of such rights or warrants, the Conversion Rate shall be readjusted to the
Conversion Rate that would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of delivery of only
the number of shares of Common Stock actually delivered.
(iv) In case the Corporation shall issue, other than pursuant to a Rights
Offering, pro rata to the holders of shares of its Common Stock rights or
warrants to subscribe for or purchase only (A) shares of its Common Stock except
as described in subparagraph (iii) above, or (B) units consisting of shares of
Common Stock and warrants to purchase shares of Common Stock, the number of
shares of its Common Stock into which each share of the Series A Preferred Stock
shall be convertible thereafter shall be determined by multiplying the number of
shares of Common Stock into which each such share was convertible theretofore by
a fraction, of which the numerator shall be the Current Market Price for a share
of Common Stock determined as of the record date mentioned below, and of which
the denominator shall be such Current
28
Market Price less the fair market value (as determined in the business judgment
of the Board of Directors) as of such record date of the rights or warrants
distributed pro rata to one of the outstanding shares of Common Stock. Such
adjustment shall be made whenever such distribution is made and shall become
retroactively effective immediately after the record date for the determination
of stockholders entitled to receive such rights or warrants.
(v) In case the Corporation shall issue or sell any shares (including treasury
shares) of Common Stock ("Additional Shares of Common Stock"), whether or not
subsequently reacquired or retired by the Corporation, other than shares of
Common Stock issued (A) upon exercise of warrants to purchase shares of Common
Stock issued prior to or substantially simultaneously with the first issuance of
shares of the Series A Preferred Stock, (B) pursuant to any stock option plan or
other stock incentive or stock ownership plan for employees or management of the
Corporation, (C) pursuant to a Rights Offering, or (D) in payment of dividends
on the Series A Preferred Stock, for a cash purchase price per share that is
less than the quotient of $1.00 divided by the number of shares of Common Stock
into which each share of Series A Preferred Stock was theretofore convertible
(such quotient, the "Conversion Price"), the number of shares of Common Stock
into which each share of the Series A Preferred Stock shall be convertible
thereafter shall be determined by multiplying the number of shares of Common
Stock into which each such share was convertible theretofore by a fraction, of
which the numerator shall be the number of shares of Common Stock outstanding
immediately after such issuance or sale, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance or sale plus the number of shares of Common Stock that the aggregate
consideration received by the Corporation for such Additional Shares of Common
Stock so issued or sold would purchase at the Conversion Price. Such adjustment
shall be made whenever any such Additional Shares of Common Stock are so issued
or sold.
The foregoing provisions for adjustment of the Conversion Rate shall apply in
each successive instance in which an adjustment is required thereby. No
adjustment in the Conversion Rate resulting from the application of the
foregoing provisions is to be given effect unless, by making such adjustment,
the Conversion Rate in effect immediately prior to such adjustment would be
changed thereby by 1% or more, but any adjustment that would change the
Conversion Rate by less than 1% is to be carried forward and given effect in
making future adjustments; provided, however, that each adjustment of the
conversion Rate shall in all events be made not later than three years from the
date such adjustment would have been required to be made except for the
provisions of this sentence. All calculations under this Section 6 shall be made
to the nearest one-hundredth (1/100th) of a share. Shares of Common Stock owned
by or held for the account of the Corporation shall not be deemed to be
outstanding for the purposes of any computation made under this Section 6.
Whenever the number of shares of Common Stock deliverable upon the conversion of
shares of the Series A Preferred Stock shall be adjusted pursuant to the
provisions hereof, the Corporation shall forthwith file at its principal office
and with any transfer agent for the Series A Preferred Stock and for the Common
Stock a statement, signed by the President or one of the Vice-Presidents of the
Corporation and by its Treasurer or one of its Assistant Treasurers, stating the
adjusted number of shares of Common Stock deliverable per share of the Series A
Preferred Stock and setting forth in reasonable detail, the method of
calculation and the facts requiring such adjustment and upon which such
calculation is based, and shall mail a notice of such adjustment to each holder
of record of the Series A Preferred Stock. Each adjustment shall remain in
effect until a subsequent adjustment hereunder is required.
In the event:
(x) of the occurrence of any of the events referred to in subparagraphs (i),
(ii), (iii) and (iv) above; or
(y) of the Liquidation of the Corporation;
then the Corporation shall cause to be mailed to any transfer agent for the
Series A Preferred Stock and to the holders of record of the outstanding shares
of the Series A Preferred Stock at least 20 days prior to the applicable date
hereinafter specified, a notice describing the event and stating the effect, if
any, that such
29
event will have upon the Conversion Rate, and (A) the date on which a record is
to be taken for the purpose of a distribution referred to in subparagraphs (i),
(iii) or (iv) above, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such distribution are to
be determined, or (B) the date on which any subdivision, combination or other
capital reorganization or reclassification or any consolidation, merger, sale or
conveyance referred to in subparagraphs (i) or (ii) above or such Liquidation is
expected to become effective.
The Corporation will at all times reserve and keep available for issuance upon
conversion of the Series A Preferred Stock the number of shares of Common Stock
that is equal to the number of shares of the Series A Preferred Stock
outstanding multiplied by the Conversion Rate; provided, however, that nothing
contained herein shall be construed to preclude the Corporation from satisfying
its obligations in respect of the conversion of the outstanding shares of the
Series A Preferred Stock by delivery of shares of Common Stock that are held in
the treasury of the Corporation. The Corporation covenants that all shares of
Common Stock that shall be issued upon conversion of the shares of the Series A
Preferred Stock will, upon issue, be fully paid and nonassessable and not
subject to any preemptive rights.
The shares of Common Stock issuable upon conversion of the shares of the Series
A Preferred Stock when the same shall be issued in accordance with the terms of
the Series A Preferred Stock are hereby declared to be and shall be fully paid
nonassessable shares of Common Stock and not liable to any calls or assessments
thereon, and the holders thereof shall not be liable for any further payments in
respect thereof.
"Common Stock" when used in Section 6 with reference to the Common Stock into
which the Series A Preferred Stock is convertible and when used in Section 8
below, shall mean only Common Stock as authorized by the Restated Certificate of
Incorporation of the Corporation, as amended to the date hereof, and any shares
into which such Common Stock may thereafter have been changed, and, when
otherwise used in Section 6 and when used in Section 3, shall also include
shares of the Corporation of any other class or series, whether now or hereafter
authorized, that ranks or is entitled to participation, as to payment of assets
upon Liquidation and payment of dividends, substantially on a parity with such
Common Stock or other class of shares into which such Common Stock may have been
changed.
The Corporation will not, by amendment of its Certificate 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 hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 6 and in the
taking of all such action as may be necessary or appropriate in order to protect
the conversion privilege of the holders of the Series A Preferred Stock against
dilution or other impairment. Without limiting the generality of the foregoing,
the Corporation (1) will not increase the par value of any shares of stock
receivable upon conversion of the Series A Preferred Stock above the Conversion
Price then in effect, and (2) will take all such actions as may be necessary or
appropriate in order that the Corporation may validly and legally issue fully
paid and nonassessable shares of stock upon the conversion in full of all Series
A Preferred Stock from time to time outstanding.
7. VOTING RIGHTS. Except as otherwise required by applicable law, the holders of
the Series A Preferred Stock shall have no voting rights or powers.
8. RANKING. The Series A Preferred Stock shall rank senior to the Common Stock
(as defined in Section 6) and to all other series of the Corporation's preferred
stock as to the payment of dividends and Shared Distributions, and as to the
distribution of the Corporation's assets, unless the terms and designations of
any such series of preferred stock shall provide otherwise, provided, however,
that in no event shall the Series A Preferred Stock rank junior to any other
class or series of the Corporation's capital stock.
9. OTHER RIGHTS. The holders of the Series A Preferred Stock shall not have any
other preferences or special rights.
10. REGISTRATION OF TRANSFER. The Corporation shall keep at its principal office
a register for the registration of Series A Preferred Stock. Upon the surrender
of any certificate representing Series A Preferred Stock at such place, the
Corporation shall, at the request of the record holder of such certificate,
30
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the number of
shares of Series A Preferred Stock represented by the surrendered certificate.
Each such new certificate shall be registered in such name (upon satisfactory
compliance with all applicable securities laws) and shall represent such number
of Shares as is requested by the holder of the surrendered certificate and shall
be substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Series A Preferred Stock represented by such new certificate
from the date to which dividends have been fully paid on such Series A Preferred
Stock represented by the surrendered certificate.
11. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of any class of Series A Preferred Stock, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation (provided that the holder's own agreement shall
be satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Series A Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such lost, stolen, destroyed or mutilated certificate.
12. AMENDMENT AND WAIVER. Any amendment, modification or waiver shall be binding
or effective with respect to any provision of Sections 1 to 12 hereof with the
prior written consent of all the holders of the Series A Preferred Stock
outstanding at the time such action is taken.
IN WITNESS WHEREOF, the undersigned officers of the Corporation have executed
and subscribed this Certificate this _____ day of ____________ 2003.
31
INTREPID TECHNOLOGY & RESOURCES, INC.
By:
Name:
Title:
ATTEST:
____________________________________
Name:
Title:
Number: W
NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER
SECURITIES STATUTE. NO SALE, TRANSFER OR OTHER DISPOSITION HEREOF OR THEREOF, OR
OF ANY INTEREST HEREIN OR THEREIN, MAY BE MADE OR SHALL BE RECOGNIZED UNLESS IN
THE OPINION OF COUNSEL TO OR REASONABLY SATISFACTORY TO THE COMPANY SUCH
TRANSACTION WOULD NOT VIOLATE OR REQUIRE REGISTRATION UNDER SUCH ACT OR OTHER
STATUTE.
WARRANT TO PURCHASE COMMON STOCK OF
INTREPID TECHNOLOGY & RESOURCES, INC.
THIS WARRANT CERTIFIES that, for value received, ___________________, (the
"Holder") is entitled to purchase from Intrepid Technology & Resources, Inc., an
Idaho corporation (the "Company"), at a price equal to the greater of $.15 per
share or 15% of the Current Market Price (as defined in Section 6 below) on the
date of exercise, subject to adjustment as provided in Section 4 hereof
("Purchase Price"), at any time after June 15, 2004 up to and including June 30,
2006 (such period, the "Exercise Period"), _________________ fully paid and
non-assessable shares of the Company's Common Stock, par value $.005 per share
("Common Stock"), subject, however, to the provisions and upon the terms and
conditions hereinafter set forth.
1. EXERCISE OF WARRANT. The rights represented by this Warrant may be exercised
by the holder hereof, at any time or from time to time during the Exercise
Period, on any day that is not a Saturday, Sunday or public holiday under the
laws of the State of Idaho (such day being hereinafter referred to as a
"Business Day"), for all or part of the number of shares of Common Stock
purchasable upon its exercise, by (i) delivery of a Subscription Notice (in the
form attached to this Warrant) of such holder's election to exercise this
Warrant, specifying the number of shares of Common Stock to be purchased, (ii)
payment of the Purchase Price for such shares by certified check or bank draft
payable to the order of the Company and (iii) surrender of this Warrant
(properly endorsed if required) at the Company's principal office or such other
office or agency of the Company as the Company may designate by notice in
writing to the holder hereof.
In the event of any exercise of the rights represented by this Warrant,
certificates for the shares of Common Stock so purchased shall be delivered to
the holder hereof as soon as reasonably practicable, but in any event within
twenty-one days, after the rights represented by this Warrant shall have been so
exercised, and unless this Warrant has expired, a new Warrant representing the
number of shares of Common Stock, if any, with respect to which this Warrant
shall not then have been exercised shall also be issued to the holder hereof
within such time. Each person in whose name any such certificate for shares of
Common Stock is issued shall for all purposes be deemed to have become the
holder of record of the Common Stock represented hereby on the date on which
this Warrant was surrendered and payment of the Purchase Price was made,
irrespective of the date of issue or delivery of such certificate.
2. TRANSFER. The Company will maintain books for the registration and transfer
of the Warrants, and any such transfer will be registrable thereon upon
surrender of the transferred Warrant to the Company's main office, together with
a duly executed assignment thereof and funds sufficient to pay any required
stock transfer taxes. Upon such surrender and payment, the Company shall,
subject to Section 9, execute and deliver a new Warrant or Warrants in the name
of the assignees and in the number of shares of Common Stock specified in the
assignment and this Warrant shall promptly be cancelled.
3. CERTAIN COVENANTS OF THE COMPANY. The Company covenants and agrees that all
shares of Common Stock that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and
non-assessable and free from all taxes, liens, charges and security interests
with respect to the issue thereof. The Company further covenants and agrees that
during the period within which the rights represented by the Warrant may be
exercised, the Company will at all times have authorized, and reserved free of
preemptive or other rights for the exclusive purpose of issue upon exercise of
the rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant. The Company shall take all such actions as may be necessary to assure
that all such shares of Common Stock may be issued upon the exercise of the
rights represented by this Warrant without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon each such
issuance).
32
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares of
Common Stock with respect to which this Warrant is exercisable (the "Exercise
Rate") shall be subject to adjustment from time to time as follows:
a. In case the Company shall (x) pay a dividend in or make a distribution of
Common Stock on outstanding Common Stock, (y) subdivide outstanding Common Stock
into a larger number of shares of Common Stock by reclassification or otherwise,
or (z) combine outstanding Common Stock into a smaller number of shares of
Common Stock by reclassification or otherwise, the Exercise Rate in effect
immediately prior thereto shall be adjusted proportionately so that the holder
of this Warrant thereafter exercised shall be entitled to receive the number of
shares of the Common Stock that such holder would have owned after the happening
of any of the events described above had such warrant been exercised immediately
prior to the happening of such event. An adjustment made pursuant to this
subparagraph (a) shall become effective retroactively to immediately after the
record date in the case of a share dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination.
b. In case of any capital reorganization or reclassification of the shares of
Common Stock (except as provided in subparagraph (a) above), or in case of any
consolidation or merger to which the Company is a party (other than a merger in
which the Company is the surviving corporation and which does not result in any
capital reorganization or reclassification of Common Stock), or in case of any
sale or conveyance to another corporation of all or substantially all of the
property and assets of the Company, and if, in connection with any such
consolidation, merger, sale or conveyance, shares or other securities or
property shall be issuable or deliverable in exchange for shares of Common
Stock, provision shall be made as part of the terms of such capital
reorganization or reclassification, consolidation, merger, sale or conveyance
that the holder of this Warrant thereafter exercised shall have the right upon
such exercise to receive the same kind and amount of stock and other securities
and property as would have been receivable upon such capital reorganization or
reclassification, consolidation, merger, sale or conveyance by a holder of the
number shares of Common Stock with respect to which such Warrant might have been
exercised immediately prior thereto. In any such case, appropriate provision (as
determined to be equitable in the business judgment of the Board of Directors)
shall be made for the application of Section 4 with respect to the rights and
interests thereafter of the holder of this Warrant to the end that such Section
(including adjustments of the Exercised Rate) shall be reflected thereafter, as
nearly as reasonably practicable, in all subsequent exercises of this Warrant.
The Company shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation (if other than the
Company) resulting from consolidation or merger or the corporation purchasing
such assets assumes by written instrument (in a manner determined to be
equitable in the business judgment of the Board of Directors to the holder of
this Warrant), the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to acquire.
c. In case the Company shall issue pro rata to the holders of shares of its
Common Stock rights or warrants entitling them, during a period not exceeding 30
days after the record date mentioned below, to subscribe for or purchase only
shares of its Common Stock at a price per share less than the average of the
Current Market Price (as defined in Section 6) of the Common Stock for the 30
consecutive trading days commencing 45 days before such record date (the
"Average Market Price"), the number of shares of its Common Stock with respect
to which this Warrant is exercisable thereafter shall be determined by
multiplying the number of shares of Common Stock with respect to which this
Warrant was exercisable theretofore by a fraction, of which the numerator shall
be the number of shares of Common Stock outstanding immediately prior to such
record date plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the number of
shares of Common Stock outstanding immediately prior to such record date plus
the number of shares of Common Stock which the aggregate offering price of the
total number of shares being offered would purchase at such Average Market
Price. Such adjustment shall be made whenever such rights or warrants are issued
and shall become retroactively effective immediately after the record date for
the determination of the stockholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not delivered after the
expiration of such rights or warrants, the Exercise Rate shall be readjusted to
the Exercise Rate that would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of delivery of only
the number of shares of Common Stock actually delivered.
33
d. In case the Company shall issue (except pursuant to a Rights Offering as
defined in subparagraph (c) above) pro rata to the holders of shares of its
Common Stock rights or warrants to subscribe for or purchase only (x) shares of
its Common Stock except as described in subparagraph (c) above, or (y) units
consisting of shares of Common Stock and warrants to purchase shares of Common
Stock, the number of shares of its Common Stock with respect to which this
Warrant is exercisable thereafter shall be determined by multiplying the number
of shares of Common Stock with respect to which this Warrant was exercisable
theretofore by a fraction, of which the numerator shall be the Average Market
Price for a share of Common Stock determined as of the record date mentioned
below, and of which the denominator shall be such Average Market Price less the
fair market value (as determined in the business judgment of the Board of
Directors) as of such record date of the rights or warrants distributed pro rata
to one of the outstanding shares of Common Stock. Such adjustment shall be made
whenever such distribution is made and shall become retroactively effective
immediately after the record date for the determination of stockholders entitled
to receive such rights or warrants.
The foregoing provisions for adjustment of the Exercise Rate shall apply in each
successive instance in which an adjustment is required thereby. No adjustment in
the Exercise Rate resulting from the application of the foregoing provisions is
to be given effect unless, by making such adjustment, the Exercise Rate in
effect immediately prior to such adjustment would be changed thereby by 1% or
more, but any adjustment that would change the Exercise Rate by less than 1% is
to be carried forward and given effect in making future adjustments; provided,
however, that each adjustment of the Exercise Rate shall in all events be made
no later than three years from the date such adjustment would have been required
to be made except for the provisions of this sentence. All calculations under
this Section 4 shall be made to the nearest one-hundredth (1/100th) of a share.
Shares of Common Stock owned by or held for the account of the Company shall not
be deemed to be outstanding for the purposes of any computation made under this
Section 4.
Whenever the number of shares of Common Stock deliverable upon the exercise of
this Warrant shall be adjusted pursuant to the provisions hereof, the Company
shall forthwith file at its principal office and with any transfer agent for the
Common Stock a statement, signed by the President or one of the Vice-Presidents
of the Company and by its Treasurer or one of its Assistant Treasurers, stating
the adjusted number of shares of Common Stock deliverable with respect to this
Warrant and setting forth in reasonable detail the method of calculation and the
facts requiring such adjustment and upon which such calculation is based, and
shall mail a notice of such adjustment to the holder of record of this Warrant.
Each adjustment shall remain in effect until a subsequent adjustment hereunder
is required.
In the event:
(x) of the occurrence of any of the events referred to in subparagraphs (a),
(b), (c) and (d) above; or
(y) of any liquidation, dissolution or winding up of the Company (a
"Liquidation");
then the Company shall cause to be mailed to the holder of record of this
Warrant at least 20 days prior to the applicable date hereinafter specified, a
notice describing the event and stating the effect, if any, that such event will
have upon the Exercise Rate, and (A) the date on which a record is to be taken
for the purpose of a distribution referred to in subparagraphs (a), (c) or (d)
above, or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such distribution are to be determined,
or (B) the date on which any subdivision, combination or other capital
reorganization or reclassification or any consolidation, merger, sale or
conveyance referred to in subparagraphs (a) or (b) above or such Liquidation is
expected to become effective.
The Company will at all times during the Exercise Period reserve and keep
available for issuance upon exercise of this Warrant the number of shares of
Common Stock that is equal to the Exercise Rate; provided, however, that nothing
contained herein shall be construed to preclude the Company from satisfying its
obligations in respect of the exercise of this Warrant by delivery of shares of
Common Stock that are held in the treasury of the Company. The Company covenants
that all shares of Common Stock that shall be issued upon exercise of this
Warrant will, upon issue, be fully paid and nonassessable and not subject to any
preemptive rights.
34
The shares of Common Stock issuable upon exercise of this Warrant when the same
shall be issued in accordance with the terms hereof are hereby declared to be
and shall be fully paid nonassessable shares of Common Stock and not liable to
any calls or assessments thereon, and the holders thereof shall not be liable
for any further payments in respect thereof.
"Common Stock" when used in Section 4 with reference to the Common Stock with
respect to which this Warrant is exercisable, shall mean only Common Stock as
authorized by the Restated Certificate of Incorporation of the Company, as
amended to the date hereof, and any shares into which such Common Stock may
thereafter have been changed, and, when otherwise used in Section 4, shall also
include shares of the Company of any other class or series, whether now or
hereafter authorized, that ranks or is entitled to participation, as to payment
of assets upon Liquidation and payment of dividends, substantially on a parity
with such Common Stock or other class of shares into which such Common Stock may
have been changed.
The Company will not, by amendment of its Certificate 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 hereunder by the company, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the conversion privilege of the holders of this Warrant against dilution or
other impairment. Without limiting the generality of the foregoing, the Company
(1) will not increase the par value of any shares of stock receivable upon
exercise of this Warrant above the Purchase Price then in effect, and (2) 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
stock upon the exercise in full of this Warrant from time to time outstanding.
5. FRACTIONAL INTERESTS. The Company shall not be required to issue fractional
shares on the exercise of a Warrant. If any faction of a share would be issuable
on the exercise of a Warrant (or specified portion thereof), the Company shall
pay an amount in cash equal to the Current Market Price per share of Common
Stock (as defined in Section 6) multiplied by such fraction.
6. DEFINITION OF CURRENT MARKET VALUE. The "Current Market Price" on any given
day shall be: (i) if the Common Stock is listed or admitted to unlisted trading
privileges on any exchange registered with the Securities and Exchange
Commission as a national securities exchange" under the Securities Exchange Act
of 1934 (a "National Securities Exchange"), the last sales price of the shares
of Common Stock on the National Securities Exchange in or nearest the City of
New York on which the shares of Common Stock shall be listed or admitted to
unlisted trading privileges (or the quoted closing bid if there be no sales on
such National Securities Exchange or Over the Counter Bulletin Board) on the
most recently completed trading day prior to such day; or (ii) if the Common
Stock is not so listed or admitted, the closing sales price of a share of Common
Stock as quoted in The Nasdaq Stock Market or bulletin board on the most
recently completed trading day prior to the day in question; or (iii) if the
Common Stock is not so quoted, the mean between the high and low bid prices of
the shares of Common Stock in the over-the-counter market on the most recently
completed trading day prior to the day in question as reported by National
Quotation Bureau Incorporated or similar organization.
7. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. In the case of all
dividends or other distributions by the Company to the holders of its Common
Stock with respect to which any provision of Section 4 refers to the taking of a
record of such holders, the Company will in each such case take such a record
and will take such record as of the close of business on a Business Day. The
Company will not at any time, except upon dissolution, liquidation or winding up
of the Company, close its stock transfer books or Warrant transfer books so as
to result in preventing or delaying the exercise or transfer of any Warrant.
8. RESTRICTIONS ON TRANSFERABILITY. This Warrant was originally issued in a
transaction exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), and neither this Warrant nor any shares
of Common Stock issuable upon the exercise hereof were then registered under the
Securities Act. Unless this Warrant or such shares were subsequently registered
under the Securities Act and sold by the holder thereof in accordance with such
registration, this Warrant or such shares, as the case
35
may be, may not be sold by the holder hereof or of such shares unless this
Warrant or such shares is or are subsequently registered under the Securities
Act or an exemption from such registration is available. The shares of Common
Stock issuable hereunder will bear an appropriate restrictive legend as is
required by the Securities Act or any state blue sky laws. The holder of this
Warrant, by acceptance of this Warrant, agrees to be bound by the provisions of
this Section and represents to the Company that it is acquiring the Warrant and
the Common Stock issuable hereunder solely for its own account, for the purpose
of investment and not with a view to distributing or selling it or any part
thereof in violation of the Securities Act, but subject, nevertheless, to any
requirement of law that the disposition of such holder's property be at all
times within its control.
9. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the Company
(an affidavit of the registered holder shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of this Warrant, and in the case
of any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Company (provided that the holder's own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of this
Warrant, the Company shall (at its expense) execute and deliver in lieu of this
Warrant a new warrant of like kind dated the date of such lost, stolen,
destroyed or mutilated Warrant.
10. NOTICE GENERALLY. Any notice, demand or delivery pursuant to the provisions
hereof shall be sufficiently given or made if sent by first class mail, postage
prepaid, addressed to the holder of this Warrant or of the Common Stock issued
upon the exercise hereof at the holder's last known address appearing on the
books of the Company, or, except as herein otherwise expressly provided, to the
Company at its main office, Attention of the President, or such other address as
shall have been furnished to the party giving or making such notice, demand or
delivery.
11. VOTING RIGHTS, DIVIDENDS. This Warrant does not grant the holder hereof any
voting rights or other rights as a stockholder of the Company. No dividends are
payable or will accrue on this Warrant or the shares purchasable hereunder
until, and except to the extent that, this Warrant is exercised.
12. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY THE LAW OF THE STATE OF
IDAHO.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed this
______ day of ____________ 2003.
INTREPID TECHNOLOGY & RESOURCES, INC.
By:
Name:
Title:
SUBSCRIPTION NOTICE
(To be executed only upon exercise of Warrant)
_______________________________________, being the undersigned registered owner
of this Warrant irrevocably exercises this Warrant for and purchases ______
shares of the Common Stock, par value $.005 per share (the "Common Stock"), of
Intrepid Technology & Resources, Inc., constituting all or part of the shares of
Common Stock purchasable with this Warrant, and herewith makes payment therefor,
all at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) together with, if
such certificates do not represent all the shares of Common Stock purchasable
with this Warrant, a new Warrant, identical to the cancelled Warrant except with
respect to the number of shares of Common Stock evidenced thereby, for the
remaining unsold shares of Common Stock, be issued in the name of and delivered
to the undersigned at the address set forth below.
Dated:_____________________ ___________________________________
Name of Warrant Holder
By:________________________________
Name:______________________________
Title:_____________________________
___________________________________
Street Address
___________________________________
City State Zip Code
36
PLEASE MARK
YOUR VOTES AS [X]
INDICATED IN
THIS EXAMPLE
1. Election of directors (to withhold authority to vote for any individual
members, strike a line through the members name in the list below). This proxy
confers on the proxy holders the power of cumulative voting and the power to
vote cumulatively for less than all of the nominees as described in the Proxy
Statement.
FOR all nominees WITHHOLD 01 Dr. Dennis D. Keiser
listed to the right AUTHORITY 02 Dr. Jacob D. Dustin
(except as marked to vote for all nominees 03 Michael F. LaFleur
to the contrary) listed to the right 04 William R. Myers
For[ ] Against [ ] 05 D. Lynn Smith
2. To approve 5,000,000 shares of Series A Redeemable Convertible 4.25%
Preferred Stock par value, $1.00 per share and include them in the Articles of
Incorporation
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To amend the Company's Restated Certificate of Incorporation to increase
authorized common stock from 135,000,000 to 185,000,000 shares
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To approve the Company's divestiture of all Mining and Mineral Rights
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. To ratify the selection of Balukoff, Lindstrom & Co., P.A. as the Company's
independent auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the proxies are authorized to vote upon such other matters
as come before the meeting.
Please sign below exactly as your name appears on this Proxy Card. If shares are
registered in more than one name, the signatures of all such persons are
required. A corporation should sign in its full corporate name by a duly
authorized officer, stating his/her title. Trustees, guardians, and
administrators should sign in their official capacity, giving their title as
such. Partnerships should sign in the partnership name by the authorized
person(s).
The undersigned acknowledge(s) receipt of the Notice of the aforesaid Annual
Meeting, the Proxy Statement and Annual Report accompany the same, each dated
December 5, 2003.
Date: December 5, 2003
SIGNATURE OF STOCKHOLDER
SIGNATURE IF HELD JOINTLY
FOLD AND DETACH HERE
INTREPID TECHNOLOGY & RESOURCES, INC.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, hereby revoking all prior proxies, hereby appoints Dr. Dennis
D. Keiser and Dr. Jacob D. Dustin and each of them, proxies with full and
several power of substitution, to represent and to vote all the shares of Common
Stock of INTREPID TECHNOLOGY & RESOURCES, INC., that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
INTREPID TECHNOLOGY & RESOURCES, INC., to be held on December 12, 2003, and at
any adjournment(s) thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC INDICATIONS ON THE
REVERSE SIDE. IN THE ABSENCE OF SUCH INDICATIONS, A SIGNED PROXY WILL BE VOTED
FOR PROPOSALS 1-5, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PROXY WITH RESPECT
TO ANY OTHER BUSINESS PROPERLY BEFORE THE MEETING.