Document:

Exhibit 10.9

 

EXECUTION VERSION

 

FIRST AMENDMENT TO FACILITY LEASE (T2)

 

THIS FIRST AMENDMENT TO FACILITY LEASE (T2) (“First Amendment”) is made and entered effective as of April 1, 2014, by and between Powerton Trust II, a Delaware statutory trust (the “Owner Lessor”), and Midwest Generation, LLC, a Delaware limited liability company (the “Facility Lessee”).

 

RECITALS

 

WHEREAS, the Owner Lessor and the Facility Lessee entered into a Facility Lease (T2) dated as of August 17, 2000 (the “Facility Lease”), with respect to the Facility and Undivided Interest (as such terms are defined in the Facility Lease).

 

WHEREAS, the Owner Lessor, the Facility Lessee, and certain other parties agreed to a Consent to Modification and Assumption of PoJo Leases and Documents (the “Consent”), contemporaneously with this First Amendment.

 

WHEREAS, as more fully described and set forth in the Consent, in connection with the effective date of the Facility Lessee’s chapter 11 plan of reorganization, the Facility Lessee is assuming the Facility Lease and related documents, subject to certain modifications and amendments, including those set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, the Owner Lessor and the Facility Lessee, intending to be legally bound, agree as follows:

 

Section 1.                                          AMENDMENTS

 

1.1.                            New Definitions.  Section 1 of the Facility Lease is amended and restated in its entirety as follows:

 

“Section 1.1.                          Participation Agreement.  Capitalized terms used in this Facility Lease, including, the recitals, and not otherwise defined herein shall have the respective meanings set forth in Appendix A to the Amended and Restated Participation Agreement (T2), dated as of April 1, 2014, (the “Participation Agreement”), among the Facility Lessee, the Owner Lessor, the Owner Trustee, the Owner Participant, NRG Energy, Inc. (“NRG”), The Bank of New York Mellon, as Pass Through Trustee and The Bank of New York Mellon, as Lease Indenture Trustee unless the context hereof shall otherwise require.  The general provisions of Appendix A to the Participation Agreement shall apply to the terms used in this Facility Lease and not specifically defined herein.”

 

“Section 1.2.                          Substitution of NRG for EME.  For all purposes of   this Facility Lease: (a) “NRG” means NRG Energy, Inc.; (b) “NRG Guarantee” means the Guarantee, dated as of April 1, 2014, issued by NRG in favor of the Owner Lessor; and (c) “NRG

 

 

OP Guarantee” means the Guarantee, dated as of April 1, 2014, issued by NRG in favor of the Owner Participant, Equity Investor, and their respective affiliates, subsidiaries, successors and assigns.”

 

1.2.                            Replacement of EME.

 

a.                                      The Facility Lease is amended by replacing any and all references to “EME” with “NRG.”

 

b.                                      The Facility Lease is amended by replacing any and all references to “EME Guarantee” with “NRG Guarantee.”

 

c.                                       The Facility Lease is amended by replacing any and all references to “EME OP Guarantee” with “NRG OP Guarantee.”

 

d.                                      All references to “Guarantor” in the Facility Lease shall mean NRG.

 

1.3.                            No Limitation on Recourse.

 

a.                                      Section 17.2 of the Facility Lease shall be deleted in its entirety.

 

b.                                      Any and all references to Section 17.2 of the Facility Lease shall be deleted in their entirety.

 

1.4.                            Notice.  The addresses for Notices set forth in Section 22.2 of the Facility Lease shall be deleted and replaced with the following:

 

If to the Owner Lessor:

 

Powerton Trust II

c/o Wilmington Trust Company, as Owner Trustee

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-0001

Attn: Corporate Trust Administration, Robert Hines

Fax: (302) 636-4140

 

with a copy to:

 

Richards, Layton & Finger, P.A.

One Rodney Square

920 North King Street

Wilmington, DE 19801

Attn: Michael F. Collins

Fax: (302) 498-7502

 

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with a copy to the Owner Participant:

 

Powerton Generation II, LLC

Citigroup Global Markets Inc.

390 Greenwich Street, 1st Floor

Attn: Cathy Krust & Brian Whalen

New York, New York 10013

Fax: (866) 663-9212

Fax: (646) 862-8059

 

-and-

 

Milbank, Tweed, Hadley & McCloy LLP

1 Chase Manhattan Plaza

New York, New York 10005

Attn.: William Bice & Tyson Lomazow

Fax: (212) 530-5219

 

and to the Lease Indenture Trustee:

 

The Bank of New York Mellon — Public Finance

385 Rifle Camp Road

Woodland Park, New Jersey 07424

Attn.:  Rosemary Melendez, Vice President

Fax: (973) 357-7840

 

with a copy to:

 

O’Melveny & Myers, LLP

7 Times Square

New York, New York 10036-6524

Attn.:  George Davis

Fax:  (212) 326-2061

 

-and-

 

Emmet, Marvin & Martin, LLP

120 Broadway 32nd Floor

New York, New York 10271

Attn:  Edward P. Zujkowski & Thomas A. Pitta

Fax:  (212) 238-3100

 

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If to the Facility Lessee:

 

NRG Energy, Inc.

211 Carnegie Center

Princeton, NJ 08540-6213

Attn.:  General Counsel — East Region

Fax:  (609) 524-5160

 

1.5.                            Reimbursement Agreement.  The Owner Lessor and the Facility Lessee have agreed to delete the term “Reimbursement Agreement” from the Facility Lease and, accordingly, each of Section 19.1(a) and Section 22.4(c)(ii) of the Facility Lease is hereby amended and restated in its entirety as follows:

 

“(a) the NRG Guarantee and the NRG OP Guarantee remain in full force and effect;”

 

“(ii) to any entity; provided that the Facility Lessee shall remain secondarily liable under the Facility Lease and all other Operative Documents, subject to Section 17.2 of this Facility Lease and Section 18.19 of the Participation Agreement such that the Facility Lessee would be directly obligated to pay or perform any obligation not paid or performed by the assignee when due, and the NRG Guarantee and the NRG OP Guarantee shall remain in full force and effect.”

 

1.6.                            Required Modifications & Permitted Temporary Shutdown.  The following are added to the Facility Lease as Section 7.4 and Section 7.5:

 

“Section 7.4.  Required Modifications. Notwithstanding anything to the contrary herein, and without causing any breach or default under the Operative Documents, Facility Lessee shall complete modifications to the Facility such that the Facility is capable of economic dispatch at full capacity or otherwise capable of participating as a capacity resource in the PJM Interconnection, L.L.C.’s (or its successor’s) market or other markets, in compliance in all material respects with all Environmental Laws (“Post-Modification Capability”). Such modifications may include, but are not limited to, gas additions, oil additions or installation of emissions controls; provided that nothing herein shall be construed to require the Facility to be operated at baseload or in any particular dispatch profile. Any shutdowns of the Facility related to making such modifications shall not cause a breach or default under the Operative Documents; provided that no shutdown shall relieve Facility Lessee of its obligations to make payment of Basic Lease Rent in accordance with Section 3.2 or Supplemental Rent in accordance with Section 3.3.”

 

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“Section 7.5.  Permitted Temporary Shutdown. Facility Lessee may temporarily shut down the Facility; provided that for voluntary shutdowns of one year or longer that are unrelated to making the modifications described in Section 7.4 of this Facility Lease, (i) prior to implementing such shutdown, NRG shall have complied with each of its obligations under Section 7.3(a)-(b) of the Participation Agreement; and (ii) the Facility Lessee shall deliver the Facility with Post-Modification Capability upon any return thereof to the Owner Lessor.”

 

1.7.                            Insurance Provision.  Section 11.3 of the Facility Lease is amended and restated in its entirety as follows:

 

“Section 11.3.                   Provisions With Respect to Insurance. Subject to Section 11.6, the Facility Lessee will place the insurance maintained pursuant to this Section 11 with companies having an A.M. Best rating of at least “A-” or, if not so rated, with comparable financial strength. All insurance policies required to be maintained pursuant to Sections 11.1 and 11.2 shall name each of the Owner Participant, the Equity Investor, the Owner Lessor, the Owner Trustee, the Lease Indenture Trustee, the Pass Through Trustees and holders of the Lessor Notes, as additional insureds, as their respective interests may appear (the “Additional Insureds”). All insurance policies required to be maintained pursuant to the terms hereof shall also provide for at least 30 days’ prior written notice (10 days if as a result of non-payment) by the insurance carrier to each Additional Insured in the event of cancellation, non-renewal, termination or expiration. The Facility Lessee will place the insurance required by the terms of this Section 11 with insurance companies which agree to waive all claims for premiums from, an all subrogation rights against, the Additional Insureds. All the insurance maintained pursuant to this Section 11 shall be primary without right of contribution of any other insurance carried by or on behalf of each of the Additional Insureds with respect to its interests in the Facility and the Facility Site.

 

Subject to Section 11.6, to the extent available on commercially reasonable terms, the Facility Lessee will use its best efforts to provide that the respective interests of the Additional Insureds shall not be invalidated by any act or neglect of the Facility Lessee, or any breach or violation by the Facility Lessee of any warranties, declarations or conditions contained in such policies or by the use of the Facility for purposes more hazardous than permitted by such policies. Additionally, to the extent available on commercially reasonable terms, the Facility Lessee will use its best efforts to provide that such policies shall be endorsed to provide that, inasmuch as the policies are written to cover more than one

 

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insured, all terms, conditions, insuring agreements and endorsements, with the exception of limits of liability, shall operate in the manner as if there were a separate policy covering each insured. The Facility Lessee shall, at its own expense, make or cause to be made all proofs of loss and take all other steps necessary to collect the proceeds of such insurance.

 

Section 2.                                          MISCELLANEOUS

 

2.1.                            References. On and after the date hereof, each reference in the Facility Lease to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import referring to the Facility Lease, and each reference in the other Operative Documents to the “Facility Lease,” “thereunder,” “thereof,” or words of like import referring to the Facility Lease shall mean and be a reference to the Facility Lease as amended by this First Amendment.

 

2.2.                            Effectiveness. This First Amendment shall become effective and binding on the parties upon execution hereof.  All other provisions of the Facility Lease remain in full force and effect.

 

2.3.                            Counterparts. This First Amendment may be executed in any number of counterparts and by the different parties in separate counterparts, each of which, when executed and delivered, shall be deemed an original, but all such counterparts together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this First Amendment by facsimile or other electronic means shall be as effective as delivery of a manually executed counterpart of this First Amendment.

 

2.4.                            Amendments. No amendment, modification, waiver, or other change to this First Amendment shall be enforceable, unless reduced to writing and executed by both parties (or with respect to a waiver by the waiving party).

 

2.5.                            Severability. The invalidity or unenforceability of any provision of this First Amendment shall not affect the validity or enforceability of any other provision of this First Amendment, which shall remain in full force and effect. Any unenforceable provision shall be deemed modified to the limited extent required to permit its enforcement in a manner most closely representing the intention of the parties as expressed herein.

 

2.6.                            Continuing Effect. Except as specifically amended by this First Amendment, all of the terms and provisions of the Facility Lease are, and shall remain, in full force and effect and are hereby ratified and confirmed.

 

2.7.                            Binding Effect. The terms of this First Amendment shall be binding upon, and inure to the benefit of, the parties and their respective successors and permitted assigns.

 

2.8.                            Preparation of Amendment. This First Amendment was prepared jointly by the parties, each party having had access to advice of its own counsel, and not by either party to the exclusion of the other party, and shall not be construed against one party or the other as a result of the manner in which this First Amendment was prepared, negotiated, or executed.

 

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2.9.                            Governing Law.  This First Amendment, and all claims hereunder, shall be governed by and construed in accordance with Section 22.6 of the Facility Lease.

 

2.10.                     Limitation of Liability.  It is expressly understood and agreed by the parties hereto that this First Amendment is executed by the Owner Trustee, not individually or personally, but solely as trustee under the Trust Agreement in the exercise of the power and authority conferred and vested in it as such trustee, that each and all of the representations, undertakings and agreements herein made on the part of the Owner Trustee or the Owner Lessor are intended not as personal representations, undertakings and agreements by the Owner Trustee, or for the purpose or with the intention of binding the Owner Trustee, personally, but are made and intended for the purpose of binding only the Trust Estate, that nothing herein contained shall be construed as creating any liability of the Owner Trustee, or any incorporator or any past, present or future subscriber to the capital stock of, or stockholder, officer or director of the Owner Trustee, to perform any covenant either express or implied contained herein or in the other Operative Documents to which the Owner Trustee or the Owner Lessor is a party, and that so far as the Owner Trustee is concerned, any person shall look solely to the Trust Estate for the performance of any obligation hereunder or thereunder or under any of the instruments referred to herein or therein; PROVIDED, that nothing contained in this Section shall be construed to limit in scope or substance any general corporate liability of the Owner Trustee as expressly provided in the Trust Agreement or in the Participation Agreement, as such agreement may be amended or amended and restated.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF the parties hereto have caused this First Amendment to Facility Lease to be executed as of the day and year first above written.

 

 

	
 
    	
POWERTON TRUST II
    
	
 
    	
 
    
	
 
    	
By: Wilmington Trust Company, not in its   individual capacity but solely as Owner Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Anita Roselli Woolery
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Anita   Roselli Woolery
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MIDWEST GENERATION, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   William Lee Davis
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
William   Lee Davis
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President
    

 

FIRST AMENDMENT TO FACILITY LEASE (T2)Exhibit 4.1

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

 INTEGRAL TECHNOLOGIES, INC.

	
Warrant Shares: _______

	
 

	
Initial Exercise Date: ________ __, 2014

THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for value received, ______________ or its assigns (the "Holder") is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the "Initial Exercise Date") and on or prior to the close of business on the eighteen (18) month anniversary of the Initial Exercise Date (the "Termination Date") but not thereafter, to subscribe for and purchase from Integral Technologies, Inc., a Nevada corporation (the "Company"), up to _______ shares (as subject to adjustment hereunder, the "Warrant Shares") of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.               Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Confidential Private Placement Memorandum, dated February __, 2014 (the "Memorandum") and that certain Subscription Agreement, dated as of the date on the signature page thereof (the "Purchase Agreement"), among the Company and the purchasers signatory thereto.

Section 2.               Exercise.

a)            Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier's check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

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b)            Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $0.30, subject to adjustment hereunder (the "Exercise Price").

c)            Call Provision.  Subject to the provisions of this Section 2(c), if, the average closing bid price for each of 10 consecutive trading days (the "Measurement Period,") exceeds $0.60 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the Initial Exercise Date), and the Holder is not in possession of any information that constitutes, or might constitute, material non-public information which was provided by the Company, then the Company may, within 30 trading days of the end of such Measurement Period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered (such right, a "Call") for consideration equal to $.01 per Share.  To exercise this right, the Company must deliver to the Holder an irrevocable written notice (a "Call Notice"), indicating therein the portion of unexercised portion of this Warrant to which such notice applies.  If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on the fifth trading day after the date the Call Notice is received by the Holder (such date and time, the "Call Date").  Any unexercised portion of this Warrant to which the Call Notice does not pertain will be unaffected by such Call Notice.  In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date.  Subject again to the provisions of this Section 2(c), the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise.  Notwithstanding anything to the contrary set forth in this Warrant, the Company may not deliver a Call Notice or require the cancellation of this Warrant (and any such Call Notice shall be void), unless, from the beginning of the Measurement Period through the Call Date, (1) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by  6:30 p.m. (New York City time) on the Call Date, and (2) there is a sufficient number of authorized shares of Common Stock for issuance of the Warrant Shares.  The Company's right to call the Warrants under this Section 2(c) shall be exercised ratably among the Holders based on each Holder's initial purchase of Warrants.

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d)        Mechanics of Exercise.

i.    Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required), and (C) payment of the aggregate Exercise Price as set forth above (such date, the "Warrant Share Delivery Date").   The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(iv) prior to the issuance of such shares, having been paid.

ii.          Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii.        No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

iv.        Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

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v.        Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Section 3.               Certain Adjustments.

a)            Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re‐classification.

b)            Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

c)            Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

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Section 4.               Transfer of Warrant.

a)            Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and any provision(s) of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b)            New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c)            Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "Warrant Register"), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)        Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.5 of the Purchase Agreement.

e)            Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

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Section 5.               Intentionally Omitted.

Section 6.               Miscellaneous.

a)            No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).

b)            Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

c)            Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

d)            Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending 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 of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e)            Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

f)             Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

g)            Nonwaiver.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder's rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.

h)            Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

i)             Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

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j)             Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

k)            Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holders of not less than 51% of the Warrants then outstanding.

l)             Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

m)           Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the ___ day of _____________, 2013.

	
 

	
INTEGRAL TECHNOLOGIES, INC.

 

 

	
 

	
By:

	
 

	
 

	
 

	
Name: Doug Bathauer

Title: Chief Executive Officer

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NOTICE OF EXERCISE

TO:            INTEGRAL TECHNOLOGIES, INC.

(1)    The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)    Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered by physical delivery of a certificate to:

_______________________________

_______________________________

_______________________________

(4)    Accredited Investor.  The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:_____________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _______________________________________________

Name of Authorized Signatory: ________________________________________________________________

Title of Authorized Signatory: _________________________________________________________________

Date: _____________________________________________________________________________________

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

 Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated:  ______________, _______

		Holder's Signature:	_____________________________

		Holder's Address:	_____________________________

_____________________________

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

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