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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 25, 1998
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period from to
Commission File Number 0-6890
MECHANICAL TECHNOLOGY INCORPORATED
(Exact name of registrant as specified in its charter)
New York 14-1462255
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
968 Albany-Shaker Rd., Latham, New York 12110
(Address of principal executive offices) (Zip Code)
(518) 785-2211
Registrant's telephone number, including area code
Not Applicable
(Former name,former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Class Outstanding at December 25, 1998
Common Stock, $1.00 Par Value 7,179,770 Shares
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<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
INDEX
Page No.
Part I Financial Information
Consolidated Balance Sheets - December 25, 1998
and September 30, 1998 3 - 4
Consolidated Statements of Operations -
Three months ended December 25, 1998
and December 26, 1997 5
Consolidated Statements of Cash Flows -
Three months ended December 25, 1998
and December 26, 1997 6
Notes to Consolidated Financial Statements 7 - 11
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 16
Part II Other Information
Item 6 17
Signatures 18
<PAGE>
PART I FINANCIAL INFORMATION
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 25, 1998 (Unaudited) and September 30, 1998
(Dollars in thousands)
Dec.25, Sept.30,
1998 1998
Assets ------- -------
Current Assets:
Cash and cash equivalents $ 5,441 $ 5,567
Restricted cash 1,176 -
Trade accounts receivable 3,812 5,058
Allowance for doubtful accounts (108) (99)
------- -------
Net receivables 3,704 4,959
Accounts receivable-Joint Venture 92 87
Inventories:
Raw materials and components 2,989 2,845
Work in process 609 791
Finished goods 122 112
------- -------
Total inventories 3,720 3,748
Note receivable - current 329 327
Prepaid expenses and other current assets 684 472
Taxes receivable - 8
Net assets of discontinued operations - 8
------- -------
Total Current Assets 15,146 15,176
Property, plant and equipment, net 5,942 4,467
Note receivable - noncurrent 244 264
Investment in Joint Venture - 1,221
------- -------
Total Assets $ 21,332 $ 21,128
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 25, 1998 (Unaudited) and September 30, 1998
(Dollars in thousands)
Dec.25, Sept.30,
1998 1998
Liabilities and Shareholders' Equity ------- -------
Current Liabilities:
Accounts payable $ 1,227 $ 2,064
Accrued liabilities 2,172 3,328
Income taxes payable 3 5
Contribution payable-Joint Venture 1,500 4,000
Current installments on long-term debt 285 -
Net liabilities of discontinued operations 295 -
------- -------
Total Current Liabilities 5,482 9,397
Long term debt, net of current maturities 5,715 -
Deferred income taxes and other credit 607 607
------- -------
Total Liabilities 11,804 10,004
Commitments
Shareholders' Equity:
Common stock 7,183 7,183
Paid-in-capital 19,866 19,866
Deficit (17,482) (15,885)
Foreign currency translation adjustment (10) (11)
Treasury stock at cost (29) (29)
------- -------
Total Shareholders' Equity 9,528 11,124
------- -------
Total Liabilities and Shareholders' Equity $ 21,332 $ 21,128
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share)
Three months ended
Dec. 25, Dec. 26,
1998 1997
------- -------
Revenue $ 2,710 $ 3,250
Cost of sales 1,711 2,021
------- -------
Gross profit 999 1,229
Selling, general and administrative
expenses 1,126 1,323
Product development and
research costs 222 148
------- -------
Operating loss (349) (242)
Interest expense (58) (5)
Equity in joint venture losses (1,221) (27)
Other income(expense), net 31 88
------- -------
Loss from continuing
operations before income taxes (1,597) (186)
Income tax expense - -
------- -------
Loss from continuing operations $ (1,597) $ (186)
------- -------
Discontinued Operations (Note 4)
Loss from operations of discontinued
Technology Division, net of tax benefit - (516)
Loss on disposal of Technology
Division, net of tax benefit - (977)
------- -------
Loss from discontinued operations - (1,493)
------- -------
Net loss $ (1,597) $ (1,679)
======= =======
Earnings per share (Basic and Diluted):
Loss from continuing operations $ (.22) $ (.03)
Loss from discontinued operations - (.25)
------- -------
Net Loss $ (.22) $ (.28)
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three months ended
Dec.25, Dec.26,
1998 1997
Operating Activities ------ ------
Net loss from continuing operations $(1,597) $ (186)
Adjustments to reconcile net income(loss) to net
cash provided (used) by continuing operations:
Depreciation and amortization 125 67
Equity in joint venture loss 1,221 27
Reserve for bad debts 9 -
Other - (3)
Changes in operating assets and liabilities
Accounts receivable 1,246 797
Accounts receivable - joint venture (5) -
Inventories 28 (503)
Prepaid expenses and other current assets (25) 61
Accounts payable (837) (111)
Income taxes 6 (252)
Contribution payable - joint venture (2,500) -
Accrued liabilities (1,156) (988)
------ ------
Net cash used by continuing operations (3,685) (1,091)
Discontinued operations: ------ ------
Net loss from discontinued operations - (1,493)
Change in net assets/liabilities of
discontinued operations 303 2,269
Net assets transferred from discontinued
operations - (907)
------ ------
Net cash provided (used) by discontinued operations 303 (131)
------ ------
Net cash used by operating activities (3,382) (1,222)
Investing Activities ------ ------
Purchases of property, plant & equipment (1,587) (33)
Principal payments from note receivable 18 10
------ ------
Net cash used by investing activities (1,569) (23)
Financing Activities ------ ------
Borrowings under IDA financing 6,000 -
------ ------
Net cash provided by financing activities 6,000 -
------ ------
Effect of exchange rate on cash 1 2
------ ------
Increase(decrease) in cash and cash equivalents 1,050 (1,243)
Cash and cash equivalents - beginning of period 5,567 1,421
------ ------
Cash and cash equivalents - end of period $ 6,617 $ 178
====== ======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management the accompanying unaudited consolidated
financial statements contain all adjustments, consisting of only normal,
recurring adjustments, necessary for a fair presentation of results for such
periods. The results for any interim period are not necessarily indicative of
results for the full year. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. These consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto for the fiscal year ended September 30, 1998.
2. Income Taxes
The Company's effective tax rate for the three months ended December 25, 1998
and December 26, 1997 was 0%.
3. Earnings per Share
The amounts used in computing earnings per share and the effect on income and
the weighted average number of shares of potentially dilutive securities are as
follows:
For the three month period For the three month period
ended December 25, 1998 ended December 26, 1997
(Dollars in Thousands)
- -------------------------------------------------------------------------------
Loss before extraordinary
item and available to common
stockholders $ (1,597) $ (186)
Weighted average number of
shares:
Weighted average number of
shares used in net loss per share 7,179,748 5,905,684
Effect of dilutive securities:
Stock options - -
Weighted average number of --------- ---------
shares used in diluted net
loss per share 7,179,748 5,905,684
- -------------------------------------------------------------------------------
During the first quarter of fiscal 1999, options to purchase 453,340 shares of
common stock at prices ranging between $2.44 and $7.9375 per share were
outstanding but were not included in the computation of Earnings per Share-
assuming dilution because the Company incurred a loss from continuing
operations. Therefore, no potential common shares are included in the
computation. The options, which expire between December 20, 1999 and December
22, 2008 were still outstanding at December 25, 1998.
During the first quarter of fiscal 1998, options to purchase 449,700 shares of
common stock at prices between $2.44 and $5.70 per share were outstanding but
were not included in the computation of Earnings per Share-assuming dilution
because the Company incurred a loss from continuing operations. Therefore, no
potential common shares are included in the computation. The options, which
expire between December 20, 1999 and October 20, 2007, were still outstanding
at December 26, 1997.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
4. Discontinued Operations
The sale of the Company's Technology Division, the sole component of the
Technology segment, to NYFM, Incorporated (a wholly owned subsidiary of Foster-
Miller, Inc., a Waltham, Massachusetts-based technology company) on March 31,
1998 completed management's planned sale of non-core businesses. Accordingly,
the Company no longer includes Technology among its reportable business
segments and now operates in only one segment, Test and Measurement. The
Technology Division is reported as a discontinued operation as of December 26,
1997, and the consolidated financial statements have been restated to report
separately the net assets and operating results of the business. In exchange
for the Technology Division's assets, NYFM, Incorporated (a) agreed to pay the
Company a percentage of gross sales in excess of $2.5 million for a period of
five years; (b) assumed approximately $40 thousand of liabilities; and (c)
established a credit for warranty work of approximately $35 thousand.
Discontinued operations during the three months ended December 26, 1997 consist
of the following:
(Dollars in thousands)
Sales $ 532
======
Loss from operations before income tax $ (516)
Income tax (benefit) -
------
Net loss from discontinued operations $ (516)
======
Loss on disposal of Division $ (977)
Income tax (benefit) -
------
Loss on disposal of Division $ (977)
======
The assets and liabilities of the Company's discontinued operations are as
follows:
Dec. 25, Sept.30,
1998 1998
------- -------
Assets $ 726 $ 1,136
Liabilities $ 1,021 $ 1,128
------ ------
Net (liabilities) assets $ (295) $ 8
====== ======
Assets with a net book value of $907 thousand consisting primarily of land,
building and management information systems were transferred to continuing
operations on October 1, 1997.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Reclassification
Certain fiscal 1998 amounts have been reclassified to conform with the fiscal
1999 presentation.
6. Comprehensive Income
Total comprehensive income consists of:
Three months ended
Dec.25, Dec.26,
(Dollars in thousands) 1998 1997
- ------------------------------------ ------- -------
Net loss $(1,597) $(1,679)
Other comprehensive income(loss),
before tax:
Foreign currency translation
adjustments 1 2
Income tax related to items of other
comprehensive income(loss) - -
------ ------
Total comprehensive loss $(1,596) $(1,677)
====== ======
7. Investment in Plug Power, L.L.C.
On April 15, 1998, Edison Development Corporation ("EDC") contributed $2.25
million in cash to Plug Power, L.L.C. ("Plug Power"). The Company contributed a
below-market lease for office and manufacturing facilities in Latham, New York,
valued at $2 million and purchased a one year option to match the remaining
$250 thousand of EDC's contribution. In May 1998, EDC contributed an additional
$2 million to Plug Power and the Company purchased another one year option to
match the contribution. The Company paid approximately $191 thousand for the
options, which mature in April 1999 ($250 thousand) and May 1999 ($2 million).
If the Company does not exercise its options, they will lapse and the Company's
ownership will be diluted. The Company is currently negotiating with Plug Power
and EDC to have amounts due the Company for its efforts in securing government
funding for Plug Power applied as payment for its options.
In addition in August, 1998, the Company committed to contribute an additional
$5 million dollars (in cash, accounts receivable and research credits) between
August 5, 1998 and March 31, 1999 and recorded a liability representing this
obligation. Such contributions will increase the Company's total contributions
to Plug Power (including contributions of cash, assets, research credits, and a
below market lease) to $11.75 million over the period commencing on June 27,
1997, and ending on March 31, 1999.
On August 5, 1998, the Company made a short-term loan to Plug Power of $500
thousand that was subsequently contributed to capital on September 23, 1998.
The Company also converted $500 thousand of its accounts receivable from Plug
Power to capital on September 23, 1998.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The Company has recorded its proportionate share of Plug Power's losses only to
the extent of its recorded investment in Plug Power. Such investment is zero as
of December 25, 1998. At December 25, 1998, the Company has a balance of $1.5
million remaining on its August 1998 obligation to fund $5 million to Plug
Power.
To the extent the Company makes future investments in Plug Power, it will also
recognize its proportionate share of losses to the extent of these investments.
8. Debt
The Industrial Development Agency for the Town of Colonie issued $6 million in
Industrial Development Revenue ("IDR") Bonds on behalf of the Company to assist
in the construction of a new building for Advanced Products and the Company's
corporate staff and renovation of existing buildings leased to Plug Power. The
construction project is due to be completed in April 1999. The bond closing was
completed December 17, 1998 and proceeds of the IDR Bonds were deposited with a
trustee for the bondholders. The Company may draw the bond proceeds to cover
qualified project costs. First Albany Companies, Inc. ("FAC"), which owns 34%
of the Company's stock, underwrote the sale of the IDR Bonds. FAC received no
fees for underwriting the IDR Bonds but will be reimbursed for its
out-of-pocket costs.
KeyBank issued a letter of credit for approximately $6 million in connection
with the $6 million IDR Bonds. The KeyBank credit agreements require the
Company to meet certain covenants, including a fixed charge coverage and
leverage ratio. Further, if certain performance standards are achieved, the
interest rates on the debt may be reduced.
9. Geographic and Segment Information
The Company operates in one business segment, Test and Measurement, which
develops, manufactures, markets and services sensing instruments,
computer-based balancing systems for aircraft engines, vibration test systems
and power conversion products.
The Company evaluates performance based on profit or loss from operations
before income taxes.
The following table details information about the Test and Measurement segment
profit or loss, segment assets and shows the reconciliation of segment data to
the Company's consolidated totals. The Company does not allocate income taxes
or unusual items to segments.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Reconciling
(Dollars in thousands) Test and Item: Consolidated
Three months ended Dec.25, 1998 Measurement Corporate Totals
- ------------------------------- ----------- ----------- ------------
Revenues $ 2,710 $ - $ 2,710
Equity in joint venture loss - (1,221) (1,221)
Loss from continuing operations
before tax (335) (1,262) (1,597)
Loss from continuing operations (335) (1,262) (1,597)
Total loss (335) (1,262) (1,597)
Segment assets 7,779 13,553 21,332
Net (liabilities) discontinued
operations - (295) (295)
Reconciling
(Dollars in thousands) Test and Item: Consolidated
Three months ended Dec.26, 1997 Measurement Corporate Totals
- ------------------------------- ----------- ----------- ------------
Revenues $ 3,250 $ - $ 3,250
Equity in joint venture loss - (27) (27)
Loss from continuing operations
before tax (109) (77) (186)
Loss from continuing
operations (109) (77) (186)
Loss on discontinued operations - (1,493) (1,493)
Total loss (109) (1,570) (1,679)
Segment assets 8,616 2,538 11,154
Net assets discontinued operations - 917 917
The reconciling items are the amounts of revenues earned and expenses incurred
for corporate operations, which is not included in the segment information.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors, which have affected the Company's earnings during the periods included
in the accompanying consolidated statements of operation.
The sale of the Company's Technology Division, the sole component of the
Technology segment, to NYFM, Incorporated (a wholly owned subsidiary of Foster-
Miller, Inc., a Waltham, Massachusetts-based technology company) on March 31,
1998 completed management's planned sale of non-core businesses. Accordingly,
the Company no longer includes Technology among its reportable business
segments and now operates in only one segment, Test & Measurement. The
Technology Division is reported as a discontinued operation as of December 26,
1997 and the consolidated financial statements have been restated to report
separately the net assets(liabilities) and operating results of the business.
Continuing Operations
Sales decreased $540 thousand to $2,710 thousand for the three months ended
December 25, 1998 as compared to $3,250 thousand for the three months ended
December 26, 1997, a 16.6% decrease. This change is the result of weakness in
its markets and lower European sales. Market conditions were showing signs of
recovery at the end of the quarter. Operating income decreased $107 thousand to
a $349 thousand loss for the three months ended December 25, 1998 as compared
to a $242 thousand loss for the three months ended December 26, 1997, a 44.2%
decrease. This decrease is the result of decreased sales levels and
corresponding decreases in gross profits.
Other
In addition to the matters noted above, during the first quarter of fiscal
1999, the Company recorded a $1,221 thousand loss from the recognition of the
Company's proportionate share of losses of the Plug Power joint venture
compared to a $27 thousand loss in fiscal 1998.
The tax rate for the three months ended December 25, 1998 and December 26, 1997
was 0%. This rate is due to the loss generated by the investment in the joint
venture and the use of net operating loss carryforwards. However, as a result
of recent ownership changes, the availability of further net operating loss
carryforwards to offset future taxable income may be significantly limited
pursuant to the Internal Revenue Code.
Financial Condition
The Company's working capital of $9.66 million at December 25, 1998 reflects a
$3.89 million increase from September 30, 1998.
At December 25, 1998, cash and cash equivalents were $6.62 million versus $5.57
million at September 30, 1998. Net cash used by operating activities for the
first three months of fiscal 1999 amounted to $3.38 million, as compared to
cash used of $1.22 million in the prior year.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The capital used during the first three months of fiscal 1999 was applied
principally to fund short term operating cash flow requirements and contribute
$2.5 million to the Company's joint venture, Plug Power, L.L.C. Additionally,
accounts receivable decreased to $3.70 million or 25.3% as of December 25, 1998
as compared to $4.96 million as of September 30, 1998 because of reduced sales.
The Industrial Development Agency for the Town of Colonie issued $6 million in
Industrial Development Revenue ("IDR") Bonds on behalf of the Company to assist
in the construction of a new building for Advanced Products and the Company's
corporate staff and renovation of existing buildings leased to Plug Power. The
construction project is due to be completed in April 1999. The bond closing was
completed December 17, 1998 and proceeds of the IDR Bonds were deposited with a
trustee for the bondholders. The Company may draw the bond proceeds to cover
qualified project costs.
KeyBank issued a letter of credit for approximately $6 million in connection
with the $6 million IDR Bonds. The KeyBank credit agreements require the
Company to meet certain covenants, including a fixed charge coverage and
leverage ratio. Further, if certain performance standards are achieved, the
interest rates on the debt may be reduced.
Capital spending during the first three months of fiscal 1999 was $1.59
million, an increase from the comparable period in 1998 during which capital
spending totaled $33 thousand. Capital spending during fiscal 1999 included the
construction described above. Total additional capital spending during fiscal
1999 for this project is expected to be approximately $1.1 million.
The Company anticipates that it will be able to meet its liquidity needs during
fiscal year 1999 from current cash resources, cash flow generated by operations
and borrowing under its existing line of credit.
Joint Venture
Plug Power, L.L.C. ("Plug Power") will continue to need substantial investment
for the foreseeable future. Plug Power continues to pursue strategic
partners and additional sources of capital. Plug Power is currently negotiating
with several strategic partners and has signed a preliminary Memorandum of
Understanding with General Electric Power Systems to market its residential
fuel cell units. There is no assurance, however, that Plug Power will
successfully conclude any transactions with strategic partners or find other
sources of capital. If other sources of funding cannot be found, the Company
will be faced with contributing and/or lending additional capital to Plug Power
or dilution of its interest in Plug Power. If EDC and the Company stop funding
Plug Power and no additional sources of capital are found, Plug Power will not
be able to continue as a going concern.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year 2000
General
Mechanical Technology Incorporated's company-wide Year 2000 plan is
proceeding on schedule. The plan is addressing the issue of computer programs
and embedded computer chips being unable to distinguish between the year 1900
and the year 2000 as well as the ability to recognize the leap year date of
February 29, 2000. The plan has been divided into six areas: (1) Systems
evaluation, (2) Software evaluation, (3) Third-party suppliers, (4) Facility
systems, (5) Products and (6) Contingency plans. The general phases common to
all segments are: (1) Inventorying Year 2000 items, (2) Assigning priorities to
identified items, (3) Assessing the Year 2000 compliance of items determined to
be material to the Company, (4) Repairing or replacing material items that are
determined not to be Year 2000 compliant, (5) Testing material items and (6)
Designing and implementing contingency and business continuation plans for each
organization and Company location.
Systems Evaluation
All internal systems have been identified, inventoried,
prioritized and assessed for Year 2000 compliance. Systems found to be totally
non-compliant are scheduled for replacement, the remaining systems were found
to be in compliance. Plans are being developed to ensure that staff are
available to oversee restarting certain machines and manually adjusting their
dates, if needed.
Software Evaluation
All software material to the Company has been identified,
evaluated, and placed into one of three categories: (1) Found to be in full
compliance and certified as such by vendors, (2) Identified as requiring
update, or (3) Identified as requiring replacement with compliant software.
Those in the latter category have been included in the current budget.
Third-Party Suppliers
This phase of the Year 2000 Plan will be completed by the
end of the second Quarter of fiscal 1999. These third-party suppliers are in
the process of implementing their own plans with an expected completion date of
1999. If any provider is not successfully compliant, the Company will evaluate
selecting alternative providers at that time.
Facility Systems
The facility systems review is complete. All systems are
believed to be Year 2000 compliant including telephone, fire alarm, security,
elevator and network components.
Products
The Company has evaluated both current product offerings and products
in the field to determine their ability to comply with Year 2000 issues. The
products were found to be non-compliant, compliant if modifications are made,
fully compliant or not impacted (that is, the product does not have a computer
or contains an embedded computer but does not use a date function). Those
products identified as non-compliant are products in the field that are not
Year 2000 compliant, cannot be modified and must be replaced. Products which
can be modified will have upgrades available for sale during fiscal 1999.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Contingency Plans
This phase is currently being developed. Contingency plans
should be in place by the end of the second Quarter of fiscal 1999.
Costs
The total cost associated with required modifications to become Year 2000
compliant is not expected to be material to the Company's financial position.
The estimated total cost of the Year 2000 project is approximately $120
thousand, which includes software, hardware and cabling upgrade and replacement
costs. This estimate does not include the Company's potential share of Year
2000 costs that may be incurred by our joint venture, in which the Company
participates but is not the operator. The total amount expended on the Plan
through December 25, 1998 was $34 thousand for the upgrade and replacement of
hardware.
Risks
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of the
Year 2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Year 2000 Plan is expected to
significantly reduce the Company's level of uncertainty about the Year 2000
problem and, in particular, about the Year 2000 compliance and readiness of its
material customers. The Company believes that, with the implementation and
completion of the Year 2000 Plan as scheduled, the possibility of significant
interruptions of normal operations should be reduced.
Statement Concerning Forward Looking Statements
Statements in this Form 10-Q or in documents incorporated herein by reference
that are not statements of historical fact constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding future revenues, expenses and profits.
These forward looking statements are subject to known and unknown risks,
uncertainties or other factors that may cause the actual results of the Company
to be materially different from the historical results or from any results
expressed or implied by the forward looking statements. Such risks and factors
include, but are not limited to, those discussed in "Management's Discussion
and Analysis of Financial Condition and Results of Operations".
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
- ----------- -----------
4.97 Building Loan Contract, dated as of December 1, 1998,
between the Town of Colonie Industrial Development Agency
and the registrant with KeyBank National Association.
4.98 Reimbursement Agreement, dated as of December 1, 1998, among
the registrant and KeyBank National Association in
connection with the issuance of $6,000,000 of Taxable
Industrial Development Revenue Bonds.
4.99 Mortgage and Security Agreement, dated as of December 1,
1998, by the registrant and Town of Colonie Industrial
Development Agency to KeyBank National Association to secure
the obligations of the Company and the Industrial
Development Agency under the Reimbursement Agreement.
4.100 Pledge and Security Agreement, dated as of December 1, 1998,
from the registrant to KeyBank National Association.
4.101 Irrevocable Transferable Direct Pay Letter of Credit issued
by KeyBank National Association to Manufacturers and Traders
Trust Company, as Trustee, in connection with the issuance
of $6,000,000 of Taxable Industrial Development Revenue
Bonds.
4.102 Trust Indenture, dated as of December 1, 1998, by and
between the Town of Colonie Industrial Development Agency
and Manufacturers and Traders Trust Company, as Trustee, for
the holders of $6,000,000 of Taxable Industrial Development
Revenue Bonds.
27 Financial Data Schedule
(b) No Form 8-K Reports were filed during the quarter ended December 25, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Mechanical Technology Incorporated
02-03-99 /s/ G.C. McNamee
-------- --------------------------------------
(Date) George C. McNamee
Chief Executive Officer
02-03-99 /s/ C.A. Scheuer
-------- --------------------------------------
(Date) Cynthia A. Scheuer
Vice President/Chief Financial Officer
_______________________________________________________________________________
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TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY
AND
MECHANICAL TECHNOLOGY INCORPORATED
WITH
KEYBANK NATIONAL ASSOCIATION
____________________
BUILDING LOAN CONTRACT
____________________
DATED AS OF DECEMBER 1, 1998
RELATING TO THE MECHANICAL TECHNOLOGY INCORPORATED PROJECT LOCATED ON
ALBANY-SHAKER ROAD IN THE TOWN OF COLONIE, ALBANY COUNTY, NEW YORK
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TABLE OF CONTENTS
ARTICLE 1 TERMS AND DEFINITIONS 2 1.1 Advance. 2 1.2 Affiliate. 2 1.3 Approval.
2 1.4 Architect. 2 1.5 Architects Contract. 2 1.6 Bank Documents. 2 1.7 Bond
Documents. 2 1.8 Bonds. 2 1.9 Commitment. 3 1.10 Completion Date. 3 1.11
Construction Budget. 3 1.12 Construction Contract. 3 1.13 Construction
Inspector. 3 1.14 Contingency Reserve. 3 1.15 Contract Assignment. 3 1.16
Contractor. 3 1.17 Costs of Improvement. 3 1.18 Date of Issuance. 3 1.19
Equipment. 3 1.20 Event of Default. 3 1.21 Existing Facility 3 1.22
Governmental Authority. 3 1.23 Guarantor 4 1.24 Guaranty 4 1.25 Improvements. 4
1.26 Indirect Costs. 4 1.27 Installment Sale Agreement. 4 1.28 Land 4 1.29
Letter of Credit. 4 1.30 Lien Law. 4 1.31 Mortgage. 4 1.32 New Facility 4 1.33
Plans and Specifications. 4 1.34 Pledge And Security Agreement. 4 1.35 Project
Facility. 4 1.36 Project Facility Costs. 4 1.37 Project Fund. 5 1.38
Reimbursement Agreement. 5 1.39 Request for Disbursement 5 1.40 Requirements. 5
1.41 Security Agreement. 5 1.42 Termination Date. 5 1.43 Trustee. 5
ARTICLE 2 BANK DOCUMENTS 5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 5 3.1 Validity of Bank
Documents. 5 3.2 Title to Project Facility. 5 3.3 Absence of Conflicts 6 3.4
Pending Litigation. 6 3.5 Violations of Requirements. 6 3.6 Compliance with
Requirements. 6 3.7 Organization, Status and Authority. 6 3.8 Availability
of Utilities. 6 3.9 Condition of Project Facility. 6 3.10 Brokerage
Commissions. 7 3.11 Financial Statements. 7 3.12 Taxes. 7 3.13 Architect's and
Construction Contracts. 7 3.14 Contractor. 7 3.15 Other Contracts. 7 3.16
Access. 7 3.17 No Default. 8 3.18 Plans and Specifications. 8 3.19 Governmental
Approvals. 8 3.20 Construction Budget. 8 3.21 Effect of Request for
Disbursement. 8 3.22 The Company As Agent; Disbursement of Funds 8
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ARTICLE 4 COVENANTS OF THE COMPANY 8 4.1 Commitment. 9 4.2 Contracts. 9 4.3
Insurance. 9 4.4 Application of Proceeds. 9 4.5 Project Facility Costs and
Expenses. 9 4.6 Commencement and Completion of Construction. 9 4.7 Right
of the Bank to Inspect Project Facility. 9 4.8 Correction of Defects. 10
4.9 Sign Regarding Construction Financing. 10 4.10 Approval of Change Orders.
10 4.11 Notice of Occupancy. 10 4.12 Books and Records. 10 4.13 Financial
Statements and Other Information. 10 4.14 Soil Tests. To provide promptly
to the Bank at the Company's expense such soil tests and environmental
assessments of the Land as the Bank may require from time to time. 10 4.15
Insufficiency of Proceeds. 10 4.16 Additional Documents. 11 4.17 Financing
Publicity. 11 4.18 Easements and Restrictions. 11 4.19 Compliance with
Requirements. 11 4.20 Leases. 12 4.21 Compliance With Restrictions, Covenants
and Easements. 12 4.22 Laborers, Subcontractors and Materialmen. 12 4.23
Further Assurance of Title. 12 4.24 Deposit of Income. 12 4.25 No Transfers or
Encumbrances 12
ARTICLE 5 AGREEMENT TO APPROVE ADVANCES 13 5.1 Reimbursement Agreement. 13 5.2
Advances. 13 5.3 Cost Overruns. 13 5.4 Contingency Reserve. 13 5.5 Stored
Materials. 13 5.6 Amount of Advances. 14 5.7 Quality of Work. 14
ARTICLE 6 CONDITIONS PRECEDENT TO DISBURSEMENT OF PROJECT FUND 14 6.1
Conditions of Initial Advance. 14 6.2 Conditions of Subsequent Advances. 17 6.3
Conditions of Final Advance. 19
ARTICLE 7 METHOD OF DISBURSEMENT OF LOAN PROCEEDS 19 7.1 Request for
Disbursement to be Submitted. 19 7.2 Notice and Frequency of Advances;
Retainage. 20 7.3 Funds Advanced. 20 7.4 Advances Do Not Constitute a
Waiver 20 7.5 Trust Fund Provisions 20
ARTICLE 8 EVENTS OF DEFAULT 21
ARTICLE 9 RIGHTS AND REMEDIES 23 9.1 Remedies. 23 9.2 Remedies Not in
Conflict with the Indenture. 26
ARTICLE 10 GENERAL CONDITIONS 27 10.1 Rights of Third Parties. 27 10.2
Limitation on Agency Liability; Indemnity. 27 10.3 Relationship. 28 10.4
Evidence of Satisfaction of Conditions. 28 10.5 Notices. 28 10.6 Assignment. 29
10.7 Successors and Assigns Included in Parties. 29 10.8 Headings. 29
10.9 Invalid Provisions to Affect No Others. 29 10.10 Number and Gender. 29
10.11 Governing Law. 29 10.12 Consent to Jurisdiction. 30 10.13 Amendments. 30
10.14 No Recourse; Special Obligation 30 10.15 Bifurcation 31
Exhibit A Construction Budget
Exhibit B Description Of Land
Exhibit D LIEN LAW, SECTION 22 AFFIDAVIT
BUILDING LOAN CONTRACT
THIS BUILDING LOAN CONTRACT (the "Agreement") is made and entered into as of
December 1, 1998 among KEYBANK NATIONAL ASSOCIATION, a national banking
association with an office for the transaction of business at 66 South Pearl
Street, Albany, New York 12207 (hereinafter referred to as the "Bank"),
MECHANICAL TECHNOLOGY INCORPORATED, a New York corporation with its principal
place of business at 968 Albany-Shaker Road, Latham, New York 12110
(hereinafter referred to as the "Company") and the TOWN OF COLONIE INDUSTRIAL
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DEVELOPMENT AGENCY, a public benefit corporation with an office for the
transaction of business at 347 Old Niskayuna Road, Latham, New York 12110
(hereinafter referred to as the "Agency").
W I T N E S S E T H:
WHEREAS, the Agency has determined to issue and sell its $6,000,000.00
Aggragate Principal amount of Taxable Industrial Development Revenue Bonds
(Mechanical Technology Incorporated Project - Letter Of Credit Secured), Series
1998A (the "Bonds") in the maximum aggregate principal amount of $6,000,000.00
to provide financing for the project consisting of construction of a building,
renovation of an existing building and the installation of machinery and
equipment therein and for the related costs and expenses associated therewith
(the "Project"); and
WHEREAS, the Bonds are to be issued pursuant to that certain Trust Indenture,
dated as of December 1, 1998 (the "Indenture"), between the Agency and
Manufacturers And Traders Trust Company, as Trustee (the "Trustee"); and
WHEREAS, the Agency has determined that issuing the Bonds and constructing the
New Facility and acquiring and renovating the Existing Facility and equipping
each will accomplish, in part, its public purposes; and
WHEREAS, in connection with the Bonds, the Bank is about to issue its
irrevocable letter of credit (the "Letter of Credit") in favor of the Trustee;
and
WHEREAS, with regard to the Letter of Credit, the Bank and the Company have or
are about to enter into the Reimbursement Agreement, dated as of December 1,
1998 (the "Reimbursement Agreement"); and
WHEREAS, the Agency, the Bank, the Trustee and the Company have agreed that
draws are to be advanced to the Company by the Trustee in accordance with the
provisions of this Agreement and the provisions of the Indenture.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Bank agrees to issue the Letter of Credit in
accordance with the terms more particularly set forth in the Reimbursement
Agreement, which Letter of Credit has been issued in order to enhance Bonds,
the proceeds of which will be used for construction of the Facility in
accordance with and subject to the terms and conditions hereinafter set forth.
ARTICLE 1
TERMS AND DEFINITIONS
In addition to the other terms defined in this Agreement, the Reimbursement
Agreement or the Indenture, the following additional terms shall have the
meanings set forth in this Article. References to documents and other materials
shall include those documents and materials as they may be revised, amended and
modified, from time to time, with the prior written approval of the Bank.
Capitalized terms not otherwise defined shall have the meanings set forth in
the Indenture.
1.1 Advance. "Advance" means any disbursement by the Trustee of Bond
proceeds in accordance with the provisions of this Agreement, Section 403 of
the Indenture and Section 4.3 of the Instalment Sale Agreement, upon
presentation of a requisition from the Company.
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1.2 Affiliate. "Affiliate" means any natural person, corporation,
partnership, limited liability company except Plug Power LLC, or other
organization or entity controlling, controlled by or in common control with,
the Company.
1.3 Approval. "Approval", "Approved", "Approval" or "Approved" means, as
the context so determines, an approval by the Bank and the Trustee of Request
for Disbursement given after full and fair disclosure to the approving parties
of all material facts necessary in order to determine whether approval should
be granted.
1.4 Architect. "Architect" means Stracher, Roth & Gilmore, whose address is
143 Jay Street, Schenectady, New York 12305.
1.5 Architects Contract. "Architects Contract" means the Contract dated
June 24, 1998 between the Company and the Architect providing for architectural
services.
1.6 Bank Documents. "Bank Documents" means, collectively, this Building
Loan Contract, the Reimbursement Agreement, the Mortgage, the Guaranty and the
Pledge And Security Agreement.
1.7 Bond Documents. "Bond Documents" means collectively, the Indenture and
any other document executed by the Company in connection with the issuance of
the Bonds other than the Bank Documents.
1.8 Bonds. "Bonds" means the $6,000,000.00 of Aggregate Principal Amount
Taxable Industrial Development Revenue Bonds (Mechanical Technology
Incorporated Project - Letter of Credit Secured), Series 1998A issued by the
Agency pursuant to the Indenture.
1.9 Commitment. "Commitment" means the commitment letter for the Letter of
Credit issued by the Bank to the Company dated July 15, 1998 and accepted by
the Company July 15, 1998.
1.10 Completion Date. "Completion Date" means April 30, 1999.
1.11 Construction Budget. "Construction Budget" means the budget for total
estimated Project Facility Costs, submitted by the Company, approved by the
Bank, and attached hereto as Exhibit A.
1.12 Construction Contract. "Construction Contract" means th Contract dated
June 19, 1998 between the Company and the Contractor providing for the
construction of the Improvements on the Land.
1.13 Construction Inspector. "Construction Inspector" means Omega Design
Architect P.C. or, in the alternative such officers or employees of the Bank.
1.14 Contingency Reserve. "Contingency Reserve" means the amount(s) (if any)
allocated as contingency reserve(s) in the Construction Budget to be disbursed
by the Trustee upon approval of the Bank.
1.15 Contract Assignment. "Contract Assignment" means the Assignment of
Contract Rights dated as of December 1, 1998 given by the Company to the Bank.
1.16 Contractor. "Contractor" means Malone & Tate Builders Inc. whose
address is 2217 Central Avenue, Schenectady, New York 12304.
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1.17 Costs of Improvement. "Costs of Improvement" means those items defined
as such under Section 2(5) of the Lien Law.
1.18 Date of Issuance. "Date of Issuance" means the date of issuance ofthe
Letter of Credit.
1.19 Equipment. "Equipment" means materials, furnishings, fixtures machinery,
equipment and all items of tangible and intangible personal property now or
hereafter owned by the Company and located on the Land or located elsewhere and
intended to be incorporated in the Improvements.
1.20 Event of Default. "Event of Default" means any condition or event
described herein as such.
1.21 Existing Facility. "Existing Facility" means three buildings containing
approximately 98,000 square feet of space located on the Land.
1.22 Governmental Authority. "Governmental Authority" means the United
States of America, the State of New York, any political subdivision thereof,
municipalities in which the Land is located and any agency, authority,
department, commission, board, bureau or instrumentality of any of them.
1.23 Guarantor. "Guarantor" means Ling Electronics, Inc.
1.24 Guaranty. "Guaranty" means the unconditional guarantee of payment by
the Guarantor dated as of December 1, 1998 of the obligations of the Company
under the Bank Documents.
1.25 Improvements. "Improvements" means those portions of the Existing
Facility which will not be demolished and the New Facility which will contain
approximatley 32,000 square feet and will be constructed on the Land in
accordance with the Plans and Specifications.
1.26 Indirect Costs. "Indirect Costs" mean and include title insurance
premiums, survey charges, engineering fees, architectural fees, real estate
taxes during the period of construction, commitment fees and interest payable
to the Bank under the Reimbursement Agreement, premiums for insurance, legal
fees and all other expenses which are, in accordance with sound accounting
practices, capital expenditures relating to the Project Facility.
1.27 Installment Sale Agreement. "Installment Sale Agreement" means the
Installment Sale Agreement between the Agency and the Company dated as of
December 1, 1998.
1.28 Land. "Land" means the real property described in Exhibit B attached
hereto.
1.29 Letter of Credit. "Letter of Credit" means the $6,160,274.00
irrevocable letter of credit issued by the Bank in favor of the Trustee on the
Date of Issuance.
1.30 Lien Law. "Lien Law" means the Lien Law of the State of New York.
1.31 Mortgage. "Mortgage" means the Mortgage And Security Agreement creating
a good and valid first mortgage lien on the Land given by the Agency and the
Company to the Bank and dated as of December 1, 1998.
1.32 New Facility. "New Facility" means an approximately 32,000 square foot
building to be constructed on the Land.
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1.33 Plans and Specifications. "Plans and Specifications" means the plans
and specifications for the Improvements.
1.34 Pledge And Security Agreement. "Pledge And Security Agreement" means
the Pledge And Security Agreement dated as of December 1, 1998 from the Company
to the Bank.
1.35 Project Facility. "Project Facility" means the Land, the Improvements
and the Equipment.
1.36 Project Facility Costs. "Project Facility Costs" means and includes all
costs that will be incurred by the Company in connection with the demolition
and renovation of the Existing Facility, construction of the New Facility, the
equipping of the Facility with the Equipment, and the operation and carrying of
the Project Facility through the expiration date of the Letter of Credit,
including without limitation all Indirect Costs.
1.37 Project Fund. "Project Fund" shall mean the Project Fund created
pursuant to Section 403 of the Indenture.
1.38 Reimbursement Agreement. "Reimbursement Agreement" means the
Reimbursement Agreement between the Company and the Bank dated as of December
1, 1998.
1.39 Request for Disbursement. "Request for Disbursement" means the request
for disbursement from Project Fund in the form attached hereto as Exhibit C.
1.40 Requirements. "Requirements" means any law, ordinance, order, rule or
regulation of any Governmental Authority relating in any way to the Project
Facility or the Company.
1.41 Security Agreement. "Security Agreement" means the Security Agreement
dated as of December 1, 1998 given by the Agency and the Company to the Bank.
1.42 Termination Date. "Termination Date" means the Completion Date.
1.43 Trustee. "Trustee" shall mean Manufacturers And Traders Trust Company,
or any successor trustee under the Indenture.
ARTICLE 2
BANK DOCUMENTS
The Bank Documents have been duly authorized, executed and delivered by each of
the parties thereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Bank and the Agency as
follows:
3.1 Validity of Bank Documents. That the Bank Documents to which it is a
party (and assuming proper execution by any other party thereto) are in all
respects valid and legally binding obligations, enforceable in accordance with
their respective terms.
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3.2 Title to Project Facility. That the Company has good clear record and
marketable fee simple absolute title to the Land, subject to no liens, security
interests, charges or encumbrances in favor of any person other than the
Trustee or the Bank or any utility servicing the Project Facility and the Lease
to Issuer (as defined in the Indenture).
3.3 Absence of Conflicts. That the execution and delivery of the Bank
Documents by the Company does not, and the performance and observance by the
Company of its obligations thereunder will not, contravene or result in a
breach of (a) any provision of the Company's articles of organization or
operating agreement; (b) any Requirements, or (c) any decree or judgement
binding on the Company, or (d) any agreement or instrument binding on the
Company or any of its properties, nor will the same result in the creation of
any lien or security interest under any such agreement or instrument.
3.4 Pending Litigation. That there are no actions, suits, investigations or
proceedings pending, or, to the knowledge of the Company, threatened against or
affecting the Company (or any Affiliate of the Company), the Guarantor or the
Project Facility, or involving the validity or enforceability of any of the
Bank Documents or the priority of the lien thereof, or which will affect the
Company's ability to pay its obligations under the Bank Documents, at law or in
equity or before or by any Governmental Authority.
3.5 Violations of Requirements. That the Company has no knowledge of any
violations or notices of violations of any Requirements.
3.6 Compliance with Requirements. That the Plans and Specifications and
construction of the Improvements pursuant thereto and the use of the Project
Facility contemplated thereby will comply with all Requirements.
3.7 Organization, Status and Authority. That the Company (i) is a business
corporation duly organized, validly existing and in good standing under the
laws of the state in which it was formed; (ii) is duly qualified to do business
and is in good standing therein and in the State of New York, (iii) it has the
power, authority and legal right to own and operate its properties and assets,
carry on the business now being conducted and proposed to be conducted by it,
and to engage in the transactions contemplated by the Bank Documents, and (iv)
the execution and delivery of the Bank Documents to which it is a party and the
performance and observance of the provisions thereof have been duly authorized
by all necessary actions of the members and/or managers of the Company.
3.8 Availability of Utilities. That all utility services necessary nd
sufficient for the construction, development and operation of the Project
Facility for its intended purposes are presently available to the boundaries of
the Land through dedicated public rights of way or through perpetual private
easements, approved by the Bank, with respect to which the Indenture and the
Mortgage create valid, binding and enforceable liens, including, but not
limited to, water supply, storm and sanitary sewer, gas, electric and telephone
facilities, and drainage.
3.9 Condition of Project Facility. That neither the Project Facility nor
any portion thereof is now damaged or injured as result of any fire, explosion,
accident, flood or other casualty or has been the subject of any condemnation,
and to the knowledge of the Company, no condemnation is pending or
contemplated.
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3.10 Brokerage Commissions. That any brokerage commissions due in connection
with the transactions contemplated hereby have been paid in full and that any
such commissions coming due in the future will be promptly paid by the Company.
The Company agrees to and shall indemnify the Bank from any liability, claims
or losses arising by reason of any such brokerage commissions. This provision
shall survive the repayment of the obligations of the Company under the Bank
Documents and shall continue in full force and effect so long as the
possibility of such liability, claims or losses exists.
3.11 Financial Statements. That any financial statements of the Company
previously delivered to the Bank are true and correct in all respects, have
been prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present the respective financial conditions of
the Company as of the respective dates thereof and the results of its
operations for the periods covered thereby; that no adverse change has occurred
in the assets, liabilities, or financial conditions reflected therein since the
respective dates thereof; and that no additional borrowings have been made by
the Company since the date thereof other than the borrowing contemplated hereby
or previously consented to in writing by the Bank.
3.12 Taxes. That all federal, state and other tax returns of the Company
required by law to be filed have been filed, that all federal, state and other
taxes, assessments and other governmental charges upon the Company or its
properties which are due and payable have been paid, and that the Company has
set aside on its books provisions reasonably adequate for the payment of all
taxes (or payment in lieu of taxes) for periods subsequent to the periods for
which such returns have been filed.
3.13 Architect's and Construction Contracts. That (i) both the Construction
Contract and the Architect's Contract are in full force and effect; and (ii)
both the Contractor and the Architect are in full compliance with their
respective obligations under their respective Contracts.
3.14 Contractor. That (i) the work to be performed by Contractor under the
Construction Contract is work called for by the Plans and Specifications and
all work required to complete the Improvements in accordance with the Plans and
Specifications is provided for under the Construction Contract; and (ii) all
work on the Improvements shall be completed in accordance with the Plans and
Specifications in a good and workmanlike manner and shall be free of any
defects.
3.15 Other Contracts. Except for the Mortgage and the Bond Documents, that
the Company has made no contract or arrangement of any kind or type whatsoever
(whether oral or written, formal or informal), the performance of which by the
other party thereto could give rise to a lien or encumbrance on the Project
Facility, except for contracts (all of which have been disclosed in writing to
the Bank) made by the Company with parties who have or will executed and
delivered lien waivers to the Company, and which, in the opinion of the Bank's
counsel, will not create rights in existing or future lien claimants which may
be superior to the lien of the Mortgage.
3.16 Access. That the rights of way for all roads necessary for the full
utilization of the Project Facility for their intended purposes have either
been acquired by the Company, the appropriate Governmental Authority or have
been dedicated to public use and accepted by such Governmental Authority, and
all such roads shall have been completed, or all necessary steps shall have
been taken by the Company and such Governmental Authority to assure the
complete construction and installation thereof prior to the date upon which
access to the Project Facility via such roads will be necessary. All curb cuts,
<PAGE>
driveway permits and traffic signals shown on the Plans and Specifications or
otherwise necessary for access to the Project Facility are existing or have
been fully approved by the appropriate Governmental Authority.
3.17 No Default. That no Event of Default exists and no event which but for
the passage of time, the giving of notice or both would constitute an Event of
Default has occurred.
3.18 Plans and Specifications. That the Company has furnished the Bank true
and complete sets of the Plans and Specifications which comply with all
Requirements, all governmental approvals, and all restrictions, covenants and
easements affecting the Project Facility, and which have been approved by any
Governmental Authority as is required for renovation of the Existing Facility
and construction of the New Facility.
3.19 Governmental Approvals. That the Company has obtained all governmental
approvals from, and has given all such notices to, and has taken all such other
actions with respect to such Governmental Authority as may be required under
applicable Requirements for the construction of the Improvements.
3.20 Construction Budget. That the Construction Budget accurately reflects
all costs of construction of the Improvements.
3.21 Effect of Request for Disbursement. That each Request for Disbursement
submitted as provided in Article 6 hereof and pursuant to the Indenture shall
constitute an affirmation that the representations and warranties contained in
Article 3 of this Agreement and in the other Bank Documents remain true and
correct as of the date thereof; and unless the Bank is notified to the
contrary, in writing, prior to the disbursement of the requested Advance or any
portion thereof, shall constitute an affirmation to the Bank and the Trustee
that the same remain true and correct on the date of such disbursement.
3.22 The Company As Agent; Disbursement of Funds. That the Agency, in
compliance with and subject to the terms of the Installment Sale Agreement, has
appointed the Company its true and lawful agent, and the Company has accepted
such agency for the purpose, among other things, of causing the Improvements to
be renovated, constructed and equipped in accordance with the terms and
conditions of this Agreement. The Agency has authorized the Trustee, with the
consent of the Bank, to disburse all monies, as provided for in this Agreement,
the Indenture and the Installment Sale Agreement directly to the Company in
accordance with this Agreement.
ARTICLE 4
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees with the Bank and the Agency as
follows:
4.1 Commitment. To permit no default under the terms of the Commitment.
4.2 Contracts. (i) To permit no default by the Company under the terms of
the Construction or Architect's Contract, (ii) to waive none of the material
and substantial obligations of the Contractor or the Architect thereunder,
(iii) to do no act which would relieve Contractor or Architect from their
respective obligations under their respective Contracts and (iv) to make no
material amendments to or changes under either Contract without the prior
written approval of the Bank.
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4.3 Insurance. To obtain insurance or evidence of insurance as the Bank may
reasonably require, including, but not limited to, the insurance required
pursuant to the Bank Documents.
4.4 Application of Proceeds. To use the proceeds of the Bonds solely for
the purpose of paying for the cost of the construction and equipping of the
Improvements in accordance with the terms of this Agreement and the Indenture.
4.5 Project Facility Costs and Expenses. To pay all Project Facility Costs,
regardless of the amount, and to pay all costs and expenses with respect to the
financing and construction of the Project Facility.
4.6 Commencement and Completion of Construction. To commence renovation of
the Existing Facility and construction of the New Facility and the acquisition
and installation therein of the Equipment within thirty (30) days after the
date hereof and to diligently pursue construction to completion prior to the
Completion Date in accordance with the Plans and Specifications, in full
compliance with all restrictions, covenants and easements affecting the Project
Facility, all Requirements, and all governmental approvals, and with all terms
and conditions of the Bank Documents without deviation from the Plans and
Specifications unless with the prior approval of the Bank; to pay all sums and
to perform such duties as may be necessary to complete such renovation of the
Existing Facility and construction of the New Facility in accordance with the
Plans and Specifications and in full compliance with all restrictions,
covenants and easements affecting the Project Facility, all Requirements and
all governmental approvals, and with all terms and conditions of the Bank
Documents, all of which shall be accomplished on or before the Completion Date,
free from any liens, claims or assessments (actual or contingent) asserted
against the Project Facility for any material, labor or other items furnished
in connection therewith. Evidence of satisfactory compliance with the foregoing
shall be furnished by the Company to the Bank on or before the Completion Date.
4.7 Right of the Bank to Inspect Project Facility. To permit the Bank and
its representatives and agents to enter upon the Project Facility and to
inspect the Project Facility and all materials to be used in the construction
thereof and to cooperate and cause any subcontractors to cooperate with the
Bank and its representatives and agents during such inspections (including
making available to the Bank working copies of the Plans and Specifications
together with all related supplementary materials); provided, however, that
this provision shall not be deemed to impose upon the Bank any obligation to
undertake such inspections.
4.8 Correction of Defects. Unless the Company demonstrates to the Bank that
such corrective work is inappropriate or inconsistent with the Plans and
Specifications, to promptly correct all defects in the Improvements or any
departure from the Plans and Specifications not previously approved by the
Bank. The Company agrees that any Advance, whether before or after such defects
or departures from the Plans and Specifications are discovered by, or brought
to the attention, of the Bank, shall not constitute a waiver of the Bank's
right to require compliance with this covenant.
4.9 Sign Regarding Construction Financing. At the Bank's option, to erect
promptly and maintain on a suitable site on the Land a sign indicating that
construction financing is being provided by the Bank, all to the satisfaction
of the Bank; and to prevent the destruction or removal of said sign without the
prior approval of the Bank.
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4.10 Approval of Change Orders. To permit no material deviations from the
Plans and Specifications during construction without the prior approval of the
Bank.
4.11 Notice of Occupancy. To notify the Bank at least ten (10) days prior
to, and again on, the date of occupancy of any portion of the Improvements
being renovated or constructed with proceeds of the Bonds.
4.12 Books and Records. To keep and maintain complete proper and accurate
books, records and accounts reflecting all items of income and expense of the
Company in connection with the Project Facility and the renovation of the
Existing Facility and construction of the New Facility and the results of the
operation thereof; and, upon the request of the Bank, to make such books,
records and accounts immediately available to the Bank for inspection or
independent audit.
4.13 Financial Statements and Other Information. To furnish to the Bank such
financial statements and information as the Company has agreed to provide
elsewhere in the Bank Documents.
4.14 Soil Tests. To provide promptly to the Bank at the Company's expense
such soil tests and environmental assessments of the Land as the Bank may
require from time to time.
4.15 Insufficiency of Proceeds. To deposit funds with the Bank as follows:
If at any time or from time to time during the terms of this Agreement, in the
Bank's judgment and opinion, the remaining undisbursed portion of the Project
Fund, together with the undisbursed balances of other sums previously deposited
by the Company with the Bank or the Trustee in connection with the renovation
of the Existing Facility and construction of the New Facility, is or will be
insufficient to fully complete renovation of the Existing Facility and
construction of the New Facility and the acquisition and installation of the
Equipment therein in accordance with the Plans and Specifications, to pay all
other Project Facility Costs and to pay all other sums due or to become due
under the Bank Documents, regardless of how such condition may be caused, the
Company shall, within seven (7) days after written notice thereof from the
Bank, deposit with the Bank or the Trustee such sums of money in cash as the
Bank may require, in an amount sufficient to remedy such condition, and
sufficient to pay any liens for services and materials alleged to be due and
payable at that time in connection with the Project Facility, and, at the
Bank's option, no further Advances shall be made by the Trustee until the
provisions of this paragraph have been fully complied with. All such deposited
sums shall stand as additional security for the Company's obligations under
this Agreement and shall be disbursed in the same manner as Advances before any
further Advances of the other proceeds shall be made. Neither the Bank nor the
Trustee shall have any obligation to pay the Company any interest with respect
to such deposited funds.
4.16 Additional Documents. To perform hereunder as follows:
(a) Regarding Construction. To furnish to the Bank all instruments,
documents, boundary surveys, footing or foundation surveys, certificates, plans
and specifications, appraisals, title and other insurance, reports and
agreements and each and every other document and instrument required to be
furnished by, the terms of the Commitment or this Agreement or the other Bank
Documents, all at the Company's expense.
<PAGE>
(b) Regarding Preservation of Security. To execute and deliver to the Bank
such documents, instruments, assignments and other writings, and to do such
other acts necessary or desirable, to preserve and protect the collateral at
any time securing or intended to secure the obligations of the Company under
the Bank Documents, as the Bank may require.
(c) Regarding this Agreement. To do and execute all and such further lawful
and reasonable acts, conveyances and assurances in the law for the better and
more effective carrying out of the intents and purposes of this Agreement as
the Bank shall require from time to time.
4.17 Financing Publicity. To permit the Bank to obtain publicity in
connection with the construction of the Improvements through press releases and
participation in such events as ground breaking and opening ceremonies; and to
give the Bank ample advance notice of such events and to give the Bank as much
assistance as possible in connection with obtaining such publicity as the Bank
may request.
4.18 Easements and Restrictions. To submit to the Bank for the Bank's
approval prior to the execution thereof by the Company all proposed easements,
restrictions, covenants, permits, licenses, and other instruments which would
or might affect the title to the Project Facility, accompanied by a survey
showing the exact proposed location thereof and such other information as the
Bank shall reasonably require. The Company shall not subject the Project
Facility or any part thereof to any easement, restriction or covenant
(including any restriction or exclusive use provision in any lease or other
occupancy agreement) without the prior approval of the Bank.
4.19 Compliance with Requirements. To comply promptly with all Requirements
and governmental approvals and to furnish the Bank, on demand, with independent
evidence of such compliance.
4.20 Leases. To enter into no leases or occupancy agreements affecting the
Project Facility without the prior approval of the Bank. The Bank is aware of
and has approved the Lease to Issuer and existing leases with Plug Power and
Foster Miller. The Company shall deliver to the Bank executed counterparts of
all leases and occupancy agreements affecting the Project Facility whether
executed before or after the date of this Agreement, and shall not amend any
provision thereof or waive any obligations of tenants under any leases or
occupancy agreements affecting the Project Facility without the prior approval
of the Bank.
4.21 Compliance With Restrictions, Covenants and Easements. To comply with
all restrictions, covenants and easements affecting the Project Facility.
4.22 Laborers, Subcontractors and Materialmen. To furnish to the Bank, upon
request at any time, and from time to time, affidavits listing all laborers,
subcontractors, materialmen, and any other parties who might or could claim
statutory or common law liens and are furnishing or have furnished labor or
material to the Project Facility or any portion thereof, together with
affidavits, or other evidence satisfactory to the Bank, showing that such
parties have been paid all amounts then due for labor and materials furnished
to the Project Facility. In addition, the Company will notify the Bank
immediately, and in writing, if the Company receives any notice, written or
oral, from any laborer, subcontractor or materialmen to the effect that said
laborer, subcontractor or materialmen has not been paid when due for any labor
or materials furnished in connection with the renovation of the Existing
<PAGE>
Facility and construction of the New Facility. The Company will also furnish to
the Bank, at any time and from time to time upon demand by the Bank, lien
waivers bearing a then current date from such subcontractors or materialmen as
the Bank may designate.
4.23 Further Assurance of Title. To further assure title as follows: if at
any time the Bank or the Bank's counsel has reason to believe that any Advance
is not secured or will or may not be secured by the Mortgage as a lien or
security interest on the Project Facility, then the Company shall, within ten
(10) days after written notice from the Bank, do all things and matters
necessary, to assure to the satisfaction of the Bank and the Bank's counsel
that any Advance previously made by the Trustee or to be made, is secured or
will be secured by the Mortgage as a valid first mortgage lien or collateral
security interest on the Project Facility, and the Bank, at its option, may
decline to consent to further Advances until the Bank has received such
assurance.
4.24 Deposit of Income. To deposit with the Bank, upon request at any time,
any sums received by the Company from tenants or occupants of the Project
Facility, in a special account, from which no funds shall be drawn by the
Company without the Bank's prior approval, and which sums shall stand as
additional security for the Company's obligations to the Bank under the Bank
Documents.
4.25 No Transfers or Encumbrances. To cause or permit no sale, conveyance,
transfer, assignment or encumbering of the Project Facility or any interest
therein without the prior approval of the Bank.
ARTICLE 5
AGREEMENT TO APPROVE ADVANCES
Subject to the terms and conditions set forth in this Agreement, the Bank
agrees to consent to Advances by the Trustee to the Company from time to time
during the period from the date hereof to the Termination Date of proceeds in
the Project Fund to pay Project Facility Costs actually incurred in connection
with the renovation of the Existing Facility and construction of the New
Facility and the cost of acquisition and installation of the Equipment in the
Project Facility (including Indirect Costs) if and to the extent such Project
Facility Costs are reflected in the Construction Budget as being funded by
proceeds of the Bonds.
5.1 Reimbursement Agreement. The Company shall have an obligation to pay
all sums due under the Reimbursement Agreement and the other Bank Documents (as
well as any and all reasonable fees and expenses set forth therein).
5.2 Advances. The Construction Budget reflects, by category and line items,
the purposes and the amounts for which funds to be advanced under this
Agreement and the Indenture are to be used. The Bank shall not be required to
consent to any disbursement for any category or line item more than the amount
specified therefor in the Construction Budget.
5.3 Cost Overruns. If the Company becomes aware of any change in Project
Facility Costs which will increase a category or line item of Project Facility
Costs reflected on the Construction Budget (as the Construction Budget is
revised from time to time and approved by the Bank), the Company shall
immediately notify the Bank in writing and promptly submit to the Bank for its
approval a revised Construction Budget. No further Advances need be consented
to by the Bank unless and until the revised Construction Budget so submitted by
<PAGE>
the Company is approved by the Bank, and the Bank reserves the right to approve
or disapprove any revised Construction Budget in its sole and absolute
discretion. If the Bank approves the revised Construction Budget, and such
revised Construction Budget reflects Project Costs to be funded by the Bank in
excess of the proceeds available in the Project Fund, the amount of such excess
shall be funded by the Company.
5.4 Contingency Reserve. Any amount allocated as Contingency Reserve in the
Construction Budget is not intended to be disbursed and will only be disbursed
upon the prior approval of the Bank, which approval can be withheld for any
reason or for no reason. The disbursement of a portion of the Contingency
Reserve shall in no way prejudice the Bank from withholding its consent to
disbursement of any further portion of the Contingency Reserve.
5.5 Stored Materials. Advances of Bond proceeds shall not be made for any
materials, furnishings or Equipment not yet incorporated into the Land or the
Facility (the "Stored Materials") without the prior written consent of the
Bank. Any disbursement for the cost of Stored Materials shall be contingent
upon the Bank's receiving satisfactory evidence that:
(a) The Stored Materials are components in a form ready for incorporation
into the Improvements;
(b) The Stored Materials are stored either at the Land, in a bonded
warehouse, at a site controlled by the Company, or at such other site as the
Bank shall approve, and are protected against theft and damage;
(c) The Stored Materials have been paid for in full or will be paid for
with the funds to be disbursed and all lien rights or claims of the supplier
have been released or will be released upon payment with disbursed funds;
(d) The Bank and the Trustee have or will have upon payment with disbursed
funds a perfected, first priority security interest in the Stored Materials;
and
(e) The Stored Materials are insured for an amount equal to their
replacement costs.
5.6 Amount of Advances. In no event shall any Advance exceed the Indirect
Costs approved by the Bank and theretofore paid or to be paid with the proceeds
of such Advance plus ninety (90%) percent of all costs for construction of
Improvements approved by the Bank and incurred by the Company through the date
of the Request for Disbursement for such Advance, less the aggregate amount of
any Advances previously made. It is further understood that the retainage
described above is intended to provide a contingency fund protecting the Bank
against failure of the Company to fulfill any obligations under the Bank
Documents, and that the Bank may charge amounts against such retainage in the
event the Bank is required or elects to expend its own funds to cure any Event
of Default.
5.7 Quality of Work. No Advance shall be due unless all work done at the
date the Request for Disbursement for such Advance is submitted is done in a
good and workmanlike manner and without defects, but the Trustee, upon consent
by the Bank, may disburse all or part of any Advance before the sum shall
become due if the Bank believes it advisable to do so, and all such Advances or
parts thereof shall be deemed to have been made pursuant to this Agreement.
<PAGE>
ARTICLE 6
CONDITIONS PRECEDENT TO DISBURSEMENT OF PROJECT FUND
6.1 Conditions of Initial Advance. The obligation of the Bank to consent to
the initial Advance shall be subject to the following conditions precedent:
(a) Commitment. All items required by the Commitment shall have been
delivered to the proper parties as required therein, and all conditions set
forth in the Commitment shall have been satisfied.
(b) Bank Documents. The Bank Documents, in form and substance satisfactory
to the Bank and the Trustee shall have been duly executed and delivered by the
parties thereto and shall be in full force and effect, and the Bank shall have
received an original or a fully executed counterpart thereof. All Bank
Documents to be filed or recorded in the public records shall have been so
filed or recorded in the appropriate public records.
(c) Construction Documents. The Architect's Contract and Construction
Contract, in form and substance satisfactory to the Bank, shall have been duly
executed and delivered by the parties thereto, shall be in full force and
effect, and the Bank shall have received a certified or a fully executed
counterpart thereof. The Architect and Contractor shall have duly executed and
delivered to the Bank a consent to the assignment of their respective
Contracts, in form and substance satisfactory to the Bank, and the Bank shall
have received the original or a fully executed counterpart thereof.
(d) Subcontracts. The Company shall have delivered to the Bank, and the
Bank shall have approved, a list of all subcontractors and materialmen who have
been or, to the extent identified by the Company, will be supplying labor or
materials for the Project Facility, a copy of the standard form of subcontract
to be used by the Company, and correct and complete photocopies of all executed
subcontracts and contracts.
(e) Other Contracts. The Company shall have delivered to the Bank correct
and complete photocopies of all other executed contracts with contractors,
engineers or consultants for the Project Facility, and of all development,
management, brokerage, sales or leasing agreements for the Project Facility.
(f) Deliveries. The following items or documents shall have been delivered
to the Bank:
(1) Plans and Specifications. Two complete sets of the Plans and
Specifications and approval thereof by any necessary Governmental Authority,
with a certification from the Architect that the Facility to be constructed
complies with all Requirements and that the contracts and subcontracts provided
to the Bank satisfactorily provide for the construction of the Improvements.
(2) Title Insurance Policy. A paid Title Insurance Policy or report in all
respects satisfactory to the Bank and the Trustee and their respective counsel.
(3) Other Insurance. Policies (or, if permitted, certificates or other
evidence of) all insurance required by this Agreement or any other Bank
Document.
<PAGE>
(4) Evidence of Sufficiency of Funds. Evidence satisfactory to the Bank
that the proceeds of the Bonds (but excluding the Contingency Reserve), will be
sufficient to cover all Project Facility Costs reasonably anticipated to be
incurred, and to satisfy the obligations of the Company under this Agreement
and the Indenture.
(5) Evidence of Access, Availability of Utilities, Requirements. Evidence
satisfactory to the Bank as to:
(A) the methods of access to and egress from the Project Facility, and
nearby or adjoining public ways, meeting the reasonable requirements of
property of the type contemplated to be completed under this Agreement and the
status of completion of any required improvements to such access;
(B) the availability of storm and sanitary sewer facilities meeting the
reasonable requirements of the Project Facility;
(C) the availability of all other required utilities, in location and
capacity sufficient to meet the reasonable needs of the Project Facility; and
(D) the satisfying of all Requirements for the construction of the
Improvements, together with copies of all certificates and permits evidencing
said compliance.
(6) Environmental Report. An environmental assessment report or reports of
one or more qualified environmental engineering or similar inspection firms
approved by the Bank in form, scope and substance satisfactory to the Bank,
which report or reports shall indicate a condition of the Land in all respects
satisfactory to the Bank in its sole discretion and upon which report or
reports the Bank is expressly entitled to rely.
(7) Survey; Site Plan.
(A) A survey prepared in accordance with the Bank's survey requirements,
certified by a land surveyor registered as such in the state in which the Land
is located, which survey shall be in form and substance satisfactory to the
Bank, and as stated in the Commitment.
(B) A site plan complying with all Requirements, together with copies of the
resolutions approving the site plan and all conditions thereto.
(8) Request for Disbursement. A Request for Disbursement complying with the
provisions of this Agreement and the Indenture.
(9) Trade Cost Breakdown. A detailed trade cost breakdown and itemization of
non-construction expenses, showing all costs required to complete the
Improvements according to the Plans and Specifications.
(g) Legal Opinions. The Bank shall have received opinions in form and
substance satisfactory to the Bank and the Bank's counsel from counsel
satisfactory to the Bank as to such matters as the Bank shall reasonably
request.
(h) Certification Regarding Chattels. The Bank shall have received a
certification from the Title Insurer or counsel satisfactory to the Bank (which
shall be updated from time to time at the Company's expense upon request by the
<PAGE>
Bank) that a search of the public records disclosed no conditional sales
contracts, chattel mortgages, leases of personalty, financing statements or
title retention agreements which affect the Project Facility other than those
required by the Bank Documents.
(i) Notices. All notices required by any Governmental Authority or by any
applicable Requirement to be filed prior to commencement of construction of the
Improvements shall have been filed.
(j) Performance; No Default. The Company shall have performed and complied
with all terms and conditions herein required to be performed or complied with
by it at or prior to the date of the initial Advance, and on the date of the
initial Advance, there shall exist no Event of Default or event which but for
the passage of time, the giving of notice or both would constitute an Event of
Default.
(k) Representations and Warranties. The representations and warranties made
by the Company in the Bank Documents or otherwise made by or on behalf of the
Company in connection therewith or after the date thereof shall have been true
and correct in all respects on the date on which made and shall also be true
and correct in all respects on the date of the initial Advance.
(l) Other Documents. Such other documents, opinions and certificates as the
Bank or its counsel may reasonably require.
(m) Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Agreement and/or the other Bank Documents
shall be satisfactory to the Bank and the Bank's counsel in form and substance,
and the Bank shall have received all information and such counterpart originals
or certified copies of such documents and such other certificates, opinions or
documents as the Bank and the Bank's counsel may reasonably require.
6.2 Conditions of Subsequent Advances. The obligation of the Bank to
consent to any Advance after the initial Advance shall be subject to the
following conditions precedent:
(a) Prior Conditions Satisfied. All conditions precedent to the initial
Advance and any prior Advance shall continue to be satisfied as of the date of
such subsequent Advance.
(b) Performance; No Default. The Company shall have performed and complied
with all terms and conditions herein required to be performed or complied with
by it at or prior to the date of such advance, and on the date of such Advance
there shall exist no Event of Default or event which but for the passage of
time, the giving of notice or both would constitute an Event of Default.
(c) Representations and Warranties. The representations and warranties made
by the Company in the Bank Documents or otherwise made by or on behalf of the
Company in connection therewith after the date thereof shall have been true and
correct in all respects on the date on which made and shall also be true and
correct in all respects on the date of such Advance.
(d) No Damage. The Project Facility shall not have been injured or damaged
by fire, explosion, accident, flood or other casualty, unless the Bank and the
Trustee shall have received insurance proceeds sufficient in the judgment of
the Bank to effect the satisfactory restoration of the Project Facility and to
permit the completion thereof prior to the Completion Date.
<PAGE>
(e) Receipt by the Bank. The Bank shall have received:
(1) Request for Disbursement. A Request for Disbursement complying with the
requirements hereof;
(2) Endorsement to Title Insurance Policy(ies). A "run down" endorsement to
the Title Insurance Policy or report indicating no change in the state of title
and containing no survey exceptions not approved by the Bank, which endorsement
shall, expressly or by virtue of a proper "pending disbursements" clause or
endorsement in the policy, increase the coverage of the policy to the aggregate
amount of all Advances made on or before the effective date of such
endorsement;
(3) Current Survey. An updated survey if required by the Bank;
(4) Certificates. Certificates from the Company, the Architect and the
Construction Inspector to the effect that in their opinion, based upon on-site
observations and submissions by the Contractor, the construction to the date
thereof was performed in a good and workmanlike manner and in accordance with
the Plans and Specifications, stating the estimated total cost of construction
of the Improvements, stating the percentage of the in-place construction of the
Improvements and stating that the remaining non- disbursed portion of the
Project Fund allocated for such purpose is adequate to complete the
construction of the Improvements;
(5) Contracts. Evidence that one hundred percent (100%) of the cost of the
remaining construction work is covered by firm contracts or subcontracts, or
orders for the supplying of materials, with contractors, subcontractors,
materialmen or suppliers satisfactory to the Bank;
(f) Bank Approval. The Bank shall have determined that the construction to
the date thereof was performed in a good and workmanlike manner and in
accordance with the Plans and Specifications and the remaining non-disbursed
portion of the proceeds of the Bonds allocated for such purpose is adequate to
complete the renovation of the Existing Facility and construction of the New
Facility;
(g) Other Documents. Such other documents, opinions and certificates as the
Bank or its counsel may reasonably require.
6.3 Conditions of Final Advance. In addition to the conditions set forth in
Paragraph 6.2 above, the Bank's obligation to consent to the final advance of
sums retained pursuant to this Agreement (the "Final Advance") shall be subject
to receipt by the Bank of the following:
(a) Approval of Project Facility. Evidence of the approval of the Project
Facility by all Governmental Authorities with jurisdiction of (i) the Project
Facility in its entirety for permanent occupancy to the extent any such
approval is or will be a condition of lawful use and occupancy of the Project
Facility and (ii) the contemplated uses thereof.
(b) Approval by Construction Inspector. Notification from the Construction
Inspector to the effect that the Improvements have been completed in a good and
workmanlike manner in accordance with the Plans and Specifications.
(c) Final Survey. A final survey acceptable to the Bank showing the
as-built location of the completed Facility.
<PAGE>
(d) Certificate of Architect. A Certificate of the Architect that the
renovation of the Existing Facility and construction of the New Facility have
been completed in accordance with the Plans and Specifications and that the
renovation of the Existing Facility and construction of the New Facility comply
with all applicable Requirements Governmental Approvals and are in all respects
ready for occupancy.
(e) Payment of Costs. Evidence satisfactory to the Bank that all sums due
in connection with the renovation of the Existing Facility and construction of
the New Facility have been paid in full (or will be paid out of the funds
requested to be advanced) and that no party claims or has a right to claim any
statutory or common law lien arising out of the renovation of the Existing
Facility and construction of the New Facility or the supplying of labor,
material, and/or services in connection therewith.
ARTICLE 7
METHOD OF DISBURSEMENT OF LOAN PROCEEDS
The Bank agrees to consent to Advances requisitioned of the Trustee by the
Company in accordance with the Construction Budget, subject to the following
conditions and procedures:
7.1 Request for Disbursement to be Submitted. At such time as the Company
shall desire an Advance, the Company shall complete and execute a Request for
Disbursement for presentation to the Bank for its consent prior to delivery to
the Trustee. Each Request for Disbursement shall be accompanied by:
(a) a completed and itemized Application and Certificate for Payment (AIA
Document No. G702) or similar form approved by the Bank, containing a
certification from the Architect as to the accuracy of same, together with
invoices relating to all items of direct cost covered thereby; all such
applications for payment shall show all subcontractors by name and trade, the
total amount of each subcontract, the amount theretofore paid to each
subcontractor as of the date of such application, and the amount to be paid
from the proceeds of the Advance to each subcontractor;
(b) if the Request for Disbursement includes payments for Indirect Costs,
it shall be accompanied by a completed and itemized Indirect Cost statement
executed by the Company, together with invoices for all items of Indirect Costs
covered thereby;
(c) written lien waivers from such laborers, subcontractors and materialmen
for work done and materials supplied by them which were paid for pursuant to
any prior Request for Disbursement;
(d) a written request of the Company for any necessary changes in the Plans
and Specifications or the Construction Budget;
(e) copies of all change orders and subcontracts, and, to the extent
requested by the Bank, of all inspection or test reports and other documents
relating to the construction of the Improvements, not previously delivered to
the Bank; and
(f) such other information, documentation and certification as the Bank
shall reasonably request.
<PAGE>
7.2 Notice and Frequency of Advances; Retainage. Each Request for
Disbursement shall be submitted to the Bank for its consent at least ten (10)
business days prior to the date of submission of the Request for Disbursement
to the Trustee, and no more frequently than monthly, based on the value of the
work (including the value of architectural and engineering work) completed,
less the holdback (the "Retainage") provided for at Section 5.6 herein, pending
issuance of certificates of occupancy and such evidence of lien-free completion
of construction as the Bank may reasonably require.
7.3 Funds Advanced. The Company irrevocably authorizes the Trustee to make
an Advance from the Project Fund for any sums requisitioned under this
Agreement in accordance with the Indenture.
7.4 Advances Do Not Constitute a Waiver. No Advance shall constitute a
waiver of any of the conditions of the Bank's obligation to consent to further
Advances nor, in the event the Company is unable to satisfy any such condition,
shall any Advance have the effect of precluding the Bank from thereafter
declaring such inability by the Company to be an Event of Default hereunder.
7.5 Trust Fund Provisions. All proceeds Advanced pursuant to this Agreement
shall be subject to the trust fund provisions of Section 13 of the Lien Law.
The affidavit attached hereto as Exhibit D is made pursuant to and in
compliance with Section 22 of the Lien Law, and, if so indicated in said
affidavit, a portion of the proceeds of the Bonds will be used, in part, for
reimbursement for payments made by the Company prior to the initial Advance
hereunder but subsequent to the commencement of the construction and equipping
of the Project Facility for items constituting Costs of Improvement.
ARTICLE 8
EVENTS OF DEFAULT
The occurrence of any one or more of the following conditions or events (each
an "Event of Default") shall constitute a default under and breach of this
Agreement:
(a) any failure by the Company to pay as and when due (including any grace
periods) and payable any interest on or principal of or other sums due and
payable under the Installment Sale Agreement or the Reimbursement Agreement; or
(b) any failure by the Company to pay as and when due and payable any other
sums to be paid by the Company under this Agreement and continuance of such
failure for a period of fifteen (15) days after written notice thereof from the
Bank or the Trustee; or
(c) title to the Project Facility becomes unsatisfactory to the Bank or the
Trustee by reason of any lien, charge, encumbrance, title condition or
exception (including without limitation, any mechanic's, materialman's or
similar statutory or common law lien or notice thereof), and such matter
causing title to be or become unsatisfactory is not cured or removed (including
by bonding) within sixty (60) days after notice thereof from the Trustee or the
Bank to the Agency and the Company; or
(d) any refusal by the Title Insurer to insure any Advance as being secured
by the Mortgage as a first lien on the Project Facility and continuance of such
refusal for a period of sixty (60) days after notice thereof by the Trustee or
the Bank to the Agency and the Company; or
<PAGE>
(e) the renovation of the Existing Facility and construction of the New
Facility is not completed by the Completion Date or, in the reasonable
estimation of the Bank, will not be completed by the Completion Date; or
(f) the Project Facility or any portion thereof is injured by fire,
explosion, accident, flood or other casualty, unless proceeds available for
restoration and held by the Trustee pursuant to the Indenture are sufficient,
in the reasonable estimation of the Bank, to effect the satisfactory
restoration of the Project Facility and to permit the completion of the
Improvements prior to the Completion Date; or
(g) the Project Facility is subject to any Condemnation, or the Project
Facility or any portion thereof is subject to any Condemnation which will
prevent, in the reasonable estimation of the Bank, the completion of the
Improvements prior to the Completion Date; or
(h) any voucher or invoice is submitted at any time which the Company knows
has not been earned by the payee for services performed or for materials used
in or furnished for the Project Facility; or
(i) any cessation at any time in construction of the Improvements for more
than twenty (20) consecutive days except for strikes, acts of God, fire or
other casualty, or other causes entirely beyond the Company's control; or
(j) any failure by the Company to duly observe or perform any term,
covenant, condition or agreement requiring the Company to maintain insurance or
to comply with the terms of the Commitment or the Bank Documents; or
(k) the Company requests a redemption of the Bonds, or confesses inability
to continue or complete renovation of the Existing Facility and construction of
the New Facility in accordance with this Agreement; or
(l) any representation or warranty made or deemed to be made by or on
behalf of the Company in this Agreement or in any other Bank Document, or in
any report, certificate, financial statement, Request for Disbursement or other
instrument furnished in connection with this Agreement any Advance or any other
Bank Document, shall prove to have been false or incorrect in any material
respect as at the date of which made or deemed to be made; or
(m) any dissolution, termination, partial or complete liquidation, merger
or consolidation of the Company, any Affiliate, or any sale, transfer or other
disposition of all or substantially all of the assets of the Company than with
the prior written approval of the Bank; or
(n) any suit or proceeding shall be filed against the Company or the
Project Facility which, if adversely determined, would have a materially
adverse affect on the ability of the Company to perform each and every one of
its obligations under and by virtue of the Bank Documents; or
(o) any failure by the Company to obtain any governmental approvals
necessary to satisfy any Requirements, or the revocation or other invalidation
of any governmental approvals previously issued; or
(p) any change in the legal or beneficial ownership of the Company or any
Affiliate (except Plug Power), other than with the prior written approval of
the Bank; or
<PAGE>
(q) any one or more of the obligations of the Company under the Bank
Documents shall at any time and for any reason cease to be in full force and
effect; or
(r) any default in the payment of money shall occur and remain uncured
under or in respect of any loan agreement, credit agreement, promissory note,
bond, trust deed, indenture, mortgage, pledge, security agreement, indemnity or
guaranty to which the Company is a party (whether as principal or guarantor or
other surety), or any other default shall occur and remain uncured thereunder
which would entitle the holder thereof to declare all amounts payable with
respect thereto to be immediately due and payable; or
(s) the Company shall be involved in financial difficulties as evidenced
by: (1) its commencement of a voluntary case under Title 11 of the United
States Code as from time to time in effect, or its authorizing, by appropriate
proceedings of partners, directors or other governing body, the commencement of
such a voluntary case; (2) its filing an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking, consenting to
or acquiescing in the relief therein provided, or by its failing to controvert
timely the material allegations of any such petition; (3) the entry of an order
for relief in any involuntary case commenced under said Title 11; (4) its
seeking relief as a debtor under any applicable law, other than said Title 11,
of any jurisdiction relating to the liquidation or reorganization of debtors or
to the modification or alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief; (5) the entry of an order by a
court of competent jurisdiction which is not withdrawn, reversed or rescinded
within one hundred twenty (120) days after its entry (i) finding it to be
bankrupt or insolvent, (ii) ordering or approving its liquidation,
reorganization or any modification or alteration of the rights of its
creditors, or (ii) assuming custody of, or appointing a receiver or other
custodian for, all or a substantial part of its property; (6) by its making an
assignment for the benefit of, or entering into a composition with, its
creditors, or appointing or consenting to the appointment of a receiver or
other custodian for all or a substantial part of its property; or (7)
generally, its failure to pay its debts as such debts become due; or
(t) any failure by the Company to duly observe or perform any other term,
covenant, condition or agreement under this Agreement and continuance of such
failure for a period of thirty (30) days after written notice thereof from the
Bank; or
(u) any "default" or "event of default" as such term is defined therein
shall occur under any of the other Bank Documents.
ARTICLE 9
RIGHTS AND REMEDIES
9.1 Remedies. Upon the occurrence of any Event of Default, the Bank may at
any time thereafter refuse to consent to further Advances and at its option,
and upon written notice to the Trustee, exercise any or all of the following
rights and remedies:
(a) The Bank may, in its sole discretion, deliver to the Trustee, with a
copy to the Agency and the Company, notice of such occurrence and upon
compliance with the Indenture, direct the Trustee to redeem the Bonds; and
<PAGE>
(b) The Bank may, in its sole discretion, by notice to the Trustee, the Agency
and the Company, declare all unpaid principal of and accrued interest due in
accordance with the Reimbursement Agreement, together with all other sums
payable under the Bank Documents, to be immediately due and payable, whereupon
same shall become and be immediately due and payable, anything in the
Reimbursement Agreement or other Bank Documents to the contrary
notwithstanding, and without presentation, protest or further demand or notice
of any kind, all of which are expressly hereby waived by the Company; provided,
however, that the Bank may consent to Advances by the Trustee thereafter
without thereby waiving the right to demand payment of the sums owing under the
Reimbursement Agreement, without being obligated to consent to any other or
further Advances, and without affecting the validity of or enforceability of
the Reimbursement Agreement or other Bank Documents. Notwithstanding and
without limiting the generality of the foregoing, upon the occurrence of an
Event of Default under paragraph (s) of Article 8, or if any event has occurred
which but for the passage of time, the giving of notice or both would
constitute an Event of Default, at the sole option of the Bank, all obligations
of the Trustee to make further Advances shall terminate, and all unpaid
principal of and accrued interest on the Bonds, together with all sums payable
under the Bank Documents, automatically shall become and be immediately so due
and payable, without any declaration or other act.
(c) At the discretion of the Bank and on behalf of the Trustee (but in its
on behalf in the event that the Trustee has drawn upon the Letter of Credit in
accordance with the Indenture), the Bank may cause the renovation of the
Existing Facility and construction of the New Facility to be completed and may
enter upon the Land and construct, equip and complete the renovation of the
Existing Facility and construction of the New Facility in accordance with the
Plans and Specifications, with such changes therein as the Bank may, from time
to time, and in its sole discretion, deem appropriate.
In connection with any renovation or construction undertaken by the Bank
pursuant to the provisions of this subparagraph, the Bank may:
(1) use any funds of the Company, including any balance which may be held
by the Bank as security or in escrow, and any funds remaining unadvanced under
the Indenture;
(2) employ existing contractors, subcontractors, agents, architects,
engineers, and the like, or terminate the same and employ others;
(3) employ security watchmen to protect the Project Facility;
(4) make such additions, changes and corrections in the Plans and
Specifications as shall, in the judgment of the Bank, be necessary or
desirable;
(5) take over and use any and all Equipment contracted for or purchased by
the Company, if appropriate, or dispose of the same as the Bank sees fit;
(6) execute all applications and certificates on behalf of the Company
which may be required by any Governmental Authority or Requirement or contract
documents or agreements;
(7) pay, settle or compromise all existing or future bills and claims which
are or may be liens against the Project Facility, or may be necessary for the
completion of the Improvements or the clearance of title to the Project
Facility;
<PAGE>
(8) enter into leases and occupancy agreements, and modify or amend
existing leases and occupancy agreements, all as the Bank shall deem to be
necessary or desirable;
(9) prosecute and defend all actions and proceedings in connection with the
construction of the Improvements or in any other way affecting the Project
Facility;
(10) enter into agreements or modify or amend existing agreements (including
the Bank Documents) with the Agency and the Trustee as the Bank, the Agency and
the Trustee in their absolute discretion deem necessary or desirable; and
(11) take such action hereunder, or refrain from acting hereunder, as the
Bank may, in its sole and absolute discretion, from time to time determine, and
without any limitation whatsoever, to carry out the intent of this
subparagraph. The Company shall be liable to the Bank for all costs paid or
incurred for the construction, completion and equipping of the Project
Facility, whether the same shall be paid or incurred pursuant to the provisions
of this subparagraph or otherwise, and all payments made or liabilities
incurred by the Bank hereunder of any kind whatsoever shall be deemed advances
made to the Company under this Agreement and shall be secured by the Mortgage
or the Indenture, and the other Bank Documents.
To the extent that any costs so paid or incurred by the Bank, together with all
other Advances made by the Bank hereunder, exceed the Project Funds, such
excess costs shall be paid by the Company to the Bank on demand, with interest
thereon at the rate set forth at Section 2.2(a)(i) of the Reimbursement
Agreement, until paid; and the Company shall execute such notes or amendments
to the Reimbursement Agreement as may be requested by the Bank to evidence the
Company's obligation to pay such excess costs and until such notes or
amendments are so executed by the Company, the Company's obligation to pay such
excess costs shall be deemed to be evidenced by this Agreement and the
Reimbursement Agreement. In the event the Bank takes possession of the Project
Facility and assumes control of such construction as aforesaid, it shall not be
obligated to continue such construction longer than it shall see fit and may
thereafter, at any time, change any course of action undertaken by it or
abandon such construction and decline to make further payments for the account
of the Company whether or not the Project Facility shall have been completed.
For the purpose of this subparagraph, the construction, equipping and
completion of the Project Facility shall be deemed to include any action
necessary to cure any Event of Default by the Company under any of the terms
and provisions of any of the Bank Documents.
(d) the Bank may to the extent permitted by applicable law, at any time and
from time to time, without notice (any such notice being expressly waived),
without regard to the adequacy of any collateral, set off and apply any and all
deposits (general or specific, time or demand, provisional or final, regardless
of currency, maturity, or the branch of the Bank where the deposits are held)
at any time held or other sums credited by or due from the Bank to the Company
against any and all liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising of the Company to the
Bank.
(e) the Bank may exercise any or all of the rights and remedies set forth
in the Reimbursement Agreement or the Mortgage, or other Bank Documents, as
appropriate.
9.2 Remedies Not in Conflict with the Indenture. In addition, and to the
extent not in conflict with the Indenture, the Company agrees to the following:
<PAGE>
(a) Power of Attorney. For the purposes of carrying out the provisions and
exercising the rights, powers and privileges granted by or referred to in this
Agreement, the Company hereby irrevocably constitutes and appoints the Bank its
true and lawful attorney-in-fact, with full power of substitution, to execute,
acknowledge and deliver any instruments and do and perform any acts which are
referred to in this Agreement, in the name and on behalf of the Company. The
power vested in such attorney-in-fact is, and shall be deemed to be, coupled
with an interest and irrevocable.
(b) Remedies Cumulative. Upon the occurrence of any Event of Default and
expiration of any cure period, the rights, powers and privileges provided in
this Article 9 and all other remedies available to the Bank under this
Agreement, the Reimbursement Agreement, or under any of the other Bank
Documents or at law or in equity may be exercised by the Bank at any time and
from time to time and shall not constitute a waiver of any of the Bank's other
rights or remedies thereunder, whether or not the Bonds shall be due and
payable, and whether or not the Bank shall have instituted any foreclosure
proceedings or other action for the enforcement of its rights under the
Reimbursement Agreement or other Bank Documents.
(c) Annulment of Defaults. An Event of Default shall not be deemed to be in
existence for any purpose of this Agreement, the Reimbursement Agreement or any
other Bank Document if the Bank shall have waived such Event of Default in
writing or stated in writing that the same has been cured to its reasonable
satisfaction, but no such waiver shall extend to or affect any subsequent Event
of Default or impair any of the rights of the Bank upon the occurrence thereof.
(d) Waivers. The Company hereby waives to the extent not prohibited by
applicable law (a) all presentments, demands for payment or performance,
notices of nonperformance (except to the extent required by the provisions
hereof or of any other Bank Documents), protests and notices of dishonor, (b)
any requirement of diligence or promptness on the Bank's part in the
enforcement of its rights (but not fulfillment of its obligations) under the
provisions of this Agreement, the Reimbursement Agreement, or any other Bank
Document, and (c) any and all notices of every kind and description which may
be required to be given by any statute or rule of law and any defense of any
kind which the Company may now or hereafter have with respect to its liability
under this Agreement or under any other Bank Document.
(e) Course of Dealing, Etc. No course of dealing between the Company and
the Bank shall operate as a waiver of any of the Bank's rights under this
Agreement or any Bank Document. No delay or omission on the Bank's part in
exercising any right under this Agreement or any other Bank Document shall
operate as a waiver of such right or any other right hereunder. A waiver on any
one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion No waiver or consent shall be binding upon the
Bank unless it is in writing and signed by the Bank. The making of an Advance
hereunder during the existence of an Event of Default shall not constitute a
waiver thereof.
ARTICLE 10
GENERAL CONDITIONS
The following conditions shall be applicable throughout the term of this
Agreement:
<PAGE>
10.1 Rights of Third Parties. All conditions of the obligations of the Bank
hereunder, including the obligation to consent to Advances, are imposed solely
and exclusively for the benefit of the Bank and its successors and assigns and
no other person shall have standing to require satisfaction of such conditions
in accordance with their terms or be entitled to assume that the Bank will make
Advances in the absence of strict compliance with any or all thereof and no
other person shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in whole or in part
by the Bank at any time if in its sole discretion it deems it desirable to do
so. In particular, the Bank makes no representations and assumes no obligations
as to third parties, including, but not limited to, the Agency or the holders
of the Bonds, concerning the quality of the construction by the Company of the
Improvements or the absence therefrom of defects. In this connection the
Company agrees to and shall indemnify the Trustee and the Bank from any
liability, claims or losses resulting from the disbursement of Advances or from
the condition of the Project Facility whether related to the quality of
construction or otherwise and whether arising during or after the termination
of the Letter of Credit. This provision shall survive the repayment of the
Bonds and any sums due under the Bank Documents and shall continue in full
force and effect so long as the possibility of such liability, claims or losses
exists.
10.2 Limitation on Agency Liability; Indemnity. No provision or covenant
contained in this Agreement or any obligation herein or the breach thereof
shall constitute or give rise to pecuniary or other liability or charge upon
the Agency, its members, officers, employees or agents. The Company shall
indemnify the Agency against all claims, demands, expenses, and liabilities
under this Agreement in accordance with the provisions of the Installment Sale
Agreement.
10.3 Relationship. The relationship between the Bank and the Company is
solely that of a lender and borrower, and nothing contained herein or in any of
the other Bank Documents shall in any manner be construed as making the parties
hereto partners, joint venturers or any other relationship other than lender
and borrower.
10.4 Evidence of Satisfaction of Conditions. Any condition of this Agreement
which requires the submission of evidence of the existence or non-existence of
a specified fact or facts implies as a condition the existence or
non-existence, as the case may be, of such fact of facts and the Bank shall, at
all times, be free independently to establish to its satisfaction and in its
absolute discretion such existence or non-existence.
10.5 Notices. (a) All notices, certificates and other communications
hereunder shall be in writing and shall be sufficiently given and shall be
deemed given when (1) sent to the applicable address stated below by registered
or certified mail, return receipt requested, or by such other means as shall
provide the sender with documentary evidence of such delivery, or (2) delivery
is refused by the addressee, as evidenced by the affidavit of the Person who
attempted to effect such delivery.
(b) The addresses to which notices, certificates and other communications
hereunder shall be delivered are as follows:
If to the Company:
Mechanical Technology Incorporated
968 Albany-Shaker Road
Latham, New York 12110
Attention: Cynthia A. Scheuer, Vice President
<PAGE>
With a Copy to:
Harry D'Agostino, Esq.
D'Agostino, Hoblock, Greisler & Siegal
39 North Pearl Street
Albany, New York 12207
If to the Agency:
Town of Colonie Industrial Development Agency
347 Old Niskayuna Road
Latham, New York 12110
Attention: Philip Pearson, Executive Director
With a Copy to:
Robert L. Sweeney, Esq.
Shanley, Sweeney, Reilly & Allen, P.C.
10 Thurlow Terrace
Albany, New York 12203
If to the Trustee:
Manufacturers And Traders Trust Company
One M&T Plaza, 7th Floor
Buffalo, New York 14203
Attention: Leslie A. Boynton, Vice President
If to the Bank:
KeyBank National Association
Corporate Banking Department
66 South Pearl Street
Albany, New York 12207
Attention: William B. Palmer
With a Copy to:
Timothy R. McGill, Esq.
St. John & Curtin, LLC
1530 First Federal Plaza
Rochester, New York 14614
With a Copy to:
Hiscock & Barclay, LLP
One KeyCorp Plaza
Albany, New York 12207
Attn: Edward J. Trombly, Esq.
(c) A duplicate copy of each notice, certificate and other communication
given hereunder by (1) the Company or the Agency shall also be given to the
Trustee, and (2) the Company, Agency or the Trustee shall also be given to the
Bank.
(d) The Agency, the Company, the Trustee and the Bank may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, certificates and other communications shall be sent.
10.6 Assignment. The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior approval of the Bank.
<PAGE>
10.7 Successors and Assigns Included in Parties. Whenever in this Agreement
one of the parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such parties shall be included and
all covenants and agreements contained in this Agreement by or on behalf of the
Company or by or on behalf of the Bank shall bind and inure to the benefit of
their respective heirs, legal representatives, successors and assigns, whether
so expressed or not.
10.8 Headings. The headings of the Articles, Paragraphs and subparagraphs of
this Agreement are for the convenience of reference only, are not to be
considered a part hereof and shall not limit or otherwise affect any of the
terms hereof.
10.9 Invalid Provisions to Affect No Others. If fulfillment of any provision
hereof or any transaction related hereto at the time performance of such
provisions shall be due, shall involve transcending the limit of validity
presently prescribed by law, with regard to obligations of like character and
amount, then ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity; and if any clause or provision herein contained
operates or would prospectively operate to invalidate this Agreement in whole
or in part, then such clause or provision only shall be held for naught, as
though not herein contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
10.10 Number and Gender. Whenever the singular or plural number, or the
masculine, feminine or neuter gender is used herein, it shall equally include
the other.
10.11 Governing Law. This Agreement shall be governed by and construed in
accordance with laws of the State of New York.
10.12 Consent to Jurisdiction. The Company hereby irrevocably and
unconditionally (a) submits to personal jurisdiction in the State of New York
over any suit, action or proceeding arising out of or relating to this
Agreement, and (b) waives any and all personal rights under the laws of any
state (i) to the right, if any, to trial by jury, or (ii) to object to
jurisdiction within the State of New York or venue in any particular forum
within the State of New York. Nothing contained herein, however, shall prevent
the Bank from bringing any suit, action or proceeding or exercising any rights
against any security and against the Company, and against any property of the
Company, in any other state. Initiating such suit, action or proceeding or
taking such action in any state shall in no event constitute a waiver of the
agreement contained herein that the laws of the State of New York shall govern
the rights and obligations of the Company and the Bank hereunder or the
submission herein by the Company to personal jurisdiction within the State of
New York.
10.13 Amendments. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
10.14 No Recourse; Special Obligation. (a) The obligations and agreements of
the Agency, if any, contained herein and in the other Bank Documents and any
other instrument or document executed in connection therewith or herewith, and
any other instrument or document supplemental thereto or hereto, shall be
deemed the obligations and agreements of the Agency, and not of any member,
officer, director, agent (other than the Company) or employee of the Agency in
his individual capacity, and the members, officers, directors, agents (other
<PAGE>
than the Company) and employees of the Agency shall not be liable personally
hereon or thereon or be subject to any personal liability or accountability
based upon or in respect hereof or thereof or of any transaction contemplated
hereby or thereby.
(b) The obligations and agreements of the Agency contained herein and
therein shall not constitute or give rise to an obligation of the State of New
York or the Town of Colonie, New York, and neither the State of New York nor
the Town of Colonie, New York shall be liable hereon or thereon, and, further,
such obligations and agreements shall not constitute or give rise to a general
obligation of the Agency, but rather shall constitute limited obligations of
the Agency payable solely from the revenues of the Agency derived and to be
derived from the sale or other disposition of the Project Facility (except for
revenues derived by the Agency with respect to the Unassigned Rights).
(c) No order or decree of specific performance with respect to any of the
obligations of the Agency hereunder shall be sought or enforced against the
Agency unless (1) the party seeking such order or decree shall first have
requested the Agency in writing to take the action sought in such order or
decree of specific performance, and ten (10) days shall have elapsed from the
date of receipt of such request, and the Agency shall have refused to comply
with such request (or, if compliance therewith would reasonably be expected to
take longer than ten days, shall have failed to institute and diligently pursue
action to cause compliance with such request within such ten day period) or
failed to respond within such notice period, (2) if the Agency refuses to
comply with such request and the Agency's refusal to comply is based on its
reasonable expectation that it will incur fees and expenses, the party seeking
such order or decree shall have placed in an account with the Agency an amount
or undertaking sufficient to cover such reasonable fees and expenses, and (3)
if the Agency refuses to comply with such request and the Agency's refusal to
comply is based on its reasonable expectation that it or any of its members,
officers, agents (other than the Company) or employees shall be subject to
potential liability, the party seeking such order or decree shall (A) agree to
indemnify, defend and hold harmless the Agency and its members, officers,
directors, agents (other than the Company) and employees against any liability
incurred as a result of its compliance with such demand, and (B) if requested
by the Agency, furnish to the Agency satisfactory security to protect the
Agency and its members, officers, directors, agents (other than the Company)
and employees against all liability expected to be incurred as a result of
compliance with such request. Any failure to provide the indemnity and/or
security required in this Section 10.14 shall not affect the full force and
effect of an Event of Default hereunder.
IN WITNESS WHEREOF, the Company, the Agency and the Bank have executed this
Agreement under seal on the date first above written.
The Company:
MECHANICAL TECHNOLOGY INCORPORATED
By:
Name: Cynthia A. Scheuer
Title: Vice President
<PAGE>
The Bank:
KEYBANK NATIONAL ASSOCIATION
By:
Name: William B. Palmer
Title: Vice President
The Agency:
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY
By:
Name: Peter J. Hess
Title: Chairman
STATE OF NEW YORK )
) ss.:
COUNTY OF ALBANY )
On this day of December, 1999, before me the subscriber personally appeared
Cynthia A. Scheuer, who being by me duly sworn, did depose and say; that she
resides at Castleton, New York, that she is a Vice President of Mechanical
Technology Incorporated the corporation described in and which executed the
foregoing instrument; and that she signed her name thereto by order of the
Board of Directors of said corporation.
NOTARY PUBLIC
STATE OF NEW YORK )
)ss.:
COUNTY OF ALBANY )
On this _______ day of December, 1998 before me personally appeared William B.
Palmer, to me personally known, who, being by me duly sworn, did depose and say
that he resides in Athens, New York; that he is a Vice President of KEYBANK
NATIONAL ASSOCIATION, the national banking association described in and which
executed the within Building Loan Contract; and that he signed his name thereto
by order of its Board of Directors.
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF ALBANY )
On this day of December, 1999, before me the subscriber personally appeared
Peter J. Hess, who being by me duly sworn, did depose and say; that he resides
at __________________________, that he is Chairman of the Town of Colonie
Industrial Development Agency the corporation described in and which executed
the foregoing instrument; and that he signed his name thereto by order of the
members of said Agency.
NOTARY PUBLIC
<PAGE>
Exhibit A Construction Budget
Exhibit B Description Of Land
Exhibit C REQUEST FOR DISBURSEMENT FROM PROJECT FUND
COMPANY: MECHANICAL TECHNOLOGY INCORPORATED
REQUISITION NO.:
DATE:
PROJECT: MECHANICAL TECHNOLOGY INCORPORATED PROJECT LOCATED ON
ALBANY-SHAKER ROAD, TOWN OF COLONIE, ALBANY COUNTY, NEW YORK
Pursuant to the Building Loan Contract (the "Agreement") between Mechanical
Technology Incorporated (the "Company"), Town of Colonie Industrial Development
Agency (the "Agency") and KeyBank National Association (the "Bank") executed in
connection with the issuance of the Agency's Taxable Industrial Development
Revenue Bonds (Mechanical Technology Incorporated Project - Letter of Credit
Secured) Series 1998A in the aggregate principal amount of $6,160,274.00 (the
"Bonds"), the Company hereby requests that the Bank consent to a disbursement
from the Project Fund (as defined in the Indenture dated as of December 1, 1998
between the Agency and Manufacturers and Traders Trust Company, as trustee) for
the following purpose(s) and in the following amounts:
Amount Purpose(s) Attributable to
$
Total: $
IN CONNECTION WITH AND IN ORDER TO INDUCE THE BANK TO CONSENT TO THE
DISBURSEMENT OF THE AMOUNT REQUESTED ABOVE, THE COMPANY HEREBY REPRESENTS,
WARRANTS AND STIPULATES AS FOLLOWS:
1. There is existing no Event of Default (as defined in the Agreement) and
no event which but for the passage of time, the giving of notice or both would
constitute an Event of Default. The undersigned has duly complied with and
observed all of the terms, covenants and conditions of each of said instruments
required to be performed by the undersigned to the date of this requisition,
and unless the Bank is notified to the contrary prior to the disbursement
requested above, will be so on the date hereof.
2. The amounts herein are true and correct to the best of the Company's
knowledge and after the honoring of this requisition, amounts in the Project
Fund not yet advanced, less the retainage held, if any, shall be sufficient to
pay for the completion of the costs of construction of the Improvements not yet
paid.
3. All sums previously requisitioned have been applied to the payment of
the costs of construction of the Improvements heretofore incurred and the
proceeds of any advance made in accordance with this requisition will be
applied to, and solely to, payment of the foregoing items.
4. All work has been performed fully in accordance with the Plans and
Specifications as defined in the Agreement.
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED
By: Authorized Officer
KeyBank National Association hereby consents to the disbursement of the
foregoing amounts from the Project Fund:
KEYBANK NATIONAL ASSOCIATION
By: Authorized Officer
Exhibit D LIEN LAW, SECTION 22 AFFIDAVIT
STATE OF NEW YORK )
) ss.:
COUNTY OF ALBANY )
Cynthia A. Scheuer, being duly sworn, deposes and says:
A. That she is a Vice President of Mechanical Technology Incorporated
described as the Company in the Building Loan Contract, dated as of December 1,
1998 (the "Agreement"), to which this Affidavit is annexed, relating to the
acquisition, construction and equipping of a certain industrial development
facility described therein on premises located on Albany-Shaker Road, Town of
Colonie, Albany County, New York and more particularly bounded and described in
Exhibit B to the Agreement.
B. The Agreement is intended to be filed in the Schohaire County Clerk's
Office in accordance with Section 22 of the Lien Law. All capitalized terms
used herein and not otherwise defined shall have the same meanings assigned
thereto in the Agreement.
C. The Bond proceeds will be advanced by the Trustee to the Company with
the consent of the Bank in accordance with the terms of the Agreement.
D. The consideration, or to be paid, in connection therewith are as
follows:
1. Architect's and/or Engineer's fees $ __________
2. The purchase price of the Land $ __________
3. Fair and reasonable sums paid for obtaining financing:
(a) Letter of Credit Fee and other expenses $ __________ (b) Letter
of Credit Commitment fee $ __________ (c) Legal fee and
disbursements of the Bank's Counsel $ __________ (d) Appraisal Fee $
__________ (e) Construction Inspector's fees $ __________ (f) Agency's
administrative fee $ __________ (g) Legal fee and disbursements of
Agency counsel $ __________ (h) the Trustee's fees $ __________ (i)
Legal fees and disbursements of the Trustee's counsel $ __________ (j)
Underwriter/Remarketing Agent fees $ __________ (k) Legal fees and
disbursements of Underwriter's counsel $ __________ (l) Cost of title
examination and UCC searches, title insurance premiums and title continuation
charges $ _________ (m) Cost of survey(s) (n) Recording and filing fees
$ _________
4. Taxes (including payments-in-lieu of taxes), assessments and water
rents accruing during the construction of the Improvements $ _________
<PAGE>
6. Taxes, assessment and water rents existing prior to the commencement of
the Improvements $ _________
7. Interest on the Bonds during construction period $ _________
8. Sums paid to repay the Bank for sums advanced to pay the costs of
construction of the Improvements incurred prior to the date of the Agreement $
_________
TOTAL $ _________
Certain of the foregoing amounts are based upon good faith estimates of costs
or expenses not yet incurred and certain items listed above may cost more or
less than such estimates. The Company reserves the right to use unexpended
amounts from any of said items to defray increases incurred in any other item
or items listed above so long as the total amount expended on such items does
not exceed the amount of items shown above.
After payment of all the above items, the net amount available to the Company
for the improvements (monies which will be available to the Company for the
cost of constructing, renovating, and equipping the Improvements) will be $ .
All monies advanced to the Company under and pursuant to the Agreement shall be
subject to the Trust Fund provisions of Section 13 of the Lien Law. If an Event
of Default occurs during construction of the Improvements, the Trustee may
refuse to advance additional funds and such unadvanced sums would not be
available to the Company to pay the cost of constructing the Improvements, the
Trustee may transfer all or a portion of incurred but unpaid items qualifying
as Project Costs and amounts sufficient to discharge any filed mechanic's lien,
to the Project Fund established under the Indenture for application to
redemption of the Bonds in accordance with the terms of the Indenture.
IN THAT EVENT, SUCH MONIES WILL NOT BE AVAILABLE TO THE COMPANY FOR THE
IMPROVEMENT.
This affidavit is made pursuant to and in compliance with Section 22 of the
Lien Law by the Company, as an "owner" for the purposes of said Section.
E. The facts herein stated are true to the best of deponent's knowledge.
Cynthia A. Scheuer
Sworn to before me this _______ day of December, 1998.
NOTARY PUBLIC-STATE OF NEW YORK
BUILDING LOAN CONTRACT
BUILDING LOAN CONTRACT
BUILDING LOAN CONTRACT
Exhibit A page 1
Exhibit B page 1
Exhibit C page 2
Exhibit D page 3
REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT ("Agreement"), dated as of the 1st day of
December, 1998, is by and among MECHANICAL TECHNOLOGY INCORPORATED, a New York
corporation (the "Company") and KEYBANK NATIONAL ASSOCIATION, a national
banking association (the "Bank").
WHEREAS, in order to provide financing for the construction of a building,
renovation of a building and installation in the buildings of machinery and
equipment and for the costs related thereto, the Company as requested, that the
Town of Colonie Industrial Development Agency (the "Agency") issue its Taxable
Industrial Development Revenue Bonds in the aggregate principal amount of Six
Million Dollars ($6,000,000) (the "Bonds") under the terms and conditions more
fully set forth in the Trust Indenture dated as of December 1, 1998 (the
"Indenture"), by and between the Company and Manufacturers And Traders Trust
Company as Trustee (the "Trustee"); and
WHEREAS, to enhance the marketability of the Bonds the Company has applied to
the Bank for the issuance of a letter of credit (the "Letter of Credit") in
favor of the Trustee in an aggregate amount of Six Million One Hundred Sixty
Thousand Two Hundred Seventy Four and no/100ths Dollars ($6,160,274.00) to
secure the payment of the principal of and accrued interest on the Bonds; and
WHEREAS, it is the purpose of this Agreement to set forth the Bank's commitment
to issue the Letter of Credit and the Company's agreement to reimburse the Bank
for any and all payments made by the Bank pursuant to the Letter of Credit; and
NOW THEREFORE, in consideration of the mutual agreements made herein and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION ONE
DEFINITIONS
Section 1.1. Terms Defined. Unless otherwise defined
herein, capitalized terms shall be defined as set forth in the Indenture. As
used in this Agreement, the following terms have the following respective
meanings. Any accounting term used but not specifically defined herein shall be
construed in accordance with GAAP. The definition of each agreement, document,
and instrument set forth in this Section 1.1 shall be deemed to mean and
include such agreement, document, or instrument as amended, restated, or
modified from time to time:
"Agency" shall mean the Town of Colonie Industrial Development Agency, a public
benefit corporation of the State of New York.
"Bank Obligation" shall mean an amount equal to the aggregate outstanding
liability of the Bank from time to time under the Letter of Credit.
"Bank" shall mean KeyBank National Association, its successors and assigns.
"Bank Documents" shall have the meaning set forth in the Indenture.
"Bonds" shall mean the Six Million Dollars ($6,000,000) Town of Colonie
Industrial Development Agency Taxable Industrial Development Revenue Bonds
(Mechanical Technology Incorporated Project - Letter Of Credit Secured) Series
1998A, issued by the Agency pursuant to the Indenture.
"Building Loan Agreement" shall mean the building loan agreement among the
Agency, the Company and the Bank dated as of December 1, 1998.
<PAGE>
"Business Day" shall mean any day of the year other than (i) a Saturday or
Sunday, (ii) any day on which banks located in either Albany, New York, or the
principal corporate trust office of the Trustee is located are required or
authorized by law to remain closed, or (iii) any day on which the New York
Stock Exchange is closed.
"Capital Expenditures" shall mean all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed
within three months (i) from insurance proceeds (or other similar recoveries)
paid on account of the loss of or damage to the assets being replaced or
restored or (ii) with awards of compensation arising from the taking by eminent
domain or condemnation of the assets being replaced.
"Capital Lease" shall mean, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of such Person.
"Closing Date" shall mean the Date of Issuance, or such other date agreed upon
by the Company and the Bank.
"Company" shall mean, Mechanical Technology, Incorporated, a New York
corporation.
"Completion Date" shall mean April 30, 1999.
"Contract Assignment" shall mean the Assignment Of Contract Rights, dated as of
December 1, 1998 given by the Company to the Bank.
"Date of Issuance" shall mean the date of issuance of the Letter of Credit.
"Default Rate" shall mean an interest rate per annum equal to four percent (4%)
in excess of the Prime Rate, with each change in the Prime Rate automatically
changing the Default Rate.
"Drawing" shall mean any drawing under the Letter of Credit.
"Environmental Law" shall mean any federal, state, or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability upon a Person in connection with the use, release or
disposal of any hazardous, toxic or dangerous substance, waste or material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the
same may from time to time be amended or supplemented, and all regulations
thereunder.
"Event of Default" shall have the meaning assigned thereto in Section 8 hereof.
"Expiration Date" shall mean April 30, 1999.
"Fee Calculation Amount" shall have the meaning set forth in Section 2.2(b).
"Financing Documents" shall have the meaning set forth in the Indenture.
"Fiscal Quarter" shall mean a fiscal quarter of a Fiscal Year.
<PAGE>
"Fiscal Year" shall mean the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on September 30 of each year.
References to a Fiscal Year with a number corresponding to any calendar year
(e.g., "Fiscal Year 1998") refer to the Fiscal Year ending on September 30 of
such calendar year.
"Fixed Charges" shall mean scheduled current maturities of long term Debt
(including payments on Capital Leases) determined in accordance with GAAP plus
interest expense plus operating lease expense plus non-financed Capital
Expenditures.
"Fixed Charge Coverage Ratio" shall mean the ratio of Operating Cash Flow to
Fixed Charges.
"GAAP" shall mean generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S.
accounting profession), which are applicable to the circumstances as of the
date of determination.
"General Contract" shall mean the construction contract with respect to the
Project being constructed on the Premises, between the Company and the general
contractor for such construction.
"Guarantor" shall mean Ling Electronics, Inc.
"Guaranty" shall mean the unconditional guaranty of payment by the Guarantor of
the obligations of the Company hereunder.
"Indenture" shall mean the Trust Indenture, dated as of November 1, 1998
between the Agency and the Trustee.
"Indenture Default" shall mean an Event of Default under and pursuant to the
Indenture.
"Interest Commitment" shall have the meaning set forth in the Letter of Credit.
"Interest Payment Date" shall have the meaning set forth in the Indenture.
"Interest Rate" shall mean the Prime Rate plus two (2%) percent.
"Letter of Credit" shall mean the Letter of Credit to be issued by the Bank on
the Date of Issuance pursuant to this Agreement, such Letter of Credit to be
substantially in the form of Exhibit A attached hereto.
"Letter of Credit Commitment" shall have the meaning set forth in the Letter of
Credit.
"Letter of Credit Fee" shall have the meaning set forth in Section 2.2(b) of
this Agreement.
"Leverage Ratio" shall mean the ratio of Total Liabilities to Tangible Net
Worth.
<PAGE>
"Lien" shall mean, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of
any obligation and shall include any mortgage, lien, encumbrance, charge or
other security interest of any kind, whether arising by contract, as a matter
of law, by judicial process or otherwise.
"Material Adverse Effect" shall mean (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of either the Company or its Subsidiaries
taken as a whole, or (b) a material adverse effect upon any substantial portion
of the collateral under the Bank Documents or upon the legality, validity,
binding effect or enforceability against the Company or any Guarantor of any
Bank Document.
"Mortgage" shall mean the Mortgage and Security Agreement creating a good and
valid first mortgage lien on the Mortgaged Property as that term is defined
therein, given by the Agency and the Company to the Bank, dated as of November
1, 1998.
"Operating Cash Flow" shall mean net income after taxes and exclusive of (i)
extraordinary gains/losses, (ii) gains/losses on discontinued operations (iii)
gains/losses on asset sales plus depreciation, plus amortization, plus interest
expense plus lease expense less dividends and distributions and less advances
of any kind to Plug Power except for advances funded by grants or equity
offerings or funded through the loans advanced under a Credit Agreement with
the Bank dated September 22, 1998 and (iv) the impact of any profit or loss
recognized or realized by the Company from its investment/interest in Plug
Power.
"Organizational Documents" shall mean with respect to a corporation, its
certificate of incorporation and bylaws, with respect to a limited liability
company, its articles of organization and operating agreement, with respect to
a partnership, its partnership agreement, with respect to other entities such
documents as create and continue the existence of the entity and specify the
manner in which its affairs are governed.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant
to Title IV of ERISA.
"Permitted Encumbrances" shall have the meaning set forth in the Indenture.
"Person" means any natural person, corporation (which shall be deemed to
include business trust), association, partnership, political entity, or
political subdivision thereof.
"Plan" shall mean any plan defined in Section 4021(a) of ERISA in respect of
which Company is an "employer" or a "substantial employer" as defined in
Section 3(5) and 4001(a)(2) of ERISA, respectively.
"Plans and Specification" shall mean the detailed plans and specifications for
the Project prepared by the architect for the Project and approved by the Bank.
"Pledge And Security Agreement" shall mean the Pledge And Security Agreement,
dated as of December 1, 1998 among the Company, the Bank, and the Trustee.
"Pledged Collateral" shall mean the collateral in which the Company has given
the Bank a mortgage lien pursuant to the Mortgage or a security interest
pursuant to the Security Agreement and/or the Pledge And Security Agreement.
<PAGE>
"Plug Power" shall mean Plug Power, LLC.
"Premises" shall mean that certain premises owned by the Agency and located at
968 Albany-Shaker Road, Town of Colonie, Albany County, New York as more fully
described in the Mortgage.
"Prime Rate" shall mean that interest rate established from time to time by the
Bank as the Bank's Prime Rate, whether or not such rate is publicly announced.
The Prime Rate may not be the lowest rate charged by the Bank for commercial or
other extensions of credit.
"Principal Commitment" shall have the meaning set forth in the Letter of
Credit.
"Prohibited Transaction" shall mean any prohibited transaction as that term is
defined for purposes of ERISA.
"Project" shall mean the building to be constructed on the Premises.
"Purchaser" shall mean the original purchaser or purchasers of the Bonds.
"Remarketing Agent" shall mean, initially, First Albany Corporation.
"Remarketing Drawing" shall have the meaning set forth in the Letter of Credit.
"Rental Expense" shall mean for any period the consolidated rental expense of
the Company and its Subsidiaries for such period.
"Reportable Event" shall mean any reportable event as that term is defined in
ERISA.
"Security Agreement" shall mean the Security Agreement, dated as of December 1,
1998, given by the Agency and the Company to the Bank.
"Senior Debt" shall mean all Debt of the Company and its Subsidiaries other
than Subordinated Debt.
"Subordinated Debt" shall mean any indebtedness of the Company and its
Subsidiaries which has subordination terms, covenants, pricing and other terms
applicable to such indebtedness which has been approved by the Bank.
"Subsidiary" shall mean with respect to any Person, a corporation of which such
Person and/or its other Subsidiaries own, directly or indirectly, an interest
of at least 25% (whether by share holding, partnership interests or otherwise)
but as to the Company, Plug Power shall not be considered a Subsidiary.
"Tangible Net Worth" shall mean tangible net worth as determined in accordance
with GAAP.
"Tender Agent" shall mean the Trustee or any successor Trustee under the
Indenture.
"Title Company" shall mean First American Title Insurance Company of New York.
"Title Policy" shall mean the ALTA Loan Policy to be issued by the Title
Company with respect to the Premises for which the Title Company has issued a
commitment in compliance with Section 5.2.
"Total Liabilities" means total liabilities as determined in accordance with
GAAP.
"Trustee" means Manufacturers And Traders Trust Company, or any successor
Trustee under the Indenture.
"Unmatured Event of Default" means any event that, if it continues uncured,
will, with lapse of time or notice or both, constitute an Event of Default.
SECTION TWO
ISSUANCE OF LETTER OF CREDIT
Section 2.1. Issuance of Letter of Credit. Subject to the terms and conditions
hereof, the Bank agrees to execute and deliver the Letter of Credit. The
obligations of the Bank under the Letter of Credit shall be absolute and
irrevocable and shall be performed strictly in accordance with the terms of the
Letter of Credit and this Agreement.
<PAGE>
Section 2.2. Fees and Reimbursement for Letter of Credit (a) The Company
hereby agrees to pay the following to the Bank: (i) Before 2:00 p.m.,
Albany, New York time, on each date that any Drawing under the Letter of Credit
pursuant to Section 408 of the Indenture is made, the Company shall pay a sum
equal to the amount of the drawing under the Letter of Credit, plus (x)
interest accrued, if any, on the amount so drawn under the Letter of Credit as
determined pursuant to clause (iii) of this subsection (a) of this Section 2.2,
plus (y) any and all charges and expenses which the Bank may pay or incur
relative to such Drawing under the Letter of Credit, plus (z) a fee in the
amount of Two Hundred Dollars ($200) for that Drawing under the Letter of
Credit. (ii) Upon each transfer of the Letter of Credit in accordance with
its terms and as a condition thereto, the Company shall pay $500 to cover the
costs and expenses to the Bank incurred in connection with such transfer. (iii)
The Company shall pay interest at the Interest Rate, payable on demand on any
and all amounts of any not paid by the Company when due under any section of
this Agreement from the date such amounts become due until payment in full.
(iv)For any payment of principal and/or interest not paid within ten (10) days
when due, the Company shall pay a late charge of an amount equal to the greater
of fifty dollars ($50) or four percent (4%) of the amount of the payment.
(v)The Company shall pay on demand, reasonable costs, fees and expenses
incurred by the Bank in connection with the issuance of the Letter of Credit
and the preparation or execution of any documents or opinions related thereto.
(vi)The Company shall pay on demand, any and all reasonable expenses incurred
by the Bank in enforcing any of its rights under the Bank Documents.
(b) The Company hereby agrees to pay to the Bank: (i) A commitment
fee (the "Commitment Fee") of $70,000.00 ($20,000.00 of which was paid prior to
the date of this Agreement) and (ii) A commission (the "Letter of Credit
Fee") equal to an amount calculated by multiplying the "Applicable Percentage"
set forth at clause (1) of this subsection (b)(ii) of this Section 2.2 times
the maximum "Fee Calculation Amount" as described at clause (2) of this
subsection (b)(ii) of this Section 2.2. The Letter of Credit Fee shall be
payable annually on the Date of Issuance and each anniversary of the Date of
Issuance thereafter until the Expiration Date of the Letter of Credit. (1) (x)
If the Company is in compliance with all of the covenants, terms and conditions
of this Agreement and any other agreement with the Bank and the Leverage Ratio
is no greater than 1.5 to 1 after receipt of the fiscal year end 1998 financial
statements, the Applicable Percentage shall be 1.5%; (y) if the conditions set
forth at (x) have been met and the Company's annual revenue is at least
$50,000,000.00, the Applicable Percentage will be 1.1%; and (z) at all other
times, the Applicable Percentage shall be 2%. (2) The "Fee Calculation Amount"
shall be the sum of (i) the maximum amount then available to be drawn under the
Letter of Credit. If the Letter of Credit is terminated prior to the Expiration
Date, the Letter of Credit Fee shall be refunded to the Company on a pro rata
basis.
(c) If any change in any law or regulation or in the interpretation thereof
by any court or administrative or governmental authority charged with the
administration thereof shall impose, modify or deem applicable any reserve,
special deposit or similar requirement which would increase or decrease the
Bank's costs(i) generally upon the issuance or maintenance of letters of credit
by the Bank, (ii) specifically in respect of this Agreement or the Letter of
Credit, or (iii) in respect of any capital adequacy requirement (including,
without limitation, a requirement which affects the manner in which the Bank
allocates capital resources to its commitments), and the result of such an
increase or decrease in costs as described in clause (i), (ii), or (iii) above
shall be to increase or decrease the costs to the Bank of issuing or
maintaining the Letter of Credit (which increase or decrease in costs shall be
the result of the Bank's reasonable allocation, of the aggregate of such cost
<PAGE>
increases or decreases resulting from such events), then, (x) within thirty
(30) days of the Bank's obtaining knowledge of such change in law, regulations
or interpretation thereof, the Bank shall so notify the Company and (y) upon
receipt of such notice from the Bank, accompanied by a certificate as to such
increased or decreased cost, the Company shall pay or receive a refund as of
the effective date of such change or interpretation all additional amounts
which are necessary to compensate the Bank or the Company for such increased or
decreased cost incurred by the Bank.
(d) The Company's obligations to make payments to the Bank under this
Section 2.2 shall be deemed satisfied to the extent of payments made by the
Trustee to the Bank from funds on deposit with and held by the Trustee pursuant
to the Indenture.
Section 2.3. Company's Obligations Unconditional. The payment obligations of
the Company under this Agreement shall be absolute, unconditional and
irrevocable and shall be satisfied strictly in accordance with the terms of
this Agreement, under all circumstances whatsoever, including, without
limitation, the following circumstances:
(a) Any lack of validity or enforceability of the Bank Documents, the
Financing Documents or any other agreement or instrument relating thereto; (b)
Any amendment or waiver of or any consent to departure from the terms of the
Letter of Credit, the Bank Documents, the Financing Documents or any other
agreement or instrument relating thereto; (c) The existence of any claim,
setoff, defense or right which the Company may have at any time against any
beneficiary or any transferee of the Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be acting),
the Bank, or any other person or entity, whether in connection with this
Agreement, the transactions contemplated by the Bank Documents, the Financing
Documents, or any unrelated transaction; (d) Any statement or any other
document presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever; or (e) Payment by the Bank under the
Letter of Credit against presentation of a request which on its face appears to
be in accordance with the terms of the Letter of Credit.
Section 2.4. Payments. The payments and amounts due the Bank under Section 2.2
above shall be made at 66 South Pearl Street or by the Bank's debiting the
Company's operating account with the Bank presently identified as Account No.
324300014853 (the "Operating Account"). The Company covenants and agrees that
on the date any payment or other amount is due under Section 2.2 above, the
Company will have unrestricted funds in the Operating Account in an amount no
less than the amount then due.
Section 2.5 Extension of Expiration Date. The Expiration Date automatically
will be extended for one year periods to successive anninversaries of the
Expiration Date unless not fewer than ninety (90) days prior to the currently
operative Expiration Date, the Bank notifies the Company, the Agency and the
Trustee that the Bank will not extend the Expiration Date.
SECTION THREE
REPRESENTATIONS AND WARRANTIES
The Company expressly represents and warrants that:
<PAGE>
Section 3.1. Existence and Legal Authority. The Company is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of New York and has all requisite corporate power and authority to own its
property and to carry on its business as now being conducted, to enter into the
Bank Documents to which it is a party and the other agreements referred to
herein and transactions contemplated thereby, and to carry out the provisions
and conditions of such Bank Documents to which it is a party. The Company is
duly qualified to do business and is in good standing in every jurisdiction
where the failure to so qualify would have a material adverse effect on its
business.
Section 3.2. Due Execution and Delivery. The Company has full power, authority
and legal right to incur the obligations provided for in, and to execute and
deliver and to perform and observe the terms and provisions of, the Bank
Documents to which it is a party, and each of the Bank Documents to which it is
a party has been duly executed and delivered by it and authorized, by all
required corporate action, and the Company has obtained all requisite consents
to the transactions contemplated thereby under any instrument to which it is a
party, and the Bank Documents to which it is a party constitute its legal,
valid and binding obligations enforceable against it in accordance with their
respective terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency or other similar laws affecting creditors'
rights generally.
Section 3.3. No Breach of Other Instruments. Neither the execution and delivery
of the Bank Documents to which the Company is a party, nor the compliance by
the Company with the terms and conditions of the Bank Documents to which it is
a party, nor the consummation of the transactions contemplated thereby, will
conflict with or result in a breach of its Organizational Documents, or any of
the terms, conditions or provisions of any agreement or instrument or any
charter or other organizational restriction or law, regulation, rule or order
of any governmental body or agency to which the Company is now a party or is
subject, or imposition of a lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of the Company pursuant to the
terms of any such agreement or instrument.
Section 3.4. Government Authorization. No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by the Bank
Documents other than any state or federal securities or "blue sky laws".
Section 3.5. Pledged Collateral. The Company has good fee simple title to the
Premises, free and clear of all liens, pledges, security interests, charges,
claims and other encumbrances, except the Permitted Encumbrances. Upon proper
recording and/or filing with the appropriate authorities, the Mortgage, the
Security Agreement and any financing statements executed in conjunction with
the Security Agreement, and the Pledge And Security Agreement create a valid
and prior perfected security interest and lien in favor of the Bank, subject to
no other liens or encumbrances arising by, through or under the Company or any
other Person, except for Permitted Encumbrances or as otherwise provided in the
Financing Documents.
Section 3.6. Absence of Defaults, etc. The Company is not (i) in material
default under any indenture or contract or agreement to which it is a party or
by which it is bound, (ii) in violation of its Organizational Documents, (iii)
in default with respect to any order, writ, injunction or decree of any court,
or (iv) in default under any order or license of any federal or state
<PAGE>
governmental department, which default or violation in any of the aforesaid
cases materially and adversely affects its business or property. There exists
no condition, event or act which constitutes, or after notice or lapse of time
or both would constitute, an Event of Default.
Section 3.7. Indebtedness of Company. The Company does not have outstanding on
the date hereof, any Indebtedness for borrowed money, except for such
Indebtedness reflected on the financial statements referred to in
Section 3.8 hereof. Section 3.8. Financial Condition. The Company has furnished
to the Bank true and correct financial statements audited by a certified public
accountant as of its September 30, 1997 year end and has also provided its 10Q
for the end of the third quarter of the current fiscal year, which financial
statements and 10Q present fairly its financial condition at such date, and
there has been no material adverse change in its financial condition since that
date.
Section 3.9. No Adverse Change. Subsequent to the date of the financial
statements referred to in Section 3.8 hereof, except as disclosed in interim
statements previously submitted to the Bank, the Company has not incurred any
liabilities or obligations, direct or contingent, not in the ordinary course of
business and there has not been any increase in the aggregate amount of its
Indebtedness, or any change in its business, properties or condition, financial
or otherwise, except for changes arising in the ordinary course of business or
in connection with the issuance and sale of the Bonds or as may be otherwise
disclosed in writing to the Bank prior to the date hereof.
Section 3.10. Taxes. The Company has filed all tax returns which are to be
filed and has paid, or has made adequate provision for the payment of, all
taxes which have or may become due pursuant to said returns or to assessments
received by it. The provisions for taxes reflected in the most recent balance
sheet included in the financial statements referred to in Section 3.8 are
believed adequate to cover any and all accrued and unpaid taxes for which the
Company is liable for the period ended on the date of such balance sheet and
all prior periods. The Company knows of no deficiency assessment or proposed
deficiency assessment of taxes against it, except as may be otherwise disclosed
in writing to the Bank prior to the date hereof.
Section 3.11. Litigation. Except as set forth on Exhibit B attached hereto,
prior to the date hereof, there are no actions, suits or proceedings pending,
or to the knowledge of the Company, threatened against or affecting the Company
property in any court, or before or by any federal, state or municipal or other
governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, which could result in any adverse change
in the business, property or assets, or in the condition, financial or
otherwise, except for actions, suits or proceedings of a character normally
incident to the kind of business conducted by it, none of which, either
individually or in the aggregate, if adversely determined, would materially
impair the right or ability of it to carry on its business substantially as now
conducted or materially adversely affect its financial position or operations.
Section 3.12. Ownership of Property. Except for Permitted Encumbrances or as
otherwise permitted in any of the Bank Documents to each of which the Company
is a party, the Company has good and marketable fee title to, or valid
leasehold interests in, its real properties in accordance with the laws of the
jurisdiction where located, respectively, and good and marketable title to
substantially all its other property and assets , subject, however, in the case
of real property, to title defects and restrictions which do not materially
interfere with its operations conducted thereon. Except for Permitted
<PAGE>
Encumbrances, the real property and all other property and assets of the
Company are free from any liens or encumbrance securing Indebtedness and from
any other liens, encumbrances, charges or security interests of any kind. Each
lease, if any, to which the Company is a party is in full force and effect, and
no material default on its part or, to its knowledge, any other party thereto
exists.
Section 3.13. Environmental Matters. The Company is in compliance with all
Environmental Laws and all applicable federal, state and local health and
safety laws, regulations, ordinances or rules, except to the extent that any
non-compliance will not, in the aggregate, have a materially adverse effect on
it or its ability to fulfill its obligations under this Agreement or any of the
other Bank Documents to which it is a party.
SECTION FOUR
CLOSING CONDITIONS
The obligation of the Bank to issue the Letter of Credit on the Closing Date
shall be subject to the following conditions precedent:
Section 4.1. Execution and Delivery of the Bank Documents and the Financing
Documents and Receipt of Other Documents and Information. With respect to
issuance of the Letter of Credit, the Company shall have delivered to the Bank
fully executed copies of each of the Bank Documents, and the Trustee and the
Company shall have duly executed and delivered the Note Documents.
Section 4.2. Issuance and Sale of the Bonds. The Bonds shall have been duly
issued and sold to the Purchaser pursuant to the Financing Documents.
Section 4.3. Representations and Warranties True as of Closing and No Event of
Default. The representations and warranties contained in this Agreement and the
other Bank Documents, shall be true in all material respects on the Closing
Date with the same effect as though made on and as of that date and no
condition, event or act shall have occurred which constitutes an Event of
Default or, with notice or lapse of time, or both, would constitute an Event of
Default.
Section 4.4. Opinion of Company's Counsel. The Bank shall have received from
counsel to the Company, on behalf of the Bank, an opinion with respect to (i)
the matters described in Sections 3.1, 3.2, and 3.4 of this Agreement, (ii) the
matters described in Sections 3.3, 3.6 and 3.11 of this Agreement, to such
counsel's knowledge and belief after inquiry and (iii) such other matters
incident to the transactions contemplated hereby as the Bank may reasonably
request.
Section 4.5. Opinion of Agency's Counsel. The Bank shall have received from
counsel for the Agency, an opinion with respect to (i) the valid organization
and good standing of the Agency, (ii) the regularity of all proceedings with
respect to the approval of the issuance of the Bonds, (iii) the qualification
of the Project under Title 1 of Article 18A of the General Municipal Law of the
State of New York, (iv) the valid issuance and enforceability of the Bonds, and
(v) such other matters as the Bank may reasonably require.
Section 4.6. Proceedings Satisfactory. All proceedings taken in connection with
the execution and delivery of this Reimbursement Agreement and the other Bank
Documents shall be satisfactory to the Bank and the Bank shall have received
copies of such certificates, documents and papers as reasonably requested in
connection therewith, all in form and substance satisfactory to the Bank.
<PAGE>
SECTION FIVE
ISSUANCE OF LETTER OF CREDIT
Section 5.1. Execution and Delivery of Miscellaneous Documents. The Bank will
not issue the Letter of Credit until the Company shall have delivered to the
Bank:
(a) Flood Certification. Evidence that no portion of the Premises is
located in a special flood hazard area as identified by HUD or, if it is so
located, that appropriate insurance coverage has been obtained.
(b) Insurance. Certificates of insurance and evidence of payment of premiums
therefor with respect to the insurance required by the Bank with respect to the
Premises as set forth in Section 6.2 below, including, but not limited to,
general liability insurance and hazard insurance, and flood insurance if
applicable.
(c) Survey. A survey of the Premises prepared by a registered surveyor
satisfactory to the Bank containing such detail as is satisfactory to the Bank.
(d) Environmental Audit. A Phase I environmental audit of the Premises
satisfactory to the Bank in its sole discretion prepared by an environmental
consultant satisfactory to the Bank.
(e) Title Commitment. A Commitment to issue an ALTA Loan Policy of Title
Insurance issued by the Title Company with respect to the Premises in the
amount of the Letter Of Credit (i) insuring that the Mortgage as of the time of
its filing for record, is a first and best lien upon the Premises and that the
title to the Premises is free, clear and unencumbered, subject only to
Permitted Encumbrances; (ii) insuring the priority of the Mortgage over
mechanics or materialmen's liens; (iii) obligating the Title Company to
affirmatively insure that access to the Premises is by a dedicated and accepted
public right-of-way; and (iv) including such endorsements and affirmative
insurance as may be required by the Bank, including, but not limited to, the
so-called "Pending Disbursement Endorsement".
(f) Compliance. Evidence satisfactory to the Bank that the Premises, and
the proposed and actual use thereof, will comply with all applicable laws,
statutes, codes, ordinances, rules and regulations, including, but not limited
to, zoning and Environmental Laws, of all governmental authorities having
jurisdiction over the same, and that there is no action or proceeding pending
(or any time for an appeal of any decision rendered) before any court, quasi-
judicial body or administrative agency at the Date of Issuance relating to the
validity of this Reimbursement Agreement on the transactions contemplated
hereby or the proposed or actual use or operation of the Premises.
(g) Appraisal. A written appraisal (the "Appraisal") of the Premises
satisfactory to the Bank in all respects, prepared by an appraiser selected and
directly engaged by the Bank pursuant to an engagement letter issued by the
Bank, the cost of which Appraisal will be charged to the Company at Closing
Date, and which Appraisal shall be prepared in accordance with the Uniform
Standards of Professional Appraisal Practice applicable to Federally Related
Transactions as set out in Appendix A to the real estate appraisal regulations
adopted by the Office of the Comptroller of the Currency pursuant to the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA")
(Sub-part C of 12 C.F.R. 34) and which Appraisal shall be updated, at the
Company's cost, upon the occurrence of an event of default under any of the
Credit Documents.
<PAGE>
Section 5.2. Building Loan Agreement. Each disbursement from the Project Fund
shall be subject to the conditions and provisions of the Building Loan
Agreement and the Indenture.
SECTION SIX
COVENANTS
The Company covenants and agrees that, from the date of this Agreement and
until the obligations of the Company to the Bank hereunder are satisfied in
full, it will comply with the following provisions:
Section 6.1. Accounting; Financial Statements and Other Information. The
Company will maintain, and will cause each Subsidiary to maintain, a standard
system of accounting, established and administered in accordance with GAAP
consistently followed through out the periods involved, and will set aside on
its books, for each fiscal year, the proper amounts for depreciation,
obsolescence, amortization, bad debts, current and deferred taxes, and other
purposes as shall be required by GAAP. The Company, unless the Bank shall
otherwise consent in writing, will deliver to the Bank or cause to be delivered
to the Bank:
(a) Audit Report. Promptly when available and in any event within 120 days
after the close of each Fiscal Year:(i) a copy of the annual audit report of
the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets of the Company and its Subsidiaries as of the end
of such Fiscal Year and consolidated statements of earnings and cash flow of
the Company and its Subsidiaries for such Fiscal Year in the form of the 10-K
submitted by the Company to the SEC, certified without qualification by
independent auditors of recognized standing selected by the Company and
reasonably acceptable to the Bank and (ii) consolidating balance sheets of the
Company and its Subsidiaries as of the end of such Fiscal Year and a
consolidating statement of earnings for the Company and its Subsidiaries for
such Fiscal Year, certified by the Chief Executive Officer, the Chief Financial
Officer or any Vice President of the Company.
(b)Quarterly Reports. Promptly when available and in any event within 45 days
after the end of each Fiscal Quarter (except the last Fiscal Quarter) of each
Fiscal Year, internally prepared consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the end of such Fiscal Quarter
together with consolidated and consolidating statements of earnings and a
consolidated and consolidating statement of cash flows for such Fiscal Quarter
and for the period beginning with the first day of such Fiscal Year and ending
on the last day of such Fiscal Quarter, certified by the Chief Executive
Officer, the Chief Financial Officer or any Vice President of the Company.
(c) Compliance Certificates. Contemporaneously with the furnishing of a copy of
each set of quarterly statements pursuant to subparagraph (c), a duly completed
compliance certificate in form acceptable to the Bank, dated the date of such
quarterly statements and signed by the Chief Executive Officer, the Chief
Financial Officer or any Vice President of the Company, containing a
computation of each of the financial ratios and restrictions set forth in
Section 7.9 and a statement to the effect that such officer has not become
aware of any Event of Default or Unmatured Event of Default that has occurred
and is continuing or, if there is any such event, describing it and the steps,
if any, being taken to cure it.
(d) Reports to SEC and to Shareholders. Promptly upon the filing or sending
thereof, copies of all regular, periodic or special reports of the Company or
any Subsidiary filed with the SEC; and copies of all registration statements of
<PAGE>
the Company or any Subsidiary filed with the SEC; and copies of all proxy
statements or other communications made to security holders generally
concerning material developments in the business of the Company or any
Subsidiary.
(e) Notice of Default, Litigation and ERISA Matters. Promptly upon becoming
aware of any of the following, written notice describing the same and the steps
being taken by the Borrower or the Subsidiary affected thereby with respect
thereto:
(i) the occurrence of an Event of Default or an Unmatured Event of Default;
(ii) any litigation, arbitration or governmental investigation or proceeding
not previously disclosed by the Company to the Bank which has been instituted
or, to the knowledge of the Company, is threatened against either the Borrower
or any Subsidiary or to which any of the properties of any thereof is subject
which, if adversely determined, might reasonably be expected to have a Material
Adverse Effect; (iii) the institution of any steps by any member of the
Controlled Group or any other Person to terminate any Pension Plan, or the
failure of any member of the Controlled Group to make a required contribution
to any Pension Plan (if such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the taking of
any action with respect to a Pension Plan which could result in the requirement
that the Company furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to any Pension Plan or
Multiemployer Pension Plan which could result in the incurrence by any member
of the Controlled Group of any material liability, fine or penalty (including
any claim or demand for withdrawal liability or partial withdrawal from any
Multiemployer Pension Plan), or any material increase in the contingent
liability of the Company with respect to any post-retirement Welfare Plan
benefit, or any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of an excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent; (iv) any cancellation or material change in
any insurance maintained by the Company or any Subsidiary; (v) any event
(including (i) any violation of any Environmental Law or the assertion of any
Environmental Claim or (ii) the enactment or effectiveness of any law, rule or
regulation) which might reasonably be expected to have a Material Adverse
Effect; or (vi) any setoff, claims, withholdings or other defenses to which any
of the Collateral, or the Bank's, rights with respect to the Collateral, are
subject.
(f) Subsidiaries. Promptly upon any change in the list of its Subsidiaries,
a written report of such change.
(g) Management Reports. Promptly upon the request of the Bank, copies of
all detailed financial and management reports submitted to the Company by
independent auditors in connection with each annual or interim audit made by
such auditors of the books of the Company.
(h) Budgets. As soon as practicable and in any event within 60 days after
the commencement of each Fiscal Year, divisional and consolidated budgets for
the Company and its Subsidiaries for such Fiscal Year prepared in a manner
reasonably satisfactory to the Bank.
(i) Other Information. From time to time such other information concerning
the Company and its Subsidiaries as the Bank may reasonably request.
<PAGE>
Section 6.2. Insurance and Maintenance of Properties and Business. The Company
shall, and shall cause each of its Subsidiaries to, maintain insurance in
responsible companies in such amounts and against such risks as is satisfactory
to the Bank, and, in the case of all policies insuring property in which Bank
shall have a lien or security interest of any kind, all such policies shall
provide that the proceeds thereof shall be payable to it and Bank, as their
respective interests may appear. All said policies or certificates thereof,
including the endorsements, shall be deposited with the Bank; and such policies
shall contain provisions that no such insurance may be canceled or decreased
without thirty (30) days prior written notice to the Bank. In the event of
acquisition by the Company of additional insurable Pledged Collateral, it shall
cause such insurance coverage to be increased or amended in such manner and to
such extent as prudent business judgment would dictate. If the Company shall at
any time or times hereafter fail to obtain and/or maintain any of the policies
of insurance required herein, or fail to pay any premium in whole or in part
relating to such policies, Bank may, but shall not be obligated to, obtain
and/or cause to be maintained insurance coverage with respect to the Pledged
Collateral, including, at Bank's option, the coverage provided by all or any of
the policies of the Company, and pay all or any part of the premium therefor,
without waiving any default by Company; any sums disbursed by Bank shall be
additional loans to Company by Bank payable on demand. Bank shall have the
right to settle and compromise any and all claims under any of the policies
required to be maintained by Company hereunder and the Company hereby appoints
Bank as its attorney-in-fact, with power to demand, receive, and receipt for
all monies payable thereunder, to execute in its name or the name of the Bank
or both any proof of loss, notice, draft, or other instruments in connection
with such policies or any loss thereunder and generally to do and perform any
and all acts as Company, but for this appointment, might or could perform. The
Company will, upon request, furnish to the Bank a schedule of all insurance
carried by it, setting forth in detail the amount and type of such insurance.
The Company will maintain, in good repair, working order and condition, all
properties used or useful in its the business.
Section 6.3. Payment of Indebtedness and Taxes. The Company will pay (a) all of
its Indebtedness (not required to be subordinated hereunder) and other
obligations in accordance with normal terms or any applicable grace periods and
(b) all taxes, assessments, and other governmental charges levied upon any of
its respective properties or assets or in respect of its respective franchises,
business, income, or profits before the same become delinquent, except that no
such Indebtedness, obligations, taxes, assessments, or other charges need be
paid if contested by the Company in good faith and by appropriate proceedings
promptly initiated and diligently conducted and if appropriate provision, if
any, as shall be required by GAAP, shall have been made therefor.
Section 6.4. Litigation; Adverse Changes. The Company will promptly notify the
Bank in writing of (a) any event which, if existing at the date hereof, would
require a material qualification of the representations and warranties set
forth in Section 3.6 and (b) any material adverse change in the condition,
business, or prospects, financial or otherwise, of the Company.
Section 6.5. Notice of Default. The Company will promptly notify the Bank of
(a) any Event of Default or event which with the passage of time or service of
notice or both would constitute an Event of Default hereunder and (b) any
demands made upon the Company by any Person for the acceleration and immediate
payment of any material Indebtedness owed to such Person.
<PAGE>
Section 6.6. Inspection. The Company will make available for inspection by duly
authorized representatives of the Bank, its books, records, and properties, and
will furnish the Bank such information regarding its respective business
affairs and financial condition within a reasonable time after written request
therefor.
Section 6.7. Environmental Matters. The Company:
(a) Shall comply in all material respects with all Environmental Laws.
(b) Shall deliver promptly to the Bank (i) copies of any documents received
from the United States Environmental Protection Agency or any state, county or
municipal environmental or health agency, and (ii) copies of any documents
submitted by the Company to the United States Environmental Protection Agency
or any state, county or municipal environmental or health agency concerning its
operations.
(c) Shall indemnify and hold Bank harmless from all liability or loss
arising out of the application of any Environmental Law to Bank or to any
collateral (including without limitation the Premises) for any loan to the
Company, including, without limitation, any Environmental Law creating a lien
upon property or imposing any liability upon Bank for any clean up costs;
provided, however, that this indemnity shall not apply to liability arising out
of willful violation of Environmental laws by the Bank.
Section 6.8. Payments Under Instalment Sale Agreement. The Company shall make
the payments required pursuant to Section 5.3 of the Instalment Sale Agreement.
Section 6.9. Existence; Business. The Company will do all things reasonably
necessary to preserve and keep in full force and effect its existence and
rights, to conduct its business in a prudent manner, to maintain in full force
and effect, and renew from time to time, its franchises, permits, licenses,
patents, and trademarks that are necessary to operate its business. The Company
will comply in all material respects with all valid laws and regulations now in
effect or hereafter promulgated by any properly constituted governmental
authority having jurisdiction; provided, however, the Company shall not be
required to comply with any law or regulation which it is contesting in good
faith by appropriate proceedings as long as either the effect of such law or
regulation is stayed pending the resolution of such proceedings or the effect
of not complying with such law or regulation is not to jeopardize any
franchise, license, permit, patent, or trademark necessary to conduct its
business.
Section 6.10. Licenses. The Company shall have all licenses, permits and
approvals required under any federal, state, or local statutes, regulation,
ordinance, rule, or other legal requirement relating to the establishment,
ownership or operation of any business conducted by it, including, without
limitation, appropriate environmental approvals.
Section 6.11. Title. The Company will keep the title to the Pledged Collateral
owned by it free and clear of all liens, encumbrances, easements, restrictions
and claims, except for (a) the Permitted Encumbrances, (b) any lien,
restriction or encumbrance created in connection with any Credit Document to
which it is a party or otherwise approved by the Bank, and (c) real estate
taxes and installment of special assessments, if any, which are a lien but not
yet due and payable.
Section 6.12. Construction of Project. The Company will cause the construction
of the Project to be carried forward with diligence and continuity and to be
<PAGE>
completed by the Completion Date, and in accordance with the Plans and
Specifications and all applicable zoning, building and other laws, statutes,
codes, ordinances, rules and regulations. The Company will comply with its
obligations under the General Contract.
SECTION SEVEN
NEGATIVE COVENANTS
The Company further covenants and agrees that, from the date of this Agreement
and until the obligations of the Company to the Bank hereunder are satisfied in
full, the Company will, unless the Bank shall otherwise consent or agree,
comply with the following provisions:
Section 7.1. Sale, Purchase of Assets. The Company will not, directly or
indirectly, (a) purchase, lease, or otherwise acquire any assets, including
without limitation shares of corporate stock or other equity interests in
entities, except in the ordinary course of business or as otherwise permitted
under this Agreement, or (b) sell, lease, transfer, or otherwise dispose of any
plant or other assets in an amount that exceeds Five Thousand Dollars
($5,000.00) per transaction, except for (i) assets sold for full and adequate
consideration in the reasonable judgment of the Company which the Company has
determined to be worn out or obsolete or not useful in the ordinary course of
its business, and (ii) assets sold in the ordinary course of business provided
that the Company receives full and adequate consideration in its reasonable
judgment in exchange for such assets sold.
Section 7.2. Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith by appropriate proceedings and, in each case, for which it maintains
adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i) Liens of
carriers, warehousemen, mechanics and materialmen and other similar Liens
imposed by law and (ii) Liens incurred in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or being
contested in good faith by appropriate proceedings and not involving any
deposits or advances or borrowed money or the deferred purchase price of
property or services, and, in each case, for which it maintains adequate
reserves;
(c) Liens identified in Schedule 7.2;
(d) Liens that constitute purchase money security interests on any property
securing debt incurred for the purpose of financing all or any part of the cost
of acquiring such property, provided that any such Lien attaches to such
property within 60 days of the acquisition thereof and such Lien attaches
solely to the property so acquired;
(e) attachments, appeal bonds, judgments and other similar Liens, for sums
not exceeding $250,000 arising in connection with court proceedings, provided
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
<PAGE>
(f) easements, rights of way, restrictions, minor defects or irregularities
in title and other similar Liens not interfering in any material respect with
the ordinary conduct of the business of the Company or any Subsidiary;
(g) Liens in favor of the Bank; and
(h) Liens granted to secure repayment of the Bonds.
Section 7.3. Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except:
(a) obligations in respect of the Loan or any Letters of Credit;
(b) other Debt due the Bank;
(c) trade debt;
(d) Debt of Guarantor owed to the Company;
(e) Debt of Subsidiaries (other than Guarantor) or Debt of Plug Power owed to
the Company in the aggregate in excess of $750,000 during any Fiscal Year,
provided that Debt in excess of $750,000 will be permitted to the extent that
the loans by the Company are funded entirely with grant funds or equity
offering proceeds; (f) the Bonds;
(g) Subordinated Debt.
Section 7.4. Advances and Other Investments. The Company will not, and not
permit any Subsidiary to, make, incur, assume or suffer to exist any Investment
in any other Person, except (without duplication) the following:
(a) the advances permitted hereunder;
(b) equity Investments existing on the Effective Date in Subsidiaries
identified in Schedule 7.4; and
(c) the Guarantor's bank deposits in the ordinary course of business;
provided that the aggregate amount of all such deposits (excluding amounts in
payroll accounts or for accounts payable, in each case to the extent that
checks have been issued to third parties) which are maintained with any bank
other than the Bank shall not at any time exceed the amount(s) necessary for
payroll plus $50,000; provided, however, that no Investment otherwise permitted
by clause (b) shall be permitted to be made if, immediately before or after
giving effect thereto, any Event of Default or Unmatured Event of Default shall
have occurred and be continuing.
Section 7.5. Assumptions; Guaranties. The Company will not assume, guarantee,
endorse, or otherwise become directly or contingently liable for (including,
without limitation, liable by way of agreement, contingent or otherwise, to
purchase, to provide funds for payment, to supply funds to, or otherwise invest
in any debtor or otherwise to assure the creditor against loss) any obligation
or Indebtedness of any other Person, except guaranties by endorsement of
negotiable instruments for deposit, collection, or similar transactions in the
ordinary course of business.
<PAGE>
Section 7.6. Mergers; Consolidation. The Company will not and will not permit
any Subsidiary to merge or consolidate with any Person, dissolve, wind up its
affairs, or sell, assign, lease, or otherwise dispose of (whether in one
transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person without the
consent of the Bank which shall not be unreasonably withheld.
Section 7.7. Subordinated Debt. The Company will not make any payment upon its
outstanding Subordinated Debt, except in such manner and amounts as may be
expressly authorized in any subordination agreement presently or hereafter held
by the Bank.
Section 7.8. Bond Documents. The Company will not enter into an amendment of
the Bond Documents, without the prior written consent of the Bank.
Section 7.9. Financial Covenants. The Company on a consolidated basis with its
Subsidiaries shall, on a quarterly basis commencing September 30, 1998 and
continuing quarterly thereafter:
(a) Fixed Charge Coverage Ratio. Not permit its Fixed Charge Coverage Ratio to
be less than 2.0 to 1.0.
(b) Leverage Ratio. Not permit its Leverage Ratio as of the last day of
each quarter through and including the quarter ending June 25, 1999 to exceed
1.75 to 1.0 and for each quarter thereafter, exceed 1.5 to 1.
(c) Losses. Not show losses for any two (2) consecutive quarters, excluding
losses on the Company's investment in Plug Power.
SECTION EIGHT
EVENTS OF DEFAULT
Section 8.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default under this Agreement:
(a) Payments. The Company fails to make or cause to be made any payment to
the Bank required to be made pursuant to the terms of this Agreement or any of
the other Bank Documents to which it is a party for a period of ten (10)
Business Days, or
(b) Representations; Warranties. If any representation or warranty made
herein by the Company, in any other written statement, certificate, report, or
financial statement at any time furnished by or for the Company in connection
herewith, proves to be incorrect in any material respect when made, or
(c) Covenant Defaults. If the Company fails to perform or observe any other
provision, covenant, or agreement contained in this Agreement or in any other
of the Bank Documents, to which it is a party and such failure remains
unremedied for thirty (30) calendar days after the Bank shall have given
written notice thereof to the Company, or
(d) Other Indebtedness. If the Company (i) fails to pay any Indebtedness
for borrowed money (other than as arising under the Bank Documents) owing by
the Company when due, whether at maturity, by acceleration, or otherwise or
(ii) fails to perform any term, covenant, or agreement on its part to be
performed under any agreement or instrument (other than the Bank Documents)
evidencing, securing or relating to such Indebtedness when required to be
performed, or is otherwise in default thereunder, if the effect of such failure
is to accelerate, or to permit the holder(s) of such Indebtedness or the
<PAGE>
trustee(s) under any such agreement or instrument to accelerate, the maturity
of such Indebtedness, whether or not such failure shall be waived by such
holder(s) or trustee(s), or
(e) Indenture. An Indenture Default shall have occurred, or
(f) Adverse Change. If the Company discontinues business, or if there
occurs a material adverse change in its business, property, or its condition or
operations, financial or otherwise, or
(g) ERISA. If any of the following events occur: (i) any Reportable Event
which the Bank determines in good faith might constitute grounds for the
termination of any Plan or for the appointment by the appropriate United States
district court of a trustee to administer any Plan, continues for thirty (30)
days after the Bank has given written notice thereof to the Company, (ii) any
Plan incurs any "accumulated funding deficiency" (as such term is defined in
ERISA) whether waived or not, (iii) the Company engages in any Prohibited
Transaction, (iv) a trustee is appointed by an appropriate United States
district court to administer any Plan, or (v) the PBGC institutes proceedings
to terminate any Plan or to appoint a trustee to administer any Plan, or
(h) Insolvency. If the Company (i) is adjudicated a debtor or insolvent, or
ceases, is unable, or admits in writing its inability to pay its debts as they
mature, or makes an Assignments for the benefit of creditors, (ii) applies for,
or consents to, the appointment of any receiver, trustee, or similar officer
for it or for all or any substantial part of its property, or any such
receiver, trustee, or similar officer is appointed without the application or
consent of the Company, (iii) institutes, or consents to the institution of, by
petition, application, or otherwise, any bankruptcy reorganization,
arrangement, readjustment of debt, dissolution, liquidation, or similar
proceeding relating to it under the laws of any jurisdiction, (iv) has any such
proceeding described in clause (iii) instituted against it which remains
thereafter undismissed for a period of one hundred twenty (120) days or (v) has
any judgment, writ, warrant of attachment or execution or similar process
issued or levied against a substantial part of its property and such judgment,
writ, or similar process is not released, vacated, or fully bonded within one
hundred twenty (120) days after its issue or levy.
(i) Other Credit Documents. If an event of default occurs under any of the
other Bank Documents (other than this Agreement).
Section 8.2. No Waiver; Remedies. If an Event of Default occurs, the Bank may
exercise any and all remedies, legal or equitable on behalf of the Bank, to
collect the amounts due from the Company pursuant to this Agreement, and, in
its sole discretion, may instruct the Trustee to redeem the Bonds. Upon receipt
by the Trustee of such instructions from the Bank, the Bonds shall be redeemed
pursuant to the Indenture. No failure on the part of the Bank to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right or remedy.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law or equity.
SECTION NINE
TRANSFER, REDUCTION OR TERMINATION OF LETTER OF CREDIT
Section 9.1. Transfer of Letter of Credit and Termination of Letter of Credit
and Related Matters.
<PAGE>
(a) Transfer. The Letter of Credit may be transferred in accordance with
the provisions set forth therein.
(b) Termination. The Letter of Credit shall terminate automatically on the
earliest of (i) the payment by the Bank to the Trustee of the final drawing
available to be made under the Letter of Credit; (ii) receipt by the Bank of
the Letter of Credit and a certificate signed by an officer of the Trustee and
an authorized representative of Company stating that no Bonds remain
outstanding; (iii) receipt by the Bank of the Letter of Credit and a
certificate signed by an officer of the Trustee and an authorized
representative of Company stating that "An Alternate Credit Facility" in
substitution for the Letter of Credit has been accepted by the Trustee and is
in effect"; or (iv) the stated Expiration Date.
SECTION TEN
MISCELLANEOUS
Section 10.1. Liability of the Bank. Between the Company and the Bank, the
Company assumes all risks of the acts or omissions of the Trustee and any
transferee of the Letter of Credit with respect to its use of the Letter of
Credit or its proceeds. Neither the Bank nor any of its officers or directors
shall be liable or responsible for: (a) the use which may be made of the Letter
of Credit or any of the proceeds thereof, or for any acts or omissions of the
Trustee and any transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, inaccuracy of any of the statements or
representations contained therein or of any endorsement(s) thereon, even if
such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (c) payment by the Bank against
presentation of documents which do not strictly comply with the terms of the
Letter of Credit, including any failure of any documents to bear any reference
or adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under the Letter of Credit,
except the Company shall have a claim against the Bank, and the Bank shall be
liable to the Company, to the extent, but only to the extent of any direct, as
opposed to consequential, damages suffered by the Company which the Company
proves were caused by (i) the Bank's willful misconduct or gross negligence in
honoring a draft under the Letter of Credit, or (ii) the Bank's willful failure
to pay under the Letter of Credit after presentation to it by the Trustee (or a
successor trustee under the Indenture to whom the Letter of Credit has been
transferred in accordance with its terms) of a sight draft and certificate
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, and may assume the
genuineness and rightfulness of any signature thereon, without responsibility
for further investigation, regardless of any notice or information to the
contrary unless actually received by the Bank; provided, that if the Bank shall
receive written notification from both the Trustee and the Company that
documents conforming to the terms of the Letter of Credit to be presented to
the Bank are not to be honored, the Bank agrees that it will not honor such
documents and the Company shall indemnify and hold the Bank harmless from such
failure to honor.
Section 10.2. Right to Set-Off. Upon the occurrence of any Event of Default
hereunder the Bank is hereby irrevocably authorized at any time and from time
to time without notice to the Company, any such notice being expressly waived
by the Company, to set-off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency,
any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect or contingent or matured or unmatured, at any time
<PAGE>
held or owing by the Bank to or for the credit or the account of the Company,
or any part thereof in such amounts as such Bank may elect, against and on
account of the obligations and liabilities of the Company to the Bank hereunder
and claims of every nature and description of the Bank against the Company,
whether arising hereunder or otherwise, as the Bank may elect, whether or not
the Bank has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. The Bank agrees to
notify the Company promptly of any such set-off and the application made by the
Bank, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Bank under this
subsection are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Bank may have.
Section 10.3. Additional Collateral. As additional security for this Agreement,
the Company agrees that in the event that Trustee shall, at any time or from
time to time, in response to an acceleration of the Bonds, draw upon the Letter
of Credit, the Bank shall be and become the assignee of all rights and
interests of the Company and the Trustee. The Company does hereby consent to
such Assignments, and agrees to execute any and all such documents, instruments
and certificates in connection therewith as the Bank shall deem appropriate.
Section 10.4. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered, or mailed first-class postage prepaid, or sent by wire, telex,
telecopier or similar electronic means of communication or delivered to a
telegraph office for transmission, addressed to the appropriate address set
forth below, if to the Bank, at: KeyBank National Association 66 South Pearl
Street Albany, New York 12207-1501 Attention: William B. Palmer Vice President
Fax Number: (518) 487-4285
With a copy to:
Edward J. Trombly, Esq.
HISCOCK & BARCLAY, LLP
One KeyCorp
Plaza, Suite 1100
30 South Pearl Street
Albany, New York 12207-3411
or at such other address as may have been furnished for such purpose to the
Company by the Bank in writing; or
if to the Company, at:
Mechanical Technology Incorporated
968 Albany-Shaker Road
Latham, New York 12110
Attention: Cynthia A. Scheuer, Vice President
with a copy to: Harry D'Agostino, Esq.
D'Agostino, Hoblock, Greisler & Siegal
39 North Pearl Street
Albany, New York 12207
or at such other address as may have been furnished for such purpose to the
Bank by the Company in writing.
<PAGE>
Section 10.5. Survival of Representations and Warranties. All agreements,
representations and warranties contained in the Bank Documents shall survive
the execution and delivery of this Agreement, any investigation at any time
made by or on behalf of the Bank and the issuance and acceptance of the Letter
of Credit. All statements contained in any certificates or other instruments
delivered by the Company pursuant hereto shall constitute representations and
warranties by the Company under this Agreement.
Section 10.6. Payments on Holidays. Whenever any payment to be made pursuant to
this Agreement shall be stated to be due on a day other than a Business Day,
such payment may be made on the next succeeding Business Day and such extension
of time shall in such case be included in computing interest, if any, in
connection with such payment.
Section 10.7. Computation of Interest. Except as otherwise provided, all
computations of interest with respect to the Letter of Credit hereunder shall
be made on the basis of a three hundred sixty-five (365) day year.
Section 10.8. Entire Agreement. The Bank Documents and the Letter of Credit
embody the entire agreement and understanding among the parties hereto and
supersede all prior agreements and understandings relating to the subject
matter hereof.
Section 10.9. Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto.
Section 10.10. Expenses. The Company agrees, regardless of whether or not the
Bonds are eventually issued and sold and regardless of whether or not the
transactions contemplated hereby shall be consummated, to pay all reasonable
expenses incurred by the Bank incident to such transactions in the preparation
of documentation relating thereto, including all reasonable fees and
disbursement of the counsel (whether special outside counsel or attorneys in
its Law Group) of the Bank, for services to the Bank. The Company further agree
to pay all like expenses incurred by the Bank in connection with any amendments
of or waivers or consents requested by the Company under or with respect to the
Bank Documents.
Section 10.11. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 10.12. New York Contract. This Agreement shall be construed and
enforced in accordance with and be governed by the laws of the State of New
York.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
as of the date first above written.
MECHANICAL TECHNOLOGY, INCORPORATED
By: Name: Cynthia A. Scheuer Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: Name: William B. Palmer Title: Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF ALBANY )
On this day of December, 1999, before me the subscriber personally appeared
CYNTHIA A. SCHEUER, who being by me duly sworn, did depose and say; that she
resides at Castleton, New York, that she is a Vice President of MECHANICAL
TECHNOLOGY INCORPORATED, the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.:
COUNTY OF ALBANY )
On this day of December, 1999, before me the subscriber personally appeared
WILLIAM B. PALMER, who being by me duly sworn, did depose and say; that he
resides at Athens, New York, that he is a Vice President of KEYBANK NATIONAL
ASSOCIATION, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
NOTARY PUBLIC
MORTGAGE AND SECURITY AGREEMENT
$6,160,274.00
THIS MORTGAGE AND SECURITY AGREEMENT, made as of the 1st day of December, 1998,
by MECHANICAL TECHNOLOGY INCORPORATED, a New York corporation with an office
for the transaction of business at 968 Albany-Shaker Road, Latham, New York
12110 (the "Company") and TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY, a
public benefit corporation duly organized and existing under and by virtue of
the laws of the State of New York with an office for the transaction of
business at 347 Old Niskayuna Road, Latham, New York 12110 (the "Issuer" and
together with the Company, the "Mortgagor") to KEYBANK NATIONAL ASSOCIATION, a
national banking association with an office located at 66 South Pearl Street,
Albany, New York 12207 (the "Mortgagee").
WITNESSETH, that to secure the obligations of the Company to the Mortgagee
under the Reimbursement Agreement dated as of December 1, 1998 between the
Company and the Mortgagee (the "Reimbursement Agreement") and also to secure
the payment by the Company to Mortgagee of all sums expended or advanced by
Mortgagee pursuant to any covenant, term or provision of this Mortgage or any
other Bank Document (as that term is defined in the Reimbursement Agreement),
and to secure the performance of each covenant, term and provision by the
Company to be performed pursuant to this Mortgage or any other Bank Document,
the Company and the Issuer hereby mortgage to Mortgagee, its successors and
assigns, their respective fee and leasehold interests in the following
described property (the "Mortgaged Property") whether now owned or held or
hereafter acquired:
ALL THAT TRACT OR PARCEL OF LAND situate in the County of Albany, State of New
York, and being the same premises described in Schedule "A" hereto annexed and
made a part hereof (the "Premises").
ALL RIGHT, TITLE AND INTEREST of Mortgagor in and to any and all buildings,
structures and improvements, including without limitation, the foundations and
footings thereof, now or at any time hereafter erected, constructed or situated
upon the Premises or any part thereof (the "Improvements").
TOGETHER with all fixtures, chattels and articles of personal property now or
hereafter attached to or used in connection with the Premises, together with
any and all replacements thereof and additions thereto (the "Chattels"). This
Mortgage shall be considered a financing statement pursuant to the provisions
of the Uniform Commercial Code, covering fixtures which are affixed to the
Premises. The types of collateral covered hereby are described in this
paragraph. The debtors are MECHANICAL TECHNOLOGY INCORPORATED and TOWN OF
COLONIE INDUSTRIAL DEVELOPMENT AGENCY. The secured party is KEYBANK NATIONAL
ASSOCIATION. Their addresses are set forth above.
TOGETHER with all right, title and interest, if any, of Mortgagor of, in and to
the bed of any street, road or avenue, opened or proposed, in front of,
adjoining or abutting upon the Premises to the center line thereof.
TOGETHER with any and all awards heretofore and hereafter made to the present
and all subsequent owners of the Premises by any governmental or other lawful
authorities for the taking by eminent domain of the whole or any part of the
Premises, or any easement therein, including any awards for any changes of
grade of streets, which said awards are hereby assigned to Mortgagee, who is
hereby authorized to collect and receive the proceeds of any such awards from
such authorities and to give proper receipts and acquittances therefor, and to
apply the same toward the payment of the amount owing on account of this
Mortgage and the other Bank Documents, notwithstanding the fact that the amount
owing thereon may not then be due and payable.
TOGETHER with any and all rights and benefits of the Issuer under and pursuant
to an installment sale agreement (the "Installment Sale Agreement") from the
Company to the Issuer dated as of December 1, 1998, except the Unassigned
Rights (as defined in the Installment Sale Agreement).
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee, its successors
and assigns, PROVIDED ALWAYS that if the Company shall pay or cause to be paid
to Mortgagee, its successors and assigns, said principal sum of money and other
charges mentioned and set forth in this Mortgage and in the other Bank
Documents, together with interest thereon, then and from thence forth, the
Mortgaged Property and the estate hereby granted shall cease, determine and be
void.
AND the Company covenants with Mortgagee as follows:
1. REPRESENTATIONS. The Company hereby represents and warrants to
Mortgagee as follows:
(a) That the Bank Documents (as that term is defined in the Reimbursement
Agreement) are in all respects valid and legally binding obligations,
enforceable in accordance with their respective terms.
(b) That the execution and delivery of the Bank Documents by the Company
and any guarantor do not, and the performance and observance by the Company and
any guarantor of their obligations thereunder will not, contravene or result in
a breach of (i) if the Company or any guarantor purports to be a corporation,
any provision of the Company's or any guarantor's corporate charter or by-laws,
or, if the Company or any guarantor purports to be partnership, any provision
of the Company's or any guarantor's partnership agreement or certificate, or if
the Company or any guarantor purports to be a limited liability company, any
provision of their Articles of Organization or Operating Agreement, or (ii) any
governmental requirements, or (iii) any decree or judgement binding on the
Company or any guarantor, or (iv) any agreement or instrument binding on the
Company or any guarantor or any of their respective properties, nor will the
same result in the creation of any lien or security interest under any such
agreement or instrument.
(c) That there are no actions, suits, investigations or proceedings
pending, or, to the knowledge of the Company, threatened against or affecting
the Company (or any general partner of the Company), any guarantor or the
Mortgaged Property, or involving the validity or enforceability of any of the
Bank Documents or the priority of the lien thereof, or which will affect the
Company's ability to repay its obligations under the Bank Documents, at law or
in equity or before or by any governmental authority.
(d) That the Company has no knowledge of any violations or notices of
violations of any requirements.
(e) If the Company (or any general partner of the Company if the Company is
a partnership) or any guarantor purports to be a corporation, that (i) it is a
corporation duly organized, validly existing and in good standing under the
laws of the state in which it is incorporated, (ii) if required by the laws of
the state in which the Premises is located, it is duly qualified to do business
and is in good standing therein, (iii) it has the corporate power, authority
and legal right to own and operate its properties and assets, carry on the
business now being conducted and proposed to be conducted by it, and to engage
in the transactions contemplated by the Bank Documents, and (iv) the execution
and delivery of the Bank Documents to which it is a party and the performance
and observance of the provisions thereof have been duly authorized by all
necessary corporate actions.
If the Company (or any general partner of the Company if the Company is a
partnership) or any guarantor is a partnership, that (i) it is duly formed and
validly existing under the laws of the state in which it is formed, (ii) if
required by the laws of the state in which the Premises is located, it is fully
qualified to do business therein, (iii) it has the power, authority and legal
right to own and operate its properties and assets, to carry on the business
conducted and proposed to be conducted by it, and to engage in the transactions
contemplated by the Bank Documents, and (iv) the execution and delivery of the
Bank Documents to which it is a party and the performance and observance of the
provisions thereof have all been duly authorized by all necessary actions of
its partners.
If the Company (or any general partner of the Company if the Company is a
partnership) or any guarantor is a limited liability company, that (i) it is
duly formed and validly existing under the laws of the state in which it is
formed, (ii) if required by the laws of the state in which the Premises is
located, it is fully qualified to do business therein, (iii) it has the power,
authority and legal right to own and operate its properties and assets, to
carry on the business conducted and proposed to be conducted by it, and to
engage in the transactions contemplated by the Bank Documents, and (iv) the
execution and delivery of the Bank Documents to which it is a party and the
performance and observance of the provisions thereof have all been duly
authorized by all necessary actions of its members.
(f) That all utility services necessary and sufficient for the
construction, development and operation of the Mortgaged Property for its
intended purposes are presently available to the Premises (or the boundaries
thereof if this Mortgage is executed in conjunction with a construction loan)
through dedicated public rights of way or through perpetual private easements,
approved by Mortgagee, with respect to which the Mortgage creates a valid,
binding and enforceable first lien, including, but not limited to, water
supply, storm and sanitary sewer, gas, electric and telephone facilities, and
drainage.
(g) That neither the Mortgaged Property nor any portion thereof is now
damaged or injured as result of any fire, explosion, accident, flood or other
casualty or has been the subject of any taking, and to the knowledge of the
Company, no taking is pending or contemplated.
(h) That any brokerage commissions due in connection with the transactions
contemplated hereby have been paid in full and that any such commissions coming
due in the future will be promptly paid by the Company. The Company agrees to
and shall indemnify Mortgagee from any liability, claims or losses arising by
reason of any such brokerage commissions. This provision shall survive the
repayment of the Company's obligations under the Bank Documents and shall
continue in full force and effect so long as the possibility of such liability,
claims or losses exists.
(i) That the financial statements of the Company and any guarantor
previously delivered to Mortgagee are true and correct in all respects, have
been prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present the respective financial conditions of
the Company and any guarantor as of the respective dates thereof and the
results of their operations for the periods covered thereby; that no adverse
change has occurred in the assets, liabilities, or financial conditions
reflected therein since the respective dates thereof; and that no additional
borrowings have been made by the Company or any guarantor since the date
thereof other than the borrowing contemplated hereby.
(j) That all federal, state and other tax returns of the Company and any
guarantor required by law to be filed have been filed, that all federal, state
and other taxes, assessments and other governmental charges upon the Company
and any guarantor or their respective properties which are due and payable have
been paid, and that the Company and any guarantor have set aside on their books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods for which such returns have been filed.
(k) That the Company has made no contract or arrangement of any kind or
type whatsoever (whether oral or written, formal or informal), the performance
of which by the other party thereto could give rise to a lien or encumbrance on
the Mortgaged Property, except for contracts (all of which have been disclosed
in writing to Mortgagee) made by the Company with parties who have executed and
delivered lien waivers to the Company, and which, in the opinion of Mortgagee's
counsel, will not create rights in existing or future lien claimants which may
be superior to the lien of the Mortgage.
(l) That the rights of way for all roads necessary for the full utilization
of the Improvements for their intended purposes have either been acquired by
the Company, the appropriate governmental authority or have been dedicated to
public use and accepted by such governmental authority, and all such roads
shall have been completed, or all necessary steps shall have been taken by the
Company and such governmental authority to assure the complete construction and
installation thereof prior to the date upon which access to the Mortgaged
Property via such roads will be necessary. All curb cuts, driveway permits and
traffic signals necessary for access to the Mortgaged Property are existing or
have been fully approved by the appropriate governmental authority.
(m) That no Event of Default (hereinbelow defined) exists and no event
which but for the passage of time, the giving of notice or both would
constitute an Event of Default has occurred.
2. THE INDEBTEDNESS. The Company will pay the indebtedness as provided in
the Reimbursement Agreement or in any modification, renewal or extension of the
Reimbursement Agreement.
3. INSURANCE. At all times that any obligations of the Company under the
Bank Documents are outstanding, including without limitation during any
construction period (a "Construction Period"), the Company shall maintain
insurance with respect to the Premises the Improvements and the Chattels
against such risks and for such amounts as are customarily insured against by
businesses of like size and type paying, as the same become due and payable,
all premiums in respect thereto, including but not limited to:
(a) Prior to completion of construction of the Improvements, if the same
have not been completed, builder's risk all risk (or equivalent coverage)
insurance upon any work done or material furnished in connection with
construction of the Improvements, issued to the Company and Mortgagee and
written in non-reporting completed form in the amount of the Mortgagee's
liability under the Letter of Credit (as that term is defined in the
Reimbursement Agreement) and with respect to the Improvements and at such time
that builder's risk insurance shall not be available due to completion of the
construction of the Improvements, or if all Improvements have been completed,
insurance protecting the interests of the Company and Mortgagee as their
interests may appear against loss or damage to the Improvements by fire,
lightning, flood and other casualties normally insured against, with a uniform
standard extended coverage endorsement, such insurance at all times to be in an
amount of the outstanding obligations of the Mortgagee under the Letter of
Credit or the total cash replacement value of the Improvements not covered by
builder's risk insurance, as determined at least once every three years by a
recognized appraiser or insurer selected by the Company and approved by the
Mortgagee.
(b) Workers' compensation insurance, disability benefits insurance, and
such other form of insurance which the Company is required by law to provide,
covering loss resulting from injury, sickness, disability or death of employees
of the Company who are located at or assigned to the Premises or who are
responsible for the construction of the Improvements.
(c) Insurance protecting the Company and Mortgagee against loss or losses
from liabilities imposed by law or assumed in any written contract and arising
from personal injury and death or damage to the property of others caused by
accident or occurrence, in such amounts as may be designated from time to time
by Mortgagee, excluding liability imposed upon the Company by any applicable
workers' compensation law, or such other amounts as may be required in writing
by the Mortgagee; and a blanket excess liability policy in an amount reasonably
satisfactory to the Mortgagee protecting the Company and Mortgagee against any
loss or liability or damage for personal injury or property damage.
4. OTHER INSURANCE PROVISIONS. All insurance required under this Mortgage
shall be procured and maintained in financially sound and generally recognized
responsible insurance companies selected by the Company and authorized to write
such insurance in the State of New York and acceptable to the Mortgagee. Such
insurance may be written with deductible amounts comparable to those on similar
policies carried by other entities engaged in businesses similar in size,
character and other respects to those in which the Company is engaged. All
policies evidencing such insurance shall provide for (i) payment of the losses
to the Company and Mortgagee as their respective interests may appear, and (ii)
at least thirty (30) days written notice to the Company and Mortgagee prior to
cancellation, reduction in policy limits or material change in coverage
thereof. The insurance required by Section 3(a) shall contain a New York
Standard mortgagee endorsement in favor of Mortgagee. All insurance required
hereunder shall be in form, content and coverage satisfactory to the Mortgagee.
The original policy, or a certified duplicate copy thereof, for all insurance
required hereby shall be delivered to Mortgagee. The proceeds of any insurance
shall be paid to the Mortgagee and shall be applied by the Mortgagee in
accordance with the terms of the Lease Agreement unless there has been a draw
on the Letter of Credit, in which event, said proceeds may be applied by the
Mortgagee to sums due the Mortgagee under the Reimbursement Agreement. The
Company shall deliver to Mortgagee at least thirty (30) days prior to the
expiration date of any insurance coverages required hereunder, a certificate
reciting that there is in full force and effect, with a term covering at least
the next succeeding year, insurance in the amounts and of the types required
hereunder.
5. ALTERATIONS. No Improvements shall be structurally altered, removed or
demolished without the prior written consent of Mortgagee.
6. APPOINTMENT OF RECEIVER. Mortgagee in any action to foreclose this
Mortgage shall be entitled, without notice and as a matter of right and without
regard to the adequacy of any security of the indebtedness or the solvency of
the Company, upon application to any court having jurisdiction, to the
appointment of a receiver of the rents, income and profits of the Mortgaged
Property.
If an Event of Default (hereinbelow defined) occurs under this Mortgage, as a
matter of right and without regard to the adequacy of any security for the
obligations of the Company under the Reimbursement Agreement, the Company, upon
demand of the Mortgagee, shall surrender the possession of, and it shall be
lawful for Mortgagee, by such officer or agent as it may appoint, to take
possession, of all or any part of the Mortgaged Property together with the
books, papers, and accounts of the Company pertaining thereto, and to hold,
operate and manage the same, and from time to time to make all needed repairs
and improvements as Mortgagee shall deem wise; and, if Mortgagee deems it
necessary or desirable, to complete construction and equipping of any
Improvements and in the course of such construction or equipping to make such
changes to the same as it may deem desirable; and Mortgagee may sell the
Mortgaged Property or any part thereof, or institute proceedings for the
complete or partial foreclosure of the lien of this Mortgage on the Mortgaged
Property, or lease the Premises or any part thereof in the name and for the
account of the Company or Mortgagee and collect, receive and sequester the
rents, revenues, earnings, income, products and profits therefrom, and out of
the same and any other monies received hereunder pay or provide for the payment
of, all proper costs and expenses of taking, holding, leasing, selling and
managing the same, including reasonable compensation to Mortgagee, its agents
and counsel, and any charges of Mortgagee hereunder, and any taxes and other
charges prior to the lien of this Mortgage which Mortgagee may deem it wise to
pay.
7. PAYMENT OF TAXES. The Company will pay all taxes, assessments, sewer
rents or water rates or sums due under any payment in lieu of tax agreement
("Pilot Agreement") and in default thereof, Mortgagee may pay the same. In the
event that Mortgagee shall pay any such tax, assessment, sewer rent or water
rate, Mortgagee shall have the right, among other rights, to declare the amount
so paid with interest thereon immediately due and payable, and upon default of
the Company in paying any such amount with interest thereon, Mortgagee shall
have the right to foreclose for such amount subject to the continuing lien of
this Mortgage for the balance of the mortgage indebtedness not then due.
In the event that the Company should fail to pay any sum the Company has agreed
to pay pursuant to this covenant for a period in excess of sixty (60) days
after the same is due and payable, in addition to any other remedies available
to the Mortgagee hereunder, the Mortgagee may, at its option, require that the
Company deposit with the Mortgagee, monthly, one-twelfth (1/12th) of the annual
charges for taxes and any other sums the Company is obligated to pay pursuant
to this covenant and the Company shall make such deposits with the Mortgagee.
The Company shall simultaneously therewith deposit with the Mortgagee a sum of
money which together with the monthly installments aforementioned will be
sufficient to make payment of all sums required to be paid hereunder at least
thirty (30) days prior to the due date of such payments, it being understood
that the Mortgagee shall calculate the amount of such deposits and notify the
Company of the sum due. Should an Event of Default (hereinbelow defined) occur,
the funds deposited with the Mortgagee pursuant to this provision may be
applied in payment of the charges for which said funds shall have been
deposited or to the payment of any other sums secured by this Mortgage as the
Mortgagee sees fit.
8. PAYMENT OF MORTGAGE TAXES. The Issuer shall pay all taxes imposed
pursuant to Article 11 of the Tax Law, whether said tax is imposed at the time
of recording or subsequent thereto. This obligation shall survive the
satisfaction or other termination of this Mortgage.
9. STATEMENT OF AMOUNT DUE. The Company, within five (5) days upon request
in person or within fifteen (15) days upon request by mail, will furnish a
written statement duly acknowledged of the amount due on this Mortgage and
whether any offsets or defenses exist against the said indebtedness.
10. NOTICES. Any notices required or permitted to be given hereunder shall
be: (i) personally delivered or (ii) given by registered or certified mail,
postage prepaid, return receipt requested, or (iii) forwarded by overnight
courier service, in each instance addressed to the addresses set forth at the
head of this Mortgage, or such other addresses as the parties may for
themselves designate in writing as provided herein for the purpose of receiving
notices hereunder. All notices shall be in writing and shall be deemed given,
in the case of notice by personal delivery, upon actual delivery, and in the
case of appropriate mail or courier service, upon deposit with the U.S. Postal
Service or delivery to the courier service.
11. WARRANTY OF TITLE. The Company warrants the title to the Premises,
Improvements and Chattels.
12. SALE IN ONE PARCEL. In case of a sale, the Premises may be sold in one
parcel together with the Improvements and Chattels. Should the Premises consist
of more than one parcel, in the event of a foreclosure of this Mortgage or any
mortgage at any time consolidated with this Mortgage, the Company agrees that
Mortgagee shall be entitled to a judgment directing the referee appointed in
the foreclosure proceeding to sell all of the parcels constituting the Premises
at one foreclosure sale, either as a group or separately and that the Company
expressly waives any right that it may now have or hereafter acquire to (i)
request or require that the parcels be sold separately or (ii) request, if
Mortgagee has elected to sell parcels separately, that there be a determination
of any deficiency amount after any such separate sale or otherwise require a
calculation of whether said parcel or parcels separately sold were conveyed for
their "fair market value".
13. NEGATIVE COVENANTS. The Company will not (i) execute an assignment of
the rents, income or profits, or any part thereof from the Mortgaged Property,
(ii) accept prepayments of any sums to become due under such leases, except
prepayments of rent for more than one (1) month in advance or prepayments in
the nature of security for the performance of the tenants thereunder, (iii) in
any other manner impair the value of the Mortgaged Property or the security of
this Mortgage or (iv) further encumber, alienate, hypothecate, grant a security
interest in or grant any other interest whatsoever in the Mortgaged Property.
Restriction (ii) is made with reference to Section 291-f of the Real Property
Law and actions in violation of those provisions shall be voidable at the
option of the Mortgagee.
14. BOOKS AND RECORDS.
(a) In addition to any requirements elsewhere in the Bank Documents, the
Company shall keep and maintain at all times at the Company's addresses stated
in this Mortgage, or such other place as Mortgagee may approve in writing,
complete and accurate books of accounts and records adequate to reflect
correctly the results of the operation of the Mortgaged Property and copies of
all written contracts, leases and other instruments which affect the Mortgaged
Property. Such books, records, contracts, leases and other instruments shall be
subject to examination and inspection at any reasonable time by Mortgagee.
(b) Upon request of Mortgagee in writing, the Company shall promptly
provide Mortgagee with all documents reasonably requested by Mortgagee prepared
in the form and manner called for in such request and as may reasonably relate
to the operation or condition thereof, or the financial condition of the
Company or any party obligated under the Bank Documents or under any guaranty,
including, without limitation, all leases or leasehold interests granted to or
by the Company, rent rolls and tenant lists, rent and damage deposit ledgers,
operating statements, profit and loss statements and balance sheets, personal
financial statements of the Company or income tax returns (including quarterly
returns), any or all of which documents shall be audited or certified as true
and accurate by a certified public accountant, if requested by Mortgagee, and
shall cover such period or periods as may be specified by Mortgagee.
15. FUTURE LAWS. In the event of the passage after the date of this
Mortgage of any federal, state or municipal law, deducting from the value of
land for the purposes of taxation any lien thereon, or changing in any way, the
laws for the taxation of mortgages or debts secured by mortgages, or the manner
of collection of any such taxes, so as to affect Mortgagee, this Mortgage, or
said indebtedness, Mortgagee shall have the right to give thirty (30) days'
written notice to the Company requiring the payment of said indebtedness. If
such notice be given, said indebtedness shall become due, payable and
collectible at the expiration of said thirty (30) days.
16. PROVISIONS REGARDING USE OF MORTGAGED PROPERTY. The Company warrants
and represents that:
(a) The Company is not responsible for any action or omission, and does not
know of any action or omission by any prior owner, that would cause the
Mortgaged Property to be subject to forfeiture pursuant to any law, rule or
regulation (a "Forfeiture").
(b) The Mortgaged Property has not been acquired with any proceeds from a
transaction or an activity that would cause the Mortgaged Property to be
subject to Forfeiture.
The Company covenants that the Company will not use, and will not permit any
third party to use, the Mortgaged Property or any portion thereof or interest
therein for any purpose or activity that would cause a Forfeiture thereof.
17. ACTIONS AND PROCEEDINGS. If any action or proceeding be commenced to
which action or proceeding Mortgagee is made a party and in which it becomes
necessary in the opinion of Mortgagee to defend or uphold the lien of this
Mortgage, all sums paid by Mortgagee for the expense of any litigation to
prosecute and defend the rights and lien created by this Mortgage, including
reasonable counsel fees, costs and allowances, shall, together with interest
thereon be a lien on the Mortgaged Property and secured by this Mortgage and
shall be collectible in like manner as said indebtedness and shall be paid by
the Company on demand.
18. SECURITY INTEREST UNDER THE UNIFORM COMMERCIAL CODE. Mortgagee is
authorized to sign as the agent of the Company such agreement in addition to
this Mortgage as Mortgagee at any time may deem necessary or proper or require
to grant to Mortgagee a perfected security interest in the Chattels. The
Company hereby authorizes Mortgagee to file financing statements (as such term
is defined in said Uniform Commercial Code) with respect to the Chattels, at
any time, without the signature of the Company. The Company will, however, at
any time upon request of Mortgagee, sign such financing statements. the Company
will pay all filing fees for the filing of such financing statements and for
the refiling thereof at the times required, in the opinion of Mortgagee, by
said Uniform Commercial Code. If the lien of this Mortgage be subject to any
security agreement covering the Chattels, then in the event of any default
under this Mortgage, all the right, title and interest of the Company in and to
any and all of the Chattels is hereby assigned to Mortgagee, together with the
benefit of any deposits or payments now or hereafter made thereof by the
Company or the predecessors or successors in title of the Company in the
Mortgaged Property.
19. CONDEMNATION. Any and all awards heretofore and hereafter made to the
Company and all subsequent owners of the Mortgaged Property by any governmental
or other lawful authorities for the taking by eminent domain of the whole or
any part of the Mortgaged Property or any easement therein, including any
awards for any changes of grade of streets, are hereby assigned to Mortgagee,
who is hereby authorized to collect and receive the proceeds of any such awards
from such authorities, to give proper receipts and acquittances therefor and to
apply the same toward the payment of the amount owing on account of this
Mortgage and said indebtedness, notwithstanding the fact that the amount owing
thereon may not then be due and payable; and the Company hereby covenants and
agrees, upon request, to make, execute and deliver any and all assignments and
other instruments sufficient for the purpose of assigning the aforesaid awards
to Mortgagee free, clear and discharged of any and all encumbrances of any kind
or nature whatsoever. The Company shall continue to make all payments required
under the Bank Documents until any such award shall have been actually received
by Mortgagee and any reduction in said indebtedness resulting from the
application by Mortgagee of such award shall be deemed to take effect only on
the date of such receipt.
Notwithstanding the foregoing, if any one or more of the portions of the
Mortgaged Property described in subparagraphs (a), (b) and (c) below shall be
damaged or taken through condemnation, either temporarily or permanently, then
the entire balance due under the Bank Documents shall, at the option of
Mortgagee, become immediately due and payable:
(a) Any portion or portions of the Improvements or the support or
foundation of any portion or portions of the Improvements; or
(b) Ten (10%) percent or more of any parking area which is not replaced; or
(c) Any portion or portions of the Premises which, when so damaged or
taken, would result either in (i) an impairment of access to the Improvements
from the publicly dedicated rights of way now adjoining the Premises, or (ii)
the failure of the Improvements to comply with any building code, zoning or
other governmental laws or regulations, lease or other agreement to which the
Mortgaged Property is subject.
The Company authorizes Mortgagee, at Mortgagee's option, as attorney in fact
for the Company, to commence, appear in and prosecute in the Company's or
Mortgagee's name, any action or proceeding relating to any condemnation or
other taking of the Mortgaged Property and to settle or compromise any claim in
connection with such condemnation or other taking.
20. TITLE TO MORTGAGED PROPERTY. The Agency is now the owner of the
Mortgaged Property upon which this Mortgage is a valid first lien for the
amount above specified, with interest thereon at the rate set forth in the
Reimbursement Agreement and there are no defenses or offsets to this Mortgage
or to the said indebtedness.
21. LEASES OF THE MORTGAGED PROPERTY. Mortgagor will not lease all or any
portion of the Mortgaged Property without the prior written consent of
Mortgagee. Mortgagee is aware of and consents to existing leases.
22. TRANSFER OF MORTGAGED PROPERTY. In the event of the sale, conveyance or
transfer, by deed, any other voluntary or involuntary act or by operation of
law or otherwise (including the entry into any land sale contract or other
similar agreement) of any interest in any of the stock of the Company, if the
Company be a corporation, or partnership interest, if the Company be a
partnership, or any membership interest, if the Company be a limited liability
company, or of the Mortgaged Property or a part thereof, while this Mortgage
shall remain a lien thereon, the full balance of the indebtedness then
remaining unpaid, with interest, shall, at the option of the Mortgagee, or its
assigns, be immediately due and payable without notice or demand unless the
prior written consent of the Mortgagee to such sale, conveyance, or transfer
shall have been obtained. A mortgage of the Mortgaged Property to any mortgagee
other than the Mortgagee shall be deemed a conveyance for the purpose of this
Section.
23. ACCESS. Mortgagee, by its employees or agents, shall at all times have
the right to enter upon the Mortgaged Property during reasonable business hours
for the purpose of examining and inspecting the same.
24. REAL PROPERTY LAW. All covenants hereof, which are in addition to those
set forth in Sections 254 and 291-f of the Real Property Law, shall be
construed as affording to Mortgagee rights additional to, and not exclusive of,
the rights conferred under the provisions of said Sections 254 and 291-f.
25. PERFORMANCE OF THE COMPANY'S COVENANTS BY MORTGAGEE. In the event of
any default in the performance of any of the covenants, terms, or provisions of
the Company under this Mortgage, Mortgagee may, at the option of Mortgagee,
perform the same and the cost thereof, with interest, shall immediately be due
from the Company to Mortgagee and secured by this Mortgage.
26. REMEDIES NOT EXCLUSIVE. Mortgagee shall have the right from time to
time, to take action to recover any amounts of past due principal indebtedness
and interest thereon, or any installment of either, or any other sums required
to be paid under the covenants, terms and provisions of this Mortgage or the
Note, as the same become due, whether or not the principal indebtedness
secured, or any other sums secured by this Mortgage shall be due, and without
prejudice to the right of Mortgagee thereafter to bring an action of
foreclosure, or any other action, for default or defaults by the Company
existing at the time such earlier action was commenced.
27. ADDITIONAL ACTS AND DOCUMENTS. The Company covenants that it will do,
execute, acknowledge, deliver, file and/or record, or cause to be recorded
every and all such further acts, deeds, conveyances, advances, mortgages,
transfers and assurances, in law as Mortgagee shall require for the better
assuring, conveying, transferring, mortgaging, assigning and confirming unto
Mortgagee all and singular the Mortgaged Property.
28. REMEDIES CUMULATIVE. The rights and remedies herein afforded to
Mortgagee shall be cumulative and supplementary to and not exclusive of any
other rights and remedies afforded the holder of this Mortgage and the Note.
29. SUCCESSORS. All of the provisions of this Mortgage shall inure to the
benefit of Mortgagee and of any subsequent holder of this Mortgage and shall be
binding upon the Company and each subsequent owner of the Mortgaged Property.
30. EFFECT OF RELEASES. Mortgagee, without notice, may release any part of
the security described herein, or any person or entity liable for any
indebtedness secured hereby without in any way affecting the lien hereof upon
any part of the security not expressly released, and may agree with any party
obligated on said indebtedness or having any interest in the security described
herein to extend the time for payment of any part or all of the indebtedness
secured hereby. Such agreement shall not in any way release or impair the lien
hereof, but shall extend the lien hereof as against the title of all parties
having any interest in said security, which interest is subject to said lien,
and no such release or agreement shall release any person or entity obligated
to pay any indebtedness secured hereby.
31. WAIVERS. Any failure by Mortgagee to insist upon the strict performance
by the Company of any of the covenants, terms and provisions of this Mortgage
shall not be deemed to be a waiver of any of the covenants, terms and
provisions of this Mortgage, and Mortgagee, notwithstanding any such failure,
shall have the right thereafter to insist upon the strict performance by the
Company of any and all of the covenants, terms and provisions of this Mortgage
to be performed by the Company. Neither the Company nor any other person or
entity now or hereafter obligated for the payment of the whole or any part of
said indebtedness shall be relieved of such obligation by reason of (i) the
failure of Mortgagee to comply with any request of the Company, or of any other
person or entity so obligated, (ii) the failure of Mortgagee to take action to
foreclose this Mortgage or otherwise enforce any of the covenants, terms and
provisions of this Mortgage or the other Bank Documents, (iii) the release,
regardless of consideration, of the whole or any part of the security held for
payment of said indebtedness or (iv) any agreement or stipulation between any
subsequent owner or owners of the Mortgaged Property and Mortgagee modifying
the covenants, terms and provisions of this Mortgage or the other Bank
Documents without first having obtained the consent of the Company or such
other person or entity. In the last mentioned event, the Company and all such
other persons or entities shall continue liable to make such payments according
to the terms and provisions of any such agreement or extension or modification
unless expressly released and discharged in writing by Mortgagee. Mortgagee may
release, regardless of consideration, any part of the security held for payment
of said indebtedness without, as to the remainder of the security, in any way
impairing or affecting the lien of this Mortgage or the priority of such lien
over any subordinate lien. Mortgagee may resort for the payment of said
indebtedness to any other security therefor held by Mortgagee in such order and
manner as Mortgagee may elect.
32. INTEREST ON ADVANCES. Wherever, under the provisions of this Mortgage
or by law, Mortgagee is entitled to interest on advances made or expenses
incurred, such interest shall be computed at a rate per annum which shall be
the Default Rate (as that term is defined in the Reimbursement Agreement).
33. MORTGAGEE NOT OBLIGATED. Nothing herein contained shall be construed as
making the payment of any insurance premiums, taxes or assessments obligatory
upon Mortgagee, although Mortgagee may pay same, or as making Mortgagee liable
in any way for loss, damage or injury, resulting from the non-payment of any
such insurance premiums, taxes or assessments.
34. LIEN LAW. The Company will, in compliance with Section 13 of the Lien
Law, receive the advances secured by this Mortgage and will hold the right to
receive such advances as a trust fund to be applied first for the purpose of
paying the cost of the improvement and will apply the same first to the payment
of the cost of the improvement before using any part of the total of the same
for any other purpose.
35. ENVIRONMENTAL WARRANTIES AND COVENANTS.
(a) Warranties. The Company makes the following representations and
warranties: (i) the Company (or the present owner of the Mortgaged Property, if
different) is in compliance in all respects with all applicable federal, state
and local laws and regulations, including, without limitation, those relating
to toxic and hazardous substances and other environmental matters (the "Laws"),
(ii) no portion of the Mortgaged Property is being used or has been used at any
previous time, for the disposal, storage, treatment, processing or other
handling of any hazardous or toxic substances, in a manner not in compliance
with the Laws, (iii) the soil and any surface water and ground water which are
a part of the Mortgaged Property are free from any solid wastes, toxic or
hazardous substance or contaminant and any discharge of sewage or effluent; and
(iv) neither the federal government nor the State of New York Department of
Environmental Conservation or any other governmental or quasi governmental
entity has filed a lien on the Mortgaged Property, nor are there any
governmental, judicial or administrative actions with respect to environmental
matters pending, or to the best of the Company's knowledge, threatened, which
involve the Mortgaged Property.
(b) Inspection. The Company agrees that Mortgagee or its agents or
representatives may, at any reasonable time and at the Company's expense
inspect the Company's books and records and inspect and conduct any tests on
the Mortgaged Property including taking soil samples in order to determine
whether the Company is in continuing compliance with the Laws.
(c) Agreement to Comply. If any environmental contamination is found on the
Mortgaged Property for which any removal or remedial action is required
pursuant to Law, ordinance, order, rule, regulation or governmental action, the
Company agrees that it will at its sole cost and expense, take such removal or
remedial action promptly and to Mortgagee's satisfaction.
(d) Indemnification. The Company agrees to defend, indemnify and hold
harmless Mortgagee, its employees, agents, officers and directors from and
against any claims, actions, demands, penalties, fines, liabilities,
settlements, damages, costs or expenses (including, without limitation,
attorney and consultant fees, investigations and laboratory fees, court costs
and litigation expenses of whatever kind or nature known or unknown, contingent
or otherwise) arising out of or in any way related to: (i) the past or present
disposal, release or threatened release of any hazardous or toxic substances on
the Mortgaged Property; (ii) any personal injury (including wrongful death or
property damage, real or personal) arising out of or related to such hazardous
or toxic substances; (iii) any lawsuit brought or threatened, settlement
reached or government order given relating to such hazardous or toxic
substances; and/or (iv) any violation of any law, order, regulation,
requirement, or demand of any government authority, or any policies or
requirements of Mortgagee, which are based upon or in any way related to such
hazardous or toxic substances.
(e) Other Sites. The Company knows of no on-site or off-site locations
where hazardous or toxic substances from the operation of any Improvement or
otherwise have been stored, treated, recycled or disposed of.
(f) Leases. The Company agrees not to lease or permit the sublease of the
Mortgaged Property to a tenant or subtenant whose operations may result in
contamination of the Mortgaged Property with hazardous or toxic substances.
(g) Non-Operation by Mortgagee. The Company acknowledges that any action
Mortgagee takes under this Mortgage shall be taken to protect Mortgagee's
security interest only; Mortgagee does not hereby intend to be involved in the
operations of the Company.
(h) Compliance Determinations. The Company acknowledges that any
determinations Mortgagee makes under this Section regarding compliance with
environmental laws shall be made for Mortgagee's benefit only and are not
intended to be relied upon by any other party.
(i) Survival of Conditions._) The provisions of this Section shall be in
addition to any other obligations and liabilities the Company may have to
Mortgagee at common law, and shall survive the transactions contemplated
herein.
(j) Other Insurance. Mortgagee may, at its option, require the Company to
carry adequate insurance to fulfill the Company's obligations under this
Section.
(k) Definitions. The term "hazardous substance" shall include, without
limit, any substance or material defined in 42 U.S.C. Section 9601 (as the same
may be amended from time to time), the Hazardous Materials Transportation Act
(as amended from to time), and the New York Environmental Conservation Law or
the Resource Conservation And Recovery Act (as each may be amended from time to
time) and in any regulations adopted or publications promulgated pursuant to
any of the foregoing.
36. EVENTS OF DEFAULT. The whole of the principal sum of the indebtedness
secured hereby and interest thereon, and all other sums due and payable
hereunder shall become due, at the option of Mortgagee, if one or more of the
following events (an "Event of Default") shall happen:
(a) The occurrence of an "Event of Default" under the Reimbursement
Agreement; or
(b) If the Company defaults in the payment of any tax, water rate or sewer
rent or payment under any Pilot Agreement against the Mortgaged Property for
fifteen (15) days after the same become due and payable or fails to exhibit to
Mortgagee, within fifteen (15) days after demand, receipts showing payment of
all taxes, water rates or sewer rents; or
(c) The actual or threatened removal, demolition or structural alteration,
in whole or in part, of any Improvement, without the prior written consent of
Mortgagee; or the removal, demolition or destruction in whole or in part, of
any Chattels without replacing the same with Chattels at least equal in quality
and condition to those replaced, free from any security interest or other
encumbrance thereon and free from any reservation of title thereto; or the
commission of any waste in respect to the Mortgaged Property; or
(d) Failure of the Company to pay within fifteen (15) days after notice and
demand any installment of any assessment made against the Premises for local
improvements, heretofore or hereafter made, which assessment is, or may become,
a lien on the Premises prior to the lien of this Mortgage, notwithstanding the
fact that such installment be not due and payable at the time of such notice
and demand; or
(e) Failure of the Company to pay the said indebtedness secured by this
Mortgage within (30) days after notice and demand, in the event of the passage
after the date of this Mortgage of any federal, state or municipal law
deducting from the value of land for the purpose of taxation any lien thereon,
or changing in any way the laws now in force for the taxation of mortgages, or
of debts secured by mortgages, or the manner of collection of any such taxes,
so as to affect Mortgagee, this Mortgage or the indebtedness which is secured,
notwithstanding that the Company, before or after such notice, may have the
option to pay or contest the payment of such tax; or
(f) Failure of the Company to maintain the Improvements on the Premises in
a rentable or tenantable state of repair to the satisfaction of Mortgagee, for
thirty (30) days after notice of such failure has been given to the Company, or
to comply with any order or requirement of any municipal, state, federal or
other governmental authority having jurisdiction of the Premises within thirty
(30) days after such order or requirement shall have been issued by any such
authority; or failure of the Company to comply with any and all and singular
the statutes, requirements, orders or decrees of any federal, state or
municipal authority relating to the use of the Mortgaged Property, or of any
part thereof; or failure of the Company to observe and timely perform all of
the covenants, terms and provisions contained in any lease now or hereafter
affecting the Premises or the Improvements or any portion thereof, on the part
of the landlord to be observed and performed; or
(g) Failure of the Company, in the event of the entry of a final judgment
for the payment of money against the Company, to discharge such judgment or to
have it stayed pending appeal within thirty (30) days from the entry thereof,
or if such judgment shall be affirmed on appeal, the failure to discharge such
judgment within thirty (30) days from the entry of such affirmance; or
(h) Failure of the Company to pay within fifteen (15) days after notice and
demand any filing or refiling fees required hereunder; or
(i) Failure of the Company or any occupant of the Mortgaged Property, to
allow or permit Mortgagee, or its duly authorized agent, to inspect said
Mortgaged Property at any time and from time to time during reasonable business
hours; or
(j) Default for fifteen (15) days after notice and demand in the observance
or performance of any other covenant or agreement under this Mortgage; or
(k) The occurrence of an event of default under any other Bank Document or
under the Installment Sale Agreement.
37. INTEREST TO ACCRUE. If the whole of the principal sum evidenced by the
Reimbursement Agreement and interest, shall become due by exercise of the
option of the Mortgagee after default by the Company under any of the terms,
covenants and conditions of this Mortgage and/or the Reimbursement Agreement,
or if the whole of said principal sum and interest shall mature and become due
under the terms, covenants and conditions of this Mortgage and the
Reimbursement Agreement regardless of default, if any, on the part of the
Company, then interest on said principal sum shall continue to accrue at the
rate provided for in the Note, and in this Mortgage, until said principal sum
is fully paid.
38. FLOOD INSURANCE. In addition to the terms and provisions of this
Mortgage with regard to insurance, in the event the Premises are determined to
be in a special flood hazard area as determined by any governmental agency, the
Company further covenants and agrees to fully insure the Premises and
Improvements against loss or damage by flood, with coverage as is therein
provided for by fire and other specified perils to the same extent and effect
as if such flood insurance was therein specifically set forth.
39. COSTS, EXPENSES AND ATTORNEY'S FEES. Should one or more Events of
Default occur hereunder, and should an action be commenced for the foreclosure
of this Mortgage, Mortgagee shall be entitled to recover all sums due
hereunder, statutory costs, and any additional allowances made pursuant to
Section 8303(a) of the Civil Practice Law and Rules of the State of New York,
and in addition thereto, reasonable attorneys' fees in such proceeding and in
all proceedings related thereto necessary to and related to the foreclosing
proceeding, and such amount shall be added to the principal balance and
interest then due and shall be a lien on the Mortgaged Property prior to any
right or title to, interest in or claim upon the Mortgaged Property attaching
and accruing subsequent to the lien of this Mortgage, and shall be deemed to be
secured by this Mortgage and the indebtedness which it secures.
40. INTERVENING LIENS. Should any agreement be hereafter entered into
modifying or changing the terms of this Mortgage or the Note secured hereby in
any manner, the rights of the parties to such agreement shall be superior to
the rights of the holder of any intervening lien.
41. TERMS. It is understood and agreed that the words, "Company", "Issuer",
"Mortgagor" and "Mortgagee" herein shall include the respective heirs,
successors and assigns of the Company and Mortgagee.
42. ENTIRE AGREEMENT. This Mortgage and the other Bank Documents constitute
the entire understanding between the Company, any guarantors, and Mortgagee and
to the extent that any writings not signed by Mortgagee or oral statements or
conversations at any time made or had shall be inconsistent with the provisions
of this Mortgage and the other Bank Documents, the same shall be null and void.
43. GOVERNING LAW; SEVERABILITY. This Mortgage shall be governed by the law
of the jurisdiction in which the Mortgaged Property is located. In the event
that any provision or clause of this Mortgage or any other Bank Document
conflicts with applicable law, such conflict shall not affect other provisions
of this Mortgage or any other Bank Document which can be given effect without
the conflicting provision, and to this end, the provisions of this Mortgage and
the other Bank Documents are declared to be severable.
44. TIME OF THE ESSENCE. Time is of the essence with respect to each and
every covenant, agreement and obligation of the Company under this Mortgage and
any and all other Bank Documents.
45. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(a) The Company shall indemnify, defend and hold Mortgagee harmless
against: (i) any and all claims for brokerage, leasing, finders or similar fees
which may be made relating to the Mortgaged Property or the loan which is the
subject of the Note, and (ii) against any and all liability, obligations,
losses, damages, penalties, claims, actions, suits, costs, and expenses
(including its reasonable attorneys' fees, together with reasonable appellate
counsel fees, if any) of whatever kind or nature which may be imposed on or
incurred by Mortgagee at any time pursuant either to a judgment or decree or
other order entered into by a court or administrative agency or to a settlement
reasonably approved by the Company, which judgment, decree, order or settlement
relates in any way to or arises out of the offer, sale or lease of the
Mortgaged Property and/or the ownership, use, occupation or operation of any
portion of the Mortgaged Property.
(b) If Mortgagee is made a party defendant to any litigation concerning the
transaction which is the subject of the Reimbursement Agreement, this Mortgage,
the Mortgaged Property, or any part thereof, or any interest therein, or the
occupancy thereof, then the Company shall indemnify, defend and hold Mortgagee
harmless from all liability by reason of said litigation, including reasonable
attorneys' fees (together with reasonable appellate counsel fees, if any) and
expenses incurred by Mortgagee in any such litigation, whether or not any such
litigation is prosecuted to judgment. If Mortgagee commences an action against
the Company to enforce any of the terms hereof or to prosecute any breach by
the Company of any of the terms hereof or to recover any sum secured hereby,
the Company shall pay to Mortgagee such reasonable attorneys' fees (together
with reasonable appellate counsel fees, if any) and expenses. The right to such
attorneys fees (together with reasonable appellate counsel fees, if any) and
expenses shall be deemed to have accrued on the commencement of such action,
and shall be enforceable whether or not such action is prosecuted to judgment.
If the Company breaches any term of this Mortgage, Mortgagee may employ an
attorney or attorneys to protect its rights hereunder, and in the event of such
employment following any breach by the Company, the Company shall pay Mortgagee
reasonable attorneys' fees (together with reasonable appellate counsel fees, if
any) and expenses incurred by Mortgagee, whether or not an action is actually
commenced against the Company by reason of such breach.
(c) A waiver of subrogation shall be obtained by the Company from its
insurance carrier and, consequently, the Company waives any and all right to
claim or recover against Mortgagee, its officers, employees, agents and
representatives, for loss of or damage to the Company, the Mortgaged Property,
the Company's property or the property of others under the Company's control
from any cause insured against or required to be insured against by the
provisions of this Mortgage.
(d) All sums payable by the Company hereunder shall be paid without notice
(except as may otherwise be provided herein), demand, counterclaim, set-off,
deduction or defense and without abatement, suspension, deferment, diminution
or reduction, and the obligations and liabilities of the Company hereunder
shall in no way be released, discharged or otherwise affected by reason of: (i)
any damage to or destruction of or any condemnation or similar taking of the
Mortgaged Property or any part thereof; (ii) any restriction or prevention of
or interference with any use of the Mortgaged Property or any part thereof;
(iii) any title defect or encumbrance or any eviction from the Premises or the
Improvements or any part thereof by title superior or otherwise; (iv) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation, or other like proceeding relating to Mortgagee, or any action
taken with respect to this Mortgage by any trustee or receiver of Mortgagee, or
by any court, in such proceeding; (v) any claim which the Company has, or might
have, against Mortgagee; (vi) any default or failure on the part of Mortgagee
to perform or comply with any of the terms hereof or of any other agreement
with the Company; or (vii) any other occurrence whatsoever, whether similar or
dissimilar to the foregoing, whether or not the Company shall have notice or
knowledge of any of the foregoing. The Company waives all rights now or
hereafter conferred by statute or otherwise to any abatement, suspension,
deferment, diminution, or reduction of any sum secured hereby and payable by
the Company.
46. WAIVER OF JURY TRIAL. The Company, the Agency and the Mortgagee hereby
waive trial by jury in any litigation in any court with respect to, in
connection with, or arising out of this Mortgage or any other Bank Document, or
any instrument or document delivered in connection with the transaction which
is the subject of the Reimbursement Agreement, or the validity, protection,
interpretation, collection or enforcement thereof, or the relationship between
the Company, the Agency and Mortgagee as borrower and lender, or any other
claim or dispute howsoever arising between the Company and Mortgagee.
47. BUILDING LOAN CONTRACT. This Mortgage is executed in conjunction with a
Building Loan Contract which is intended to be filed on even date with the
recording of this Mortgage and any breach, violation or default in the
performance of any covenant required to be performed under the Building Loan
Contract shall be an Event of Default under this Mortgage.
48. NON RECOURSE AS TO ISSUER. _)
(a) The obligations and agreements of the Agency, if any, contained herein and
in the other Bank Documents and any other instrument or document executed in
connection therewith or herewith, and any other instrument or document
supplemental thereto or hereto, shall be deemed the obligations and agreements
of the Agency, and not of any member, officer, director, agent (other than the
Company) or employee of the Agency in his individual capacity, and the members,
officers, directors, agents (other than the Company) and employees of the
Agency shall not be liable personally hereon or thereon or be subject to any
personal liability or accountability based upon or in respect hereof or thereof
or of any transaction contemplated hereby or thereby.
(b) The obligations and agreements of the Agency contained herein and
therein shall not constitute or give rise to an obligation of the State of New
York or the Town of Colonie, New York, and neither the State of New York nor
the Town of Colonie, New York shall be liable hereon or thereon, and, further,
such obligations and agreements shall not constitute or give rise to a general
obligation of the Agency, but rather shall constitute limited obligations of
the Agency payable solely from the revenues of the Agency derived and to be
derived from the sale or other disposition of the Mortgaged Property (except
for revenues derived by the Agency with respect to the Unassigned Rights).
(c) No order or decree of specific performance with respect to any of the
obligations of the Agency hereunder shall be sought or enforced against the
Agency unless (1) the party seeking such order or decree shall first have
requested the Agency in writing to take the action sought in such order or
decree of specific performance, and ten (10) days shall have elapsed from the
date of receipt of such request, and the Agency shall have refused to comply
with such request (or, if compliance therewith would reasonably be expected to
take longer than ten days, shall have failed to institute and diligently pursue
action to cause compliance with such request within such ten day period) or
failed to respond within such notice period, (2) if the Agency refuses to
comply with such request and the Agency's refusal to comply is based on its
reasonable expectation that it will incur fees and expenses, the party seeking
such order or decree shall have placed in an account with the Agency an amount
or undertaking sufficient to cover such reasonable fees and expenses, and (3)
if the Agency refuses to comply with such request and the Agency's refusal to
comply is based on its reasonable expectation that it or any of its members,
officers, agents (other than the Company) or employees shall be subject to
potential liability, the party seeking such order or decree shall (A) agree to
indemnify, defend and hold harmless the Agency and its members, officers,
directors, agents (other than the Company) and employees against any liability
incurred as a result of its compliance with such demand, and (B) if requested
by the Agency, furnish to the Agency satisfactory security to protect the
Agency and its members, officers, directors, agents (other than the Company)
and employees against all liability expected to be incurred as a result of
compliance with such request. Any failure to provide the indemnity and/or
security required in this Section 48 shall not affect the full force and effect
of an Event of Default hereunder.
49. TAX LAW SECTION 253 STATEMENT. Check one box only.
[ ] This Mortgage covers real property principally improved or to be
improved by one or more structures containing in the aggregate not more than
six residential dwelling units, each having their own separate cooking
facilities.
[ X ] This Mortgage does not cover real property improved as described above.
Where used herein, the word, the "Company" may be read the "Company's" where
applicable.
IN WITNESS WHEREOF, this Mortgage has been duly executed by the Mortgagor.
MECHANICAL TECHNOLOGY INCORPORATED
By Name: Cynthia A. Scheuer Title: Vice President
STATE OF NEW YORK ) ) ss.: COUNTY OF ALBANY )
On this day of December, 1999, before me the subscriber personally appeared
Cynthia A. Scheuer, who being by me duly sworn, did depose and say; that she
resides at Castleton, New York; that she is a Vice President of MECHANICAL
TECHNOLOGY INCORPORATED the corporation described in and which executed the
foregoing instrument; and that she signed her name thereto by order of the
Board of Directors of said corporation.
NOTARY PUBLIC
IN WITNESS WHEREOF, this Mortgage has been duly executed by the Issuer.
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY
By Name: Peter J. Hess Title: Chairman
STATE OF NEW YORK ) ) ss.: COUNTY OF ALBANY )
On this day of December, 1999, before me the subscriber personally appeared
Peter J. Hess, who being by me duly sworn, did depose and say; that he resides
at , New York, that he is Chairman of the Town of Colonie Industrial
Development Agency, the corporation described in and which executed the
foregoing instrument; and that he/she signed his/her name thereto by order of
the members of said Agency.
NOTARY PUBLIC
kb\mechtech.ejt\mortgage.3
CLOSING ITEM NO.: A-18
MECHANICAL TECHNOLOGY INCORPORATED
TO
KEYBANK NATIONAL ASSOCIATION
_____________________________________
PLEDGE AND SECURITY AGREEMENT
_____________________________________
DATED AS OF DECEMBER 1, 1998
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT dated as of December 1, 1998 (the "Pledge
and Security Agreement") from MECHANICAL TECHNOLOGY INCORPORATED, a business
corporation duly organized and existing under the laws of the State of New York
having an office for the transaction of business located at 968 Albany-Shaker
Road, Latham, New York 12110 (the "Company") to KEYBANK NATIONAL ASSOCIATION, a
national banking association organized under the laws of the State of New York
having an office for the transaction of business located at 66 South Pearl
Street, Albany, New York 12207 (the "Bank");
W I T N E S S E T H :
WHEREAS, Town of Colonie Industrial Development Agency (the "Issuer") has
issued its $6,000,000 aggregate principal amount of Taxable Industrial
Development Revenue Bonds (Mechanical Technology Incorporated Project - Letter
of Credit Secured), Series 1998A (the "Bonds") pursuant to a trust indenture
dated as of December 1, 1998 (the "Indenture") by and between the Issuer and
Manufacturers and Traders Trust Company, as trustee (the "Trustee"); and
WHEREAS, the Indenture requires the Trustee to purchase Bonds under certain
circumstances as set forth in Sections 304 and 305 of the Indenture (the
"Tendered Bonds") from the holders thereof; and
WHEREAS, the Company has entered into a remarketing agreement dated as of
December 1, 1998 (the "Remarketing Agreement") with First Albany Corporation
(the "Remarketing Agent") in order to provide a mechanism for remarketing the
Tendered Bonds; and
WHEREAS, the Company has entered into an irrevocable letter of credit
reimbursement agreement dated as of December 1, 1998 (the "Reimbursement
Agreement") with the Bank, pursuant to which the Bank has issued in favor of
the Trustee an irrevocable transferable direct- pay letter of credit (the
"Letter of Credit") which may be used, inter alia, to pay, under certain
circumstances, the Purchase Price (as defined in the Indenture) of the Tendered
Bonds; and
WHEREAS, to induce the Bank to issue its Letter of Credit, the Company is
willing to enter into this Pledge and Security Agreement whereby the Company
agrees to pledge to the Bank any Bonds purchased with moneys drawn under the
Letter of Credit;
<PAGE>
NOW, THEREFORE, for and in consideration of the covenants herein made, the
parties hereto hereby agree as follows:
SECTION 1. DEFINED TERMS. Except as otherwise provided herein, all words and
terms used herein shall have the meanings ascribed thereto in Article I of the
Indenture.
SECTION 2. PLEDGE. (A) The Company hereby pledges, assigns, hypothecates,
transfers and delivers to the Bank all its right, title and interest to the
Pledged Bonds as the same may be from time to time delivered to the Trustee by
the holders thereof and hereby grants the Bank a first Lien on, and security
interest in, its right, title and interest in and to the Pledged Bonds, the
interest thereon and all proceeds thereof as collateral security for the prompt
and complete payment when due of all amounts due in respect of the obligations
of the Subsidiary set forth in the Reimbursement Agreement (all the foregoing
are hereinafter referred to as the "Obligations").
(B) The Company shall deliver or cause to be delivered to the Tender Agent
as nominee for the Bank (the Tender Agent, in such capacity, is hereinafter
referred to as the "Pledge Agent"), the Pledged Bonds (together with
appropriate assignments in blank necessary to further transfer the Pledged
Bonds).
(C) The Company acknowledges that the Pledge Agent is acting as agent
solely for the Bank and the Company acknowledges and agrees that it shall have
no right to direct or control any of the actions of the Pledge Agent taken
pursuant to this Pledge and Security Agreement.
SECTION 3. PAYMENTS ON THE BONDS. If, while this Pledge and Security Agreement
is in effect, the Company shall become entitled to receive or shall receive any
principal or interest payment in respect of the Pledged Bonds, or the Purchase
Price of any Pledged Bonds tendered or deemed tendered under Section 304 of the
Indenture, the Company agrees to accept the same as the Bank's agent and to
hold the same in trust on behalf of the Bank and to deliver the same forthwith
to the Bank. All sums of money so paid in respect of the Pledged Bonds which
are received by the Company and paid to the Bank shall be credited against the
Obligations of the Company to the Bank described in the Reimbursement
Agreement. So long as no Default or Event of Default has occurred and is
continuing, any amounts received by the Bank in respect of the stated interest
on any Pledged Bonds in excess of the amounts then owing to the Bank pursuant
to the Reimbursement Agreement shall, upon request of the Company, be remitted
to the Company.
SECTION 4. COLLATERAL. All property at any time pledged to the Bank hereunder,
and all income therefrom and proceeds thereof, are hereinafter referred to as
the "Collateral".
SECTION 5. TERMINATION OF LIEN; RELEASE OF PLEDGED BONDS. The Lien of this
Pledge and Security Agreement shall terminate as to Pledged Bonds and the
Pledge Agent shall deliver Pledged Bonds, as follows:
<PAGE>
(A) If Pledged Bonds are disposed of pursuant to Section 7 hereof and the
Letter of Credit is reinstated as provided in Section 11 hereof, the Lien of
this Pledge and Security Agreement shall terminate as to Pledged Bonds, the
principal amount of which is equal (as nearly as possible) to the amount of the
payment made to the Bank with respect to such sale or, if less, the principal
amount of Pledged Bonds so sold. Such Pledged Bonds shall be delivered by the
Pledge Agent (without recourse to, representation or warranty by, the Pledge
Agent, express or implied) to the Company, the Remarketing Agent or otherwise,
as provided in the Indenture.
(B) If the Company makes or causes to be made to the Bank a prepayment in
respect of its reimbursement obligation under the Reimbursement Agreement, the
Lien of the Pledge and Security Agreement shall terminate as to Pledged Bonds
in an aggregate principal amount equal to the amount of the prepayment so made
and the Pledge Agent shall deliver such Pledged Bonds to the Company.
Notwithstanding the foregoing, no prepayment of amounts owing to the Bank may
be made, and no Pledged Bonds shall be released, during the period commencing
fifteen (15) Business Days prior to an Interest Payment Date with respect to
the Bonds and ending at the close of business on such interest payment date.
SECTION 6. RIGHTS OF THE BANK. The Bank shall not be liable for failure to
collect or realize upon the Obligations or any collateral security or guarantee
therefor, or any part thereof, or for any delay in so doing, or be under any
obligation to take any action whatsoever with regard thereto. If an Event of
Default has occurred and is continuing, the Bank may thereafter, without notice
(except the notice specified in Section 7 hereof of time and place of public or
private sale), exercise all rights, privileges or options pertaining to any
Pledged Bonds as if it were the absolute owner thereof, upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but the Bank shall have no duty to exercise
any of the aforesaid rights, privileges or options (or to exercise them in any
particular order) and shall not be responsible for any failure to do so or
delay in so doing.
SECTION 7. REMEDIES. (A) In the event that any portion of the Obligations has
been declared due and payable pursuant to the Reimbursement Agreement, the
Bank, without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon the Company or any other person (all and each of which
demands, advertisements and/or notices are hereby expressly waived), may
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give an option or options to
purchase, contract to sell or otherwise dispose of and deliver the Collateral,
or any part thereof, in one or more parcels at public or private sale or sales,
at any exchange, broker's board or at any of the Bank's offices or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as
it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk, with the right to the Bank upon any such sale or
sales, public or private, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Company, which right
or equity is hereby expressly waived or released.
(B) The Bank shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any and all of the Collateral or in any way
relating to the rights of the Bank hereunder, including reasonable attorneys'
fees and legal expenses, to the payment, in whole or in part, of the
Obligations in such order as the Bank may elect, the Company remaining liable
<PAGE>
for any deficiency remaining unpaid after such application, and only after so
applying such net proceeds and after the payment by the Bank of any other
amount required to be paid by any provisions of law, including, without
limitation, Section 9-504(1)(c) of the New York Uniform Commercial Code, need
the Bank account for the surplus, if any, to the Company.
(C) The Company agrees that the Bank need not give more than ten (10) days
notice of the time and place of any public sale or of the time after which a
private sale or other intended disposition is to take place and that such
notice is reasonable notification of such matters. No notification need be
given to the Company if it has signed after default a statement renouncing or
modifying any right to notification of sale or other intended disposition. In
addition to the rights and remedies granted to it in the Pledge and Security
Agreement and in any other instrument or agreement securing, evidencing or
relating to any of the Obligations, the Bank shall have all the rights and
remedies of a secured party under the New York Uniform Commercial Code. The
Company further agrees to waive and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the New York Uniform
Commercial Code, and the Company shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all amounts to which the Bank is entitled and the fees of any attorneys
employed by the Bank to collect such deficiency.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company represents and warrants that (A) on the date of delivery to the Bank of
any Pledged Bonds described herein, neither the Issuer, the Remarketing Agent
nor the Trustee will have any right, title or interest in and to the Pledged
Bonds; (B) it has, and on the date of delivery to the Bank of any Pledged Bonds
will have, full power, authority and legal right to pledge all of its right,
title and interest in and to the Pledged Bonds pursuant to the Pledge and
Security Agreement; (C) the Pledge and Security Agreement has been duly
authorized, executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company enforceable in accordance with its
terms; (D) no consent of any other party (including, without limitation,
creditors of the Company) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority, domestic or foreign, is required
to be obtained by the Company in connection with the execution, delivery or
performance of the Pledge and Security Agreement; (E) the execution, delivery
and performance of the Pledge and Security Agreement will not violate any
provision of any applicable law or regulation or of the Company's certificate
of incorporation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of any mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which the Company is a party or which purports to be binding upon the Company
or upon its assets and will not result in the creation or imposition of any
lien, charge or encumbrance on or security interest in any of the assets of the
Company except as contemplated by the Pledge and Security Agreement; and (F)
the pledge, assignment and delivery of such Pledged Bonds pursuant to the
Pledge and Security Agreement will create a valid first lien on and a first
perfected security interest in the Pledged Bonds and the proceeds thereof,
subject to no prior pledge, lien, mortgage, hypothecation, security interest,
charge, option or encumbrance or any agreement purporting to grant to any third
party a security interest in the property or assets of the Company which would
include the Pledged Bonds. The Company covenants and agrees that (i) it will
<PAGE>
defend the Bank's right, title and security interest in and to the Pledged
Bonds and the proceeds thereof against the claims and demands of all persons
whomsoever; and (ii) it will have like title to and the right to pledge any
other property at any time hereafter pledged to the Bank as Collateral
hereunder and will likewise defend the Bank's right thereto and security
interest therein.
SECTION 9. SALE OF COLLATERAL. (A) The Company recognizes that the Bank may be
unable to effect a public sale of any or all of the Pledged Bonds by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who may be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Company acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, withstanding such circumstances, agrees that such private sale shall
be deemed to have been made in a commercially reasonable manner. The Bank shall
not be under any obligation to delay a sale of any of the Pledged Bonds for the
period of time necessary to permit the Issuer to register such securities for
public sale under applicable Federal securities laws, or under applicable state
securities laws, even if the Issuer would agree to do so.
(B) The Company further agrees to do or cause to be done all such acts and
things as may be necessary to make such sale or sales of any portion or all of
the Pledged Bonds valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Company's
expense. The Company further agrees that a breach of any of the covenants
contained in this Section 9 will cause irreparable injury to the Bank, that the
Bank has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Section 9
shall specifically enforceable against the Company, and the Company hereby
waives and agrees, to the extent permitted by law, not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred. The Company further acknowledges
the impossibility of ascertaining the amount of damages which would be suffered
by the Bank by reason of a breach of any of such covenants and, consequently,
agrees that, if the Bank shall sue for damages for such breach, the Company
shall pay, as liquidated damages and not as a penalty, an amount equal to the
par value plus accrued interest on the Pledged Bonds on the date the Bank shall
demand compliance with this Section 9. Upon such payment, the Bank will release
its interest in such Pledged Bonds.
SECTION 10. LIMITATION ON DISPOSITION. Notwithstanding the rights and remedies
given to the Bank in Section 7 and elsewhere herein to dispose of the Pledged
Bonds, the Bank may tender Pledged Bonds to the Trustee for payment and
cancellation, and the Company agrees that such tender and payments shall not
constitute a disposition of collateral for purposes of Section 9-504 of the
Code, but shall constitute a simple reduction in the contingent obligations of
the Company to the Bank.
SECTION 11. GENERAL PROVISION RELATING TO RELEASE OF BONDS. The Lien of this
Pledge and Security Agreement shall not terminate and the Pledge Agent shall
not release or deliver any Pledged Bonds unless the Letter of Credit is
reinstated for the amount which is drawn on the Letter of Credit at the time
such Bonds became Pledged Bonds.
<PAGE>
SECTION 12. NO DISPOSITION. Without the prior written consent of the Bank, the
Company agrees that it will not sell, assign, transfer, exchange or otherwise
dispose of, or grant any option with respect to, the Collateral, or create,
incur or permit to exist any pledge, lien, mortgage, hypothecation, security
interest, charge, option or any other encumbrance with respect to any of the
Collateral, or any interest therein, or any proceeds thereof, except for the
lien and security interest provided for by the Pledge and Security Agreement
and sale of the Pledged Bonds as provided in the Indenture.
SECTION 13. FURTHER ASSURANCE. The Company agrees that, at any time and from
time to time upon the written request of the Bank, the Company will execute and
deliver such further documents, including, but not limited to, bond powers and
assignments, and do such further acts and things as the Bank may reasonably
request in order to effect the purposes of the Pledge and Security Agreement.
SECTION 14. SEVERABILITY. Any provision of the Pledge and Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 15. NOTICES. (A) All notices, certificates and other communications
hereunder shall be in writing and shall be sufficiently given and shall be
deemed given when (1) sent to the applicable address stated below by registered
or certified mail, return receipt requested, or by such other means as shall
provide the sender with documentary evidence of such delivery, or (2) delivery
is refused by the addressee, as evidenced by the affidavit of the Person who
attempted to effect such delivery. The addresses to which notices, certificates
and other communications hereunder shall be delivered are as follows:
IF TO THE COMPANY:
Mechanical Technology Incorporated 968 Albany-Shaker Road Latham, New York
12110 Attention: Cynthia Scheuer, Vice President
WITH A COPY TO:
Harry D'Agostino, Esq. D'Agostino, Hoblock, Greisler & Siegal 39 North Pearl
Street Albany, New York 12207
IF TO THE TRUSTEE:
Manufacturers and Traders Trust Company, as Trustee One M&T Plaza, 7th Floor
Buffalo, New York 14203 Attention: Leslie A. Boynton, Vice President
WITH A COPY TO:
Timothy R. McGill, Esq. St. John & Curtin, LLC 1530 First Federal Plaza
Rochester, New York 14614
IF TO THE BANK:
KeyBank National Association 66 South Pearl Street Albany, New York 12207
Attention: William B. Palmer, Vice President
<PAGE>
WITH A COPY TO:
Hiscock & Barclay, LLP One KeyCorp Plaza - Suite 1100 Albany, New York 12207
Attention: Edward J. Trombly, Esq.
(B) A duplicate copy of each notice, certificate and other communication given
hereunder by the Company shall be given to the Trustee and to the Bank. The
Company, the Trustee and the Bank may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates and
other communications shall be sent.
SECTION 16. NO WAIVER; REMEDIES CUMULATIVE. The Bank shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Bank, and then only to the extent therein set forth. A waiver by the Bank
of any right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Bank would otherwise have on any future
occasion. No failure to exercise or any delay in exercising on the part of the
Bank any right, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by the Financing Documents or by law.
SECTION 17. WAIVERS, AMENDMENTS; APPLICABLE LAW. None of the terms or provision
of the Pledge and Security Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by the Bank. The
Pledge and Security Agreement and all obligations of the Company hereunder
shall be binding upon the successors and assigns of the Company and shall,
together with the rights and remedies of the Bank hereunder, inure to the
benefit of the Bank and its successors and assigns. The Pledge and Security
Agreement shall be governed by, and be construed and interpreted in accordanc
with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Pledge and Security Agreement
to be duly executed and delivered as of the day and year first above written.
MECHANICAL TECHNOLOGY INCORPORATED
BY: Authorized Representative
EXHIBIT A
KEYBANK NATIONAL ASSOCIATION International Division 66 South Pearl Street
Albany, New York 12207-1501
Date: December __, 1998
Irrevocable Transferable Direct Pay Letter of Credit No. ________
Beneficiary: Manufacturers And Traders Trust Company, as Trustee One M&T
Plaza, 7th Floor Buffalo, New York 14203
Applicant
Mechanical Technology Incorporated 968 Albany-Shaker Road Latham, New York
12110
Attention: Corporate Trust Department
Amount: USD 6,160,274.00 [SUBJECT TO CONFIRMATION OF CALCULATION] Expiration
Date: December ____, 2003 Dear Sirs: You, as Trustee under the Trust Indenture
dated as of December 1, 1998 (the "Indenture") between you and Mechanical
Technology Incorporated, pursuant to which Six Million Dollars ($6,000,000) in
aggregate principal amount of Town of Colonie Industrial Development Agency
Industrial Development Revenue Bonds (Mechanical Technology Incorporated
Project - Letter of Credit Secured) Series 1999A (the "Bonds"), are hereinafter
referred to as the "Notes") are being issued by the Town of Colonie Industrial
Development Agency (the "Issuer"), are hereby irrevocably authorized to draw on
KeyBank National Association pursuant to our Irrevocable Transferable Direct
Pay Letter of Credit, for the account of Mechanical Technology Incorporated
(the "Company") available by one or more of your drafts at sight, upon the
terms and conditions hereinafter set forth, an amount (subject to reinstatement
as hereinafter set forth) not exceeding Six Million One Hundred Sixty Thousand
Two Hundred Seventy-Four Dollars ($6,160,274.00) (the "Letter of Credit
Commitment") of which (a) an amount not exceeding Six Million Dollars
($6,000,000.00) may be drawn with respect to the payment of (i) the unpaid
principal amount of the Bonds as and when the same become due at maturity or by
acceleration or by redemption, or pursuant to any mandatory sinking fund
requirements, (the "Principal Commitment") or (ii) that portion of the purchase
price of the Bonds corresponding to the principal thereof when delivered to the
Remarketing Agent for remarketing and not remarketed and (b) an amount not
exceeding One Hundred Sixty Thousand Two Hundred Seventy-Four Dollars
($160,274.00) may be drawn with respect to the payment of (i) up to sixty-five
(65) days' interest at a maximum rate of fifteen percent (15%) per annum
(calculated on the basis of a year of 365 days; 366 days in a leap year) (the
"Maximum Rate") accrued on the Bonds on or prior to their stated maturity dates
or (ii) the portion of the purchase price of Bonds corresponding to up to 65
days' interest accrued on such Bonds at the Maximum Rate when delivered to the
Remarketing Agent for remarketing and not remarketed (the "Interest
Commitment"), effective immediately and expiring at the close of business on
December ____, 2003 (the "Expiration Date"). Funds under this Letter of Credit
are available to you against your executed sight draft(s) drawn on us, stating
on their face: "Drawn under KeyBank National Association Irrevocable
Transferable Direct Pay Letter of Credit No. ________" and accompanied by: (A)
if the drawing is being made with respect to the payment of principal on the
Bonds, whether due at maturity, upon call for redemption, upon acceleration or
pursuant to any mandatory sinking fund requirements (a "Principal Drawing"), a
certificate signed by you in the form of Schedule 1 attached hereto
appropriately completed; (B) if the drawing is being made with respect to a
<PAGE>
payment corresponding to the unpaid principal amount of, and interest accrued
on, Bonds when delivered to the Remarketing Agent for remarketing and not
remarketed (a "Remarketing Drawing"), a certificate signed by you in the form
of Schedule 2 attached hereto appropriately completed, and (C) if the drawing
is being made with respect to a payment of interest on the Bonds (an "Interest
Drawing"), a certificate signed by you in the form of Schedule 3 hereto
appropriately completed. Presentation of such draft(s) and certificate(s) shall
be made by telephone facsimile confirmed in writing at our Main Office, 66
South Pearl Street, Albany, New York 12207-1501, Attention: International
Department, or at any other office of ours in the City of Albany, New York
which may be designated by us by written notice delivered to you. We hereby
agree that all drafts drawn under and in compliance with the terms of this
Letter of Credit will be duly honored by us by twelve noon (Albany, New York
time) of the Business Day following the transmission of the telephone facsimile
of the draft(s) and certificate(s) not later than 11:00 a.m. (Albany, New York
time) (originals thereof to be presented by mail before 10:00 a.m. (Albany, New
York time) within one (1) Business Day following the telephone facsimile
transmission) as specified at such office on or before the Expiration Date. If
requested by you, payment under this Letter of Credit may be made by wire
transfer of federal funds to your account at the Federal Reserve Bank of New
York, or by deposit of immediately available funds into a designated account
that you maintain with us. As used herein, "Business Day" shall mean any day of
the year other than (i) a Saturday or Sunday, (ii) any day on which banks
located in either Albany, New York, or the city in which the principal
corporate trust office of the Trustee pursuant to the Indenture is located are
required or authorized by law to remain closed or (iii) any day on which the
New York Stock Exchange is closed. Drawings hereunder shall not exceed the
Letter of Credit Commitment, as the Letter of Credit Commitment may be reduced
or reinstated pursuant hereto, and, except as hereinafter modified, each
drawing honored by us shall pro tanto reduce the amount available under this
Letter of Credit. In connection with any Interest Drawing, the Interest
Commitment will be automatically decreased by the amount of such Interest
Drawing and will be automatically reinstated by the amount of such Interest
Drawing on the date of such Interest Drawing. We will reinstate amounts drawn
pursuant to a Remarketing Drawing hereunder, as to the Principal Commitment and
the Interest Commitment, to the extent that money is received by us (other than
from drawings under this Letter of Credit) from the Tender Agent described in
the Indenture, which proceeds were held by the Tender Agent for the sole
purpose of reimbursing us for all or a portion of amounts drawn hereunder
pertaining to such Remarketing Drawing. Upon presentation by you of any
Principal Drawing, the amount of this Letter of Credit and the amounts
available to be drawn by you by any subsequent Principal Drawing shall be
automatically and permanently decreased by an amount equal to the amount of
such Principal Drawing plus the amount of corresponding interest allocable to
such Principal Drawing in the Interest Commitment. If the Borrower shall be
entitled to a credit against the principal amount of the Bonds prior to
maturity (the "Credit") pursuant to an optional redemption of a portion of the
Bonds or to the purchase of Bonds in the open market and cancellation thereof
in accordance with the provisions of the Indenture, and such amounts have been
paid by or on behalf of the Company other than by us, the Company shall have
the right at any time thereafter to reduce permanently, without penalty or
premium, the Letter of Credit Commitment in the manner set forth below. The
Letter of Credit Commitment will be reduced by an amount equal to the sum of
the following corresponding reductions in the Principal Commitment and the
Interest Commitment: (i) the Principal Commitment will be reduced by an amount
equal to the amount of such Credit and (ii) the Interest Commitment will be
reduced by an amount equal to sixty-five (65) days' interest on the amount of
such Credit at the Maximum Rate (calculated on the basis of a 365-day year; 366
days in a leap year). The reduction in the Letter of Credit Commitment pursuant
<PAGE>
to such Credit will occur not less than three (3) Business Days after written
notice to us, accompanied by this Letter of Credit and the written certificate
of you and the Company in the form of Schedule 4 attached hereto stating that
the Company is entitled to such reduction and designating the amount of such
Credit and the date of the Business Day upon which such reduction shall become
effective. Upon such presentation we will either reissue this Letter of Credit
in the maximum amount available hereunder or otherwise amend this Letter of
Credit to reflect such maximum amount then available. Only you, as Trustee, may
make a drawing under this Letter of Credit. Upon the payment to you or your
account of the amount specified in a sight draft drawn hereunder, we shall be
fully discharged on our obligation under this Letter of Credit with respect to
such sight draft, and we shall not thereafter be obligated to make any further
payments under this Letter of Credit in respect of such sight draft to you or
to any other person who may have made to you or who makes to you a demand for
payment of principal of or interest on any of the Bonds. This Letter of Credit
shall be governed by the International Chamber of Commerce Uniform Customs and
Practice for Documentary Credits, Publication No. 500 (1993 Revision), and
including any amendments, modifications, or revisions thereof) and the laws of
the State of Ohio. Communications with respect to this Letter of Credit shall
be in writing and shall be addressed to KeyBank National Association, 66 South
Pearl Street, Albany, New York 12207- 1501, Attention: International Department
specifically referring thereon to KeyBank National Association Irrevocable
Transferable Direct Pay Letter of Credit No. ________. This Letter of Credit is
transferable in its entirety (but not in part) to any transferee who has
succeeded you as Trustee under the Indenture and such transferred Letter of
Credit may be successively transferred to any Successor Trustee or Co-Trustee
thereunder, but may not be assigned, transferred or conveyed under any other
circumstance. Transfer of the amount available under this Letter of Credit to
such transferee shall be effected by the presentation to us of this Letter of
Credit accompanied by a transfer fee of $500.00 and the transfer form in the
form attached hereto as 5 and, unless this Letter of Credit is so presented to
us, we shall have no obligation hereunder to any transferee. Upon such
transfer, we will either reissue this Letter of Credit in the maximum amount
then available hereunder or otherwise amend this Letter of Credit to reflect
such maximum amount then available. Upon the earliest of (i) the payment by us
to the Trustee of the final drawing available to be made under the Letter of
Credit, (ii) our receipt of this outstanding Letter of Credit and a written
certificate signed by your officer and an authorized representative of the
Company in the form of Schedule 6 hereto appropriately completed, stating that:
(a) no Bonds remain outstanding within the meaning of the Indenture; and (b)
such officer and representative are duly authorized to sign such certificate on
behalf of you and the Company, (iii) the twentieth (20th) Business Day after
our receipt of this Letter of Credit and a written certificate signed by your
officer and an authorized representative of the Company in the form of Schedule
7 hereto appropriately completed, stating that: (a) an Alternate Credit
Facility in substitution of this Letter of Credit has been accepted by you and
is in effect; and (b) such officer and representative are duly authorized to
sign such certificate on behalf of you and the Company, or (iv) the stated
Expiration Date, this Letter of Credit shall automatically terminate and be
delivered to us for cancellation. This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document, instrument or agreement
referred to herein (including, without limitation, the Bonds or the
Reimbursement Agreement), except only the certificate(s) and the sight draft(s)
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement except for such
certificate(s) and such sight draft(s).
<PAGE>
SCHEDULE 1
CERTIFICATE FOR THE PAYMENT OF PRINCIPAL OF TOWN OF COLONIE INDUSTRIAL
DEVELOPMENT AGENCY TAXABLE INDUSTRIAL REVENUE BONDS (MECHANICAL TECHNOLOGY
INCORPORATED PROJECT-LETTER OF CREDIT SECURED), SERIES 1998A (THE "BONDS")
The undersigned, a duly authorized officer of Manufacturers And Traders Trust
Company (the "Trustee"), hereby certifies to KeyBank National Association (the
"Bank"), with reference to Irrevocable Transferable Direct Pay Letter of Credit
No. ________ (the term "Letter of Credit" and other capitalized terms used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit) issued by the Bank in favor of the Trustee, that: The Trustee
is the Trustee under the Indenture for the holders of the Bonds. The Trustee is
making a drawing under the Letter of Credit with respect to the payment of the
principal of the Bonds. The amount of principal of the Bonds which will be due
and payable on , ______, is $ . The amount of the sight draft accompanying this
Certificate ($ ), together with the aggregate of all prior payments made
pursuant to Principal Drawings under this Letter of Credit for the payment of
the Bonds, does not exceed $ . The amount of the sight draft accompanying this
Certificate was computed in accordance with the terms and conditions of the
Letter of Credit, the Reimbursement Agreement, the Bonds, and the Indenture. IN
WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as of
the day of , _____. MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee By:
Its:
SCHEDULE 2 CERTIFICATE FOR THE PAYMENT OF REMARKETING DRAWING OF TOWN OF
COLONIE INDUSTRIAL DEVELOPMENT AGENCY TAXABLE INDUSTRIAL REVENUE BONDS
(MECHANICAL TECHNOLOGY INCORPORATED PROJECT - LETTER OF CREDIT SECURED), SERIES
1998A (THE "BONDS")
The undersigned, a duly authorized officer of Manufacturers And Traders Trust
Company as Trustee (the "Trustee"), hereby certifies to KeyBank National
Association (the "Bank") with reference to KeyBank National Association
Irrevocable Transferable Direct Pay Letter of Credit No. ________ (the "Letter
of Credit", the capitalized terms defined therein and not defined herein being
used as therein defined) issued by the Bank in favor of the Trustee that: The
Trustee is the Trustee under the Indenture for the holders of the Bonds. The
total amount of Bonds outstanding (as defined in the Indenture) is
$_________________. The Trustee is making a drawing under the Letter of Credit
at the written request of the Remarketing Agent (as defined in the Indenture),
to pay, pursuant to the terms of the Remarketing Agreement (as defined in the
Indenture), the purchase price equal to the principal amount of those Bonds
which the Remarketing Agent has been unable to remarket and the interest
accrued on such Bonds but not paid. The Trustee: (a) is delivering or causing
to be delivered to the Bank, or its designated agent, a principal amount of the
Bonds, registered in the names of Town of Colonie IDA (the "Issuer") as
pledgor and the Bank as pledgee, equal to the amount of the draft accompanying
this Certificate; (b) acknowledges the pledge by the Issuer to the Bank of the
Bonds delivered pursuant to subparagraph (a) and (c) agrees that all payments
of principal, premium, if any, and interest made on such Bonds shall be made to
the Bank, so long as the Bank is the pledgee of such Bonds. The principal
amount of the Bonds delivered to the Remarketing Agent which the Remarketing
Agent has been unable to remarket is $____________. The amount of interest upon
such Bonds which has accrued but is unpaid is $_________. The amount of the
draft accompanying this Certificate does not exceed such amount due as the
purchase price of such Bonds corresponding to such principal amount of, and
interest on, such Bonds. The amount of the draft accompanying this Certificate,
together with the aggregate of all prior payments pursuant to Remarketing
<PAGE>
Drawings which have not been reinstated under the Letter of Credit for the
payment of purchase price of the Bonds, does not exceed the Letter of Credit
Commitment. Upon receipt by the Trustee of the amount demanded hereby, (a) the
Trustee will deliver it to Note holders only for the purpose of payment of the
principal amount of the Bonds referenced in the second paragraph hereof, (b) no
portion of it shall be applied by the Trustee for any other purpose, and (c) no
portion of it shall be commingled with other funds held by the Trustee. This
drawing is made in accordance with the provisions of the Indenture and the
Letter of Credit. The amount of the draw accompanying this Certificate was
computed in accordance with the terms and conditions of the Bonds and the
Indenture. IN WITNESS WHEREOF, the Trustee has executed and delivered this
certificate as of the _____ day of _________, ______.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: Its:
SCHEDULE 3
CERTIFICATE FOR THE PAYMENT OF INTEREST OF TOWN OF COLONIE INDUSTRIAL
DEVELOPMENT AGENCY TAXABLE INDUSTRIAL REVENUE BONDS (MECHANICAL TECHNOLOGY
INCORPORATED PROJECT-LETTER OF CREDIT SECURED), SERIES 1998A (THE "BONDS")
The undersigned, a duly authorized officer of Manufacturers And Traders Trust
Company (the "Trustee"), hereby certifies to KeyBank National Association (the
"Bank"), with reference to Irrevocable Transferable Direct Pay Letter of Credit
No. ________ (the term "Letter of Credit" and other capitalized term used
herein and not defined shall have its respective meaning as set forth in the
Letter of Credit) issued by the Bank in favor of the Trustee, that:
The Trustee is the Trustee under the Indenture for the holders of the Bonds.
The Trustee is making a drawing under the Letter of Credit with respect to a
payment of interest accrued on the Bonds on or prior to their stated maturity
date.
The amount of interest on the Bonds which will be due and payable on , _______,
is $ .
The amount of the sight draft accompanying this Certificate ($______________)
does not exceed the amount available on the date hereof to be drawn under the
Letter of Credit in respect of the payment of interest accrued on the Bonds on
or prior to their stated maturity date.
The amount of the sight draft accompanying this Certificate was computed in
accordance with the terms and conditions of the Letter of Credit, the
Reimbursement Agreement, the Bonds and the Indenture.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Certificate as
of the day of , ________.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: Its:
<PAGE>
SCHEDULE 4
CERTIFICATE AS TO REDUCTION OF LETTER OF CREDIT COMMITMENT
KeyBank National Association 66 South Pearl Street Mailcode: Albany, New York
12207-1501
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable Direct Pay Letter of
Credit No. ________
Gentlemen:
The undersigned, a duly authorized officer of Manufacturers And Traders Trust
Company, as Trustee (the "Trustee"), and a duly authorized representative of
Mechanical Technology Incorporated (the "Company"), respectively, hereby
certify to KeyBank National Association with reference to KeyBank National
Association Irrevocable Transferable Direct Pay Letter of Credit No. ________
(the "Letter of Credit"), the capitalized terms defined therein and not defined
herein being used as therein defined, issued by KeyBank National Association in
favor of the Trustee that:
The Trustee is the Trustee under the Indenture for the holders of the Bonds.
The Company is entitled to a reduction in the Letter of Credit Commitment. The
Letter of Credit Commitment shall be reduced, effective as of , as follows:
(i) The Principal Commitment shall be reduced to $ .
(ii) The Interest Commitment shall be reduced to $ .
The undersigned officer and representative are duly authorized to sign this
certificate on behalf of the Trustee, and on behalf of the Company,
respectively.
IN WITNESS WHEREOF, the Trustee and the Company have executed and delivered
this Certificate as of the day of , .
TRUSTEE: MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: Title:
COMPANY: MECHANICAL TECHNOLOGY INCORPORATED
By: Title:
<PAGE>
SCHEDULE 5
KeyBank National Association 66 South Pearl Street Mailcode: Albany, New York
12207-1501 Attention: International Department
Date: , _____
RE: KeyBank National Association Irrevocable Transferable Direct Pay Letter
of Credit No. ________
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably transfers to
the following (the "Transferee"):
(Name of Transferee) (Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety.
By this transfer, all rights of the undersigned beneficiary in the Letter of
Credit are transferred to the Transferee and the Transferee shall have the sole
rights as beneficiary thereof, including sole rights relating to any amendments
of the Letter of Credit, whether increases in the amount to be drawn
thereunder, extensions of the Expiration Date thereof, or other amendments, and
whether such amendments now exist or are made after the date hereof. All
amendments of the Letter of Credit are to be advised direct to the Transferee
without necessity of any consent of or notice to the undersigned beneficiary.
The undersigned hereby certifies that the Transferee has become successor
Trustee under the Trust Indenture dated as of ______________ 19____, between
the undersigned and the Town of Colonie Industrial Development Agency (the
"Issuer") relating to the Issuer's $6,000,000 Taxable Industrial Development
Revenue Bonds (Mechanical Technology Incorporated Project - Letter of Credit
Secured), Series 1998A and has accepted such appointment in writing.
We enclose our check in the amount of $500.00 representing your transfer fee.
The original of such Letter of Credit is returned herewith, and in accordance
therewith we ask you to endorse the within transfer on the reverse thereof, and
forward it directly to the Transferee with your customary notice of transfer,
or issue a replacement Letter of Credit to the Transferee as provided therein.
Very truly yours,
SIGNATURE AUTHENTICATED as Trustee
By: (Bank)
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: (Authorized Officer)
<PAGE>
SCHEDULE 6
CERTIFICATE THAT NO BONDS ARE OUTSTANDING
KeyBank National Association 66 South Pearl Street Mailcode: Albany, New York
12207-1501
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable Direct Pay Letter
of Credit No. ________
Gentlemen:
The undersigned, a duly authorized officer of Manufacturers And Traders Trust
Company, as Trustee (the "Trustee"), and a duly authorized representative of
Mechanical Technology Incorporated (the "Company"), hereby certify to KeyBank
National Association with reference to KeyBank National Association Irrevocable
Transferable Direct Pay Letter of Credit No. ________ (the "Letter of Credit,"
the capitalized terms defined therein and not defined herein being used as
therein defined) issued by KeyBank National Association in favor of the Trustee
that:
(i) The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
(ii) No Bonds are Outstanding within the meaning of the Indenture.
(iii) The undersigned officer and representative are duly authorized to sign
this certificate on behalf of the Trustee and on behalf of the Company,
respectively.
IN WITNESS WHEREOF, the Trustee and the Company have executed and delivered
this certificate as of the day of , _______.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: Title:
MECHANICAL TECHNOLOGY INCORPORATED
By: Title:
SCHEDULE 7
CERTIFICATE OF ACCEPTANCE OF ALTERNATE SECURITY
KeyBank National Association 66 South Pearl Street Mailcode: Albany, New York
12207-1501
Attention: International Department
RE: KeyBank National Association Irrevocable Transferable Direct Pay Letter
of Credit No. ________
Gentlemen:.
The undersigned, a duly authorized officer of Manufacturers And Traders Trust
Company, as Trustee (the "Trustee"), and a duly authorized representative of
<PAGE>
Mechanical Technology Incorporated (the "Company"), respectively, hereby
certify to KeyBank National Association with reference to KeyBank National
Association Irrevocable Transferable Direct Pay Letter of Credit No. ________
(the "Letter of Credit", and other capitalized terms used herein and not
defined shall have their respective meanings as set forth in the Letter of
Credit) issued by KeyBank National Association in favor of the Trustee that:
(i) The Trustee is the Trustee under the Indenture for the holders of the
Bonds. (ii) An Alternate Credit Facility in substitution for the Letter of
Credit has been accepted by the Trustee. (iii) The undersigned officer of the
Trustee and representative of the Company are duly authorized to sign this
certificate on behalf of the Trustee and the Company, respectively.
IN WITNESS WHEREOF, the Trustee and the Company have executed and delivered
this certificate as of the day of , _______.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
By: Its:
KEYBANK Irrevocable Transferable Direct Pay Letter of Credit No. _________
______________________________________ Authorized Signature
______________________________________ Authorized Signature
Page 1 of 16
CLOSING ITEM NO.: A-3
_______________________________________________________________________________
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY
AND
MANUFACTURERS AND TRADERS TRUST COMPANY, AS TRUSTEE
________________________________
TRUST INDENTURE ________________________________
DATED AS OF DECEMBER 1, 1998
________________________________
RELATING TO TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY $6,000,000 AGGREGATE
PRINCIPAL AMOUNT TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS (MECHANICAL
TECHNOLOGY INCORPORATED PROJECT - LETTER OF CREDIT SECURED), SERIES 1998A.
_______________________________________________________________________________
THIS INSTRUMENT IS INTENDED TO CONSTITUTE A SECURITY AGREEMENT UNDER THE
UNIFORM COMMERCIAL CODE OF THE STATE OF NEW YORK.
TABLE OF CONTENTS
(This Table of Contents is not part of this Trust Indenture and is for
convenience of reference only.)
PARTIES 1
RECITALS 1
GRANTING CLAUSES 4
ARTICLE I
DEFINITIONS
SECTION 101. DEFINITIONS 6
SECTION 102. INTERPRETATION 21
SECTION 103. CONDITIONS PRECEDENT SATISFIED 22
ARTICLE II
THE BONDS
SECTION 201. RESTRICTION ON ISSUANCE OF BONDS 23
SECTION 202. LIMITED OBLIGATIONS 23
SECTION 203. EXECUTION 23
SECTION 204. AUTHENTICATION 24
SECTION 205. MUTILATED, LOST, STOLEN OR DESTROYED BONDS 24
SECTION 206. TRANSFER AND EXCHANGE OF BONDS; PERSONS TREATED AS OWNERS 24
SECTION 207. PAYMENT PROVISIONS 25
SECTION 208. TEMPORARY BONDS 27
SECTION 209. SPECIFIC DETAILS OF THE BONDS 27
<PAGE>
SECTION 210. DELIVERY OF THE INITIAL BONDS 31
SECTION 211. CANCELLATION OF BONDS 31
SECTION 212. PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS 32
SECTION 213. BOOK ENTRY BONDS 32
SECTION 214. ADDITIONAL BONDS 33
ARTICLE III
REDEMPTION OF BONDS PRIOR TO MATURITY
SECTION 301. REDEMPTION OF BONDS PRIOR TO MATURITY 36
SECTION 302. COMPANY'S ELECTION TO REDEEM 38
SECTION 303. NOTICE OF REDEMPTION; PAYMENT OF REDEEMED BONDS 38
SECTION 304. MANDATORY TENDER; NOTICE 39
SECTION 305. DEMAND PURCHASE OPTION 40
SECTION 306. FUNDS FOR PURCHASE OF BONDS 42
SECTION 307. DELIVERY OF PURCHASED BONDS 42
SECTION 308. DUTIES OF TRUSTEE AND TENDER AGENT WITH RESPECT TO
PURCHASE OF BONDS 42
ARTICLE IV
FUNDS AND APPLICATION OF PROCEEDS OF BONDS AND REVENUES
SECTION 401. ESTABLISHMENT OF FUNDS 44
SECTION 402. APPLICATION OF PROCEEDS OF BONDS 44
SECTION 403. PROJECT FUND 45
SECTION 404. TRANSFERS OF TRUST REVENUES TO FUNDS 46
SECTION 405. BOND FUND 46
SECTION 406. INSURANCE AND CONDEMNATION FUND 46
SECTION 407. [INTENTIONALLY OMITTED] 48
SECTION 408. DRAWING BY THE TRUSTEE ON THE LETTER OF CREDIT 48
SECTION 409. NON-PRESENTMENT OF BONDS 50
SECTION 410. INVESTMENT OF FUNDS 50
SECTION 411. FINAL DISPOSITION OF MONEYS 51
SECTION 412. PERIODIC REPORTS BY TRUSTEE 51
ARTICLE V
GENERAL COVENANTS
SECTION 501. AUTHORITY OF ISSUER; VALIDITY OF INDENTURE AND BONDS 52
SECTION 502. PAYMENT OF PRINCIPAL AND INTEREST 52
SECTION 503. PROCESSING OF TRANSFERS 52
SECTION 504. PERFORMANCE OF COVENANTS; AUTHORITY OF ISSUER 52
SECTION 505. PRIORITY OF LIEN OF INDENTURE 52
SECTION 506. INSTRUMENTS OF FURTHER ASSURANCE 52
SECTION 507. INSPECTION OF PROJECT BOOKS 53
SECTION 508. NO MODIFICATION OF SECURITY; LIMITATION ON LIENS 53
SECTION 509. DAMAGE OR DESTRUCTION 53
SECTION 510. CONDEMNATION 53
SECTION 511. ACCOUNTS AND AUDITS 53
SECTION 512. RECORDATION; FINANCING STATEMENTS 54
SECTION 513. [INTENTIONALLY OMITTED] 54
SECTION 514. COVENANT REGARDING ADJUSTMENT OF DEBTS 54
SECTION 515. [INTENTIONALLY OMITTED] 54
SECTION 516. LIMITATION ON OBLIGATIONS OF THE ISSUER 54
SECTION 517. AGREEMENT TO PROVIDE INFORMATION 55
<PAGE>
ARTICLE VI
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS
SECTION 601. EVENTS OF DEFAULT 56
SECTION 602. ACCELERATION 57
SECTION 603. ENFORCEMENT OF REMEDIES 57
SECTION 604. APPOINTMENT OF RECEIVERS 58
SECTION 605. RIGHTS OF BONDHOLDERS TO OBLIGATE TRUSTEE TO PROTECT
BONDHOLDERS 58
SECTION 606. REMEDIES NOT EXCLUSIVE; WAIVER AND NON-WAIVER OF EVENT OF
DEFAULT 58
SECTION 607. RIGHTS OF BONDHOLDERS TO DIRECT PROCEEDINGS 59
SECTION 608. WAIVER BY ISSUER 59
SECTION 609. APPLICATION OF MONEYS 59
SECTION 610. REMEDIES VESTED IN TRUSTEE 61
SECTION 611. RIGHTS AND REMEDIES OF BONDHOLDERS 61
SECTION 612. TERMINATION OF PROCEEDINGS 61
SECTION 613. WAIVERS OF EVENTS OF DEFAULT 62
SECTION 614. NOTICE OF DEFAULTS; OPPORTUNITY TO CURE 62
SECTION 615. STATEMENT OF INCOME AND EXPENDITURES 62
ARTICLE VII
THE TRUSTEE
SECTION 701. ACCEPTANCE OF TRUSTS 64
SECTION 702. FEES, CHARGES AND EXPENSES OF TRUSTEE 66
SECTION 703. NOTICE TO BONDHOLDERS OF DEFAULT 67
SECTION 704. INTERVENTION BY TRUSTEE 67
SECTION 705. SUCCESSOR TRUSTEE 67
SECTION 706. RESIGNATION BY TRUSTEE 67
SECTION 707. REMOVAL OF TRUSTEE 67
SECTION 708. APPOINTMENT OF SUCCESSOR TRUSTEE BY BONDHOLDERS;
TEMPORARY TRUSTEE 68
SECTION 709. CONCERNING ANY SUCCESSOR TRUSTEE 68
SECTION 710. TRUSTEE PROTECTED IN RELYING UPON RESOLUTIONS, ETC. 68
SECTION 711. SUCCESSOR TRUSTEE AS TRUSTEE, PAYING AGENT AND BOND
REGISTRAR 68
SECTION 712. TRUST MAY BE VESTED IN SEPARATE OR CO-TRUSTEE 69
SECTION 713. TRUSTEE TO EXERCISE POWERS OF STATUTORY TRUSTEE 69
SECTION 714. NEW YORK REAL PROPERTY LAW 69
SECTION 715. CONFLICTS OF INTEREST 71
SECTION 716. DESIGNATION OF SUCCESSION OF TENDER AGENTS 74
SECTION 717. QUALIFICATIONS OF TENDER AGENT 75
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 801. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF BONDHOLDERS 76
SECTION 802. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS 76
SECTION 803. SUPPLEMENTAL INDENTURES; CONSENT OF BANK 77
SECTION 804. SUPPLEMENTAL INDENTURES; CONSENT OF COMPANY 77
SECTION 805. EFFECT OF SUPPLEMENTAL INDENTURES 78
<PAGE>
ARTICLE IX
AMENDMENT TO INSTALLMENT SALE AGREEMENT, LETTER OF CREDIT, MORTGAGE, OR OTHER
FINANCING DOCUMENTS
SECTION 901. AMENDMENTS TO INSTALLMENT SALE AGREEMENT, MORTGAGE OR OTHER
FINANCING DOCUMENTS NOT REQUIRING CONSENT OF BONDHOLDERS 79
SECTION 902. AMENDMENTS TO INSTALLMENT SALE AGREEMENT, MORTGAGE OR OTHER
FINANCING DOCUMENTS REQUIRING CONSENT OF BONDHOLDERS 79
SECTION 903. AMENDMENTS TO INSTALLMENT SALE AGREEMENT, MORTGAGE OR OTHER
FINANCING DOCUMENTS; CONSENT OF BANK 80
SECTION 904. AMENDMENTS TO LETTER OF CREDIT 80
SECTION 905. AMENDMENTS REQUESTED BY BANK 80
ARTICLE X
SATISFACTION AND DISCHARGE OR ASSIGNMENT OF INDENTURE
SECTION 1001. SATISFACTION AND DISCHARGE OR ASSIGNMENT OF LIEN 81
ARTICLE XI
MISCELLANEOUS
SECTION 1101. CONSENTS AND OTHER INSTRUMENTS OF BONDHOLDERS 83
SECTION 1102. LIMITATION OF RIGHTS 83
SECTION 1103. NOTICES 84
SECTION 1104. TRUSTEE AS PAYING AGENT AND BOND REGISTRAR 85
SECTION 1105. COUNTERPARTS 85
SECTION 1106. SUCCESSORS AND ASSIGNS 85
SECTION 1107. INFORMATION UNDER UNIFORM COMMERCIAL CODE 85
SECTION 1108. APPLICABLE LAW 85
SECTION 1109. NO RECOURSE; SPECIAL OBLIGATION 85
SECTION 1110. ASSIGNMENT TO BANK 87
SECTION 1111. NOTICES TO RATING AGENCY 87
TESTIMONIUM 88
SIGNATURES 88
ACKNOWLEDGEMENTS 89
EXHIBIT A - Form of Bond Prior to Conversion Date A-1
EXHIBIT B - Form of Bond After Conversion Date B-1
EXHIBIT C-1 - Form of Notice of Mandatory Tender or Conversion Date C-1-1
EXHIBIT C-2 - Form of Notice of Bondholder's Election Regarding
Conversion Date C-2-1
EXHIBIT C-3 - Form of Notice of Mandatory Tender or Alternate Security
Date C-3-1
EXHIBIT C-4 - Form of Notice of Bondholder's Election Regarding
Alternate Security Date C-4-1
EXHIBIT C-5 - Form of Tender Notice C-5-1
EXHIBIT D - Description of Land D-1
EXHIBIT E - Description of Equipment E-1
EXHIBIT F - Form of Request for Disbursement F-1
<PAGE>
TRUST INDENTURE
THIS TRUST INDENTURE dated as of December 1, 1998 (the "Indenture") by and
between TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY, a public benefit
corporation of the State of New York (the "State") having an office for the
transaction of business located at 347 Old Niskayuna Road, Latham, New York
(the "Issuer") and MANUFACTURERS AND TRADERS TRUST COMPANY, a trust company
organized and existing under the laws of the State of New York having an office
for the transaction of business located at One M & T Plaza, 7th Floor, Buffalo,
New York 14203, as trustee (the "Trustee") for the holders of the Issuer's
Industrial Development Revenue Bonds (Mechanical Technology Incorporated
Project - Letter of Credit Secured), Series 1998A in the aggregate principal
amount of $6,000,000 (the "Bonds") issued by the Issuer hereunder;
W I T N E S S E T H :
WHEREAS, Title 1 of Article 18-A of the General Municipal Law of the State (the
"Enabling Act") was duly enacted into law as Chapter 1030 of the Laws of 1969
of the State; and
WHEREAS, the Enabling Act authorizes and provides for the creation of
industrial development agencies for the benefit of the several counties,
cities, villages and towns in the State and empowers such agencies, among other
things, to acquire, construct, reconstruct, lease, improve, maintain, equip and
dispose of land and any building or other improvement, and all real and
personal properties, including, but not limited to, machinery and equipment
deemed necessary in connection therewith, whether or not now in existence or
under reconstruction, which shall be suitable for manufacturing, warehousing,
research, civic, commercial or industrial purposes, in order to advance the job
opportunities, health, general prosperity and economic welfare of the people of
the State and to improve their standard of living; and
WHEREAS, the Enabling Act further authorizes each such agency to lease or sell
any or all of its facilities, to issue its bonds, for the purpose of carrying
out any of its corporate purposes and, as security for the payment of the
principal and redemption price of and interest on any such bonds so issued and
any agreements made in connection therewith, to mortgage and pledge any or all
of its facilities, whether then owned or thereafter acquired, and to pledge the
revenues and receipts from the lease or sale thereof to secure the payment of
such bonds and interest thereon; and
WHEREAS, the Issuer was created, pursuant to and in accordance with the
provisions of the Enabling Act, by Chapter 232 of the Laws of 1977 of the State
(collectively, with the Enabling Act, the "Act") and is empowered under the Act
to undertake the Project (as hereinafter defined) in order to so advance the
job opportunities, health, general prosperity and economic welfare of the
people of the State and improve their standard of living; and
WHEREAS, the Issuer, by resolution adopted on May 4, 1998 (the "Inducement
Resolution"), determined to issue its revenue bonds for the purpose of
financing a portion of the costs of a certain project consisting of the
following: (A) (1) the acquisition of a leasehold interest in a parcel of land
containing approximately 35.6 acres located at 968 Albany- Shaker Road in the
Town of Colonie, Albany County, New York (the "Land"), together with the
existing buildings located thereon which contain approximately 98,000 square
feet in the aggregate (such buildings known individually as Building I,
Building II and Building III and hereinafter collectively referred to as the
"Existing Facility"), (2) the demolition of Building I which contains
<PAGE>
approximately 14,105 square feet of space, (3) the construction of a new
building to replace Building I and which will contain approximately 32,000
square feet of space (the "New Facility") (the Existing Facility and the New
Facility hereinafter collectively referred to as the "Facility"), (4) the
renovation of Building III and (5) the acquisition of and installation therein
and thereon of certain machinery and equipment (the "Equipment") (the Land, the
Facility and the Equipment being hereinafter collectively referred to as the
"Project Facility"), all of the foregoing to be occupied by Mechanical
Technology Incorporated (the "Company") and operated as a manufacturing
facility, a portion of which will be leased by the Company to Plug Power, LLC
and operated as a facility for the manufacture, research and development of
fuel cells for residential and automotive applications and related products and
any other related activities; (B) the financing of all or a portion of the
costs of the foregoing by the issuance of the Bonds; (C) the granting of
certain other "financial assistance" (within the meaning of Section 854(14) of
the Act) with respect to the foregoing, including exemption from certain sales
taxes, deed transfer taxes, mortgage recording taxes and real property taxes
(collectively with the Bonds, the "Financial Assistance"); and (D) the lease
(with an obligation to purchase) or sale of the Project Facility to the Company
or such other person as may be designated by the Company and agreed upon by the
Agency; and
WHEREAS, the Issuer and the Company have entered into an installment sale
agreement dated as of December 1, 1998 (the "Installment Sale Agreement")
specifying the terms and conditions pursuant to which the Issuer agrees to
acquire, construct and install the Project Facility and to sell the Project
Facility to the Company; and
WHEREAS, the Issuer, by resolution adopted on November 23, 1998 (the "Bond
Resolution"), determined to issue its $6,000,000 aggregate principal amount of
Taxable Industrial Development Revenue Bonds (Mechanical Technology
Incorporated Project - Letter of Credit Secured), Series 1998A (the "Bonds")
for the purpose of financing the costs of undertaking the Project; and
WHEREAS, the Issuer, by the terms of this Indenture and as security for the
Bonds, will grant the Trustee a first security interest in the Trust Revenues
(as hereinafter defined); and
WHEREAS, as security for the Bonds, the Company has entered into an irrevocable
letter of credit reimbursement agreement dated as of December 1, 1998 (the
"Reimbursement Agreement") with KeyBank National Association (the "Bank"),
pursuant to which the Bank has issued in favor of the Trustee an irrevocable
transferable direct-pay letter of credit (the "Letter of Credit") in an amount
equal to the principal amount of the Bonds Outstanding and sixty-five (65)
days' interest thereon, under which the Bank is obligated to pay to the
Trustee, upon presentation of a sight draft and required accompanying
documentation, the amount necessary to pay the principal of and interest on the
Bonds then due and payable; and
WHEREAS, as security for all amounts payable to the Bank pursuant to the
Reimbursement Agreement, the Issuer and the Company have granted the Bank a
mortgage Lien (as hereinafter defined) on and security interest in the Project
Facility pursuant to a mortgage dated as of December 1, 1998 (the "Mortgage");
and
<PAGE>
WHEREAS, as further security for the Bonds the Issuer has assigned to the
Trustee certain of the Issuer's rights and remedies under the Installment Sale
Agreement, including the right to receive installment purchase payments and
other amounts payable thereunder, but not including the Unassigned Rights (as
hereinafter defined), pursuant to a pledge and assignment dated as of December
1, 1998 (the "Pledge and Assignment") from the Issuer to the Trustee; and
WHEREAS, the Trustee has the power to enter into this Indenture and to execute
the trusts hereby created and in evidence thereof has joined in the execution
hereof; and
WHEREAS, the execution and delivery of the Indenture and the issuance of the
Bonds under the Act as herein provided have been in all respects approved and
duly and validly authorized by the Bond Resolution; and
WHEREAS, the providing of the Project Facility is for a proper purpose, to wit,
to promote the job opportunities, the health and the general prosperity and
economic welfare of the inhabitants of the State pursuant to the provisions of
the Act; and
WHEREAS, the Issuer deems it appropriate and necessary that the proceeds of the
sale of the Bonds shall be deposited with the Trustee, and that, upon
satisfaction of the requirements set forth herein, the Trustee shall disburse
such proceeds to pay the Cost of the Project (as hereinafter defined); and
WHEREAS, the Bonds shall be payable solely from the Trust Revenues, which
include, without limitation, installment purchase payments made by the Company
under the Installment Sale Agreement and payments made by the Bank pursuant to
the Letter of Credit; and
WHEREAS, the Bonds and the Trustee's certificate of authentication to be
endorsed on the Bonds are to be in substantially the forms attached hereto as
Exhibits A and B and made a part hereof, with necessary and appropriate
variations, omissions and insertions as permitted or required by this
Indenture; and
WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee and issued as in this Indenture provided, the valid, binding and legal
special obligations of the Issuer according to the import thereof, and to
constitute this Indenture a valid pledge of and Lien (as hereinafter defined)
on the Trust Revenues herein pledged to the payment of the Bonds, have been
done and performed, and the creation, execution and delivery of this Indenture,
and the execution and issuance of the Bonds, subject to the terms hereof, have
in all respects been duly authorized;
GRANTING CLAUSES
NOW, THEREFORE, the Issuer, in consideration of the premises and the acceptance
by the Trustee of the trusts hereby created and of the purchase and acceptance
of the Bonds by the holders and owners thereof, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, and in order to
secure the payment of the principal of, premium, if any, and interest on the
Bonds according to their tenor and effect and the performance and observance by
the Issuer of all the covenants expressed or implied herein and in the Bonds,
does hereby unto the Trustee and its successors and assigns, for the benefit of
the holders and all future holders of the Bonds, GRANT A SECURITY INTEREST IN,
PLEDGE AND ASSIGN the following (hereinafter referred to as the "Trust
Estate"):
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I
All right, title and interest of the Issuer in and to the Trust Revenues,
including any payment made by the Bank pursuant to the Letter of Credit;
II
Any and all moneys and securities from time to time held by the Trustee under
the terms of the Indenture except (A) moneys deposited with or paid to the
Trustee for the redemption of Bonds, notice of which has been duly given, and
(B) moneys deposited with the Trustee or the Tender Agent (as hereinafter
defined) for the purchase of Tendered Bonds (as hereinafter defined) pursuant
to Section 305 hereof;
III
Any and all other Property (as hereinafter defined) of every name and nature
from time to time hereafter by delivery or by writing of any kind conveyed,
mortgaged, pledged, assigned or transferred, as and for additional security
hereunder, by the Issuer or by anyone in its behalf or with its written consent
in favor of the Trustee;
The Indenture is also intended to constitute a security agreement under the
Uniform Commercial Code of the State so that the Trustee shall have and may
enforce a security interest, to secure payment of all sums due or to become due
under the Bonds and the Indenture, in so much of the Property (as hereinafter
defined) described in Granting Clauses "I", "II" and "III" above as may be made
subject to such a security interest, including the moneys held by the Trustee
hereunder, such security interest to attach at the earliest moment permitted by
law and also to include and attach to all additions and accessions thereto, all
substitutions and replacements therefor and all proceeds thereof, and all other
contract rights and general intangibles of the Issuer (except the Unassigned
Rights [as hereinafter defined]) obtained in connection with or relating to the
Project Facility, as well as any and all items of property in the foregoing
classifications which are hereafter acquired;
SUBJECT, HOWEVER, to Permitted Encumbrances (as hereinafter defined);
EXCEPTING THEREFROM, the Unassigned Rights (as hereinafter defined);
TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby
pledged and assigned or agreed, or intended so to be, unto the Trustee and its
successors in said trust and to it and its assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal
and proportionate benefit, security and protection of all holders and owners of
the Bonds issued under and secured by this Indenture without privilege,
priority or distinction as to the Lien or otherwise of any of the Bonds over
any other Bonds; and
PROVIDED, HOWEVER, that if the Issuer or its successors or assigns shall well
and truly pay, or cause to be paid, to the holders and owners of the Bonds the
principal of, premium, if any, and interest due or to become due on the Bonds
at the times and in the manner provided herein and in the Bonds, or shall
provide for the payment thereof by depositing with the Trustee the entire
amount due or to become due thereon as permitted by and in the manner provided
in Article X hereof, and shall well and truly cause to be kept, performed and
observed all of its covenants contained in this Indenture, and shall pay or
<PAGE>
cause to be paid to the Trustee all sums of money due or to become due to it in
accordance with the terms and provisions of this Indenture, then upon such
final payment, these presents and the Lien upon the Property described in
Granting Clauses "I", "II" and "III" above and the pledge of the Trust Revenues
and rights hereby granted shall (except and only to the extent the Lien upon
the Property described in Granting Clauses "I", "II" and "III" above and the
pledge of the Trust Revenues is assigned to the Bank as provided in Section
1001(B) hereof in the event the Trustee draws upon the Letter of Credit) cease,
terminate and be void, and thereupon the Trustee shall execute and deliver to
the Person (as hereinafter defined) or Persons designated in Article X such
instruments in writing as shall be requisite to satisfy the Lien hereof upon
the Property described in Granting Clauses "I", "II" and "III" above, and
convey to the Person or Persons designated in Article X the moneys and other
Property, if any, then held by the Trustee, except moneys held by the Trustee
for the payment of interest on, premium, if any, and principal of the Bonds and
except as expressly provided in this Indenture; otherwise this Indenture shall
remain in full force and effect, upon the trusts and subject to the covenants
and conditions hereinafter set forth.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds
issued and secured hereunder are to be issued, authenticated and delivered and
the Lien on all of the Property described in Granting Clauses "I", "II" and
"III" above and all Trust Revenues, including without limitation the revenues,
receipts and other moneys hereby assigned and pledged, are to be dealt with and
disposed of under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes as hereinafter expressed, and
the Issuer hereby agrees and covenants with the Trustee and with the respective
holders and owners, from time to time, of the Bonds, as follows:
ARTICLE I
DEFINITIONS
SECTION 101. DEFINITIONS. The following words and terms used in this Indenture
shall have the respective meanings set forth below unless the context or use
indicates another or different meaning or intent:
"Accountant" shall mean an independent certified public accountant or a firm of
independent certified public accountants selected by the Company and acceptable
to the Bank.
"Act" shall mean Title 1 of Article 18-A of the General Municipal Law of the
State, as amended from time to time, together with Chapter 232 of the Laws of
1977 of the State, as amended from time to time.
"Act of Bankruptcy" shall mean the filing of a petition in bankruptcy (or the
other commencement of a bankruptcy or similar proceeding) by or against the
Company or the Issuer under any applicable bankruptcy, insolvency,
reorganization or similar law, now or hereafter in effect.
"Additional Bonds" shall mean any bonds issued by the Issuer pursuant to
Section 214 of the Indenture.
"Adjustable Rate" shall mean the variable interest rate on the Bonds as
determined in accordance with the Indenture, from and including the original
date of issuance of the Bonds through but not including the Fixed Rate
Conversion Date.
<PAGE>
"Adjustable Rate Period" shall mean that period during which the Bonds shall
bear interest at an Adjustable Rate.
"Adjustment Date" shall mean (i) during the Adjustable Rate Period, every
Thursday in each week of each year, and (ii) the Fixed Rate Conversion Date,
provided that if any such date shall not be a Business Day, the Adjustment Date
shall be the next succeeding Business Day.
"Adjustment Period" shall mean each period beginning on an Adjustment Date and
ending on the day immediately preceding the immediately succeeding Adjustment
Date, except that the first Adjustment Period shall be the period from and
including the date of original delivery of the Bonds to and including the day
immediately preceding the first Adjustment Date.
"Alternate Letter of Credit" shall mean a Substitute Letter of Credit which
does not satisfy the requirements of Section 5.8(A)(1) of the Installment Sale
Agreement with respect to the rating of the Substitute Letter of Credit or the
Substitute Bank delivering such Substitute Letter of Credit.
"Alternate Security Date" shall mean the date upon which an Alternate Letter of
Credit shall be effective and available to be drawn upon by the Trustee,
provided that if any such date shall not be a Business Day, such date shall be
the next succeeding Business Day.
"Applicable Laws" shall mean all statutes, codes, laws, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions, policies and Requirements of all Governmental
Authorities (including without limitation, Local Authorities), foreseen or
unforeseen, ordinary or extraordinary, which now or at any time hereafter may
be applicable to or affect the Project Facility or any part thereof or the
conduct of work on the Project Facility or any part thereof or to the
operation, use, manner of use or condition of the Project Facility or any part
thereof (the applicability of such statutes, codes, laws, acts, ordinances,
orders, rules, regulations, directions, policies and requirements to be
determined both as if the Issuer were the owner of the Project Facility and as
if the Company and not the Issuer were the owner of the Project Facility),
including but not limited to (1) applicable building, zoning, environmental,
planning and subdivision laws, ordinances, rules and regulations of
Governmental Authorities (including without limitation, Local Authorities)
having jurisdiction over the Project Facility, (2) restrictions, conditions or
other Requirements applicable to any permits, licenses or other governmental
authorizations issued with respect to the foregoing, and (3) judgments, decrees
or injunctions issued by any court or other judicial or quasi-judicial
Governmental Authority (including without limitation, any Local Authority).
"Authorized Investments" shall mean any of the following: (A) direct
obligations of the United States of America or of any agency or instrumentality
thereof when such obligations are backed by the full faith and credit of the
United States, including, but not limited to, United States Treasury
obligations, (B) Federal Home Loan Mortgage Corporation and Farm Credit Banks
(Federal Land Banks, Federal Intermediate Credit Banks for Cooperatives)
participation certificates and senior debt obligations, (C) Federal National
Mortgage Association mortgage backed securities and senior debt obligations,
(D) Student Loan Marketing Association (Sallie Mae) letter of credit backed
issues and senior debt obligations, (E) federal funds, certificates of deposit,
time deposits and bankers' acceptances (having original maturities of not more
than 365 days) of any bank, the debt obligations of which (or, in the case of
the principal bank in a bank holding company, debt obligations of the bank
<PAGE>
holding company) have been rated "A-1+" or better by Standard & Poors, (F)
commercial paper (having original maturities of not more than 365 days) rated
"A-1+" or better by Standard & Poors, (G) deposits which are fully insured by
Federal Deposit Insurance Corporation or its successors ("FDIC"), (H)
repurchase agreements with any banks insured by FDIC, provided (1) the
collateral level, the valuation and the cure period are acceptable to the Bank,
(2) the Trustee or a third party acting solely as agent for the Trustee has
possession of the collateral, (3) the Trustee has a perfected first priority
security interest in the collateral, (4) the collateral is free and clear of
third party Liens, and (5) failure to maintain the requisite collateral
percentage in (1) above will require the Trustee to liquidate the collateral,
(I) obligations of any state or political subdivision thereof which bear an
investment grade rating from Standard & Poor's or Moody's, (J) any money market
funds customarily invested in by the Trustee, or (K) any other investment with
the prior written consent of the Bank.
"Authorized Representative" shall mean the Person or Persons at the time
designated to act in behalf of the Issuer, the Bank or the Company, as the case
may be, by written certificate furnished to the Trustee containing the specimen
signature of each such Person and signed on behalf of (A) the Issuer by its
Chairman or Vice-Chairman, or such other person as may be authorized by
resolution of the Issuer, (B) the Bank by a Vice President or an Assistant Vice
President, or such other person as may be authorized by the Bank, and (C) the
Company by its President or any Vice President, or such other person as may be
authorized by the Company.
"Bank" shall mean (A) KeyBank National Assocation, a national banking
association having an office for the transaction of business located at 66
South Pearl Street, Albany, New York, as issuer of the Letter of Credit, and
(B) any Substitute Bank.
"Bank Documents" shall mean the Letter of Credit, the Reimbursement Agreement,
the Mortgage, the Building Loan Contract and the Pledge and Security Agreement
and any other document now or hereafter executed by the Issuer, the Company in
favor of the Bank which affects the rights of the Bank in or to the Project
Facility, in whole or in part, or which secures or guarantees any sum due under
any Bank Document.
"Bank Rate" shall mean, as the case may be, (A) the rate of interest being
charged the Company by the Bank under Section 2 of the Reimbursement Agreement
or (B) the applicable rate of interest being charged the Company by a
Substitute Bank in connection with the issuance by a Substitute Bank of a
Substitute Letter of Credit under a Substitute Reimbursement Agreement.
"Bill of Sale to Company" shall mean the bill of sale from the Issuer to the
Company conveying the Issuer's interest in the Equipment to the Company and
being substantially in the form attached as Exhibit D to the Installment Sale
Agreement.
"Bill of Sale to Issuer" shall mean the bill of sale dated as of the Closing
Date from the Company to the Issuer conveying the Company's interest in the
Equipment to the Issuer.
<PAGE>
"Bond" shall mean the Issuer's $6,000,000 aggregate principal amount of Taxable
Industrial Development Revenue Bonds (Mechanical Technology Incorporated
Project - Letter of Credit Secured), Series 1998A, issued pursuant to the
Resolution and Article II of the Indenture and sold to the Underwriter pursuant
to the Bond Purchase Agreement, and any Bonds issued in exchange or
substitution thereof.
"Bond Counsel" shall mean the law firm of Hodgson, Russ, Andrews, Woods &
Goodyear, LLP, Albany, New York or such other attorney or firm of attorneys
located in the State whose experience in matters relating to the issuance of
obligations by states and their political subdivisions is nationally recognized
and who are acceptable to the Issuer.
"Bond Fund" shall mean the fund so designated established pursuant to Section
401(A)(2) of the Indenture.
"Bond Fund Non-Preference Moneys Subaccount" shall mean the account so
designated within the Bond Fund established pursuant to Section 401 of the
Indenture.
"Bond Payment Date" shall mean each Interest Payment Date and each date on
which principal, interest or premium shall be payable on the Bonds according to
their terms and the Indenture, including without limitation, scheduled
mandatory redemption dates, unscheduled mandatory redemption dates, optional
redemption dates and stated maturity, so long as any Bonds shall be
Outstanding.
"Bond Purchase Agreement" shall mean the bond purchase agreement dated December
16, 1998 by and among the Issuer, the Company and the Underwriter, as original
purchaser of the Bonds, as the same may be supplemented or amended from time to
time.
"Bond Rate" shall mean with respect to any Bond, the applicable rate of
interest on such Bond, as set forth in such Bond.
"Bond Registrar" shall mean the Trustee.
"Bond Resolution" shall mean the Resolution.
"Bond Year" shall mean each one (1) year period ending on the anniversary of
the Closing Date.
"Bondholder" or "holder" or "owner of the Bonds" shall mean the registered
owner of any Bond as indicated on the bond register maintained by the Bond
Registrar.
"Book Entry Bonds" shall mean the Bonds with respect to which the procedures
set forth in Section 213 of the Indenture shall apply.
"Building Loan Contract" shall mean the building loan contract dated as of
December 1, 1998 by and among the Issuer, the Company and the Bank, as said
building loan contract may be supplemented or amended from time to time.
"Business Day" shall mean any day of the year other than a Saturday or Sunday
or a day on which banking institutions located in the city in which the Office
of the Trustee is located are authorized by law, regulation or executive order
to remain closed.
<PAGE>
"Certificate of Authentication" shall mean the certificate of authentication in
substantially the form attached to the forms of Bond attached as Exhibits A and
B to the Indenture.
"Closing Date" shall mean (A) with respect to the Bonds, the date on which
authenticated Bonds are delivered to or upon the order of the Underwriter and
payment is received therefor by the Trustee on behalf of the Issuer, and (B)
with respect to any Additional Bonds, the date on which Bonds are authenticated
and delivered to the purchaser thereof and payment therefor is received by the
Trustee on behalf of the Issuer.
"Code" shall mean the Internal Revenue Code of 1986, as amended, including,
when appropriate, the statutory predecessor of said Code, and the applicable
regulations (whether proposed, temporary or final) of the United States
Treasury Department promulgated under said Code and the statutory predecessor
of said Code.
"Company" shall mean Mechanical Technology Incorporated, a business corporation
organized and existing under the laws of the State of New York having an office
for the transaction of business located at 968 Albany-Shaker Road, Latham, New
York and its successors and assigns, to the extent permitted by Section 8.4 of
the Installment Sale Agreement.
"Completion Date" shall mean the earlier of (A) April 30, 1999 or (B) the date
of substantial completion of the Project Facility as evidenced in the manner
provided in Section 4.4 of the Installment Sale Agreement.
"Condemnation" shall mean the taking of title to, or the use of, Property under
the exercise of the power of eminent domain by any Governmental Authority.
"Construction Contract" shall mean the contract by and between the Contractor
and the Company for the construction of the Facility.
"Construction Period" shall mean the period (A) beginning on May 25, 1998 and
(B) ending on the Completion Date.
"Contractor" shall mean such Person with whom the Company contracts from time
to time for the acquisition, construction and/or installation of the Project
Facility.
"Conversion Date" shall mean the Fixed Rate Conversion Date.
"Conversion Option" shall mean the option to convert the interest rate on the
Bonds from the Adjustable Rate to the Fixed Rate on a Fixed Rate Conversion
Date.
"Corporate Guarantor" shall mean Ling Electronics, Inc.
"Cost of the Project" shall mean all those costs and items of expense
enumerated in Section 4.3 of the Installment Sale Agreement.
"Debt Service Payment" shall mean, with respect to any Bond Payment Date, (A)
the interest payable on the Bonds on such Bond Payment Date, plus (B) the
principal, if any, payable on the Bonds on such Bond Payment Date, plus (C) the
premium, if any, payable on the Bonds on such Bond Payment Date.
"Defaulted Payments" shall have the meaning ascribed to such term in Section
207(C) of the Indenture.
<PAGE>
"Demand Purchase Option" shall mean the option granted to the owners of the
Bonds to require that Bonds be purchased in accordance with Section 305 of this
Indenture.
"Depository" shall mean The Depository Trust Company, New York, New York, a
limited purpose trust company organized under the laws of the State, or its
nominee, or any other Person designated in any supplemental resolution of the
Issuer to serve as securities depository for the Bonds.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Equipment" shall mean all materials, machinery, equipment, fixtures or
furnishings intended to be acquired with the proceeds of the Bonds or any
payment made by the Company pursuant to Section 4.5 of the Installment Sale
Agreement, and such substitutions and replacements therefor as may be made from
time to time pursuant to the Installment Sale Agreement, including, without
limitation, all the Property described in Exhibit B attached to the Installment
Sale Agreement.
"Event of Default" shall mean (A) with respect to the Indenture, any of those
events defined as Events of Default by the terms of Article VI of the
Indenture; (B) with respect to the Installment Sale Agreement, any of those
events defined as Events of Default by the terms of Article X of the
Installment Sale Agreement; (C) with respect to the Mortgage, any of those
events defined as Events of Default by the terms of Article VI of the Mortgage;
and (D) with respect to any other Financing Document, any of those Events of
Default defined therein.
"Existing Facility" shall mean the three existing buildings containing, in the
aggregate, approximately 98,000 square feet of space and located at 968
Albany-Shaker Road in the Town of Colonie, New York.
"Extraordinary Services" and "Extraordinary Expenses" shall mean all services
rendered and all expenses incurred by the Trustee or any paying agent under the
Indenture, other than Ordinary Services and Ordinary Expenses, including, but
not limited to, reasonable attorneys fees and any services rendered and any
expenses incurred with respect to an Event of Default or with respect to the
occurrence of an event which upon the giving of notice or the passage of time
would ripen into an Event of Default under any of the Financing Documents.
"Facility" shall mean, collectively, the Existing Facility and the New
Facility, and any other buildings, improvements, structures and other related
facilities (A) affixed to or attached to the Land, (B) financed with the
proceeds of the sale of the Bonds or any payment made by the Company pursuant
to Section 4.5 of the Installment Sale Agreement, and (C) not constituting a
part of the Equipment, all as they may exist from time to time.
"Financial Institution" shall mean (A) any national bank, or banking
institution, whether acting in its individual or fiduciary capacity, organized
under the laws of the United States, any state, any territory or the District
of Columbia, the business of which is substantially confined to banking and is
supervised by the Comptroller of the Currency or a comparable state or
territorial official or agency; banking commission or similar official; (B) an
insurance company which is organized as an insurance company whose primary and
predominant business activity is the writing of insurance or the reinsuring of
risks underwritten by insurance companies and which is subject to supervision
by the insurance commissioner or a similar official or agency of a state or a
<PAGE>
territory or the District of Columbia; (C) an investment company registered
under the Investment Company Act of 1940 or a business development company as
described in Section 2(a)(48) of that Act; (D) an employee benefit plan,
including an individual retirement account, which is subject to the provisions
of the Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, insurance company or registered investment company; or
(E) institutional investors or other entities who customarily purchase
commercial paper or tax-exempt securities in large denominations.
"Financing Documents" shall mean the Bonds, the Indenture, the Installment Sale
Agreement, the Mortgage, the Bond Purchase Agreement, the Bank Documents, the
Remarketing Agreement and any other document now or hereafter executed by the
Issuer, the Company or the Bank in favor of the Bondholders, the Trustee or the
Bank which affects the rights of the Bondholders, the Trustee or the Bank in or
to the Project Facility, in whole or in part, or which secures or guarantees
any sum due under the Bonds or any other Financing Document, each as amended
from time to time, and all documents related thereto and executed in connection
therewith.
"Fixed Rate" shall mean the fixed interest rate on the Bonds as determined in
accordance with the Indenture, from and including the Fixed Rate Conversion
Date.
"Fixed Rate Conversion" shall mean the conversion of the interest rate on the
Bonds from an Adjustable Rate to a Fixed Interest Rate.
"Fixed Rate Conversion Date" shall mean the date on which the Bonds shall
commence to bear interest at the Fixed Rate as provided in the Indenture,
provided that if any such date shall not be a Business Day, such date shall be
the next succeeding Business Day.
"Fixed Rate Period" shall mean that period during which the Bonds shall bear
interest at the Fixed Rate.
"Government Obligations" shall mean direct obligations of, or obligations the
principal of and interest on which are fully and unconditionally guaranteed as
full faith and credit obligations by, the United States of America which are
not subject to redemption by the issuer thereof prior to their stated maturity.
"Governmental Authority" shall mean the United States, the State, any other
state and any political subdivision thereof, and any agency, department,
commission, board, bureau or instrumentality of any of them.
"Gross Proceeds" shall mean one hundred percent (100%) of the proceeds of the
transaction in question, including, but not limited to, the settlement of any
insurance claim or Condemnation award.
"Guaranty" shall mean the guaranty dated as of December 1, 1998 from the
Corporate Guarantor to the Trustee, as said guaranty may be supplemented or
amended from time to time.
"Hazardous Materials" shall mean all hazardous materials including, without
limitation, any flammable explosives, radioactive materials, radon, asbestos,
urea formaldehyde foam insulation, polychlorinated byphenyls, petroleum,
petroleum products, methane, hazardous materials, hazardous wastes, hazardous
or toxic substances, or related materials as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
<PAGE>
U.S.C. Sections 6901, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Sections 9601, et seq.), Articles 15 or 27
of the State Environmental Conservation Law, or in the regulations adopted and
publications promulgated pursuant thereto, or any other Federal, state or local
environmental law, ordinance, rule or regulation.
"Immediate Notice" shall mean same-day notice by telephone, telecopy or telex,
followed by prompt written confirmation sent by overnight delivery.
"Indebtedness" shall have the meaning assigned to such term in Section 2.01 of
the Mortgage.
"Indenture" shall mean the trust indenture dated as of December 1, 1998 by and
between the Issuer and the Trustee, as said trust indenture may be supplemented
or amended from time to time.
"Independent Counsel" shall mean an attorney or firm of attorneys duly admitted
to practice law before the highest court of any state and approved by the Bank
and not a full-time employee of the Company or the Issuer.
"Installment Sale Agreement" shall mean the installment sale agreement dated as
of December 1, 1998 by and between the Issuer and the Company, as said
installment sale agreement may be supplemented or amended from time to time.
"Insurance and Condemnation Fund" shall mean the fund so designated established
pursuant to Section 401(A) of the Indenture.
"Insurance and Condemnation Fund Non-Preference Moneys Subaccount" shall mean
the account so designated within the Insurance and Condemnation Fund
established pursuant to Section 401(A) of the Indenture.
"Interest Payment Date" shall mean (A) prior to the Conversion Date, the first
(1st) Thursday of each month, and (B) after the Conversion Date, such dates as
may be determined in accordance with Section 209(B)(2)(e)(ii)(B) of the
Indenture.
"Issuer" shall mean (A) Town of Colonie Industrial Development Agency and its
successors and assigns, and (B) any public benefit corporation or political
subdivision resulting from or surviving any consolidation or merger to which
Town of Colonie Industrial Development Agency or its successors or assigns may
be a party.
"Land" shall mean the parcel of land containing approximately 35.6 acres and
located at 968 Albany-Shaker Road in the Town of Colonie, Albany County, New
York.
"Lease to Issuer" shall mean the lease agreement dated the Closing Date from
the Company to the Issuer conveying a leasehold interest in a portion of the
Land and the Facility to the Issuer.
"Letter of Credit" shall mean (A) the irrevocable transferable direct-pay
letter of credit dated the Closing Date, issued by the Bank in favor of the
Trustee, in a maximum amount (which shall decline at fixed intervals) equal to
the principal of the Bonds Outstanding, and sixty-five (65) days' interest on
all Outstanding Bonds (computed at the maximum interest rate equal to 15%) and
(B) any Substitute Letter of Credit.
<PAGE>
"Lien" shall mean any interest in Property securing an obligation owed to a
Person, whether such interest is based on the common law, statute or contract,
and including but not limited to a security interest arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes. The term "Lien" includes reservations,
exceptions, encroachments, projections, easements, rights of way, covenants,
conditions, restrictions, leases and other similar title exceptions and
encumbrances, including but not limited to mechanics', materialmen's,
warehousemen's and carriers' liens and other similar encumbrances affecting
real property. For purposes hereof, a Person shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional sale
agreement or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes.
"Lien Law" shall mean the Lien Law of the State.
"Local Authority" shall mean any Governmental Authority which exercises
jurisdiction over the Land or the acquisition, construction or installation of
the Project Facility.
"Mandatory Tender" shall mean the mandatory tender of Bonds by the owner
thereof upon (A) the Company's exercise of the Conversion Option pursuant to
Section 209 of the Indenture, or (B) the delivery by the Company of an
Alternate Letter of Credit pursuant to Section 304 of the Indenture.
"Maturity Date" shall mean, with respect to any Bond, the final Stated Maturity
of the principal of such Bond.
"Moody's" shall mean Moody's Investors Service, Inc., and its successors and
assigns.
"Mortgage" shall mean the mortgage dated as of December 1, 1998 from the Issuer
and the Company to the Bank, as said mortgage may be supplemented or amended
from time to time.
"Mortgaged Property" shall mean all Property which may from time to time be
subject to the Lien of the Mortgage.
"Net Proceeds" shall mean so much of the Gross Proceeds with respect to which
that term is used as remain after payment of all fees for services, expenses,
costs and taxes (including attorneys' fees) incurred in obtaining such Gross
Proceeds.
"Non-Preference Moneys" shall mean (A) proceeds of the Bonds deposited on the
Closing Date in the Bond Fund, (B) (1) proceeds from the issuance and sale of
bonds issued to refund the Bonds, which proceeds (a) are deposited directly
with the Trustee upon the issuance of such refunding bonds, and (b) are at all
times after their receipt by the Trustee held separately and not commingled
with other moneys, and (2) proceeds from the investment thereof (provided,
however, that proceeds of bonds issued to refund the Bonds shall not be
considered "Non-Preference Moneys" unless the Trustee shall receive an opinion
of nationally recognized counsel acceptable to it and experienced in bankruptcy
matters to the effect that the payment of such proceeds to an owner of Bonds
would not constitute a "preferential payment" subject to avoidance under the
United States Bankruptcy Code in the event of a filing by or against the
Company or Related Person to either the Company as debtor under Title 11 of the
United States Code), (C) moneys paid by the Bank under the Letter of Credit,
(D) moneys or Authorized Investments derived directly or indirectly from the
<PAGE>
Company or a Related Person to either the Company, but only if such moneys or
Authorized Investments have been on deposit with the Trustee for a period of
not less than three hundred sixty-seven (367) days; provided, however, that if
on the date in question a petition had previously been filed by or against the
Company, or a Related Person to either the Company in a case under Title 11 of
the United States Code and such case has not been dismissed, "Non-Preference
Moneys" will not include any moneys or Authorized Investments derived directly
or indirectly from the Person against or by whom such petition was filed that
were deposited with the Trustee fewer than three hundred sixty-seven (367) days
prior to the date such petition was filed, and (E) moneys on deposit in the
Project Fund or in the Insurance and Condemnation Fund, provided that such
moneys shall have been on deposit with the Trustee for three hundred and
sixty-seven (367) days following the date on which the Company shall have no
further right to draw on the same, and provided further that during such period
there shall not have occurred a filing by or against the Company or Related
Person to either the Company as debtor under Title 11 of the United States
Code.
"Office of the Trustee" shall mean the principal corporate trust office of the
Trustee, presently located at One M & T Plaza, 7th Floor, Buffalo, New York
14203.
"Optional Redemption Premium" shall mean the maximum applicable premium payable
upon an optional redemption of the Bonds after the Conversion Date, as
determined by the Remarketing Agent pursuant to Section 301(D)(2) of the
Indenture.
"Ordinary Services" and "Ordinary Expenses" shall mean those services normally
rendered with those expenses, including reasonable attorneys' fees, normally
incurred by a trustee or a paying agent, as the case may be, under instruments
similar to the Indenture.
"Outstanding" shall mean, when used with reference to the Bonds as of any date,
all Bonds which have been duly authenticated and delivered by the Trustee under
the Indenture, except:
(A) Bonds theretofore cancelled or deemed cancelled by the Trustee or
theretofore delivered to the Trustee for cancellation;
(B) Bonds the payment or redemption of which moneys or Government
Obligations shall have been theretofore deposited with the Trustee (whether
upon or prior to the maturity or redemption date of any such Bonds); provided
that such moneys or obligations are Non-Preference Moneys; and provided that if
such Bonds are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given or arrangements satisfactory to the Trustee
shall have been made therefor, or waiver of such notice satisfactory in form to
the Trustee shall have been filed with the Trustee; and
(C) Bonds in lieu of or in substitution for which other Bonds have been
authenticated and delivered under the Indenture.
If the Indenture shall be discharged pursuant to Article X thereof, no Bonds
shall be deemed to be Outstanding within the meaning of this provision.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established under
Title IV of ERISA, or any other governmental agency, department or
instrumentally succeeding to the functions of said corporation.
<PAGE>
"Permitted Encumbrances" shall mean (A) utility, access and other easements,
rights of way, restrictions, encroachments and exceptions that benefit or do
not materially impair the utility or the value of the Property affected thereby
for the purposes for which it is intended, (B) mechanics', materialmen's,
warehousemen's, carriers' and other similar Liens to the extent permitted by
Section 8.8(B) of the Installment Sale Agreement, (C) Liens for taxes,
assessments and utility charges (1) to the extent permitted by Section 6.2(B)
of the Installment Sale Agreement, or (2) at the time not delinquent, (D) any
Lien on the Project Facility obtained through any Financing Document, (E) any
Lien on the Project Facility in favor of the Trustee or the Bank, and (F) any
Lien which is subordinate to the Lien of the Mortgage.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization or Governmental Authority.
"PILOT Agreement" shall mean the payment in lieu of tax agreement dated as of
December 1, 1998 by and among the Issuer and the Company, as said agreement may
be supplemented or amended from time to time.
"Plans and Specifications" shall mean the plans and specifications for the
construction of the Facility prepared by the Company and approved by the Bank,
and all amendments and modifications thereof made by approved change orders;
and, if an item for the construction of the Facility is not specifically
detailed in the aforementioned plans and specifications, but rather is
described by way of manufacturer's or supplier's or contractor's shop drawings,
catalog references or similar descriptions, the term also includes such shop
drawings, catalog references and descriptions, all to be approved as required
by the Building Loan Agreement.
"Pledged Bonds" shall mean any Bonds at any time purchased, in whole or in
part, with the proceeds of a draw on the Letter of Credit upon tender of each
such Bond and held by the Trustee as nominee for the Bank pursuant to the
Pledge and Security Agreement.
"Predecessor Bonds" of any particular Bond shall mean every previous Bond
evidencing all or a portion of the same debt as that evidenced by such
particular Bond; and, for purposes of this definition, any Bond authenticated
and delivered under Section 205 of the Indenture in lieu of a lost, destroyed
or stolen Bond shall be deemed to evidence the same debt as the lost, destroyed
or stolen Bond.
"Principal Payment Date" shall mean, after the Conversion Date, the annual
payment date for the payment of principal on the Bonds, the first such payment
date being the second Interest Payment Date following the Fixed Rate Conversion
Date, and on the same day annually thereafter.
"Project" shall mean the project undertaken by the Issuer consisting of the
following: (A) (1) the acquisition of a leasehold interest in a parcel of land
containing approximately 35.6 acres located at 968 Albany-Shaker Road in the
Town of Colonie, Albany County, New York (the "Land"), together with the
existing buildings located thereon which contain approximately 98,000 square
feet in the aggregate (such buildings known individually as Building I,
Building II and Building III and hereinafter collectively referred to as the
"Existing Facility"), (2) the demolition of Building I which contains
approximately 14,105 square feet of space, (3) the construction of a new
building to replace Building I and which will contain approximately 32,000
square feet of space (the "New Facility") (the Existing Facility and the New
Facility hereinafter collectively referred to as the "Facility"), (4) the
<PAGE>
renovation of Building III and (5) the acquisition of and installation therein
and thereon of certain machinery and equipment (the "Equipment") (the Land, the
Facility and the Equipment being hereinafter collectively referred to as the
"Project Facility"), all of the foregoing to be occupied by Mechanical
Technology Incorporated (the "Company") and operated as a manufacturing
facility, a portion of which will be leased by the Company to Plug Power, LLC
and operated as a facility for the manufacture, research and development of
fuel cells for residential and automotive applications and related products and
any other related activities; (B) the financing of all or a portion of the
costs of the foregoing by the issuance of the Bonds; (C) the granting of
certain other "financial assistance" (within the meaning of Section 854(14) of
the Act) with respect to the foregoing, including exemption from certain sales
taxes, deed transfer taxes, mortgage recording taxes and real property taxes
(collectively with the Bonds, the "Financial Assistance"); and (D) the lease
(with an obligation to purchase) or sale of the Project Facility to the Company
or such other person as may be designated by the Company and agreed upon by the
Agency.
"Project Facility" shall mean, collectively, the Land, the Facility and the
Equipment.
"Project Fund" shall mean the fund so designated established pursuant to
Section 401(A) of the Indenture.
"Project Fund Non-Preference Moneys Subaccount" shall mean the account so
designated within the Project Fund established pursuant to Section 401(A) of
the Indenture.
"Property" shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Purchase Date" shall mean (A) the Repurchase Closing Date, (B) the Conversion
Date, and (C) the Alternate Security Date, in each case a date on which Bonds
tendered or deemed tendered for purchase are to be purchased at the Purchase
Price pursuant to the Indenture.
"Purchase Price" shall mean an amount equal to one hundred percent (100%) of
the principal amount of any Bond tendered or deemed tendered pursuant to
Section 304 of the Indenture, plus accrued and unpaid interest thereon to the
Purchase Date.
"Record Date" shall mean either a Regular Record Date or a Special Record Date.
"Redemption Price" shall mean, when used with respect to a Bond, the principal
amount thereof plus the applicable premium, if any, payable upon the prior
redemption thereof pursuant to the provisions of the Indenture and such Bond.
"Regular Record Date" shall mean, with respect to the interest and any Sinking
Fund Payment or principal payment due on the Bonds prior to maturity payable on
any Bond payable on any Interest Payment Date, (A) prior to the Conversion
Date, the Business Day next preceding any Interest Payment Date, and (B) after
the Conversion Date, the fifteenth (15th) day (whether or not a Business Day)
of the calendar month next preceding an Interest Payment Date.
"Reimbursement Agreement" shall mean (A) the irrevocable letter of credit
reimbursement agreement dated as of December 1, 1998 by and between the Company
and the Bank, pursuant to which, among other things, the Bank agrees to issue
the Letter of Credit and the Company agrees to reimburse the Bank for amounts
<PAGE>
drawn under the Letter of Credit, and (B) any agreement by and between the
Company and a Substitute Bank pursuant to which a Substitute Letter of Credit
shall be issued, in each case as said reimbursement agreement may be
supplemented or amended from time to time.
"Related Person" shall mean any Person constituting a "related person" within
the meaning ascribed to such quoted term in Section 144(a)(3) of the Code,
except when used in connection with the phrase "substantial user", in which
case the phrase "Related Person" shall have the meaning set forth in Section
147(a) of the Code.
"Remarketing Agent" shall mean First Albany Corporation, having an office at 30
South Pearl Street, Albany, New York 12207.
"Remarketing Agreement" shall mean the remarketing agreement dated as of
December 1, 1998 by and between the Company and the Remarketing Agent, as said
agreement may be further amended or supplemented from time to time.
"Repurchase Closing Date" shall mean the Business Day on which the owner of any
Tendered Bond demands purchase of such Tendered Bond, which shall be not prior
to seven (7) calendar days following receipt by the Tender Agent or the Trustee
of a Tender Notice.
"Request for Disbursement" shall mean a request from the Company, as agent of
the Issuer, stating the amount of disbursement sought and containing the
statements, representations and other items required by Section 4.3 of the
Installment Sale Agreement and the Building Loan Agreement, in substantially
the form of Exhibit F attached to the Indenture.
"Requirement" or "Local Requirement" shall mean any law, ordinance, order, rule
or regulation of a Governmental Authority or a Local Authority, respectively.
"Resolution" shall mean the resolution of the Issuer adopted on November 23,
1998 authorizing the Issuer to undertake the Project, to issue and sell the
Bonds and to execute and deliver the Financing Documents to which the Issuer is
a party.
"Sinking Fund Payments" shall mean (A) with respect to the Bonds, the sinking
fund redemption payments due on the Bonds pursuant to Section 301(E) of the
Indenture and (B) with respect to any Additional Bonds, the sinking fund
redemption payments (if any) required pursuant to the supplemental Issuer
Indenture authorizing issuance of such Additional Bonds.
"Special Record Date" shall mean a date for the payment of any Defaulted
Payments on the Bonds fixed by the Trustee pursuant to Section 207(C) of the
Indenture.
"Standard & Poor's" shall mean Standard & Poor's, and its successors and
assigns.
"State" shall mean the State of New York.
"Stated Maturity" shall mean, when used with respect to any Bond or any
installment of interest thereon, the date specified in such Bond as the fixed
date on which the principal of such Bond or such installment of interest on
such Bond is due and payable.
<PAGE>
"Substitute Bank" shall mean a commercial bank or savings and loan association
which has issued a Substitute Letter of Credit.
"Substitute Letter of Credit" shall mean a letter of credit, delivered to the
Trustee in accordance with Section 5.8 of the Installment Sale Agreement, (A)
issued by the Bank or a Substitute Bank, (B) replacing any existing Letter of
Credit, (C) dated as of a date prior to the expiration date of the Letter of
Credit for which the same is to be substituted, (D) which shall have a term of
at least one year and expire on a date which is at least fifteen (15) days
after an Interest Payment Date, and (E) issued on substantially identical terms
and conditions as the then existing Letter of Credit, except that the stated
amount of the Substitute Letter of Credit shall equal the sum of (1) the
aggregate principal amount of Bonds at the time Outstanding, plus (2) an amount
equal to (i) prior to the Conversion Date, at least sixty-five (65) days'
interest on the Bonds at the time Outstanding computed at a rate of fifteen
percent (15%) and (ii) after the Conversion Date, at least 210 days' interest
on the Bonds, computed at the Fixed Rate in effect, together with the Optional
Redemption Premium.
"Substitute Reimbursement Agreement" shall mean a substitute reimbursement
agreement by and between the Company and a Substitute Bank providing for the
issuance by the Substitute Bank of a Substitute Letter of Credit.
"Tender Agent" shall mean the Trustee or any successor Tender Agent under the
Indenture.
"Tender Notice" shall mean the notice, in substantially the form attached as
Exhibit C-5 to the Indenture and complying with the requirements of Section 305
of the Indenture, pursuant to the delivery of which a Bondholder shall demand
redemption of a Tendered Bond. A notice shall not be considered a validly
delivered notice unless it complies with the requirements of the Indenture.
"Tender Notice Date" shall mean the date on which the Tender Agent receives a
Tender Notice.
"Tendered Bond" shall mean any Bond or a portion thereof which has been the
subject of (A) a Demand Purchase Option under Section 305 of the Indenture or
(B) a Mandatory Tender under Section 304 of the Indenture.
"Title Insurer" shall mean the issuer of the title insurance policy required by
Section 210 of the Indenture.
"Trust Estate" shall mean all Property which may from time to time be subject
to a Lien in favor of the Trustee created by the Indenture or any other
Financing Document.
"Trust Revenues" shall mean (A) all payments of installment purchase payments
made or to be made under the Installment Sale Agreement (except payments made
with respect to the Unassigned Rights), (B) all other amounts pledged to the
Trustee by the Issuer or the Company to secure the Bonds or performance of
their respective obligations under the Installment Sale Agreement and the
Indenture, (C) the Net Proceeds (except proceeds with respect to the Unassigned
Rights) of insurance settlements and Condemnation awards with respect to the
Project Facility, (D) the Net Proceeds (except proceeds with respect to the
Unassigned Rights) from the disposition of the Project Facility upon
foreclosure of the Lien of the Mortgage, (E) all payments received by the
Trustee under the Letter of Credit, (F) moneys and investments held from time
to time in each fund and account established under the Indenture and all
<PAGE>
investment income thereon, except (1) moneys deposited with or paid to the
Trustee for the redemption of Bonds, notice of which has been duly given, (2)
moneys deposited with the Trustee or the Tender Agent for the purchase of
Tendered Bonds, and (3) as specifically otherwise provided, and (G) all other
moneys received or held by the Trustee for the benefit of the Bondholders
pursuant to the Indenture.
"Trustee" shall mean Manufacturers and Traders Trust Company, a trust company
organized and existing under the laws of the State of New York having an office
for the transaction of business located at One M & T Plaza, 7th Floor, Buffalo,
New York 14203, or any successor trustee or co-trustee, acting as trustee under
the Indenture.
"Unassigned Rights" shall mean (A) the rights of the Issuer granted pursuant to
Sections 2.2, 3.1, 3.2, 3.3, 4.1(A), 4.1(B), 4.1(D), 4.1(E)(2), 4.1(F), 4.1(G),
4.4, 4.5, 4.6, 5.2(A), 5.3(B)(2), 5.3(B)(3), 5.4(B), 6.1(A), 6.1(B), 6.2, 6.3,
6.4, 6.5, 6.6, 7.1, 7.2, 8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.15,
9.1, 9.3, 9.4, 11.1, 11.4, 11.6, 11.8 and 11.10 of the Installment Sale
Agreement, (B) the moneys due and to become due to the Issuer for its own
account or the members, officers, agents and employees of the Issuer for their
own account pursuant to Sections 2.2(F), 3.1, 3.3, 4.1(F), 5.3(B)(2),
5.3(B)(3), 5.3(C), 6.4(B), 8.2, 10.2 and 10.4 of the Installment Sale Agreement
and the moneys due as payments in lieu of taxes under Section 6.6 of the
Installment Sale Agreement and the PILOT Agreement, (C) the rights of the
Issuer under Section 6.6 of the Installment Sale Agreement, and (D) the right
to enforce the foregoing pursuant to Article X of the Installment Sale
Agreement. Notwithstanding the preceding sentence, to the extent the
obligations of the Company under the Sections of the Installment Sale Agreement
listed in (A), (C) and (D) above do not relate to the payment of moneys to the
Issuer for its own account or to the members, officers, directors, agents
(other than the Company) and employees of the Issuer for their own account,
such obligations, upon assignment of the Installment Sale Agreement by the
Issuer to the Trustee pursuant to the Pledge and Assignment, shall be deemed to
and shall constitute obligations of the Company to the Issuer and the Trustee,
jointly and severally, and either the Issuer or the Trustee may commence an
action to enforce the Company's obligations under the Installment Sale
Agreement.
"Underwriter" shall mean First Albany Corporation, having an office for the
transaction of business located at 30 South Pearl Street, Albany, New York
12207, as original purchaser of the Bonds on the Closing Date.
SECTION 102. INTERPRETATION. (A) In this Indenture, unless the context
otherwise requires:
(1) the terms "hereby", "hereof", "hereto", "herein", "hereunder", and any
similar terms, as used in this Indenture, refer to this Indenture, and the term
"heretofore" shall mean before, and the term "hereafter" shall mean after, the
date of this Indenture;
(2) words of masculine gender shall mean and include correlative words of
the feminine and neuter genders;
(3) words importing the singular number shall mean and include the plural
number, and vice versa;
<PAGE>
(4) any headings preceding the texts of the several Articles and Sections
of this Indenture, and any table of contents or marginal notes appended to
copies hereof, shall be solely for convenience of reference and shall neither
constitute a part of this Indenture nor affect its meaning, construction or
effect;
(5) words importing the redemption or redeeming of a Bond or the calling of
a Bond for redemption do not include or connote the payment of such Bond at its
Stated Maturity or the purchase of said Bond;
(6) all references to time in this document refer to New York City time;
and
(7) any certificates, letters or opinions required to be given pursuant to
this Indenture shall mean a signed document attesting to or acknowledging the
circumstances, representations, opinions of law or other matters therein stated
or set forth or setting forth matters to be determined pursuant to this
Indenture.
(B) Nothing in this Indenture expressed or implied is intended or shall be
construed to confer upon, or to give to, any persons, other than the Issuer,
the Trustee, the Bank and the holders of the Bonds, any right, remedy or claim
under or by any reason of this Indenture or any covenant, condition or
stipulation thereof. All the covenants, stipulations, promises and agreements
herein contained by and on behalf of the Issuer shall be for the sole and
exclusive benefit of the Issuer, the Trustee, the Bank and the holders of the
Bonds.
SECTION 103. CONDITIONS PRECEDENT SATISFIED. All acts, conditions and things
required by law to exist, happen and be performed precedent to and in
connection with the execution and entering into of this Indenture have happened
and have been performed in regular and due time, form and manner as required by
law, and the parties hereto are now duly empowered to execute and enter into
this Indenture.
ARTICLE II
THE BONDS
SECTION 201. RESTRICTION ON ISSUANCE OF BONDS. No Bonds may be authenticated
and issued under the provisions of this Indenture except in accordance with
this Article II. Except as provided in Section 205 and Section 214 hereof, the
total aggregate principal amount of Bonds that may be issued and authenticated
hereunder is expressly limited to $6,000,000.
SECTION 202. LIMITED OBLIGATIONS. (A) The Bonds, together with the premium, if
any, and the interest thereon, shall be limited obligations of the Issuer
payable, with respect to the Issuer, solely from the Trust Revenues, which
Trust Revenues are hereby pledged and assigned for the equal and ratable
payment of all sums due under the Bonds, and shall be used for no other purpose
than to pay the principal of, premium, if any, on and interest on the Bonds
except as may be otherwise expressly provided herein.
(B) THE BONDS ARE NOT AND SHALL NOT BE A DEBT OF THE STATE OR OF THE TOWN
OF COLONIE, NEW YORK AND NEITHER THE STATE NOR THE TOWN OF COLONIE, NEW YORK
SHALL BE LIABLE THEREON. THE BONDS DO NOT GIVE RISE TO A PECUNIARY LIABILITY OR
CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF THE STATE OR OF THE TOWN
OF COLONIE, NEW YORK.
<PAGE>
(C) No recourse shall be had for the payment of the principal of or
premium, if any, on or the interest on any Bond or for any claim based thereon
or on this Indenture against any past, present or future member, officer,
employee or agent (other than the Company), as such, of the Issuer or of any
predecessor or successor corporation, either directly or through the Issuer or
otherwise, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty, or otherwise.
SECTION 203. EXECUTION. (A) The Bonds shall be executed on behalf of the Issuer
by the manual or facsimile signature of its Chairman or its Vice Chairman, and
the Issuer's corporate seal, or a reproduction thereof, shall be impressed,
imprinted or otherwise reproduced thereon and attested by the manual or
facsimile signature of its Secretary or its Assistant Secretary. All such
facsimile signatures shall have the same force and effect as if said officers
had manually signed the Bonds. The reproduction of the Issuer's corporate seal
on the Bonds shall have the same force and effect as if the Issuer's corporate
seal had been impressed on the Bonds.
(B) In case any Authorized Representative of the Issuer whose signature
shall appear on any Bond shall cease to be such Authorized Representative
before the delivery of such Bond or the issuance of a new Bond following a
transfer or exchange, such signature or such facsimile shall nevertheless be
valid and sufficient for all purposes, the same as if such Authorized
Representative had remained in office until delivery.
SECTION 204. AUTHENTICATION. Only such Bonds as shall have endorsed thereon the
Certificate of Authentication substantially in the forms set forth in the forms
of Bond attached hereto as Exhibits A and B duly executed by the manual
signature of an authorized officer of the Trustee shall be entitled to any
right or benefit under this Indenture. No Bonds shall be valid or obligatory
for any purpose unless and until such Certificate of Authentication shall have
been duly executed by the Trustee; and such executed Certificate of
Authentication upon any such Bond shall be conclusive evidence that such Bond
has been authenticated and delivered under this Indenture. The Trustee's
Certificate of Authentication on any Bond shall be deemed to have been executed
by it if signed by an authorized officer of the Trustee, but it shall not be
necessary that the same person sign the Certificate of Authentication on all of
the Bonds. In the event of the appointment of a Tender Agent, other than the
Trustee such Tender Agent may act as Co- Authenticating Agent with respect to
the Tendered Bonds.
SECTION 205. MUTILATED, LOST, STOLEN OR DESTROYED BONDS. (A) In the event any
Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the
Trustee may authenticate a new Bond, executed by the Issuer as provided in
Section 203 hereof, of like maturity, interest rate and denomination as the
Bond so mutilated, lost, stolen or destroyed. Any mutilated Bond shall first be
surrendered to the Trustee; and in the case of any lost, stolen or destroyed
Bond, there shall first be furnished to the Trustee evidence of such loss,
theft or destruction satisfactory to the Trustee, together with indemnity
satisfactory to the Trustee. The Issuer or the Trustee may charge the holder or
owner of such Bond a sum sufficient to cover any tax or other governmental
charge in connection with such exchange or substitution of such new Bond,
together with any other reasonable fees and expenses incurred by the Issuer or
the Trustee in connection therewith.
(B) Every Bond issued pursuant to the provisions of this Section 205 shall
be equally and proportionately entitled to the benefits of this Indenture with
all other Bonds secured by the Indenture. However, the Trustee shall not be
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required to treat both the original Bond and any Bond issued in lieu thereof as
being Outstanding for purposes of determining the principal amount of Bonds
Outstanding under this Indenture or for the purpose of determining any
percentage of Bonds Outstanding hereunder, but both the original Bond and the
Bond issued in lieu thereof shall be treated as one and the same.
(C) Notwithstanding any other provision of this Section 205, in lieu of
delivering a new Bond for a Bond which has been mutilated, lost, stolen or
destroyed and which has matured, upon receipt of evidence of such mutilation,
loss, theft or destruction and indemnity satisfactory to the Trustee, the
Trustee may make payment for such Bond.
SECTION 206. TRANSFER AND EXCHANGE OF BONDS; PERSONS TREATED AS OWNERS. (A) The
Trustee is designated and agrees to act as Bond Registrar and shall cause a
bond register to be kept on behalf of the Issuer at the Office of the Trustee
for the registration and transfer of Bonds. Except as provided in Section 213
hereof, any Bond, upon the surrender of such Bond to the Bond Registrar, may be
transferred, but only upon delivery of an assignment duly executed by the
registered owner or his duly authorized legal representative in the form
imprinted on the Bond or in such other form as shall be satisfactory to the
Bond Registrar.
(B) Except as otherwise provided in Section 206(E) or Section 213 hereof,
upon receipt of such Bond and upon satisfaction of the conditions set forth in
Section 206(A) and Section 206(C) hereof, the Trustee shall immediately record
the transfer of such bond on the bond register and cause the transferee or
transferees to be the registered owner of such Bond. Upon any such registration
of transfer, the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange for such Bond one or more new Bonds, executed by the Issuer
as provided in Section 203 hereof, registered in the name of the designated
transferee thereof, of any denomination or denominations authorized by this
Indenture and for the same aggregate principal amount as the Bond or Bonds
surrendered for transfer.
(C) In the event of the appointment of a Tender Agent, other than the
Trustee, such Tender Agent may act as Co-Bond Registrar with respect to
Tendered Bonds.
(D) No service charge shall be made for any transfer or exchange of Bonds,
but in all cases in which Bonds shall be transferred or exchanged hereunder,
the Issuer or the Trustee may make a charge for every transfer or exchange of
Bonds sufficient to reimburse them for any tax, fee or other governmental
charge required to be paid with respect to such transfer or exchange, and such
charge shall be paid before any such new Bond shall be delivered.
(E) The Person in whose name any Bond shall be registered shall be deemed
and regarded as the absolute Owner thereof for all purposes, and payment of or
on account of the principal of, or the premium if any or interest on, any such
Bond shall be made only to or upon the order of the registered Holder thereof
or his duly authorized legal representative, subject to the terms of Section
207(C) hereof. Such registration may be changed only as provided in this
Section 206, and no other notice to the Issuer or the Trustee shall affect the
rights or obligations with respect to the transference of any Bond or be
effective to transfer any Bond. All payments to the Person in whose name any
Bond shall be registered shall be valid and effectual to satisfy and discharge
the liability upon such Bond to the extent of the sum or sums so paid.
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(F) The Trustee shall not be required to make any such transfer or exchange
of (1) any Bond during the fifteen (15) days next preceding a Bond Payment Date
or (2) any Bond selected for redemption in whole or in part under Article III
hereof; provided, however, that in the event of a Bond selected for redemption
in part, nothing in this paragraph shall prohibit exchange of the remaining
portion of such Bond redeemed in part for a new Bond with a reduced principal
amount or the transfer or exchange of any such new Bond; provided, further that
the foregoing shall not apply to the registration or transfer of any Bond which
has been tendered to the Tender Agent pursuant to Section 304 hereof, and in
any such case, for purposes of selection for redemption, the Bond so tendered
and the Bond issued to the transferee thereof shall be deemed and treated as
the same Bond.
SECTION 207. PAYMENT PROVISIONS. (A) Payment of the principal of, premium, if
any, on and interest on the Bonds shall be made in lawful money of the United
States of America.
(B) Interest and any Sinking Fund Payment or principal payment due prior to
maturity on any Bond which is payable, and which is punctually paid or duly
provided for, on any Bond Payment Date shall be paid to the Person appearing on
the bond register as the registered owner of that Bond (or one or more
Predecessor Bonds) at the close of business on the Regular Record Date, by
check or draft of the Trustee mailed by the Trustee on such Bond Payment Date
to such registered owner at his address as it appears on the bond register;
provided that at the option of any Holder of Bonds in an aggregate principal
amount of $250,000 or greater, the Trustee shall cause such amounts to be
transmitted on such Interest Payment Date by wire transfer at such owner's
written request to the bank account number on file with the Trustee, provided
such owner has delivered adequate instructions regarding same to the Trustee at
least ten (10) Business Days prior to such Bond Payment Date.
(C) Any interest and any Sinking Fund Payment or principal payment due
prior to maturity on any Bond which is payable, but is not punctually paid or
duly provided for, on any Bond Payment Date (herein called "Defaulted
Payments") shall forthwith cease to be payable to the Person appearing on the
bond register as the registered owner on the relevant Regular Record Date
solely by virtue of such Person having been such registered owner; and the
Trustee shall make payment of any Defaulted Payments on Bonds to the Persons in
whose names such Bonds (or their respective Predecessor Bonds) are registered
at the close of business on a Special Record Date for the payment of such
Defaulted Payments, which shall be fixed in the following manner. The Trustee
shall determine the amount of Defaulted Payments to be paid on each Bond and
establish the date of the proposed payment (which date shall be such as will
enable the Trustee to comply with the next sentence hereof), and money in the
aggregate amount of the proposed Defaulted Payments shall be segregated by the
Trustee to be held in trust for the benefit of the Persons entitled to such
Defaulted Payments as in this Subsection provided and not to be deemed part of
the Trust Revenues. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Payments which shall be not more than fifteen
(15) nor less than ten (10) days prior to the date of the proposed payment. The
Trustee shall promptly notify the Issuer, the Bank and the Company of such
Special Record Date and shall cause notice of the proposed payment of such
Defaulted Payments and the Special Record Date therefor to be mailed one time,
first-class postage prepaid, to each registered owner of a Bond at his address
as it appears in the bond register not less than ten (10) days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted Payments
and the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Payments shall be paid to the Persons in whose names the Bonds (or
their respective Predecessor Bonds) are registered on such Special Record Date.
<PAGE>
(D) Subject to the foregoing provisions of this Section, each Bond
delivered under this Indenture upon transfer of or in exchange for or in lieu
of any other Bond shall carry all the rights to interest and any Sinking Fund
Payments or principal payments due prior to maturity accrued and unpaid, and to
accrue, which were carried by such other Bond, and each such Bond shall bear
interest from such date so that neither gain nor loss in interest shall result
from such transfer, exchange or substitution.
(E) The principal of and premium, if any, on any Bonds due at maturity
shall be payable at the Office of the Trustee, upon presentation and surrender
of such Bond by the registered owner thereof or his duly authorized legal
representative at the maturity of such Bond or such other date as such payments
become due, by redemption or otherwise. Except as provided in subsection (B)
hereof, in the event of a partial redemption of any Bond, payment of the
redemption price shall be made to the registered owner or his duly authorized
legal representative only upon surrender to the Trustee of such Bond, and upon
such surrender the Trustee shall authenticate a new Bond executed by the Issuer
as provided in Section 203 for the unredeemed portion of such Bond.
(F) In NO EVENT shall the Trustee pay any portion of the principal of,
premium, if any, or interest on any Bond from other than Non-Preference Moneys.
SECTION 208. TEMPORARY BONDS. (A) Until definitive Bonds are ready for
delivery, there may be executed, and upon the request of the Issuer the Trustee
shall authenticate and deliver in lieu of definitive Bonds, temporary printed,
lithographed or typewritten Bonds, in any authorized denomination, in
substantially the tenor set forth in Exhibits A and B attached hereto and with
such appropriate omissions, insertions and variations as may be required.
(B) If the Bonds are no longer Book Entry Bonds and if temporary Bonds
shall have been issued, the Issuer shall, at the sole cost and expense of the
Company, cause the definitive Bonds to be prepared and to be executed and
delivered to the Trustee, and the Trustee, upon presentation to it at the
Office of the Trustee of any temporary Bond, shall cancel the same and
authenticate and deliver in exchange therefor, without charge to the owner
thereof, a definitive Bond or Bonds of an equal aggregate principal amount of
the same maturity and bearing interest at the same rate as the temporary Bond
surrendered. Until so exchanged, the temporary Bonds shall in all respects be
entitled to the same benefit and security of this Indenture as the definitive
Bonds to be issued and authenticated hereunder.
SECTION 209. SPECIFIC DETAILS OF BONDS. (A) The Bonds shall be issued in the
aggregate principal amount of $6,000,000, shall be designated "Town of Colonie
Industrial Development Agency Taxable Industrial Development Revenue Bonds
(Mechanical Technology Incorporated Project - Letter of Credit Secured), Series
1998A". The Bonds shall be numbered from one upward and prefixed "R". The Bonds
shall be issued in the denomination of $100,000 or any integral multiple of
$5,000 in excess thereof. Interest on the Bonds prior to the Conversion Date
shall be payable on the first (1st) Thursday of each month, commencing January
7, 1999.
(B) (1) The Bonds shall be dated the Closing Date and shall bear
interest from the Closing Date, or from the most recent Interest Payment Date
to which interest has been paid. The Bonds shall mature on December 1, 2013.
(2) The Bonds shall bear interest as follows:
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(a) From the Closing Date through and including December 23, 1998, the
Bonds shall bear interest at a rate per annum equal to five and fifty-five
hundredths percent (5.55%).
(b) Thereafter, except as provided in (e) below, the Bonds (other than
Pledged Bonds) shall bear interest at the "Adjustable Rate".
(i) The Adjustable Rate shall be the rate of interest established by the
Remarketing Agent on the first Business Day prior to each Adjustment Date,
which in the Remarketing Agent's reasonable judgment would result, as nearly as
practicable, in the market value of the Bonds on an Adjustment Date being equal
to one hundred percent (100%) of the principal amount thereof. The Adjustable
Rate so determined shall be adjusted in accordance with the directions of the
Remarketing Agent on the Adjustment Date and shall remain in effect through and
including the day prior to the next following Adjustment Date.
(ii) In determining the Adjustable Rate pursuant to the foregoing Section
209(B)(2)(b)(i), the Remarketing Agent shall take into account, to the extent
applicable, (A) the market interest rates for comparable securities held by
open-end municipal or other fixed income bond funds or other institutional or
private investors with substantial portfolios (w) with interest rate adjustment
periods and demand purchase options substantially identical to the Bonds, (x)
bearing interest at a variable rate intended to maintain par value, (y) rated
by a national credit rating agency in the same category as the Bonds or, if not
rated, secured by substantially the same level of security as the Bonds, and
(z) the interest on which is included in gross income of the holders thereof
for federal income taxation purposes; (B) other financial market rates and
indices which may have a bearing on the Adjustable Rate (including, but not
limited to rates borne by commercial paper, Treasury bills, commercial bank
prime rates, certificate of deposit rates, federal funds rates, the London
Interbank Offered Rate, indices maintained by The Bond Buyer, and other
publicly available taxable interest rate indices); (C) general financial market
conditions (including current forward supply); (D) factors particular to the
Project or the credit standing of the Company and the Bank; and (E) such other
factors which the Remarketing Agent deems appropriate.
(iii) On the Business Day prior to each Adjustment Date, the Remarketing
Agent shall notify the Trustee, by Immediate Notice, of the Adjustable Rate.
(c) If for any reason the position of Remarketing Agent is vacant or the
Remarketing Agent fails to act, the Adjustable Rate shall be determined by a
third party selected by the Company at the Company expense and shall be equal
to one hundred percent (100%) of the yield applicable to 13-week United States
Treasury bills determined by such third party on the basis of the average per
annum discount rate at which such 13- week Treasury bills shall have been sold
(1) at the most recent Treasury auction conducted during the immediately
preceding Adjustment Period, (2) if no such auction shall have been conducted
during the immediately preceding Adjustment Period, at the most recent Treasury
auction conducted prior to such preceding Adjustment Period, plus fifty (50)
basis points; provided, however, that in the event the Company notifies the
Trustee that an index (as published in The Wall Street Journal) of seven-day
yield evaluations at par of issuers of securities, the interest on which is
includable in gross income for federal income tax purposes, and of comparable
rating to the rating on the Bonds, published by any nationally recognized
municipal securities evaluation service is available, the Adjustable Rate shall
be determined by the Trustee and shall be equal to such index.
<PAGE>
(d) The Adjustable Rate shall be calculated based on a 365 or 366- day year
for the actual number of days elapsed. Further, each determination of the
Adjustable Rate pursuant to and in accordance with the foregoing terms of the
Indenture and the terms of the Bonds shall be conclusive and binding on the
Issuer, the Trustee, the Company, the Bank, and the holders of the Bonds.
(e) (i) From and after the Conversion Date through the maturity or earlier
redemption of the Bonds, the Bonds shall bear interest at the Fixed Rate, which
shall be a fixed rate (or rates) of interest established by the Remarketing
Agent at least fifteen (15), but not more than thirty (30) days prior to the
Conversion Date, which in the reasonable judgment of the Remarketing Agent
would result, as nearly as practicable, in the market value of the Bonds on the
Conversion Date being equal to one hundred percent (100%) of the principal
amount thereof.
(ii) (A) At the Remarketing Agent's discretion, after the exercise of
the Conversion Option, the Bonds may be converted into serial bonds, with a
principal amount of Bonds maturing on a Principal Payment Date each year equal
to the principal amount required to be redeemed as set forth in Section 301(E)
hereof. In such event, each maturity of Bonds may bear a different interest
rate, each of which shall be determined by the Remarketing Agent in the same
manner as the Fixed Rate (for convenience each such rate shall be referred to
as the Fixed Rate); provided, however, that in no event shall the Remarketing
Agent be permitted to convert the Bonds into serial bonds as described above
without delivering to the Trustee an opinion of Bond Counsel that such
conversion is lawful under the Act and permitted under the Indenture.
(B) The Interest Payment Dates after the exercise of the Conversion Option
shall be semi-annual, with one Interest Payment Date being the first day of the
month preceding the Fixed Rate Conversion Date and the other Interest Payment
Date being the first day of the month six (6) months later. Principal shall be
payable annually thereafter in the amounts and the years set forth in Section
301(E) hereof on the Principal Payment Dates.
(iii) In determining the Fixed Rate, the Remarketing Agent shall take into
account, to the extent applicable, (A) market interest rates for comparable
securities which are held by open-end municipal or other fixed income bond
funds or other institutional or private investors with substantial portfolios
(w) with a term equal to the period to maturity remaining on the Bonds, (x) the
interest on which is includable in the gross income of the holders thereof for
federal income tax purposes, (y) rated by a national credit rating agency in
the same rating category as the Bonds, or, if not rated, secured by
substantially the same level of security as the Bonds, and (z) with redemption
provisions similar to those which have bearing on the Fixed Rate; (B) other
financial market rates and indices (including but not limited to rates borne by
taxable industrial development bonds, other taxable revenue bonds, Treasury
obligations, commercial bank prime rates, certificate of deposit rates, federal
funds rates, indices maintained by The Bond Buyer and other publicly available
taxable interest rates and indices); (C) general financial market conditions
(including current forward supply); (D) factors particular to the Project or
the credit standing of the Company and the Bank; and (E) such other factors
which the Remarketing Agent deems appropriate.
<PAGE>
(iv) The Fixed Rate shall be calculated based on a 360-day year of twelve
30-day months. The determination of the Fixed Rate by the Remarketing Agent
pursuant to and in accordance with the terms of the Indenture and the terms of
the Bonds shall be conclusive and binding on the Issuer, the Trustee, the
Company, the Bank and the Holders of the Bonds.
(v) To exercise the Conversion Option, the Company shall deliver at least
sixty (60) days prior to the Conversion Date, written notice to the Trustee,
the Issuer and the Bank of its election of the Conversion Option. On the
Conversion Date, the Bonds shall be subject to a Mandatory Tender for purchase
as provided in Section 304 of the Indenture. Notwithstanding anything to the
contrary contained herein, such notice shall not be effective unless the Bank
shall have consented thereto in writing and such notice is accompanied by:
(A) a Substitute Letter of Credit with an expiration date of not earlier
than fifteen (15) days following the Principal Payment Date which is at least
three (3) years after the next succeeding Principal Payment Date and in an
amount equal to the sum of the aggregate principal amount of the Bonds then
Outstanding, 210 days' interest thereon computed at the Fixed Rate, together
with the Optional Redemption Premium; provided, however, that if the Letter of
Credit then in place has an expiration date of not earlier than fifteen (15)
days following the Principal Payment Date which is at least three (3) years
after the next succeeding Principal Payment Date and in an amount equal to the
aggregate principal amount of the Bonds then Outstanding, 210 days' interest
thereon computed at the Fixed Rate, together with the Optional Premium, no
Substitute Letter of Credit need be obtained;
(B) a statement as to whether the Bonds shall be serial bonds as set forth
in Section 209(B)(2)(e)(ii) above; and
(C) an opinion of Bond Counsel reasonably satisfactory to the Trustee, the
Issuer and the Bank to the effect that the exercise of the Conversion Option is
lawful under the Act and permitted by the Indenture.
(f) Notwithstanding anything herein to the contrary, any Pledged Bond shall
bear interest at a rate equal to the Bank Rate, as such rate shall change from
time to time; provided, however, that at no time shall the interest rate in
effect for any Pledged Bond exceed the maximum rate permitted by applicable
usury laws.
(g) Notwithstanding anything herein to the contrary, in no event will the
rate of interest borne by any Bond (except any Bond constituting a Pledged
Bond) exceed fifteen percent (15%) per annum.
(h) The Issuer hereby appoints the Company to act as agent of the Issuer
for purposes of exercising the Conversion Option, all as set forth in this
Indenture, and subject to compliance with the terms and provisions of this
Indenture.
SECTION 210. DELIVERY OF THE BONDS. Upon the execution and delivery of this
Indenture, the Issuer shall execute and deliver the Bonds (including a number
of additional Bonds to be retained by the Trustee for authentication and
delivery upon transfer or exchange of any Bond) to the Trustee, and the Trustee
shall authenticate and deliver the Bonds to the purchasers thereof against
payment of the purchase price therefor, plus accrued interest to the day
preceding the date of delivery, upon receipt by the Trustee of the following:
(A) a certified copy of the Resolution;
<PAGE>
(B) the executed original Letter of Credit;
(C) executed counterparts of the Indenture and the other Financing
Documents;
(D) a request and authorization to the Trustee on behalf of the Issuer
signed by an Authorized Representative of the Issuer to deliver the Bonds to
the purchasers thereof upon payment to the Trustee for the account of the
Issuer of the purchase price therefor;
(E) signed copies of the opinions of counsel to the Issuer, the Company and
the Bank, and of Bond Counsel, as required by the Bond Purchase Agreement;
(F) the certificates and policies, if available, of the insurance required
by the Installment Sale Agreement;
(G) a current survey of the Land certified to the Issuer and the Trustee;
(H) proof of compliance with the State Environmental Quality Review Act;
(I) evidence that the Project Facility is not an area of special flood
hazards, or a certificate and a policy, if available, of the insurance required
by Section 6.3(D) of the Installment Sale Agreement; and
(J) such other documents as the Trustee, the Bank or Bond Counsel may
reasonably require.
SECTION 211. CANCELLATION OF BONDS. All Bonds surrendered to the Trustee for
payment, redemption, transfer or exchange shall be promptly cancelled by the
Trustee. No Bond shall be authenticated in lieu of or in exchange for any Bond
cancelled as provided in this Section 211, except as expressly provided by this
Indenture. All Bonds cancelled by the Trustee shall be destroyed by the Trustee
and shall not be reissued. At the request of the Company, certificates of
destruction evidencing such destruction shall be furnished by the Trustee to
the Issuer and the Company.
SECTION 212. PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. In any case where
the date of maturity of interest or a Sinking Fund Payment on or the principal
of any Bond or the date fixed for redemption of any Bond shall not be a
Business Day, then payment of interest on or principal or Redemption Price of
such Bond shall be made on the next succeeding Business Day with the same force
and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date.
SECTION 213. BOOK ENTRY BONDS. (A) Notwithstanding any other provision of this
Indenture, the Bonds are hereby authorized to be issued in book entry form as
Book Entry Bonds, with respect to which the following procedures shall apply.
(B) For all purposes of this Indenture, the Depository shall be deemed to
be holder of a Book Entry Bond and neither the Issuer, nor the Trustee shall
have any responsibility or obligation to the beneficial owner of such Bond or
to any direct or indirect participant in such Depository. Without limiting the
generality of the foregoing, neither the Issuer nor the Trustee shall have any
responsibility or obligation to any such participant or to the beneficial owner
of a Book Entry Bond with respect to (1) the accuracy of the records of the
Depository or any participant with respect to any beneficial ownership interest
in such Book Entry Bond, (2) the delivery to any participant of the Depository,
the beneficial owner of such Book Entry Bond or any other person, other than
<PAGE>
the Depository, of any notice with respect to such Book Entry Bond, including
any notice of the redemption thereof, (3) the payment to any participant of the
Depository, the beneficial owner of such obligation or any other person, other
than the Depository, of any amount with respect to the principal or Redemption
Price of, or interest or Sinking Fund Payments on, such Book Entry Bond or (4)
any consent given or any other action taken by the Depository as Holder of the
Book Entry Bonds.
(C) The Issuer and the Trustee may treat the Depository of a Book Entry
Bond as the absolute owner of such Book Entry Bond for purpose of (1) payment
of the principal of, premium, if any, and interest on such Book Entry Bond, (2)
giving notices of redemption and of other matters with respect to such Book
Entry Bond, (3) registering transfers with respect to such Book Entry Bond, and
(4) for all other purposes whatsoever. The Trustee shall pay all principal of,
premium, if any, and interest and Sinking Fund Payments on, such Book Entry
Bond only to or upon the order of the Depository, and all such payments shall
be valid and effective to fully satisfy and discharge the Book Entry Bonds with
respect to such principal of, premium, if any, Sinking Fund Payments and
interest to the extent of the sum or sums so paid. No person other than the
Depository shall receive a Book Entry Bond or other instrument evidencing the
Issuer's obligation to make payments of the principal of, premium, if any,
Sinking Fund Payments and interest thereon.
(D) The Issuer, in its sole discretion, upon thirty (30) days prior written
notice to the Trustee and without the consent of the Trustee or the beneficial
owner of a Book Entry Bond or any other person, may terminate the services of
the Depository with respect to a Book Entry Bond if the Issuer determines that
(1) the Depository is unable to discharge its responsibilities with respect to
such Book Entry Bond or (2) a continuation of the requirement that all of the
Outstanding Bonds issued in book entry form be registered in the registration
books of the Issuer in the name of the Depository, is not in the best interest
of the beneficial owners of such Bonds, and the Issuer shall terminate the
services of the Depository upon receipt by the Issuer and the Trustee of
written notice from the Depository that it has received written requests that
such Depository be removed from its participants having beneficial interests,
as shown in the records of the Depository, in an aggregate amount of not less
than fifty percent in principal amount of the then Outstanding Book Entry
Bonds.
(E) Upon the termination of the services of a Depository with respect to a
Book Entry Bond, or upon the resignation of a Depository with respect to a Book
Entry Bond, after which no substitute securities depository willing to
undertake the functions of such Depository can be found which, in the opinion
of the Issuer, is able to undertake such functions upon reasonable and
customary terms, such Bonds shall no longer be registered in the registration
books kept by the Trustee in the name of a Depository, but may be registered in
the name of the beneficial owners of such Bonds, and such beneficial owners,
upon registration of such Bonds in their names, shall become the holders of
such Bonds.
(F) Notwithstanding any other provisions of the Indenture, the Trustee
shall have no liability for any inconsistency, if any, between a letter of
representations that may be executed and delivered by the Issuer and/or the
Trustee with the Depository and the provisions hereof, and with respect to any
such inconsistency, the provisions of such letter of representations shall
control.
<PAGE>
SECTION 214. ADDITIONAL BONDS. (A) So long as the Installment Sale Agreement is
in effect and no Event of Default exists thereunder or hereunder (and no event
exists which upon notice or lapse of time or both, would become an Event of
Default thereunder), the Issuer may, upon request from the Company, issue one
or more series of Additional Bonds to provide funds to pay any one or more of
the following: (1) costs of completion of the Project Facility in excess of the
amount in the Project Fund; (2) costs of refunding or advance refunding any or
all of the Bonds previously issued; (3) costs of making any modifications,
additions or improvements to the Project Facility; or (4) costs of the issuance
and sale of the Additional Bonds, capitalized interest, funding debt service
reserves, and other costs reasonably related to any of the foregoing.
Additional Bonds may mature at different times, bear interest at different
rates and otherwise vary from the Bonds as authorized under Article II of the
Indenture, all as may be provided in the supplemental Indenture authorizing the
issuance of such Additional Bonds.
(B) Prior to the execution of a supplemental Indenture authorizing the
issuance of Additional Bonds, the Issuer must deliver certain documents set
forth in this Indenture to the Trustee, including:
(1) an amendment to the Reimbursement Agreement and the Letter of Credit
providing for issuance by the Bank of a Substitute Letter of Credit in the
aggregate principal amount of all Bonds then Outstanding plus the principal
amount of the proposed Additional Bonds, together with sixty-five (65) days'
interest thereon and a written opinion of counsel to the Bank which shall state
that the execution and delivery of each such Substitute Letter of Credit by the
Bank has been duly authorized, executed and delivered by the Bank and that the
Letter of Credit, as amended, constitutes the legal, valid and binding
obligation of the Bank enforceable against the Bank in accordance with its
terms, subject to the standard exceptions with respect to bankruptcy laws,
equitable remedies and specific performance, or (b) a Substitute Letter of
Credit issued by a Substitute Bank in the aggregate principal amount of all
Bonds then Outstanding plus the principal amount of the proposed Additional
Bonds, together with sixty-five (65) days' interest thereon and a written
opinion of counsel to the Substitute Bank which shall state that the execution
and delivery of such Substitute Letter of Credit by the Substitute Bank has
been duly authorized, executed and delivered by the Substitute Bank and the
Substitute Letter of Credit constitutes the legal, valid and binding obligation
of the Substitute Bank enforceable against the Substitute Bank in accordance
with its terms, subject to the standard exceptions with respect to bankruptcy
laws, equitable remedies and specific performance;
(2) a written opinion of counsel to the Bank which shall state that the
execution and delivery of such Substitute Letter of Credit by the Bank has been
duly authorized, executed and delivered by the Bank and that the Letter of
Credit, as amended, constitutes the legal, valid and binding obligation of the
Bank enforceable against the Bank in accordance with its terms, subject to the
standard exceptions with respect to bankruptcy laws, equitable remedies and
specific performance;
(3) evidence that the Financing Documents, as amended or supplemented in
connection with the issuance of the Additional Bonds, provide that (a) the
Bonds referred to therein shall mean and include the Additional Bonds being
issued as well as the Bonds originally issued under the Indenture and any
Additional Bonds theretofore issued, and (b) the Project Facility referred to
in the Financing Documents includes any Additional Facilities being financed;
<PAGE>
(4) a copy of the resolution of the Board of Directors of the Company, duly
certified by the Secretary or Assistant Treasurer of the Company, which
approves the issuance of the Additional Bonds and authorizes the execution and
delivery by the Company of the amendments to the Financing Documents described
in paragraph (3) above;
(5) a written opinion of counsel to the Company which shall state that the
execution and delivery of the amendments to the Financing Documents by the
Company have been duly authorized, executed and delivered by the Company and
that the Financing Documents, as amended, constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, subject to the standard exceptions with respect to
bankruptcy laws, equitable remedies and specific performance;
(6) a copy of the resolution, duly certified by the secretary or assistant
secretary of the Issuer, authorizing the issuance of the Additional Bonds and
the execution and delivery by the Issuer of any amendments to the Financing
Documents to be executed in connection therewith;
(7) an opinion of counsel to the Issuer stating that the supplements and
amendments to the Financing Documents described above have been duly authorized
and lawfully executed and delivered on behalf of the Issuer; that such
amendments to the Financing Documents are in full force and effect and are
valid and binding upon the Issuer; and that all conditions precedent provided
for in the Indenture to the issuance, execution and delivery of the Additional
Bonds have been complied with;
(8) an opinion of Bond Counsel stating that, in the opinion of such Bond
Counsel, the Issuer is duly authorized and entitled to issue such Additional
Bonds and that, upon the execution, authentication and delivery thereof, such
Additional Bonds will be duly and validly issued and will constitute valid and
binding special obligations of the Issuer, subject to the standard exceptions
with respect to bankruptcy laws, equitable remedies and specific performance;
and that the issuance of the Additional Bonds will not, in and of itself,
adversely affect the validity of the Bonds originally issued under the
Indenture or any Additional Bonds theretofore issued;
(9) written evidence from each rating agency, if any, by which the Bonds
are then rated to the effect that the issuance of such Additional Bonds will
not, by itself, result in a reduction of the rating(s) on the Outstanding Bonds
applicable immediately prior to the issuance of the Additional Bonds;
(10) a written order to the Trustee executed by an Authorized Officer of the
Issuer requesting the Trustee to authenticate and deliver the Additional Bonds
to the purchasers therein identified; and
(11) such other documents as the Trustee may reasonably request.
(C) Each series of Additional Bonds shall be equally and ratably secured
under the Indenture with the Bonds issued on the Closing Date and with all
other series of Additional Bonds, if any, previously issued under the
Indenture, without preference, priority or distinction of any Bond over any
other.
(D) The consent of the Bondholders shall not be required prior to the
issuance of Additional Bonds, or to the execution and delivery of any
amendments to the Financing Documents required in connection therewith. The
Trustee shall, however, notify in writing the Bondholders and each rating
<PAGE>
agency of the issuance of the Additional Bonds, detailing, at least, the
aggregate principal amount of such Bonds, and summarizing the nature of the
amendments to the Financing Documents proposed to be executed in connection
therewith.
ARTICLE III
REDEMPTION OF BONDS PRIOR TO MATURITY
SECTION 301. REDEMPTION OF BONDS PRIOR TO MATURITY. (A) The Bonds are subject
to redemption prior to maturity (1) as a whole, without premium, as provided in
Section 406 hereof, in the event of (a) a taking in Condemnation of, or failure
of title to, all or substantially all of the Project Facility, (b) damage to or
destruction of part or all of the Project Facility and election by the Company
to redeem the Bonds in accordance with Section 7.1 of the Installment Sale
Agreement, or (c) a taking in Condemnation of part of the Project Facility and
election by the Company to redeem the Bonds in accordance with Section 7.2 of
the Installment Sale Agreement, or (2) in part, without premium, (a) as
provided in Section 406(G) hereof, in the event that (i) to the extent excess
moneys remain in the Insurance and Condemnation Fund following damage or
condemnation of a portion of the Project Facility and completion of the repair,
rebuilding or restoration of the Project Facility by the Company, and (ii) such
moneys are not paid to the Company pursuant to Section 406(G) hereof, or (b) as
provided in Section 403 hereof, in the event that excess moneys remain in the
Project Fund after the Completion Date. In any such event, the Bonds shall be
redeemed, as a whole or in part, as the case may be, in the manner provided in
this Article III, at such time as the Trustee determines, at a redemption price
equal to the principal amount thereof, plus accrued interest to the redemption
date, without premium.
(B) The Bonds are also subject to redemption prior to maturity in the event
of failure by the Company to provide a Substitute Letter of Credit at least
forty-five (45) days prior to the Interest Payment Date immediately preceding
the expiration date of the Letter of Credit then in effect. In any such event,
the Bonds shall be redeemed, as a whole, on such Interest Payment Date at a
redemption price equal to the principal amount to be redeemed, plus accrued
interest to the redemption date, without premium.
(C) The Bonds are also subject to redemption prior to maturity upon receipt
by the Trustee of a written notice from the Bank of the occurrence and
continuance of a default by the Company under the Reimbursement Agreement and
the Bank's election to compel redemption of the Bonds. In either such event,
the Bonds shall be redeemed, as a whole, in the manner provided in this Article
III, on the earliest date for which the Trustee can give notice of redemption
pursuant to Section 303 hereof, at a redemption price equal to the principal
amount thereof, plus accrued interest to the redemption date, without premium.
(D) (1) On or prior to the Conversion Date, the Bonds are also subject to
redemption prior to maturity in denominations of $5,000 or any integral
multiple of $5,000 in excess thereof at the option of the Company by exercise
of its right to prepay the installment purchase payments payable under the
Installment Sale Agreement as provided in Section 5.5 of the Installment Sale
Agreement, on any Interest Payment Date, in the manner provided in this Article
III, at a redemption price equal to the principal amount thereof, plus accrued
interest to the redemption date, without premium.
<PAGE>
(2) After the Conversion Date, the Bonds are subject to redemption, at the
option of the Company by exercise of its right to prepay the installment
purchase payments under the Installment Sale Agreement as provided in Section
5.5 thereof, as a whole or in part on any Interest Payment Date occurring after
the end of the applicable call protection period at the redemption prices,
expressed as percentages of unpaid principal amount to be redeemed, plus
accrued interest to the redemption date, determined as follows: the call
protection period and redemption prices shall be determined by the Remarketing
Agent, after taking into account the factors described in Section 209(B)(2)(e)
hereof and such other factors which the Remarketing Agent deems appropriate.
The determination of the call protection period and redemption prices by the
Remarketing Agent pursuant to and in accordance with the terms of the Indenture
shall be conclusive and binding on the Issuer, the Trustee, the Company, the
Bank and the Holders of the Bonds.
(E) The Bonds will also be subject to scheduled mandatory redemption, by lot in
such manner as the Trustee shall deem fair and appropriate for random
selection, prior to maturity, commencing December 1, 1999 and on each December
1 thereafter, by the application of Sinking Fund Payments at a redemption price
equal to one hundred percent (100%) the principal amount thereof, plus accrued
interest to the redemption date, without premium, on December 1 of the years
and in the principal amounts set forth below:
YEAR SINKING FUND PAYMENT YEAR SINKING FUND PAYMENT
1999 $285,000 2006 $385,000
2000 $275,000 2007 $410,000
2001 $290,000 2008 $435,000
2002 $310,000 2009 $460,000
2003 $325,000 2010 $485,000
2004 $345,000 2011 $515,000
2005 $365,000 2012 $540,000
<PAGE>
Following retirement by mandatory sinking fund redemption prior to their Stated
Maturity, there will remain $575,000 principal amount of the Bonds maturing on
December 1, 2013 to be paid at maturity.
(F) In no event shall the Trustee, in connection with any redemption of
Bonds under this Section 301, pay any portion of the principal of, premium, if
any, or interest on any Bond from other than Non-Preference Moneys.
Furthermore, the Trustee shall make such payments by first drawing on the
Letter of Credit pursuant to Section 408 hereof.
(G) In the event of any partial redemption, the particular Bonds or
portions thereof to be redeemed shall be selected by the Trustee not more than
sixty (60) days prior to the redemption date by lot. The Trustee shall apply
any partial redemption payments (other than a scheduled mandatory redemption)
to the schedule of mandatory redemption in inverse order of maturity. After the
Conversion Date, if the Bonds are serial bonds as provided in Section
209(B)(2)(e)(ii) hereof, the Bonds shall be redeemed in inverse order of
maturity selected by lot. Further, the Trustee may provide for the selection
for redemption of portions (equal to $5,000 or any whole multiple thereof) of
Bonds of a denomination larger than $5,000. In no event shall the principal
amount of Bonds subject to any partial redemption be other than a whole
multiple of $5,000; provided, however, that no $5,000 portion of a Bond shall
be redeemed if it results in the unredeemed portion of the Bond being less than
$100,000.
SECTION 302. COMPANY'S ELECTION TO REDEEM. (A) The Company shall give written
notice to the Trustee, the Bank and the Issuer of its election to cause
redemption of Bonds prior to maturity pursuant to subsections (A) and (D) of
Section 301 hereof and of the redemption date.
(B) In the event of an election by the Company to redeem the Bonds pursuant
to Section 301(D) hereof, such notice shall be given at the time the Company
delivers to the Trustee either (1) the prepayment of installment purchase
payments with which the Bonds are to be redeemed, or (2) the assurance from the
Bank that the Letter of Credit may be drawn upon to pay the redemption price of
the Bonds, described in Section 5.5 of the Installment Sale Agreement, and the
redemption date specified in such notice shall be deemed to be (notwithstanding
the actual date set forth therein) the first Interest Payment Date more than
thirty (30) days after such payment or assurance, as the case may be, is
received by the Trustee and on which any moneys delivered to the Trustee by the
Company for such purpose shall be Non-Preference Moneys.
SECTION 303. NOTICE OF REDEMPTION; PAYMENT OF REDEEMED BONDS. (A) Notice of the
intended redemption of each Bond subject to redemption shall be given by the
Trustee one time by first class mail postage prepaid to the registered Owner of
such Bond at the address of such Owner shown on the Trustee's bond register and
to the Bank at its address set forth of in Section 1103 hereof. All such
redemption notices shall be given not less than thirty (30) days prior nor more
than forty-five (45) days prior to the date fixed for redemption. A follow-up
notice shall be given by the Trustee by registered or certified mail to each
registered owner who has not submitted a Bond subject to redemption within
ninety (90) to one hundred twenty (120) days following the redemption date.
Each notice shall specify the redemption price, the principal amount of the
Bonds to be redeemed, the numbers of the Bonds to be redeemed if less than all
of the Bonds are to be redeemed, the redemption date and the place or places
where amounts due upon such redemption will be payable. Such notice shall
further state that payment of the applicable redemption price plus accrued
interest to the redemption date will be made upon presentation and surrender of
<PAGE>
the Bonds or portions thereof to be redeemed; that upon presentation and
surrender to the Trustee of any Bond being redeemed in part, a new Bond in the
principal amount of the unredeemed portion of such Bond will be issued; and
that the Bonds or portions thereof so called for redemption will be deemed
redeemed and will cease to bear interest on the specified redemption date,
provided Non-Preference Moneys for their redemption have been duly deposited in
the Bond Fund and, except for the purpose of payment, that such Bonds will no
longer be protected by this Indenture. The failure to give any such notice, or
any defect therein, shall not affect the validity of any proceeding for the
redemption of any Bond with respect to which no such failure to give notice, or
defect therein, has occurred. Notwithstanding anything herein to the contrary,
the Trustee shall not give any notice under this Section 303 in the case of an
optional redemption pursuant to Section 301(D) hereof requiring the payment of
a premium upon such redemption unless the Company shall have complied with the
provisions of Section 302(B) hereof.
(B) After notice shall have been given in the manner provided in Subsection
(A) above, the Bonds or portions thereof called for redemption shall become due
and payable on the redemption date so designated. Upon presentation and
surrender of such Bonds at the Office of the Trustee, such Bonds shall be paid
at the Redemption Price, plus accrued interest to the redemption date. If there
shall be selected for redemption less than all of a Bond, the Issuer shall,
upon the surrender of such Bond and with no charge to the Owner thereof, (1)
pay the Redemption Price of the principal amount called for redemption, and (2)
cause the Trustee to authenticate and deliver for the unredeemed balance of the
principal amount of such Bond so surrendered a fully registered Bond of like
maturity in any of the authorized denominations.
(C) If, on the redemption date, moneys for the redemption of all Bonds or
portions thereof to be redeemed, in an amount equal to the principal of such
Bonds or portions thereof to be redeemed, together with any premium due thereon
and interest thereon to the redemption date, shall be held by the Trustee so as
to be available therefor on such date, the Bonds or portions thereof so called
for redemption shall cease to bear interest, and such Bonds or portions thereof
shall no longer be Outstanding hereunder or be secured by or be entitled to the
benefits of this Indenture. If such moneys shall not be so available on the
redemption date, such Bonds or portions thereof shall continue to bear interest
until paid at the same rate as they would have borne had they not been called
for redemption and shall continue to be secured by and be entitled to the
benefits of this Indenture.
SECTION 304. MANDATORY TENDER; NOTICE. (A) The Bonds are subject to Mandatory
Tender upon the exercise by the Company of the Conversion Option or the
delivery by the Company of an Alternate Letter of Credit.
(B) Upon the exercise by the Company of the Conversion Option with respect
to the Bonds, all such Bonds which have not been called for redemption shall be
subject to Mandatory Tender by the owner thereof on the Conversion Date.
Notwithstanding the foregoing, each Bondholder may, by delivery to the Trustee
for receipt at least by twenty (20) days immediately preceding the Conversion
Date of an irrevocable election not to tender, elect to continue to hold its
Bonds (or portions thereof) past the Conversion Date at a Fixed Rate to be in
effect at such time. Such notice shall be in substantially the form of Exhibit
C-2 attached hereto.
(C) Not earlier than sixty (60) days prior to the Conversion Date or later
than thirty (30) days prior to the Conversion Date, the Trustee shall send a
notice to the owners of all Outstanding Bonds which have not been called for
<PAGE>
redemption, in substantially the form of Exhibit C-1 attached hereto. Such
notice shall describe (1) the terms of the Mandatory Tender, (2) the right of
the owner to elect not to tender, (3) the Letter of Credit to be in effect
following the Mandatory Tender, (4) the right of the owner of Bonds in an
aggregate amount of $200,000 or more to elect not to tender the total principal
amount and to continue to hold a portion of its Bonds (but in no event may
either the amount tendered or the amount not tendered be any amount other than
$100,000, or any integral multiple of $5,000 in excess thereof) and (5) that
the rating then in effect with respect to the Bonds, if any, may be withdrawn
or lowered.
(D) In the event that prior to the Conversion Date of the Bonds the Company
shall deliver notice to the Trustee at least sixty (60) days prior to the
expiration of the Letter of Credit or Substitute Letter of Credit securing such
Bonds of its intent to deliver an Alternate Letter of Credit pursuant to the
terms of Section 5.8(A)(2) of the Installment Sale Agreement in substitution
for such Letter of Credit or Substitute Letter of Credit, all Bonds secured by
such Letter of Credit which have not been called for redemption shall be
subject to Mandatory Tender by the owner thereof on the Alternate Security
Date. Notwithstanding the foregoing, each Bondholder may, by delivery to the
Trustee for receipt at least twenty (20) days immediately preceding any
Alternate Security Date of an irrevocable election not to tender, elect to
continue to hold its Bonds past the respective Alternate Security Date. Such
notice shall be in substantially the form of Exhibit C-4 attached hereto.
(E) Not earlier than sixty (60) days prior to the Alternate Security Date
or later than thirty (30) days prior to the Alternate Security Date, the
Trustee shall send a notice to the owners of all Outstanding Bonds which have
not been called for redemption, in substantially the form of Exhibit C-3
attached hereto. Such notice shall describe (1) the terms of the Mandatory
Tender, (2) the right of the owner to elect not to tender, (3) a brief
description of the Alternate Letter of Credit and the identity of the
Substitute Bank issuing the Alternate Letter of Credit, (4) the right of the
owner of Bonds in an aggregate amount of $200,000 or more to elect not to
tender the total principal amount and to continue to hold a portion of its
Bonds (but in no event may either the amount tendered or the amount not
tendered be any amount other than $100,000 or any integral multiple of $5,000
in excess thereof) and (5) that the rating then in effect with respect to the
Bonds secured by such Alternate Letter of Credit will be withdrawn or lowered.
(F) Owners of Bonds required to be tendered who do not provide the Trustee
with the notice of their election not to tender as described in Section 304
hereof shall be required to deliver their Bonds to the Trustee for purchase at
the Purchase Price on the Conversion Date or the Alternative Security Date, as
the case may be, with an appropriate endorsement for transfer or accompanied by
a bond power endorsed in blank. Any such Bonds not so delivered on such
Conversion Date or the Alternate Security Date, as the case may be
("Undelivered Bonds"), for which there has been irrevocably deposited in trust
with the Trustee an amount of moneys sufficient to pay the Purchase Price of
the Undelivered Bonds, shall be deemed to have been purchased pursuant to this
Section 304.
IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS REQUIRED TO BE TENDERED (OTHER
THAN AN OWNER OF BONDS WHO HAS GIVEN NOTICE OF ITS ELECTION NOT TO TENDER AS
PROVIDED ABOVE) TO DELIVER ITS BONDS ON OR PRIOR TO THE CONVERSION DATE OR THE
ALTERNATE SECURITY DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT
(INCLUDING ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO THE CONVERSION DATE OR
THE ALTERNATE SECURITY DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED
<PAGE>
BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF
THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE
THEREFOR.
SECTION 305. DEMAND PURCHASE OPTION. (A) Prior to the Conversion Date, any Bond
shall be purchased at the Purchase Price from the Owner thereof upon:
(1) delivery to, and receipt by, the Tender Agent or the Trustee at the
addresses set forth in Section 1103 hereof on a Business Day of a Tender Notice
which requests the purchase of the Bond. The Tender Notice shall be in
substantially the form of Exhibit C-5 attached hereto. Such Tender Notice shall
provide the following information: (a) the principal amount of the Tendered
Bond or portion thereof to be purchased, which portion shall be $100,000 or an
integral multiple of $5,000 in excess thereof; provided, however, that no
portion of a Tendered Bond shall be purchased if it results in the unpurchased
portion of the Tendered Bond being less than $100,000, (b) the number of the
Tendered Bond, (c) the date on which the Tendered Bond shall be purchased,
which date shall be a Business Day at least seven (7) calendar days following
the receipt by the Trustee or the Tender Agent of the Bondholder's Tender
Notice (the "Repurchase Closing Date"), (d) the name and address of the
Bondholder, (e) an irrevocable request of such purchase, and (f) an undertaking
of the Bondholder to deliver the Bond to the Tender Agent or the Trustee in
accordance with Section 305(A)(2) of the Indenture;
(2) delivery of the Tendered Bond, at the office of the Trustee or Tender
Agent at or prior to 10:00 a.m., New York City time on the Repurchase Closing
Date with an appropriate endorsement for transfer or accompanied by a bond
power endorsed in blank; provided, however, the Tendered Bond shall only be
deemed properly tendered hereunder if the Tendered Bond delivered to the Tender
Agent or the Trustee conforms in all respects to the description thereof in the
Bondholder's Tender Notice; and
(3) in the event the Tender Agent or the Trustee, as the case may be,
determines that the Bondholder's Tender Notice is defective in any respect
whatsoever, the Tender Agent or the Trustee, as the case may be, shall
immediately notify the Bondholder tendering the Bond.
(B) Immediately upon receipt of a Bondholder's Tender Notice, the Tender
Agent or the Trustee, as the case may be, shall notify the Company, the
Remarketing Agent, the Bank and the Trustee or the Tender Agent, as the case
may be, by Immediate Notice and shall promptly send a copy of such Bondholder's
Tender Notice to the Company, the Remarketing Agent and the Trustee or the
Tender Agent, as the case may be.
(C) (1) Bonds which are the subject of a Bondholder's Tender Notice
described in (A)(1) above, but which are not tendered in accordance with (A)(2)
above, shall be deemed tendered and all rights of the holder thereof shall be
satisfied from the deposit with the Tender Agent or the Trustee of the Purchase
Price thereof and the Tender Agent or the Trustee, as the case may be, shall
hold such Purchase Price in trust for the benefit of such holder until the
Bonds purchased with such moneys shall have been delivered to or for the
account of such holder; and
(2) Holders of Tendered Bonds which are not delivered to the Tender Agent
or the Trustee by the holder thereof shall have no further rights with respect
to such Bonds except to receive payment of the Purchase Price therefor upon
surrender of such Bonds to the Tender Agent or the Trustee.
<PAGE>
(D) Notwithstanding the foregoing, the Bondholders shall have no Demand
Purchase Option described in Section 305 hereof if (1) there shall have
occurred and be continuing an Event of Default hereunder, except for an Event
of Default under Section 601(I) hereof, or (2) the Fixed Rate is in effect for
the Bonds being held by such Bondholder.
(E) Furthermore, no Bondholder shall have the right to exercise a Demand
Purchase Option pursuant to Section 305 hereof with respect to those Bonds for
which a notice of redemption has been mailed by the Trustee.
SECTION 306. FUNDS FOR PURCHASE OF BONDS. On any Purchase Date, the Tendered
Bonds shall be purchased by the Trustee at the Purchase Price only from the
funds listed below. Funds for payment of the Purchase Price of the Tendered
Bonds shall be derived from the following sources in order of priority
indicated:
(A) The cash proceeds actually on hand with the Trustee from the sale of
such Bonds which have been remarketed by the Remarketing Agent prior to 10:00
a.m. New York time, on the Business Day preceding the date such Bonds are to be
purchased, to any entity other than the Company, the Issuer or the Corporate
Guarantor, or a Related Person to any of the foregoing;
(B) Moneys drawn by the Trustee under the Letter of Credit;
(C) Any other Non-Preference Moneys (except amounts drawn under the Letter
of Credit) held by the Trustee and available for such purpose; and
(D) Any other moneys furnished to the Trustee and available for such
purpose.
SECTION 307. DELIVERY OF PURCHASED BONDS. (A) Bonds purchased with moneys
described in Section 306(A) hereof shall be delivered by the Trustee, at its
principal office, to or upon the order of the Remarketing Agent.
(B) Bonds purchased with moneys described in Section 306(B) hereof shall be
held by the Trustee as nominee for the Bank pursuant to the Pledge and Security
Agreement.
(C) Bonds purchased with moneys described in Section 306(C) and Section
306(D) hereof shall, at the direction of the Company, be (1) delivered as
instructed by the Company or (2) delivered to the Trustee for cancellation;
provided, however, that any Bonds so purchased after selection thereof by the
Trustee for redemption shall be delivered to the Trustee for cancellation.
(D) Bonds delivered as provided in Section 307 shall be registered in the
manner directed by the recipient thereof (or the Remarketing Agent on the
recipient's behalf).
SECTION 308. DUTIES OF TRUSTEE AND TENDER AGENT WITH RESPECT TO PURCHASE OF
BONDS. (A) The Tender Agent and the Trustee shall hold all Bonds delivered to
them pursuant to Sections 304 or 305 hereof in trust for the benefit of the
respective Bondholders delivering such Bonds until moneys representing the
Purchase Price of such Bonds shall have been delivered to or for the account of
or to the order of such Bondholders.
<PAGE>
(B) The Trustee and the Tender Agent shall hold all moneys delivered to
them pursuant to this Indenture for the purchase of Bonds in a separate
account, in trust for the benefit of the Person which shall have so delivered
such moneys until the Bonds purchased with such moneys shall have been
delivered to or for the account of such Person.
(C) The Trustee shall, not later than 10:00 a.m., New York time, on the
tenth (10th) day preceding a Conversion Date (or, if such tenth (10th) day is
not a Business Day, on the next following Business Day) advise the Remarketing
Agent by telephone of the principal amount of Bonds for which Bondholders
delivered proper notice of election not to tender their Bonds and promptly
thereafter deliver to the Company, the Bank and the Remarketing Agent a copy of
each notice of a Bondholder's election not to tender delivered to it in
accordance with Section 304(A) hereof.
(D) The Trustee shall draw moneys under the Letter of Credit in accordance
with the terms thereof to the extent required by Sections 306 and 408 hereof on
the Business Day immediately preceding the Purchase Date to provide for timely
payment of the Purchase Price of Bonds.
(E) The Trustee shall cause arrangements satisfactory to it to be made and
thereafter continued whereby funds from the sources described in Section 306
hereof will be available to the Trustee for the timely payment of the Purchase
Price of Bonds.
(F) The Trustee as nominee for the Bank under the Pledge and Security
Agreement shall not release or deliver any Pledged Bonds unless the Trustee has
received prior written notice from the Bank that the Letter of Credit has been
reinstated for the amount drawn on the Letter of Credit at the time such Bonds
became Pledged Bonds.
ARTICLE IV
FUNDS AND APPLICATION OF PROCEEDS OF BONDS AND REVENUES
SECTION 401. ESTABLISHMENT OF FUNDS. (A) The Issuer hereby establishes and
creates the following special separate trust funds:
(1) Town of Colonie Industrial Development Agency - Mechanical Technology
Incorporated Project - Project Fund (the "Project Fund") and, within the
Project Fund, the following special account:
Project Fund Non-Preference Moneys Subaccount;
(2) Town of Colonie Industrial Development Agency - Mechanical Technology
Incorporated Project - Bond Fund (the "Bond Fund") and, within the Bond Fund,
the following special account:
Bond Fund Non-Preference Moneys Subaccount;
and
(3) Town of Colonie Industrial Development Agency - Mechanical Technology
Incorporated Project - Insurance and Condemnation Fund (the "Insurance and
Condemnation Fund") and, within the Insurance and Condemnation Fund, the
following special account:
Insurance and Condemnation Fund Non-Preference Moneys Subaccount.
<PAGE>
(B) The funds created under the Indenture shall be maintained by the
Trustee and shall be held in the custody of the Trustee. The Issuer authorizes
and directs the Trustee to withdraw moneys from said funds for the purposes
specified herein, which authorization and direction the Trustee hereby accepts.
All moneys required to be deposited with or paid to the Trustee under any
provision of the Indenture (1) shall be held by the Trustee in trust, and (2)
except for moneys held by the Trustee (a) for the redemption of Bonds, notice
of redemption of which has been duly given, or (b) for the purchase of Tendered
Bonds, shall, while held by the Trustee constitute part of the Trust Revenues
and be subject to the Lien hereof. Moneys which have been deposited with, paid
to or received by the Trustee for the redemption of a portion of the Bonds or
for the payment of Bonds or interest thereon due and payable otherwise than
upon acceleration by declaration, shall be held in trust for and be subject to
a Lien in favor of only the Holders of such Bonds so redeemed or so due and
payable.
SECTION 402. APPLICATION OF PROCEEDS OF BONDS. (A) The Issuer shall deposit
with the Trustee all of the proceeds from the sale of the Bonds, including
accrued interest payable on the Bonds. The Trustee shall deposit the proceeds
from the sale of the Bonds as follows: (1) the portion of the proceeds of the
Bonds representing accrued interest on the Bonds into the Bond Fund, and (2)
the Trustee shall deposit the remainder of such proceeds into the Project Fund.
(B) The proceeds of any Additional Bonds shall be deposited as provided in
the supplement to this Indenture authorizing the issuance of such Additional
Bonds. Any such proceeds required to be deposited in the Project Fund shall be
deposited in the appropriate subaccount relating to such Additional Bonds
within the Project Fund.
SECTION 403. PROJECT FUND. (A) In addition to moneys deposited in the Project
Fund from the proceeds of the Bonds pursuant to Section 402 hereof, there shall
be deposited into the Project Fund all other moneys received by the Trustee
under or pursuant to the Indenture or the other Financing Documents which, by
the terms hereof or thereof, are to be deposited in the Project Fund. Moneys on
deposit in the Project Fund shall be disbursed and applied by the Trustee to
pay the Cost of the Project pursuant to the provisions of Section 4.3 of the
Installment Sale Agreement, this Section 403, and the applicable provisions of
the Building Loan Agreement.
(B) The Trustee is hereby authorized and directed to disburse moneys from
the Project Fund upon receipt by the Trustee of a Request for Disbursement, in
substantially the form attached hereto as Exhibit F, certified to by an
Authorized Representative of the Company.
(C) (1) All earnings on amounts held in the Project Fund shall be
deposited by the Trustee into the Project Fund.
(2) All moneys which remain in the Project Fund for three hundred and
sixty- seven (367) days following the date on which the Company shall have no
further right to draw on the same shall be transferred to the Project Fund
Non-Preference Moneys Subaccount. Any moneys in the Project Fund Non-Preference
Moneys Subaccount which are transferred to the Bond Fund pursuant to Section
403(D) hereof shall be placed in the Bond Fund Non-Preference Moneys
Subaccount.
<PAGE>
(D) (1) Except for any amount retained for the payment of incurred and
unpaid items of the Cost of the Project, after the Completion Date, all moneys
in the Project Fund, shall be transferred from the Project Fund to the Bond
Fund and, to the extent such moneys constitute Non-Preference Moneys, applied
as soon as possible to the redemption of Bonds in accordance with Article III
hereof.
(2) In the event the unpaid principal amount of the Bonds shall be
accelerated upon the occurrence of an Event of Default, the balance in the
Project Fund shall be transferred from the Project Fund to the Bond Fund as
soon as possible and, to the extent such moneys constitute Non-Preference
Moneys, shall be used to pay the principal of, premium, if any, on and interest
on the Bonds.
(E) The Trustee shall maintain adequate records pertaining to the Project
Fund and all disbursements therefrom, and shall, upon request and within sixty
(60) days after the Completion Date, file an accounting thereof with the
Issuer, the Company and the Bank.
SECTION 404. TRANSFERS OF TRUST REVENUES TO FUNDS. (A) Commencing the first
date on which installment purchase payments are received from the Company
pursuant to the Installment Sale Agreement, and from month to month thereafter,
the Trustee shall deposit such payments, upon the receipt thereof, in the Bond
Fund.
(B) The Net Proceeds of any insurance settlement or Condemnation award
received by the Trustee shall, upon receipt thereof, be deposited in the
Insurance and Condemnation Fund.
SECTION 405. BOND FUND. (A) In addition to the moneys deposited to the Bond
Fund (1) from the proceeds of the Bonds pursuant to Section 402 hereof and (2)
pursuant to Sections 403 and 404 hereof, there shall be deposited into the Bond
Fund (a) all installment purchase payments received from the Company under the
Installment Sale Agreement (except payments made with respect to the Unassigned
Rights), (b) any amount in the Insurance and Condemnation Fund directed to be
paid into the Bond Fund under Section 406 hereof, (c) all prepayments by the
Company in accordance with Section 5.5 of the Installment Sale Agreement in
connection with which notice has been given to the Trustee pursuant to Section
302 hereof, (d) any amounts received by the Trustee under the Letter of Credit,
and (e) all other moneys received by the Trustee under and pursuant to the
Indenture or the other Financing Documents which by the terms hereof or thereof
are to be deposited to the Bond Fund, or are accompanied by directions from the
Company or the Issuer that such moneys are to be paid into the Bond Fund.
(B) (1) Moneys on deposit in the Bond Fund shall be invested in
Authorized Investments in accordance with Section 410 hereof. All interest and
other income accrued and earned on moneys on deposit in the Bond Fund shall be
deposited by the Trustee into the Bond Fund. Any payment of interest due on the
Bonds shall be made from amounts on deposit in the Bond Fund Non-Preference
Moneys Subaccount.
(2) All moneys in the Bond Fund which constitute or become Non- Preference
Moneys shall be deposited by the Trustee into the Bond Fund Non-Preference
Moneys Subaccount. Any drawings on the Letter of Credit will be deposited into
the Bond Fund Non-Preference Moneys Subaccount. Moneys on deposit in the Bond
Fund Non-Preference Moneys Subaccount shall be applied by the Trustee to pay
the principal of, premium, if any, and interest on the Bonds as the same become
due, whether at Stated Maturity, upon acceleration of the Bonds or upon
<PAGE>
redemption of the Bonds, except as provided in Section 411 and Section 408(E)
hereof.
(C) In NO EVENT shall the Trustee pay any portion of the principal of,
premium, if any, on or interest on any Bond from other than Non-Preference
Moneys. Furthermore, the Trustee shall make such payments by first drawing on
the Letter of Credit pursuant to Section 408 hereof.
SECTION 406. INSURANCE AND CONDEMNATION FUND. (A) The Net Proceeds of any
insurance settlement or Condemnation award received by the Trustee in
connection with damage to or destruction of or the taking of part or all of the
Project Facility shall be deposited into the Insurance and Condemnation Fund.
(B) If, pursuant to Sections 7.1(B) or 7.2(B) of the Installment Sale
Agreement, the Company exercises its option not to repair, rebuild or restore
the Project Facility and to require the redemption of the Bonds, or if a taking
in Condemnation as described in Section 7.2(C) of the Installment Sale
Agreement occurs, the Trustee shall transfer all moneys held in the Insurance
and Condemnation Fund to the Bond Fund to be applied to the redemption of the
Bonds then Outstanding pursuant to Section 301(A) hereof, except as provided in
Section 411 and Section 408(E) hereof.
(C) If the Company elects to repair, rebuild or restore the Project
Facility, and provided no Event of Default has occurred and is continuing,
moneys held in the Insurance and Condemnation Fund and attributable to the
damage to or destruction of or the taking of the Project Facility shall be
applied to pay the costs of such repairs, rebuilding or restoration in
accordance with the terms and conditions set forth in Section 406(D) hereof.
(D) The Trustee is hereby authorized to and shall make such disbursements,
at the Company's request, either upon the completion of such repairs,
rebuilding or restoration or periodically as such repairs, rebuilding or
restoration progress, upon receipt by the Trustee of a certificate of an
Authorized Representative of the Company, approved by the Bank, stating, with
respect to each payment to be made: (1) the amount or amounts to be paid, the
Person or Persons (which may include the Company for reimbursement of such
costs) to whom an amount is to be paid and the total sum of all such amounts;
(2) that the Company has expended, or is expending, concurrently with the
delivery of such certificate, such amount or amounts on account of costs
incurred in connection with the repair, rebuilding or restoration of the
Project Facility; (3) that all contractors, workmen and suppliers have been or
will be paid through the date of such certificate from the funds to be
disbursed; (4) that there exists no Event of Default and no condition, event or
act which, with notice or the lapse of time or both, would constitute an Event
of Default; (5) that such Authorized Representative of the Company has no
knowledge, after diligent inquiry and after searching the records of the
appropriate state and local filing offices, of any vendor's Lien, mechanic's
Lien or security interest which should be satisfied, discharged or bonded
before the payment as requisitioned is made or which will not be discharged by
such payment; (6) that no certificate with respect to such expenditures has
previously been delivered to the Trustee; and (7) that there remain sufficient
moneys in the Insurance and Condemnation Fund attributable to the damage to,
destruction of, or taking of the Project Facility to complete the repair,
rebuilding or restoration of the Project Facility. Each such requisition shall
be accompanied by bills, invoices or other evidences reasonably satisfactory to
the Bank. The Trustee shall be entitled to rely on such requisition.
<PAGE>
(E) Upon completion of the repair, rebuilding or restoration of the Project
Facility, an Authorized Representative of the Company shall deliver to the
Issuer, the Trustee and the Bank a certificate stating (1) the date of such
completion, (2) that all labor, services, materials and supplies used therefor
and all costs and expenses in connection therewith have been paid, (3) that the
Project Facility has been restored to substantially its condition immediately
prior to the damage or Condemnation thereof, or to a condition of at least
equivalent value, operating efficiency and function, (4) that the Issuer or the
Company has good and valid title to all Property constituting part of the
restored Project Facility, and that the Project Facility is subject to the
Installment Sale Agreement and the Liens and security interests of the
Indenture and the Mortgage, and (5) that the restored Project Facility is ready
for occupancy, use and operation for its intended purposes. Notwithstanding the
foregoing, such certificate may state (a) that it is given without prejudice to
any rights of the Company against third parties which exist at the date of such
certificate or which may subsequently come into being, (b) that it is given
only for the purposes of this Section 406, and (c) that no Person other than
the Issuer, the Bank or the Trustee may benefit therefrom. Such certificate
shall be accompanied by (i) a certificate of occupancy, if required, and any
and all permissions, licenses or consents required of Governmental Authorities
for the occupancy, operation and use of the Project Facility for its intended
purposes, and (ii) an opinion of counsel to the Company addressed to the
Issuer, the Trustee and the Bank that the Mortgage constitutes a valid first
mortgage Lien on and a valid first perfected security interest in the Project
Facility, subject only to Permitted Encumbrances.
(F) (1) All earnings on amounts held in the Insurance and Condemnation
Proceeds Fund shall be transferred by the Trustee to the Insurance and
Condemnation Fund.
(2) All moneys which remain in the Insurance and Condemnation Fund for
three hundred and sixty-seven (367) days following the date on which the
Company shall have no further right to draw on the same shall be transferred to
the Insurance and Condemnation Fund Non-Preference Moneys Subaccount. Any
moneys in the Insurance and Condemnation Fund Non-Preference Moneys Subaccount
which are transferred to the Bond Fund pursuant to Section 406(G) hereof shall
be placed in the Bond Fund Non- Preference Moneys Subaccount.
(G) If the cost of the repairs, rebuilding or restoration of the Project
Facility effected by the Company shall be less than the amount in the Insurance
and Condemnation Fund, then on the completion of such repairs, rebuilding or
restoration, the Trustee shall transfer such difference to the Company for its
purposes if (1) the Company so requests, and (2) the Company obtains the prior
written consent of the Bank; otherwise such difference shall be deposited by
the Trustee in the Bond Fund and applied to redeem the Bonds in accordance with
Article III hereof.
(H) If the cost of the repair, rebuilding or restoration of the Project
Facility shall be in excess of the moneys held in the Insurance and
Condemnation Fund, the Company shall deposit such additional moneys in the
Insurance and Condemnation Fund as are necessary to pay the cost of completing
such repair, rebuilding or restoration.
SECTION 407. [INTENTIONALLY OMITTED].
SECTION 408. DRAWING BY THE TRUSTEE ON THE LETTER OF CREDIT. (A) (1) The
Trustee shall, without any further authorization or direction, timely present
in person, by facsimile transmission or by tested telex on or before 11:00
<PAGE>
o'clock a.m. on the Business Day immediately preceding a Bond Payment Date to
the Bank a sight draft, together with all accompanying documentation as is
required by the Letter of Credit by the terms thereof, in order to draw funds
on the Letter of Credit in an amount which will be sufficient to pay in full
when due (whether by reason of interest payment, maturity, redemption or
otherwise) the principal of, premium, if any, and interest on the Bonds.
(2) In addition, immediately upon a declaration under Section 602 hereof
that the principal of and accrued interest on all the Bonds then Outstanding
has become due and payable by virtue of acceleration, the Trustee shall,
without any further authorization or direction, present to the Bank a sight
draft, together with all accompanying documentation as is required under the
Letter of Credit by the terms thereof, in order to draw funds under the Letter
of Credit in an amount which shall be necessary to pay the principal of,
premium, if any, and accrued interest on the Bonds then Outstanding due by
virtue of such acceleration.
(3) In addition, on or before 11:00 o'clock a.m. on the Business Day
immediately preceding any Purchase Date, the Trustee shall, without any further
authorization or direction, present to the Bank a sight draft, together with
all accompanying documentation as is required under the Letter of Credit by the
terms thereof, in order to draw funds under the Letter of Credit to the extent
moneys described in Section 306(A) hereof are not available to pay when due the
Purchase Price of Bonds tendered pursuant to Sections 304 and 305 hereof.
(B) (1) The Trustee shall exercise any and all rights under the Letter
of Credit, regardless of whether the Bank is in default under the Letter of
Credit, in the manner provided therein and in the Indenture, and the Trustee
shall bring such actions and proceedings under the Letter of Credit as shall be
required for the enforcement thereof in accordance with its terms and the terms
of the Indenture.
(2) All funds received by the Trustee under the Letter of Credit shall be
deposited by the Trustee in the Bond Fund Non-Preference Moneys Subaccount and
used solely to pay the principal of, premium, if any, and interest on the
Bonds.
(C) Contemporaneously with the presentation of the sight draft required for
a drawing on the Letter of Credit described in Section 408(A)(2) hereof, the
Trustee shall transfer to the Bond Fund Non-Preference Moneys Subaccount all
Non-Preference Moneys held by the Trustee under the Indenture as part of the
Trust Revenues.
(D) Except as provided below, any obligations of the Issuer under the
Indenture and the Bonds or of the Company under the Installment Sale Agreement
which are satisfied from the exercise of the Trustee's rights under the Letter
of Credit or under this Section 408 shall be deemed to be satisfied, and no
claim therefor shall be made by the Bondholders against the Issuer, the Trustee
or the Company or by the Issuer, the Trustee or the Bondholders against the
Company in respect of such obligations; provided, however, that to the extent
the Bank has not been reimbursed for amounts paid under the Letter of Credit or
under any other Financing Document, such obligations shall not be deemed
satisfied, and the Bank shall be subrogated to the rights of the Issuer under
the Installment Sale Agreement (except the Unassigned Rights) and the rights of
the Trustee hereunder and under the other Financing Documents (except the
rights of the Trustee to receive payments for fees, expenses, indemnifications
or other amounts which are payable to the Trustee individually under the
Financing Documents and are not to be subsequently delivered to the
<PAGE>
Bondholders), and, further, such subrogation shall not release the Company from
its obligations under the Reimbursement Agreement or under the other Financing
Documents or release the Company from its obligations under the Guaranty.
(E) (1) After a drawing on the Letter of Credit described in Section
408(A)(1), any and all moneys held by the Trustee in the Bond Fund shall be
paid to the Bank to be applied against the Company's obligations under the
Reimbursement Agreement.
(2) After a drawing on the Letter of Credit described in Section 408(A)(2),
any and all moneys held by the Trustee in any fund or account established by
the Indenture shall be paid to the Bank to be applied against the Company's
obligations under the Reimbursement Agreement within three (3) days following
such Bond Payment Date.
SECTION 409. NON-PRESENTMENT OF BONDS. (A) Subject to the provisions of
Sections 206 and 207 hereof, in the event any Bond shall not be presented for
payment when the principal thereof becomes due, either at maturity or at the
date fixed for redemption thereof or otherwise, if Non-Preference Moneys
sufficient to pay such Bond shall have been deposited with the Trustee for the
benefit of the Holder thereof, such Bond shall be deemed cancelled, redeemed or
retired on such date even if not presented on such date and all liability of
the Issuer to the Holder thereof for the payment of such Bond shall forthwith
cease, determine and be completely discharged; and thereupon it shall be the
duty of the Trustee to hold such funds, without liability for interest thereon,
for the benefit of the Holder of such Bond who shall thereafter be restricted
exclusively to such funds for any claim of whatever nature on his part under
the Indenture or with respect to such Bond.
(B) If any Bond shall not be presented for payment prior to the earlier of
(1) two (2) years following the date when such Bond becomes due, either at
maturity or at the date fixed for redemption or otherwise, or (2) the date on
which such moneys would escheat to the State, such amounts shall be paid by the
Trustee first to the Bank to the extent any amounts remain unpaid by the
Company under the Reimbursement Agreement, with any balance to be paid to the
Company. Thereafter, Bondholders shall be entitled to look only to the Company
and/or the Bank, as the case may be, for payment, and then only to the extent
of the amount so repaid to the respective parties, who shall not be liable for
any interest thereon and shall not be regarded as trustees of such money. The
Trustee shall, at least sixty (60) days prior to the expiration of the above
described period, give notice to any Owner who has not presented any Bond for
payment that any moneys held for the payment of any such Bond will be returned
as provided in this Section 409 at the expiration of such period. The failure
of the Trustee to give any such notice shall not affect the validity of any
transfer of funds pursuant to this Section 409.
SECTION 410. INVESTMENT OF FUNDS. Any moneys held as part of any fund created
herein shall be continuously invested and reinvested, from time to time, by the
Trustee in Authorized Investments at the written or oral direction of the
Company, but, if oral, to be promptly confirmed in writing by the Company, or,
in the absence of such direction, in Authorized Investments with the shortest
available maturities. The Company shall direct that any moneys held in any fund
shall be invested so that (1) all investments shall mature or be subject to
mandatory redemption by the holder of such investments (at not less than the
principal amount thereof, or the cost of acquisition, whichever is lower), and
all deposits in time accounts shall be subject to withdrawal, without penalty,
not later than the date when the amounts will foreseeably be needed for
purposes of the Indenture, (2) investments of moneys on deposit in the Bond
<PAGE>
Fund shall mature or be subject to mandatory redemption by the holder (at not
less than the principal amount thereof) not more than ninety (90) days from the
date of acquisition, and in no event shall moneys on deposit in the Bond Fund
be invested in investments described in clause (J) of the definition of
Authorized Investments and (3) moneys received pursuant to a draw on the Letter
of Credit and moneys in the Bond Fund Non-Preference Moneys Subaccount shall
only be invested in cash or investments described in clause (A) of the
definition of Authorized Investments which mature in not more than 30 days or
as needed; provided, however, in the event moneys on deposit in the Bond Fund
Non-Preference Moneys Subaccount are invested in investments described in
clause (A) of the definition of Authorized Investments, such investments shall
be non-callable. The investments so purchased shall be held by the Trustee and
shall be deemed at all times to be a part of the fund in which such moneys were
held. The Trustee is directed to sell and reduce to cash a sufficient amount of
such investments whenever the cash balance in said fund shall be insufficient
to cover a proper disbursement from said fund. The Trustee may make any
investment permitted by this Section 410 through its own investment department.
The Trustee shall not be liable (except for gross negligence or willful
misconduct) for any depreciation in the value of any investment made pursuant
to this Section 410 or for any loss arising from such investment.
SECTION 411. FINAL DISPOSITION OF MONEYS. In the event there are no Bonds
Outstanding, and subject to any applicable law to the contrary, after payment
of all fees, charges and expenses, including, but not limited to reasonable
attorney's fees, of the Issuer, the Trustee, the Company and the Bank and all
other amounts required to be paid hereunder and under the other Financing
Documents, all amounts remaining in any fund established under the Indenture
shall be transferred to the Company (except amounts held with respect to the
Unassigned Rights, which amounts shall be paid to the Issuer); provided,
however, that, in the event that the Bonds are retired or redeemed, in whole or
in part, from amounts drawn on the Letter of Credit and the Bank remains
unreimbursed for such amounts, such remaining amounts shall be transferred to
the Bank to be applied against the obligation of the Company to repay the Bank
for amounts paid under the Letter of Credit or any other Financing Document,
and any amounts in excess thereof shall be paid to the Company.
SECTION 412. PERIODIC REPORTS BY TRUSTEE. Within fifteen (15) days after each
January 1 and July 1, the Trustee shall furnish to the Issuer, the Company and
the Bank, commencing on or before the fifteenth day of the first such date
following the date in which the Bonds are delivered, a report on the status of
each of the funds established under this Article IV, showing at least the
balance in such fund as of the final day of the period with respect to which
the last such report described (or, if such report is to first such report, as
of the Closing Date), the total of deposits into (including interest on
investments) and the total of disbursements from such fund, the dates of such
deposits and disbursements, and the balance in such fund on the last day of the
period to which such report relates (which date shall be not earlier than the
last day of the calendar month preceding the date of such report).
ARTICLE V
GENERAL COVENANTS
SECTION 501. AUTHORITY OF ISSUER; VALIDITY OF INDENTURE AND BONDS. The Issuer
hereby represents, warrants and covenants that it is duly authorized under the
Constitution and laws of the State, including particularly and without
limitation the Act, to issue the Bonds authorized hereby, to execute this
Indenture and to pledge the revenues and receipts in the manner necessary for
<PAGE>
the issuance of the Bonds authorized hereby; that the execution and delivery of
this Indenture has been duly and effectively authorized; and that such Bonds in
the hands of the owners thereof are and will be valid and enforceable special
obligations of the Issuer according to the import thereof.
SECTION 502. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer covenants that it
shall promptly pay the principal of, premium, if any, and interest on every
Bond issued under the Indenture at the place, on the dates and in the manner
provided herein and in the Bonds, according to the true intent and meaning
thereof, subject to the provisions of Section 202 and Section 1109 hereof.
SECTION 503. PROCESSING OF TRANSFERS. Subject to the provisions of Section
206(D) hereof, the Trustee represents to and covenants with the Issuer and the
Bondholders that it will take all reasonable action required and capable of
performance on its part to process transfers of Bonds within three (3) Business
Days hours of receipt of a request therefor.
SECTION 504. PERFORMANCE OF COVENANTS; AUTHORITY OF ISSUER. The Issuer
covenants, and the Trustee by executing this Indenture covenants, that each
will faithfully perform at all times any and all covenants, undertakings,
stipulations and provisions contained in the Indenture, in any and every Bond
executed, authenticated and delivered hereunder and in all proceedings
pertaining thereto. The Issuer covenants and represents that it is duly
authorized under the laws of the State to issue the Bonds authorized hereby and
to execute and deliver the Indenture, to convey the interests described herein
and conveyed hereby, to pledge the revenues, receipts and other moneys hereby
pledged in the manner and to the extent herein set forth and to execute and
deliver the Financing Documents to which it is a party; that all action on its
part for the issuance of the Bonds and the execution and delivery of the
Financing Documents to which it is a party has been duly and effectively taken;
and that the Bonds in the hands of the holders and owners thereof are and will
be valid and enforceable special obligations of the Issuer according to the
import thereof.
SECTION 505. PRIORITY OF LIEN OF INDENTURE. The Issuer hereby represents,
warrants and covenants that this Indenture is and will be a first Lien upon the
Trust Revenues and the Issuer agrees not to create or suffer to be created any
Lien having priority or preference over the Lien of this Indenture upon the
Trust Revenues or any part thereof, except as otherwise specifically provided
herein.
SECTION 506. INSTRUMENTS OF FURTHER ASSURANCE. The Issuer covenants that it
will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered such indentures supplemental hereto, and such
further acts, instruments and transfers as the Trustee may reasonably require
for the better assuring, transferring, conveying, pledging, assigning and
confirming unto the Trustee all and singular its interest in all Property
purported to be made subject to the Lien hereof by the Granting Clauses hereof,
and in the Trust Estate herein described and pledged hereby to the payment of
the principal of, premium, if any, and interest on the Bonds. Any and all
interest in the Trust Estate or any other Property hereafter acquired which is
of any kind or nature herein provided to be and become subject to the Lien
hereof shall, without any further conveyance, assignment or act on the part of
the Issuer or the Trustee, become and be subject to the Lien of the Indenture
as fully and completely as though specifically described herein, but nothing in
this sentence contained shall be deemed to modify or change the obligations of
the Issuer under this Section. The Issuer covenants and agrees that, except as
herein otherwise provided, it has not and will not sell, convey, mortgage,
<PAGE>
encumber or otherwise dispose of any part of its interest in the Trust
Revenues.
SECTION 507. INSPECTION OF PROJECT BOOKS. The Issuer covenants and agrees that
all books and documents in its possession relating to the Project shall at all
times be open to inspection by such accountants or other agencies as the
Trustee or the Bank may from time to time reasonably designate.
SECTION 508. NO MODIFICATION OF SECURITY; LIMITATION ON LIENS. The Issuer
covenants that it will not, without the written consent of the Trustee and the
Bank, alter, modify or cancel, or agree to alter, modify or cancel, the
Installment Sale Agreement or any other Financing Document to which the Issuer
is a party, or which has been assigned to the Issuer, and which relates to or
affects the security for the Bonds, except as contemplated hereby or pursuant
to the terms of such document. The Issuer further covenants that, except for
the Financing Documents and other Permitted Encumbrances, the Issuer will not
incur any mortgage, Lien, charge or encumbrance on or pledge of any of the
Trust Revenues prior to or on a parity with the Lien of the Indenture.
SECTION 509. DAMAGE OR DESTRUCTION. The rights and obligations of the Company,
the Issuer, the Trustee and the Bank in the event of damage or destruction of
the Project Facility or part thereof shall be determined by reference to
Section 7.1 of the Installment Sale Agreement.
SECTION 510. CONDEMNATION. The rights and obligations of the Company, the
Issuer, the Trustee and the Bank in the event of a taking of part or all of the
Project Facility by Condemnation shall be determined by reference to Section
7.2 of the Installment Sale Agreement and this Indenture.
SECTION 511. ACCOUNTS AND AUDITS. The Trustee shall keep proper books of record
and account (separate from all other records and accounts) in which complete
and correct entries shall be made of its transactions relating to the Project
Facility or any part thereof, and which, together with all other books and
papers of the Trustee in connection with the Project Facility, shall at all
reasonable times be subject to the inspection of the Company, the Bank and the
Issuer, or the holder or holders of not less than five percent (5%) in
aggregate principal amount of the Bonds then Outstanding or their
representatives duly authorized in writing.
SECTION 512. RECORDATION; FINANCING STATEMENTS. The Lien on the Project
Facility created by the Mortgage and the other Financing Documents shall be
perfected by the recording by the Issuer of the Mortgage and the other
Financing Documents in the office of the County Clerk of Albany County, New
York. The security interests of the Trustee created by the Indenture and the
other Financing Documents and the security interests of the Issuer assigned to
the Trustee shall be perfected by the filing by the Company in the office of
the County Clerk of Albany County, New York, and the office of the New York
State Department of State, Uniform Commercial Code Unit of financing and
continuation statements required to be filed pursuant to the Uniform Commercial
Code of the State in order to perfect and to maintain the perfection of the
security interests created by this Indenture and the Financing Documents. The
Company shall furnish, from time to time as reasonably requested by the
Trustee, satisfactory evidence to the Trustee of the recording and filing of
all financing statements, continuation statements and other instruments
necessary to preserve, perfect and maintain the perfection of the Liens of the
Mortgage and the other Financing Documents. The Issuer and the Company
irrevocably appoint the Trustee as their lawful attorneys and agents to execute
and file such financing statements and continuation statements on their behalf
<PAGE>
(and without their signature where allowed by law).
SECTION 513. [INTENTIONALLY OMITTED].
SECTION 514. COVENANT REGARDING ADJUSTMENT OF DEBTS. In any case under Chapter
9 of Title 11 of the United States Code involving the Issuer as debtor, the
Issuer, unless compelled by a court of competent jurisdiction, shall neither
list the Trust Revenues or any part thereof or the Project Facility or any part
thereof as an asset or property of the Issuer nor list any amounts owed upon
the Bonds Outstanding as a debt of or claim against the Issuer.
SECTION 515. [INTENTIONALLY OMITTED].
SECTION 516. LIMITATION ON OBLIGATIONS OF THE ISSUER. Notwithstanding any
provision of this Indenture to the contrary, no order or decree of specific
performance with respect to any of the obligations of the Issuer hereunder
shall be sought or enforced against the Issuer unless (A) the party seeking
such order or decree shall first have requested the Issuer in writing to take
the action sought in such order or decree of specific performance, and ten (10)
days shall have elapsed from the date of receipt of such request, and the
Issuer shall have refused to comply with such request (or, if compliance
therewith would reasonably be expected to take longer than ten [10] days, shall
have failed to institute and diligently pursue action to cause compliance with
such request within such ten [10] day period) or failed to respond within such
notice period, (B) if the Issuer refuses to comply with such request and the
Issuer's refusal to comply is based on its reasonable expectation that it will
incur fees and expenses, the party seeking such order or decree shall have
placed in an account with the Issuer an amount or undertaking sufficient to
cover such reasonable fees and expenses, and (C) if the Issuer refuses to
comply with such request and the Issuer's refusal to comply is based on its
reasonable expectation that it or any of its members, directors, officers,
agents or employees shall be subject to potential liability, the party seeking
such order or decree shall (1) agree to indemnify and hold harmless the Issuer
and its members, directors, officers, agents and employees against any
liability incurred as a result of its compliance with such demand, and (2) if
requested by the Issuer, furnish to the Issuer satisfactory security to protect
the Issuer and its members, directors, officers, agents and employees against
all liability expected to be incurred as a result of compliance with such
request; provided, however, that no limitation on the obligations of the Issuer
contained in this Section 516 by virtue of any lack of assurance provided in
(B) or (C) hereof shall be deemed to prevent the occurrence and full force and
effect of any Event of Default hereunder.
SECTION 517. AGREEMENT TO PROVIDE INFORMATION. The Trustee agrees, whenever
requested in writing by the Issuer or the Company, to provide such information
that is known to the Trustee relating to the Bonds as the Issuer or the Company
from time to time may reasonably request, including, but not limited to, such
information as may be necessary to enable the Issuer or the Company to make any
reports required by any Federal, state or local law or regulation.
ARTICLE VI
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS
SECTION 601. EVENTS OF DEFAULT. The following shall be "Events of Default"
under this Indenture, and the terms "Event of Default" shall mean, when they
are used in this Indenture, any one or more of the following events:
<PAGE>
(A) failure by the Issuer to make due and punctual payment of the interest
or premium on any Bond;
(B) failure by the Issuer to make due and punctual payment of the principal
of any Bond, whether at the Stated Maturity thereof, or upon proceedings for
the redemption thereof, or upon the maturity thereof by declaration;
(C) failure of the Trustee to have on hand by 12:00 noon on a Purchase Date
moneys sufficient to pay the Purchase Price of a Bond properly tendered for
purchase on such date;
(D) failure by the Bank to make any payment required to be made by the Bank
under the Letter of Credit;
(E) after a draw has been made under the Letter of Credit pursuant to the
Interest Draft (as defined in the Letter of Credit), receipt by the Trustee of
a written notice from the Bank that the Bank has not been reimbursed for such
draw;
(F) a decree or order of a court or agency or Governmental Authority having
jurisdiction in the premises for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceeding, or for the winding-up or liquidation of
its affairs, shall have been entered against the Bank;
(G) the Bank shall consent to the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceeding of or relating to the Bank or of or
relating to all or substantially all of its Property;
(H) the Bank shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations; or
(I) default in the performance or observance of any other covenant,
agreement or condition on the part of the Issuer in the Indenture or in any
Bond to be performed or observed and the continuance thereof for a period of
thirty (30) days after written notice thereof is given to the Issuer and the
Company by the Trustee or by the holders of at least twenty- five percent (25%)
in the aggregate principal amount of the Bonds then Outstanding.
SECTION 602. ACCELERATION. (A) Upon (1) the occurrence of an Event of Default
under Section 601(A) through (H), the Trustee shall, or (2) the occurrence of
an Event of Default under Section 601(I) hereof and so long as such Event of
Default is continuing, the Trustee may, and upon the written request of the
holders of not less than twenty-five percent (25%) in aggregate principal
amount of Bonds then Outstanding the Trustee shall, by notice in writing
delivered to the Company, with copies of such notice being sent to the Issuer
and the Bank, declare the entire principal amount of all Bonds then Outstanding
and the interest accrued thereon to be immediately due and payable, and such
principal and interest shall thereupon become and be immediately due and
payable. Upon any such declaration, the Trustee shall immediately declare an
amount equal to all amounts then due and payable on the Bonds to be immediately
due and payable under the Installment Sale Agreement.
(B) Upon the occurrence of any declaration by the Trustee under this
Section 602, the principal of the Bonds then Outstanding and the interest
<PAGE>
accrued thereon shall thereupon become and be immediately due and payable, and
interest shall cease to accrue thereon, and the Trustee shall immediately draw
upon the Letter of Credit to the extent and in the manner provided in Section
408 hereof.
SECTION 603. ENFORCEMENT OF REMEDIES. (A) Upon the occurrence and continuance
of any Event of Default, the Trustee shall exercise such of the rights and
powers vested in the Trustee by the Indenture and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs. In considering what actions
are or are not prudent in the circumstances, the Trustee shall consider whether
or not to take such action as may be permitted to be taken by the Trustee under
any of the Financing Documents.
(B) Upon the occurrence and continuance of any Event of Default, the
Trustee shall give such notices and take all actions necessary to cause
payments to be made under the Letter of Credit and may proceed forthwith to
protect and enforce its rights under the Act, the Letter of Credit, the
Installment Sale Agreement and the other Financing Documents by such suits,
actions or proceedings as the Trustee, being advised by counsel, shall deem
expedient.
(C) Upon the occurrence and continuance of any Event of Default, the
Trustee may pursue any available remedy at law or in equity by suit, action,
mandamus or other proceeding to enforce payment of and receive any amounts due
or becoming due from the Issuer, the Bank or the Company under any of the
provisions of this Indenture, the Installment Sale Agreement and the other
Financing Documents, without prejudice to any other right or remedy of the
Trustee or the Bondholders.
(D) Regardless of the happening of an Event of Default, the Trustee may
institute and maintain such suits and proceedings as it may be advised shall be
necessary or expedient to prevent any impairment of the security under this
Indenture and the other Financing Documents by any acts which may be unlawful
or in violation of the Indenture or of any other Financing Document or of any
resolution authorizing the Bonds, or to preserve or protect the interest of the
Trustee and/or the Bondholders.
(E) Notwithstanding anything to the contrary herein, so long as the Letter
of Credit is in effect and the Bank is making all required payments with
respect to the Letter of Credit in accordance with the terms of the Letter of
Credit, the Trustee shall not exercise any remedies under this Article VI and
the Trustee shall not, without the prior written consent of the Bank, take any
actions which the Trustee is required or entitled to take under this Article VI
unless and until the Trustee shall have accelerated the Bonds and drawn upon
the Letter of Credit in accordance with Section 602 hereof and the Bank shall
have defaulted in the performance of its obligations under the Letter of
Credit, in which case the Bank shall have no authority to exercise any further
rights hereunder.
(F) In the event of a default by the Bank in the performance of its
obligations under the Letter of Credit, notwithstanding the provisions of
subparagraph (E) above, the Bank shall have no authority to exercise any
further rights hereunder, unless and until said default shall have been cured
by the Bank to the satisfaction of the Trustee.
(G) Notwithstanding any other provision of this Indenture, failure of the
Company or the Trustee to comply with the Continuing Disclosure Agreement shall
<PAGE>
not be considered an Event of Default; however, the Trustee may (and, at the
request of any Underwriter or the Holders of at least twenty-five percent (25)%
aggregate principal amount of Outstanding Bonds, shall) or any Bondholder may
take such actions as may be necessary and appropriate, including seeking
mandatory or specific performance by court order, to cause the Company to
comply with its obligations under Section 8.5(B) of the Installment Sale
Agreement or to cause the Trustee to comply with its obligations under Section
517(B) hereof.
SECTION 604. APPOINTMENT OF RECEIVERS. Upon the occurrence and continuance of
an Event of Default and upon the filing of a suit or commencement of other
judicial proceedings to enforce the rights of the Trustee under the Indenture
and the other Financing Documents, the Trustee shall be entitled, as a matter
of right, to the appointment of a receiver or receivers of the Project Facility
and of the revenues and receipts thereof, pending such proceedings, with such
powers as the court making such appointment shall confer.
SECTION 605. RIGHTS OF BONDHOLDERS TO OBLIGATE TRUSTEE TO PROTECT BONDHOLDERS.
If an Event of Default shall have happened, and if requested so to do by the
holders of not less than twenty-five percent (25%) in aggregate principal
amount of Bonds then Outstanding, and if secured and indemnified as provided in
Section 701(I) herein, the Trustee shall be obligated to proceed to protect its
rights and the rights of the Bondholders under applicable law, the Installment
Sale Agreement, the Bonds, the Letter of Credit, the Indenture and the other
Financing Documents, as the Trustee, being advised by Independent Counsel,
shall deem most expedient in the interest of the Bondholders.
SECTION 606. REMEDIES NOT EXCLUSIVE; WAIVER AND NON-WAIVER OF EVENT OF DEFAULT.
(A) No remedy by the terms of the Indenture conferred upon or reserved to the
Trustee or to the Bondholders is intended to be exclusive of any other remedy,
but each and every such remedy shall be cumulative and shall be in addition to
any other remedy given to the Trustee or to the Bondholders hereunder or now or
hereafter existing at law or in equity or by statute.
(B) No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any such right or power or shall be construed to
be a waiver of any such Event of Default or acquiescence therein; and every
such right and power may be exercised from time to time and as often as may be
deemed expedient.
(C) No waiver of any Event of Default hereunder, whether by the Trustee or
by the Bondholders, shall extend to or shall affect any subsequent or
concurrent Event of Default or shall impair any rights or remedies consequent
thereto.
SECTION 607. RIGHTS OF BONDHOLDERS TO DIRECT PROCEEDINGS. Anything in the
Indenture to the contrary notwithstanding, the Holders of a majority in
aggregate principal amount of Bonds then Outstanding shall have the right at
any time, by an instrument in writing executed and delivered to the Trustee and
upon offering the Trustee the security and indemnity provided for in Section
701(I) herein, to direct the time, method and place of conducting all
proceedings to be taken in connection with the enforcement of the terms and
conditions of the Indenture, the Letter of Credit, the Installment Sale
Agreement or the other Financing Documents, or for the appointment of a
receiver or any other proceedings hereunder, provided that such direction is in
accordance with the provisions of law, and is not unduly prejudicial to the
interests of the Bondholder not joining such direction.
<PAGE>
SECTION 608. WAIVER BY ISSUER. Upon the occurrence of an Event of Default, to
the extent that such right may then lawfully be waived, neither the Issuer, nor
anyone claiming through or under it, shall set up, claim or seek to take
advantage of any appraisal, valuation, stay, extension or redemption laws now
or hereafter in force, in order to prevent or hinder the enforcement of the
Indenture or the foreclosure of the mortgage Lien on the Project Facility
created by the Mortgage; and the Issuer, for itself and all who may claim
through or under it, hereby waives, to the extent that it may lawfully do so,
the benefit of all such laws and all rights of appraisal and redemption to
which it may be entitled under the laws of the State.
SECTION 609. APPLICATION OF MONEYS. (A) Except as provided in subsection (C)
below, all moneys received by the Trustee pursuant to any right given or action
taken under the provisions of this Article VI shall, after payment of the cost
and expenses of the proceedings resulting in the collection of such moneys and
of the fees, expenses, liabilities and advances incurred or made by the
Trustee, be deposited into the Bond Fund; and all moneys in the Bond Fund shall
be applied, together with the other moneys held by the Trustee hereunder, as
follows:
(1) Unless the principal of all the Bonds shall have become due or shall
have been declared due and payable, all such moneys shall be applied:
FIRST - to the payment to the Persons entitled thereto of all installments of
interest then due on the Bonds, in the order of the maturity of the
installments of such interest and, if the amount available shall not be
sufficient to pay in full any particular installment, then to the payment
ratably, according to the amounts due on such installment, to the Persons
entitled thereto, without any discrimination or privilege;
SECOND - to the payment to the Persons entitled thereto of the unpaid principal
of and any premium on the Bonds (other than Bonds called for redemption for the
payment of which moneys shall be held pursuant to the provisions of the
Indenture) which shall have become due, in order of their maturities, with
interest from the date upon which they became due and, if the amount available
shall not be sufficient to pay in full the principal of and premium, if any,
and interest on the Bonds due on any particular date, then to the payment
ratably, according to amounts due respectively for principal, interest and
premium, if any, to the Persons entitled thereto, without any discrimination or
privilege;
THIRD - to the payment to the Persons entitled thereto of the principal of,
premium, if any, on, or interest on the Bonds which may thereafter become due
and payable, and, if the amount available shall not be sufficient to pay in
full Bonds due on any particular date, together with interest and premium, if
any, then due and owing thereon, payment shall be made ratably according to the
amount of interest, principal and premium, if any, due on such date to the
Persons entitled thereto, without any discrimination or privilege; and
FOURTH - to the Bank.
(2) If the principal of all the Bonds shall have become due or shall have
been declared due and payable, all such moneys shall be applied to the payment
of the principal, premium, if any, and interest then due and unpaid upon the
Bonds, without preference or priority of principal and premium over interest or
of interest over principal and premium, or of any installment of interest over
any other installment of interest, or of any Bonds over any other Bonds,
ratably, according to the amounts due respectively for principal, premium, if
<PAGE>
any, and interest, to the Persons entitled thereto without any discrimination
or privilege.
(3) If the principal of all the Bonds shall have been declared due and
payable, and if such declaration shall thereafter have been rescinded and
annulled under the provisions of paragraph (A)(2) of this Section 609 in the
event that the principal of all the Bonds shall later become due or be declared
due and payable, the moneys shall be applied in accordance with the provisions
of paragraph (A)(1) of this Section.
(B) Whenever moneys are to be applied pursuant to the provisions of Section
609(A)(1) hereof, such moneys shall be applied at such times, and from time to
time, as the Trustee shall determine, having due regard to the amount of such
moneys available for such application and the likelihood of additional moneys
becoming available in the future. Whenever the Trustee shall apply such moneys
under Section 609(A)(1), it shall fix the date (which shall be an Interest
Payment Date unless it shall deem another date more suitable) upon which such
application is to be made, and upon such date interest on the amounts of
principal to be paid on such date shall cease to accrue. Whenever moneys are to
be applied pursuant to the provisions of Section 609(A)(2), such moneys shall
be applied immediately upon receipt thereof. In either case, the Trustee shall
give such notice as it may deem appropriate of the deposit with it of any such
moneys and of the fixing of any such date, and shall not be required to make
payment to the holder of any Bond until such Bond shall be presented to the
Trustee and a new Bond is issued or the Bond is cancelled if fully paid.
(C) Any moneys received by the Trustee from the Bank pursuant to the
exercise of any rights granted hereunder or under the Letter of Credit shall
first be applied in accordance with Section 408 hereof.
SECTION 610. REMEDIES VESTED IN TRUSTEE. All rights of action, including the
right to file proof of claims, under the Indenture or under any of the Bonds
may be enforced by the Trustee without the possession of any of the Bonds or
the production thereof in any trial or other proceedings relating thereto, and
any such suit or proceeding instituted by the Trustee shall be brought in its
name as Trustee without the necessity of joining as plaintiffs or defendants
any holders of the Bonds. Subject to the provisions of Section 609 hereof and
any recovery or judgment shall be for the equal benefit of the holders of the
Outstanding Bonds.
SECTION 611. RIGHTS AND REMEDIES OF BONDHOLDERS. No holder of any Bond shall
have any right to institute any suit, action or proceeding in equity or at law
for the enforcement of the Indenture or for the execution of any trust under
the Indenture or for the appointment to the extent permitted by law of a
receiver or any other remedy hereunder, unless an Event of Default under
Section 601(A) through (H) hereof has occurred or a default under Section
601(I) hereof has occurred of which the Trustee has been notified as provided
in Section 614 hereof; nor unless also (A) such default, in the case of a
default under Section 601(I), shall have become an Event of Default, and (B)
the holders of at least twenty-five percent (25%) in aggregate principal amount
of Bonds then Outstanding shall have made written request to the Trustee and
shall have offered reasonable opportunity either to proceed to exercise the
powers hereinbefore granted or to institute such action, suit or proceeding in
its own name; nor unless also they have offered to the Trustee indemnity as
provided in Section 701(I) hereof; nor unless the Trustee shall thereafter fail
or refuse to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding; and such notification, request and offer of
indemnity are hereby declared in every case at the option of the Trustee to be
<PAGE>
conditions precedent to the execution of the powers and trusts of the
Indenture, and to any action or cause of action for the enforcement of the
Indenture, or for the appointment to the extent permitted by law of a receiver
or for any other remedy hereunder; it being understood and intended that no one
or more holders of the Bonds shall have any right in any manner whatsoever to
affect, disturb, or prejudice the Lien of the Indenture by any action or to
enforce any right hereunder except in the manner herein provided, and that all
proceedings at law or in equity shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of the holders of all Bonds
then Outstanding. Nothing in the Indenture shall, however, affect or impair the
right of any Bondholder to enforce the payment of the principal of and interest
on any Bond at and after the maturity thereof, or the obligation of the Issuer
to pay the principal of and interest on each of the Bonds issued hereunder to
the respective holders thereof, at the time and place and from the source and
in the manner in the Bonds expressed.
SECTION 612. TERMINATION OF PROCEEDINGS. In case the Trustee shall have
undertaken any proceedings to enforce any right under the Indenture and such
proceedings shall have been discontinued or abandoned for any reason, or shall
have been determined adversely, then and in every such case, the Issuer, the
Company, the Bank and the Trustee shall be restored to their former positions
and rights hereunder, and all rights, remedies and powers of the Trustee shall
continue as if no such proceedings had been taken.
SECTION 613. WAIVERS OF EVENTS OF DEFAULT. The Trustee, with the prior written
consent of the Bank, shall waive any Event of Default hereunder and its
consequences and rescind any declaration of maturity of principal of and
interest on the Bonds upon the written request of the holders of a majority of
the aggregate principal amount of all the Bonds then Outstanding; provided,
however, that there shall not be waived (A) any default in the payment of the
principal of any Outstanding Bond at the date of maturity specified therein, or
upon proceedings for mandatory redemption, (B) any Event of Default requiring a
draw under the Letter of Credit unless the Trustee shall have received written
notice from the Bank that the Letter of Credit has been reinstated to its full
stated amount, if there has been a reduction thereon, or (C) any default in the
payment when due of the interest or premium on any such Bonds, unless prior to
such waiver or rescission all arrears of interest, with interest (to the extent
permitted by law) at the rate borne by the Bonds in respect of which such
default shall have occurred on overdue installments of interest or all arrears
of payments of principal when due (whether at the stated maturity thereof or
upon proceedings for redemption) as the case may be, shall have been paid or
provided for, and no such waiver or rescission shall extend to any subsequent
or other default, or impair any right consequent thereto. The Trustee shall not
grant any waiver or rescission hereunder unless all ordinary and extraordinary
fees and expenses of the Trustee, including, but not limited to, reasonable
attorneys' fees, incurred in connection with said default have been paid or
provided for, and in case of any such waiver or rescission, or in case any
proceeding taken by the Trustee on account of any such default shall have been
discontinued or abandoned or determined adversely, then, and in every such
case, the Issuer, the Trustee, the Bank and the Bondholders, respectively,
shall be restored to their former positions and rights hereunder.
SECTION 614. NOTICE OF DEFAULTS; OPPORTUNITY TO CURE. (A) Anything herein to
the contrary notwithstanding, no default under Section 601(I) hereof shall
constitute an Event of Default until the Trustee shall have received written
notice thereof or shall have actual notice thereof and until actual notice of
such default by registered or certified mail shall be given by the Trustee or
by the holders of not less than twenty-five (25%) percent of the aggregate
<PAGE>
principal amount of Bonds then Outstanding to the Issuer, the Bank and the
Company, and the Issuer, the Bank and the Company shall have had thirty (30)
days after receipt of such notice to correct said default or cause said default
to be corrected, and shall not have corrected said default or caused said
default to be corrected within the applicable period; provided, however, if
said default be such that it cannot be corrected within the applicable period,
it shall not constitute an Event of Default if corrective action is instituted
by the Issuer, the Bank or the Company within the applicable period and
diligently pursued until the default is corrected.
(B) The Trustee shall immediately notify the Issuer, the Company and the
Bank of any Event of Default known to the Trustee.
SECTION 615. STATEMENT OF INCOME AND EXPENDITURES. Upon the occurrence and
continuance of an Event of Default, the Trustee shall render annually to the
Bondholders a summarized statement of income and expenditures in connection
with the Project Facility, but only to the extent, if any, that the Trustee can
obtain such information without unreasonable effort or expense.
ARTICLE VII
THE TRUSTEE
SECTION 701. ACCEPTANCE OF TRUSTS. The Trustee hereby accepts the trusts
imposed upon it by the Indenture and agrees to perform said trusts upon the
following terms and conditions:
(A) The Trustee may execute any of the trusts or powers hereof and perform
any of its duties hereunder by or through attorneys, agents, receivers or
employees, but shall not be answerable for the conduct of the same if appointed
with due care, and shall be entitled to advice of counsel concerning all
matters of the trusts hereof and the duties hereunder, and may in all cases pay
such reasonable compensation to all such attorneys, agents, receivers and
employees as may be reasonably employed in connection with the trusts hereof.
The Trustee may act upon the opinion or advice of any attorney, who may be the
attorney or attorneys for the Issuer, and shall not be responsible for any loss
or damage resulting from any action or nonaction in reliance upon any such
opinion or advice.
(B) Except as expressly provided herein, the Trustee shall not be
responsible for any recital herein or in the Bonds (except in respect to the
authentication certificate of the Trustee endorsed on the Bonds), or for the
validity of the execution by the Issuer of the Indenture or of any supplements
thereto or instruments of further assurance, or for the sufficiency of the
security for the Bonds issued hereunder or intended to be secured hereby, or
for insuring the Property subject to the Lien of the Financing Documents, or
for the value or title of any of the Property subject to the Lien of the
Financing Documents, or for the payment of, or for minimizing taxes, charges,
assessments or Liens upon the same, or otherwise as to the maintenance of the
security hereof, except as to the safekeeping of the pledged collateral and
except that, in the event the Trustee enters into possession of part or all of
the Property subject to the Lien of the Financing Documents pursuant to any
provision thereof, it shall use due diligence in preserving the same, and the
Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any covenant, condition or agreement on the part of the Issuer or
<PAGE>
the Company, but the Trustee may require of the Issuer and the Company full
information and advice as to the performance of the covenants, conditions and
agreements aforesaid and as to the condition of the Property subject to the
Lien of the Financing Documents.
(C) The Trustee may become the owner of Bonds secured hereby with the same
rights which it would have if not the Trustee.
(D) The Trustee shall be protected in acting upon any notice, request,
consent, certificate, order, affidavit, letter, telegram or other paper or
document reasonably believed to be genuine and correct and to have been signed
or sent by the proper Person or Persons. Any action taken by the Trustee
pursuant to the Indenture upon the request or authority or consent of any
Person who at the time of making such request or giving such authority or
consent is the owner of any Bond shall be conclusive and binding upon all
future owners of the same Bond and of any Bond or Bonds issued in exchange
therefore or in place thereof.
(E) The Trustee may accept a certificate of the Secretary or Assistant
Secretary of the Issuer under its corporate seal to the effect that a
resolution in the form therein set forth has been adopted by the Issuer as
conclusive evidence that such resolution has been duly adopted and is in full
force and effect. As to the existence or nonexistence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate of the Company or the Bank signed
by an Authorized Representative of the Company or the Bank, as the case may be,
or a certificate of an Authorized Representative of the Issuer under seal, as
sufficient evidence of the facts therein contained and, prior to the occurrence
of a default of which it has been notified as provided in paragraph (M) of this
Section or of which by said paragraph it is deemed to have notice, shall also
be at liberty to accept a similar certificate to the effect that any particular
dealing, transaction or action is or is not necessary or expedient, but may at
its discretion, at the reasonable expense of the Company, in every case secure
such further evidence as it may think necessary or advisable, but shall in no
case be bound to secure the same.
(F) The permissive right of the Trustee to do things enumerated in the
Indenture shall not be construed as a duty unless so specified herein, and in
doing or not doing so the Trustee shall not be answerable for other than its
own gross negligence or willful misconduct.
(G) At any and all reasonable times, the Trustee, and its duly authorized
agents, attorneys, experts, accountants and representatives, shall have the
right fully to inspect all books, papers and records of the Issuer pertaining
to the Project Facility and the Bonds, and to take such memoranda from and in
regard thereto as may be desired.
(H) Notwithstanding anything elsewhere in the Indenture, the Trustee shall
have the right, but shall not be required, to demand, in respect of the
authentication of any Bonds, the withdrawal of any moneys, the release of any
interest in Property or any action whatsoever, within the purview of the
Indenture, any showings, certificates, opinions, appraisals or other
information, or corporate action or evidence thereof, in addition to those
required herein.
(I) Before taking any action hereunder (except declaring an Event of
Default or drawing under the Letter of Credit on an Interest Payment Date or a
Bond Payment Date), the Trustee may require that a security and indemnity
<PAGE>
reasonably satisfactory to it be deposited with it for the reimbursement of all
fees, costs and expenses including, but not limited to, reasonable attorney's
fees to which it may be put and to protect it against all liability, except
liability which is adjudicated to have resulted from its gross negligence or
willful misconduct by reason of any action so taken.
(J) All moneys received by the Trustee or any paying agent shall, until
used or applied or invested as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by law or by the Indenture. Neither the
Trustee nor any paying agent shall be under any liability for interest on any
moneys received hereunder except such as may be agreed upon with the Issuer.
(K) The Trustee, prior to an Event of Default hereunder and after curing
all Events of Default which may have occurred, undertakes to perform only such
duties as are specifically set forth in the Indenture. In case an Event of
Default has happened which has not been cured, the Trustee shall exercise the
rights, duties and powers vested in it by the Indenture in good faith and with
that degree of diligence, care and skill which ordinarily prudent persons would
exercise under similar circumstances in handling their own affairs.
(L) The Trustee shall furnish to the Issuer during the term of this
Indenture upon the written request of the Issuer any reports or other account
of the use of any of the Issuer's funds held by the Trustee that may be
required by any governmental body.
(M) The Trustee shall not be required to take notice or be deemed to have
notice of the occurrence of any Event of Default other than an Event of Default
under Section 601(A) through (H), unless the Trustee shall have actual notice
of such Event of Default or unless the Trustee shall be specifically notified
in writing of such Event of Default by the Issuer, the Bank or the Company or
by the owners of at least twenty-five percent (25%) in aggregate principal
amount of Bonds Outstanding hereunder, and all notices or other instruments
required by this Indenture to be delivered to the Trustee must, in order to be
effective, be delivered at the main office of the Trustee, and, in the absence
of such notice so delivered, the Trustee may conclusively assume there is no
Event of Default, except as aforesaid.
(N) The Trustee shall not be personally liable for any debts contracted or
for damages to Persons or to personal Property injured or damaged, or for
salaries or nonfulfillment of contracts, during any period in which it may be
in the possession of or managing any Property subject to the Lien of the
Financing Documents as in this Indenture provided.
(O) The Trustee shall not be required to give any bond or surety in respect
of the execution of the said trusts and powers or otherwise in respect of the
premises.
(P) There shall be no additional fee charged by the Trustee for a draw
under the Letter of Credit as contemplated by Section 408 hereof or by the
terms of the Letter of Credit. Nothing in the foregoing sentence, however,
shall limit the Trustee's right to charge additional fees in the event it is
required to perform Extraordinary Services hereunder.
(Q) Before taking any action hereunder, or under the Mortgage or any other
Financing Document, which would result in the Trustee acquiring title to or
taking possession of any portion or all of the Project Facility, the Trustee
may require such environmental inspections and tests of the Project Facility
<PAGE>
and other environmental reviews as the Trustee deems necessary and if the
Trustee determines that the taking of title or possession of all or any portion
of the Project Facility will expose it to claims or damages resulting from
environmental or ecological conditions in any way relating to the Project
Facility or any activities at the Project Facility, the Trustee may decline to
take title to or possession of the Project Facility.
SECTION 702. FEES, CHARGES AND EXPENSES OF TRUSTEE. The Trustee shall be
entitled to payment for its Ordinary Services and Ordinary Expenses, including,
but not limited to, reasonable attorney's fees, rendered or incurred hereunder
and, in the event that it should become necessary for the Trustee to perform
Extraordinary Services, it shall be entitled to reasonable extra compensation
therefor, and to reimbursement for reasonable and necessary Extraordinary
Expenses, including, but not limited to, reasonable attorney's fees, in
connection therewith; provided that, if such Extraordinary Services or
Extraordinary Expenses are occasioned by the gross negligence or willful
misconduct of the Trustee, it shall not be entitled to compensation or
reimbursement therefor.
SECTION 703. NOTICE TO BONDHOLDERS OF DEFAULT. If an Event of Default occurs of
which the Trustee is, by Section 614 or paragraph (M) of Section 701 hereof,
required to take notice or if notice of an Event of Default has been given to
it as in said Section 614 or paragraph (M) provided, then the Trustee shall
give written notice thereof by mail to all owners of Bonds then Outstanding as
shown on the bond register maintained by the Trustee.
SECTION 704. INTERVENTION BY TRUSTEE. In any judicial proceeding to which the
Issuer is a party and which in the opinion of the Trustee and its counsel has a
substantial bearing on the interests of Bondholders, the Trustee may intervene
on behalf of Bondholders and shall do so if requested in writing by the owners
of at least twenty-five percent (25%) in aggregate principal amount of all
Bonds then Outstanding if offered the security and indemnity provided for in
Section 701(I). The rights and obligations of the Trustee under this Section
704 are subject to the approval of a court of competent jurisdiction.
SECTION 705. SUCCESSOR TRUSTEE. Any corporation or association into which the
Trustee may be converted or merged, or with which it may be consolidated, or to
which it may sell or transfer its trust business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a
party, shall, ipso facto, be and become successor Trustee hereunder and vested
with all of the title to the Trust Revenues and all the trusts, powers,
discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instruments or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 706. RESIGNATION BY TRUSTEE. The Trustee and any successor Trustee may
at any time resign from the trusts hereby created by giving sixty (60) days'
written notice to the Issuer, the Bank and the Company and by registered or
certified mail to each owner of Bonds then Outstanding and such resignation
shall take effect at the end of such sixty (60) days, but not prior to the
acceptance of appointment by a successor Trustee under Section 709 hereof. Such
notice to the Issuer, the Bank and the Company may be served personally or sent
by registered mail. If an instrument of acceptance by a successor Trustee shall
not be delivered to the Trustee within sixty (60) days after the giving of such
notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
<PAGE>
SECTION 707. REMOVAL OF TRUSTEE. (A) The Trustee may be removed at any time, by
an instrument or concurrent instruments in writing delivered to the Trustee,
the Issuer, the Bank and the Company, and signed by the owners of a majority in
aggregate principal amount of all Bonds then Outstanding. Such notice shall
specify the date that such removal shall take effect.
(B) No removal of the Trustee under this Section 707 shall be effective
until a successor Trustee shall have been appointed and shall have accepted the
terms and conditions imposed hereby.
SECTION 708. APPOINTMENT OF SUCCESSOR TRUSTEE BY BONDHOLDERS; TEMPORARY
TRUSTEE. In case the Trustee hereunder shall resign or be removed, or be
dissolved, or shall be in course of dissolution or liquidation, or otherwise
become incapable of acting hereunder, or in case it shall be taken under the
control of any public officer or officers, or of a receiver appointed by a
court, a successor may be appointed by the owners of a majority in aggregate
principal amount of Bonds then Outstanding, by an instrument or concurrent
instruments in writing signed by such owners, or by their duly authorized
attorneys; provided, nevertheless, that in case of vacancy, the Issuer by an
instrument executed and signed by the Chairman or Vice Chairman and attested by
the Secretary or Assistant Secretary of the Issuer under its seal, may appoint
a temporary Trustee to fill such vacancy until a successor Trustee shall be
appointed by such Bondholders in the manner above provided; and any such
temporary Trustee so appointed by the Issuer shall immediately and without
further act be superseded by the Trustee so appointed by such Bondholders.
Every such successor or temporary Trustee appointed pursuant to the provisions
of this Section 708 shall (A) be a trust company or bank organized under the
laws of the United States of America or any state thereof and which is in good
standing, (B) be located within or outside the State, (C) be duly authorized to
exercise trust powers in the State, and (D) maintain a reported capital and
surplus of not less than $5,000,000, or be a subsidiary of a bank holding
company with such capital and surplus.
SECTION 709. CONCERNING ANY SUCCESSOR TRUSTEE. Every successor Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Issuer an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, Properties, rights,
powers, trusts, duties and obligations of its predecessor; but such predecessor
shall, nevertheless, on the written request of the Issuer, or of its successor,
and upon payment of all amounts due such predecessor, execute and deliver an
instrument transferring to such successor Trustee all the estates, Properties,
rights, powers and trusts of such predecessor hereunder; and every predecessor
Trustee shall deliver all securities and moneys held by it as Trustee hereunder
to its successor. Should any instrument in writing from the Issuer be required
by a successor Trustee for more fully and certainly vesting in such successor
the estates, Properties, rights, powers and duties hereby vested or intended to
be vested in the predecessor, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Issuer. The resignation
of any Trustee and the instrument or instruments removing any Trustee and
appointing a successor hereunder, together with all other instruments provided
for in this Article VII, shall be filed and/or recorded by the successor
Trustee in each recording office where the Indenture shall have been filed
and/or recorded.
SECTION 710. TRUSTEE PROTECTED IN RELYING UPON RESOLUTIONS, ETC. The
resolutions, opinions, certificates and other instruments provided for in the
Indenture may be accepted by the Trustee as conclusive evidence of the facts
<PAGE>
and conclusions stated therein and shall be full warrant, protection and
authority to the Trustee for the release of property and the withdrawal of
moneys hereunder.
SECTION 711. SUCCESSOR TRUSTEE AS TRUSTEE, PAYING AGENT AND BOND REGISTRAR. In
the event of a change in the office of Trustee, the predecessor Trustee which
has resigned or has been removed shall cease to be Trustee and paying agent on
the Bonds and Bond Registrar, and the successor Trustee shall become such
Trustee and paying agent and Bond Registrar.
SECTION 712. TRUST MAY BE VESTED IN SEPARATE OR CO-TRUSTEE. (A) It is the
purpose of the Indenture that there shall be no violation of any law of any
jurisdiction, including particularly the law of the State, denying or
restricting the right of banking corporations or associations to transact
business as trustee in such jurisdiction. It is recognized that in case of
litigation under the Indenture, and in particular in case of the enforcement of
any such instrument on default, or in case the Trustee deems that by reason of
any present or future law of any jurisdiction it may not exercise any of the
powers, rights or remedies herein granted to the Trustee or hold title to the
trust herein created, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint
an additional individual or institution as a separate or co-trustee.
(B) In the event that the Trustee appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right,
claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by the Indenture to be exercised by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest
in such separate or co-trustee, but only to the extent necessary to enable such
separate or co-trustee to exercise such powers, rights and remedies; and every
covenant and obligation necessary to the exercise thereof by such separate or
co-trustee shall run to and be enforceable by either of them.
(C) Should any deed, conveyance or instrument in writing from the Issuer be
required by the separate trustee or co-trustee so appointed by the Trustee for
more fully and certainly vesting in and confirming to him or it such
Properties, rights, powers, trusts, duties and obligations, any and all such
deeds, conveyances and instruments in writing shall, on request, be executed,
acknowledged and delivered by the Issuer. In case any separate trustee or
co-trustee, or a successor to either, shall die, become incapable of acting,
resign or be removed, all the estates, Properties, rights, powers, trusts,
duties and obligations of such separate trustee or co- trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee until the
appointment of a new trustee or successor to such separate trustee or co-
trustee.
SECTION 713. TRUSTEE TO EXERCISE POWERS OF STATUTORY TRUSTEE. The Trustee shall
be and is hereby vested with all of the rights, powers and duties of a Trustee
which could be appointed by the Bondholders pursuant to Section 878 of the Act,
and the right of the Bondholders to appoint a Trustee pursuant to Section 878
of the Act is hereby abrogated in accordance with the provisions of the Act.
SECTION 714. NEW YORK REAL PROPERTY LAW. (A) To the extent, if any, that
Article 4-a of the New York Real Property Law, as in effect from time to time,
may apply to this Indenture or the transactions contemplated hereby, then and
in such event, notwithstanding any provision of this Indenture to the contrary,
the following provisions of this Section 714 shall apply to this Indenture.
<PAGE>
(B) The Trustee shall have, without limitation, the following additional
powers and duties:
(1) To receive and collect directly and without the intervention or
assistance of any fiscal agent or other intermediary all payments of monies
required to be made under this Indenture and to disburse the same pursuant to
the terms hereof.
(2) To act as tax withholding agent, and to receive, collect and pay the
necessary taxes and hold the surplus, if any, in trust for the rightful owner
thereof.
(3) In the event of a default in the payment or deposit of interest,
amortization, taxes, assessments or principal (without any request from the
Bondholders or any of them) with due diligence, prudence and care in its
discretion:
(a) to take such action as may be necessary or proper to sequester the
rents and income from the Project Facility and otherwise from the Trust Estate;
(b) to procure from the owner of the Project Facility and/or of the Trust
Estate an assignment of rents and/or a consent to enter into possession of the
Project Facility and/or the Trust Estate and to collect the rents and income
therefrom;
(c) to apply to any court of competent jurisdiction for the appointment of
a receiver of the rents and income from the Project Facility and the Trust
Estate;
(d) to declare due and payable forthwith any principal amount remaining due
and unpaid and commence an action to foreclose any Lien on the Project Facility
and/or the Trust Estate;
(e) to apply the moneys received as rents and income from the Project
Facility and/or the Trust Estate as well as moneys received by the Trustee from
any receiver appointed for the Project Facility and/or the Trust Estate in his
discretion, to the maintenance and operation of such Trust Estate, the payment
of taxes, water rents and assessments levied thereon and any arrears thereof,
to the payment of underlying Liens, and to the creation and maintenance of a
reserve or sinking fund, and after the commencement of an action to foreclose
any Lien on the Project Facility and/or the Trust Estate, to distribute ratably
among the Bondholders any moneys remaining in its hands; and
(f) to render annually to the Bondholders, after the occurrence of an Event
of Default, unless such Event of Default be previously cured, a summarized
statement of income and expenditures in connection with the Trust Estate.
(4) To permit the Issuer or other Person in possession or control of the
Project Facility and/or the Trust Estate, or its successors in interest, to be
free to select the insurance broker or agent through whom any insurance of any
kind is to be placed or written on any property affected or covered by a
mortgage held by such Trustee.
(C) The powers and duties conferred and imposed in subsection (B) of this
Section 714 shall be in addition to those conferred and imposed by other
provisions of this Indenture and, in case of a conflict, the provisions of said
subsection (B) shall prevail; provided, however, that if Article 4-A of the
Real Property Law of the State (or any successor provision) or any portion
<PAGE>
thereof should at any time be repealed or should be construed by a non-
appealable judicial decision of a State or Federal court specifically to be
inapplicable to this Indenture, said subsection (B) or the corresponding
provisions of said subsection (B), as the case may be, shall cease to have any
further force and effect; provided, further, that any modification of the
powers and duties of a trustee pursuant to Article 4-A of the Real Property Law
of the State shall be incorporated by reference herein as part of said
subsection (B).
SECTION 715. CONFLICTS OF INTEREST. (A) To the extent, if any, that Article 4-
A of the New York Real Property Law, as in effect from time to time, may apply
to this Indenture or the transactions contemplated hereby, then and in such
event, notwithstanding any provision of this Indenture to the contrary, the
following provisions of this Section 715 shall apply to this Indenture. If the
Trustee has or shall acquire any conflicting interest as hereinafter defined:
(1) the Trustee shall, within ninety (90) days after ascertaining that it
has such conflicting interest, either eliminate such conflicting interest or
resign, such resignation to become effective upon the appointment of a
successor trustee and such successor's acceptance of such appointment; and the
Issuer shall take prompt steps to have a successor appointed in the manner
provided in this Indenture;
(2) in the event that the Trustee shall fail to comply with the provisions
of paragraph (1) of this subsection (A), the Trustee shall, within ten (10)
days after the expiration of such ninety-day period, transmit notice of such
failure by mail (a) to all registered Holders of Bonds, as the names and
addresses of such Holders appear upon the registration books of the Issuer, (b)
to such Holders of Bonds as have, within the two (2) years preceding such
transmission, filed their names and addresses with the Trustee for the purpose
of receiving notices or reports to Holders of Bonds and (c) to all Holders of
Bonds whose names and addresses are contained in information currently
preserved by the Trustee for such purpose in accordance with subsection (G) of
this Section 715; and
(3) any Holder of Bonds who has been a bona fide Holder thereof for at
least six (6) months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee, and the appointment of a successor, if the Trustee fails, after
written request therefor by such Holder, to comply with the provisions of
paragraph (1) of this subsection (A).
(B) For purposes of subsection (A) of this Section 715, the Trustee shall
be deemed to have a conflicting interest if:
(1) the Trustee is trustee under another mortgage, deed of trust, trust
indenture or other similar instrument (hereinafter in this Section 715 referred
to as an "indenture") under which any other securities, or certificates of
interest or participation in any other securities, of an obligor upon the Bonds
are outstanding unless (1) such other indenture is a collateral trust indenture
under which the only collateral consists of Bonds issued under this Indenture,
or (2) such obligor has no substantial unmortgaged assets and is engaged
primarily in the business of owning, or of owning and developing or operating,
real estate, and this Indenture and such other indenture are secured by wholly
separate and distinct parcels of real estate; provided, however, that there
<PAGE>
shall be excluded from the operation of this paragraph any other indenture or
indentures which shall have been qualified with the United States Securities
and Exchange Commission pursuant to the provisions of the Trust Indenture Act
of 1939, as from time to time amended and in force;
(2) the Trustee or any of its directors or executive officers is an obligor
upon the Bonds or an underwriter for such an obligor;
(3) the Trustee directly or indirectly controls, or is directly or
indirectly controlled by or is under direct or indirect common control with, an
obligor upon the Bonds or an underwriter for such an obligor;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of an obligor
upon the Bonds, or of an underwriter (other than the Trustee itself) for such
an obligor who is currently engaged in the business of underwriting, except
that (a) one individual may be a director or an executive officer of the
Trustee and a director or an executive officer of such obligor, but may not be
at the same time an executive officer of both the Trustee and of such obligor,
and (b) if and so long as the number of directors of the Trustee in office is
more than nine, one additional individual may be a director or an executive
officer of the Trustee and a director of such obligor, and (c) the Trustee may
be designated by any such obligor or by any underwriter for any such obligor to
act in the capacity of transfer agent, registrar, custodian, paying agent,
fiscal agent, escrow agent or depositary, or in any other similar capacity, or,
subject to the provisions of paragraph (1) of this subsection (B), to act as
trustee, whether under an indenture or otherwise;
(5) ten per centum or more of the voting securities of the Trustee is
beneficially owned either by an obligor upon the Bonds or by any director,
partner or executive officer thereof, or twenty percentum or more of such
voting securities is beneficially owned, collectively, by any two or more of
such persons; or ten per centum or more of the voting securities of the Trustee
is beneficially owned either by an underwriter for any such obligor or by any
director, partner or executive officer thereof, or is beneficially owned,
collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default as hereinafter defined, (a) five per
centum or more of the voting securities, or ten per centum or more of any other
class of security, of an obligor upon the Bonds, not including the Bonds and
securities issued under any other indenture under which the Trustee is also
such trustee, or (b) ten per centum or more of any class of securities of an
underwriter for any such obligor;
(7) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default as hereinafter defined, five per centum
or more of the voting securities of any person who, to the knowledge of the
Trustee, owns ten per centum or more of the voting securities of, or controls
directly or indirectly or is under direct or indirect control with, an obligor
upon the Bonds;
(8) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default as hereinafter defined, ten per centum or
more of any class of securities of any person who, to the knowledge of the
Trustee, owns fifty per centum or more of the voting securities of an obligor
upon the Bonds; or
<PAGE>
(9) the Trustee owns, on May fifteenth in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos trustee,
guardian, committee or conservator, or in any other similar capacity, an
aggregate of twenty-five per centum or more of the voting securities, or of any
class of securities, of any person, the beneficial ownership of a specified
percentage of which would have constituted a conflicting interest under
paragraph (6), (7) or (8) of this subsection (B). As to any such securities of
which the Trustee acquired ownership through becoming executor, administrator
or testamentary trustee of an estate which included them, the provisions of the
preceding sentence shall not apply, for a period of not more than two (2) years
from the date of such acquisition, to the extent that such securities included
in such estate do not exceed twenty-five per centum of such voting securities
or twenty-five per centum of any such class of securities. Promptly after May
fifteenth in each calendar year, the Trustee shall make a check of its holdings
of such securities in any of the above-mentioned capacities as of such May
fifteenth. If the Issuer fails to make payment in full of principal or interest
under this Indenture when and as the same becomes due and payable, and such
failure continues for thirty (30) days thereafter, the Trustee shall make a
prompt check of its holdings of such securities in any of the above-mentioned
capacities as of the date of the expiration of such thirty-day period, and
after such date, notwithstanding the foregoing provisions of this paragraph,
all such securities so held by the Trustee, with sole or joint control over
such securities vested in it, shall be considered as though beneficially owned
by the Trustee, for the purposes of paragraphs (6), (7) and (8) of this
subsection (B).
(C) The specification of percentages of paragraphs (5) through (9),
inclusive, of subsection (B) of this Section 715 shall not be construed as
indicating that the ownership of such percentages of the securities of a Person
is or is not necessary or sufficient to constitute direct or indirect control
for the purposes of paragraph (3) or (7) of subsection (B) of this Section 715.
(D) For the purposes of paragraphs (6), (7), (8) and (9) of paragraph (B)
of this Section 715, (1) the terms "security" and "securities" shall include
only such securities as are generally known as corporate securities, but shall
not include any note or other evidence of indebtedness issued to evidence an
obligation to repay monies lent to a Person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (2) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
thirty (30) days or more, and shall not have been cured; and (3) the Trustee
shall not be deemed the owner or holder of (a) any security which it holds as
collateral security (as trustee or otherwise) for an obligation which is not in
default as above defined, or (b) any security which it holds as collateral
security under this Indenture, irrespective of any default thereunder, or (c)
any security which it holds as agent for collection, or as custodian, escrow
agent or depositary, or in any similar representative capacity.
(E) For the purposes of subsection (B) of this Section 715, the term
"underwriter", when used with reference to an obligor upon the Bonds, means
every Person who, within three (3) years prior to the time as of which the
determination is made, was an underwriter of any security of such obligor
outstanding at such time.
(F) When used in subsections (B) through (E), inclusive, of this Section
715, unless the context otherwise requires:
<PAGE>
(1) The term "underwriter" means any Person who has purchased from an
issuer with a view to, or offers or sells for an issuer in connection with, the
distribution of any security, or participates or has a direct or indirect
participation in any such undertaking, or participates or has a participation
in the direct or indirect underwriting of any such undertaking; but such term
shall not include a Person whose interest is limited to a commission from an
underwriter or dealer not in excess of the usual and customary distributors' or
sellers' commission.
(2) The term "director" means any director of a corporation or any
individual performing similar functions with respect to any organization,
whether incorporated or unincorporated.
(3) The term "executive officer" means the president, every vice president,
every trust officer, the cashier, the secretary, and the treasurer of a
corporation, and any individual customarily performing similar functions with
respect to any organization, whether incorporated or unincorporated, but shall
not include the chairman of the board of directors.
(4) The term "obligor", when used with respect to the Bonds, means every
person who is liable thereon.
(5) The term "voting security" means any security presently entitling the
owner or holder thereof to vote in the direction or management of the affairs
of a person, or any security issued under or pursuant to any trust, agreement
or arrangement whereby a trustee or trustees or agent or agents for the owner
or holder of such security are presently entitled to vote in the direction or
management of the affairs of a Person; and a specified percentage of the voting
securities of a Person means such amount of the outstanding voting securities
of such Person as entitles the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the outstanding
voting securities of such Person are entitled to cast in the direction or
management of the affairs of such Person.
(G) The Issuer agrees that it will furnish or cause to be furnished to the
Trustee as soon as reasonably practicable after receipt thereof and at such
other times as the Trustee may request in writing all information in the
possession or control of the Issuer as to the names and addresses of the
Holders of the Bonds. The Trustee shall preserve, in as current a form as is
reasonably practicable, all such information so furnished to it.
SECTION 716. DESIGNATION AND SUCCESSION OF TENDER AGENTS. (A) (1) In the event
a Tender Agent, other than the Trustee, is required in connection with the
remarketing of the Bonds, the Company is hereby authorized to appoint a Tender
Agent meeting the requirements set forth in Section 717 hereof.
(2) Upon the appointment of a Tender Agent pursuant to Section 717 hereof,
the Tender Agent shall agree to provide, as soon as practicable, the Trustee
with copies of all written notices it receives in connection with its duties as
Tender Agent.
(B) Any corporation or association into which a Tender Agent may be merged,
or with which it may be consolidated, or to which it may sell, lease or
transfer its investment banking business and assets as a whole or substantially
as a whole, shall be and become successor hereunder and shall be vested with
all the powers, rights, obligations and duties hereunder as was its
predecessor, without the execution or filing of any instrument by any party
hereto. Any Tender Agent may at any time resign and be discharged of the duties
<PAGE>
and obligations created by this Indenture by giving at least sixty (60) days
notice to the Issuer, the Company, the Bank and the Trustee; provided, that
such resignation shall not take effect until a successor Tender Agent shall
have accepted its duties and obligations hereunder. The Tender Agent may be
removed at any time upon at least sixty (60) days' notice by an instrument,
signed by the Issuer at the direction of the Company and delivered to the
Tender Agent and filed with the Trustee.
(C) In the event of the resignation or removal of a Tender Agent, or in the
event the Tender Agent shall be dissolved, or if the property or affairs of a
Tender Agent shall be taken under the control of any state or federal court or
administrative body by reason of insolvency or bankruptcy, the Issuer shall, or
for any other reason the Issuer may, with the consent of the Bank and the
Company, appoint a successor Tender Agent, meeting the requirements set forth
in Section 717 hereof. The former Tender Agent shall pay over, assign and
deliver any moneys and Bonds held by it in such capacity to the successor
Tender Agent when appointed, or, if there be no successor Tender Agent
appointed with thirty (30) days, to the Trustee. In the event that (1) the
Issuer shall fail to propose for the consent of the Bank and the Company a
successor Tender Agent hereunder or, (2) the position of Tender Agent shall be
vacant for any other reason, the Trustee, shall accept the assignment and
delivery of the moneys and Bonds held by the former Tender Agent and shall hold
and dispose of them as set forth in this Section. It is expressly understood
hereunder that if in the event the position of Tender Agent is vacant for any
reason, the Trustee shall assume the duties of Tender Agent hereunder. If the
Issuer shall fail to propose a successor Tender Agent for the consent of the
Bank and the Company within thirty (30) days after request, the Trustee may
appoint a successor Tender Agent with the consent of the Bank and the Company.
Neither the Issuer nor the Trustee shall incur any liability as a result of any
appointment or failure to appoint the Tender Agent or a successor Tender Agent.
SECTION 717. QUALIFICATIONS OF TENDER AGENT. Each Tender Agent shall be a bank
or a trust company.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 801. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF BONDHOLDERS. (A)
The Issuer and the Trustee, without the consent of, or notice to, any of the
Bondholders, may enter into an indenture or indentures supplemental to the
Indenture and not inconsistent with the terms and provisions hereof or
materially adverse to the holders of the Bonds or to the Bank for any one or
more of the following purposes:
(1) to cure any ambiguity or formal defect or omission in the Indenture;
(2) to grant to or confer upon the Trustee for the benefit of the
Bondholders any additional rights, remedies, powers or authority that may
lawfully be granted to or conferred upon the Bondholders or the Trustee or
either of them;
(3) to subject additional rights and revenues to the Lien of this
Indenture, or to identify more precisely the Trust Estate;
(4) to obtain or maintain a rating on the Bonds from Moody's or Standard &
Poor's; or
<PAGE>
(5) to modify, amend or supplement the Indenture or any indenture
supplemental hereto in such manner as to permit the qualification hereof and
thereof under the Trust Indenture Act of 1939 or any similar Federal statute
hereafter in effect or under any state Blue Sky Law.
(B) The Issuer and the Trustee may rely on an opinion of Independent
Counsel as conclusive evidence that the execution and delivery of any amendment
or supplemental indenture has been effected in compliance with this Section
801.
SECTION 802. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS. (A)
Except for supplemental indentures as provided in Section 801 hereof, the
holders of not less than two-thirds in aggregate principal amount of the Bonds
then Outstanding shall have the right, from time to time, anything in the
Indenture to the contrary notwithstanding, to consent to and approve the
execution by the Issuer and the Trustee of such indenture or indentures
supplemental hereto as shall be deemed necessary and desirable by the Issuer or
the Trustee for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in the
Indenture or in any supplemental indenture; provided, however, that nothing
contained in this Section 802 shall permit or be construed as permitting (1)
without the consent of the holder of such Bond, (a) a reduction in the rate, or
extension of the time of payment, of interest on any Bond, (b) a reduction of
any premium payable on the redemption of any Bond, or an extension of time for
such payment, or (c) a reduction in the principal amount payable on any Bond,
or an extension of time in which the principal amount of any Bond is payable,
whether at the stated or declared maturity or redemption thereof, (2) the
creation of any Lien prior to or on a parity with the Lien of this Indenture
(other than that parity Lien created to secure the Additional Bonds), (3) a
reduction in the aforesaid aggregate principal amount of Bonds, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of all the Bonds at the time Outstanding which would be
affected by the action to be taken, (4) the modification of the rights, duties
or immunities of the Trustee, without the written consent of the Trustee, or
(5) a privilege or priority of any Bond or Bonds over any other Bond or Bonds.
(B) If at any time the Issuer and the Trustee propose to enter into any
such supplemental indenture for any of the purposes specified in this Section
802, the Trustee shall, upon being satisfactorily secured and indemnified as
provided in Section 701(I) hereof with respect to fees, costs and expenses,
including, but not limited to, reasonable attorneys' fees, cause notice of the
proposed execution of such supplemental indenture to be mailed to each
Bondholder. Such notice shall briefly set forth the nature of the proposed
supplemental indenture and shall state that copies thereof are on file at the
Office of the Trustee for inspection by all Bondholders. If, within sixty (60)
days or such longer period as shall be prescribed by the Trustee following the
mailing of such notice, the holders of not less than two- thirds in aggregate
principal amount of the Bonds Outstanding at the time of the execution of any
such supplemental indenture shall have consented to and approved the execution
thereof as herein provided, no holder of any Bond shall have any right to
object to any of the terms and provisions contained therein, or the operation
thereof, or in any manner to question the propriety of the execution thereof,
or to enjoin or restrain the Trustee or the Issuer from executing the same or
from taking any action pursuant to the provisions thereof. Upon the execution
of any such supplemental indenture as in this Section 802 permitted and
provided, the Indenture shall be and be deemed to be modified and amended in
accordance therewith.
<PAGE>
(C) The Issuer and the Trustee may rely upon an opinion of Independent
Counsel as conclusive evidence that the execution and delivery of a
supplemental indenture has been effected in compliance with the provisions of
this Section 802.
SECTION 803. SUPPLEMENTAL INDENTURES; CONSENT OF BANK. Notwithstanding anything
to the contrary herein contained, the Issuer and the Trustee shall in no event
enter into any indenture supplemental to the Indenture under Section 802 hereof
without the prior written consent of the Bank and such other assurance from the
Bank as counsel to the Trustee may require that the Bank's obligations under
the Letter of Credit have not been diminished or otherwise affected by such
supplemental indenture. The Issuer and the Trustee shall be entitled to rely
upon such certificates or opinions delivered by the Bank or its counsel to such
effect.
SECTION 804. SUPPLEMENTAL INDENTURES; CONSENT OF COMPANY. Notwithstanding
anything contained in this Indenture to the contrary, no supplemental indenture
which affects any rights or liabilities of the Company shall become effective
unless or until the Company shall have consented in writing to the execution
and delivery of such supplemental indenture. In this regard, the Trustee shall
cause notice of the proposed execution and delivery of any such supplemental
indenture to be mailed by certified or registered mail to the Company at least
fifteen (15) days prior to the proposed date of execution and delivery of any
supplemental indenture. The Company shall be deemed to have consented to the
execution and delivery of any supplemental indenture if the Trustee has not
received a letter of protest or objection signed by the Company within fifteen
(15) days after the mailing of said notice and a copy of the supplemental
indenture. The Trustee may rely upon the opinion of Independent Counsel whether
or not a supplemental indenture affects any rights or liabilities of the
Company within the meaning of, and for the purposes of this Section 804.
SECTION 805. EFFECT OF SUPPLEMENTAL INDENTURES. Any supplemental indenture
executed in accordance with the provisions of this Article VIII shall
thereafter form part of the terms and conditions of this Indenture for any and
all purposes.
ARTICLE IX
AMENDMENT TO INSTALLMENT SALE AGREEMENT, LETTER OF CREDIT, MORTGAGE, OR OTHER
FINANCING DOCUMENTS
SECTION 901. AMENDMENTS TO INSTALLMENT SALE AGREEMENT, MORTGAGE, OR OTHER
FINANCING DOCUMENTS NOT REQUIRING CONSENT OF BONDHOLDERS. (A) The Issuer, the
Company and the Trustee may, without the consent of or notice to the
Bondholders, consent to any amendment, change or modification of the
Installment Sale Agreement or any other Financing Document (other than the
Indenture) as may be required (1) by the provisions of any Financing Document,
(2) for the purpose of curing any ambiguity or formal defect or omission
therein, (3) so as to identify more precisely the Project Facility described in
the Installment Sale Agreement, (4) in connection with any supplemental
indenture entered into pursuant to Section 801 hereof, (5) to obtain or
maintain a rating on the Bonds from Moody's or Standard & Poor's, (6) in
connection with any other supplemental indenture, but only if any such
amendment, change or modification, in the judgment of the Trustee, is not to
the prejudice of the Trustee or the Bondholders, or (7) as may be requested by
the Bank pursuant to Section 905 hereof.
<PAGE>
(B) The Trustee may rely upon an opinion of Independent Counsel as
conclusive evidence that the execution and delivery of any amendment, change or
modification to the Installment Sale Agreement or any other Financing Document
has been effected in compliance with the provisions of this Section 901.
SECTION 902. AMENDMENTS TO INSTALLMENT SALE AGREEMENT, MORTGAGE OR OTHER
FINANCING DOCUMENTS REQUIRING CONSENT OF BONDHOLDERS. (A) Except for the
amendments, changes or modifications as provided in Section 901 hereof, neither
the Issuer, the Company nor the Trustee shall consent to any other amendment,
change or modification of the Installment Sale Agreement or any other Financing
Document (other than the Indenture) without mailing of notice and the written
approval or consent of the holders of not less than two-thirds in aggregate
principal amount of the Bonds at the time Outstanding given as in this Section
902 provided.
(B) If at any time the Issuer and the Company shall request the consent of
the Trustee to any such proposed amendment, change or modification of the
Installment Sale Agreement or any other Financing Document (other than the
Indenture) not authorized by Section 901 hereof, the Trustee shall, upon being
satisfactorily secured and indemnified as provided in Section 701(I) hereof
with respect to fees, costs and expenses including, but not limited to,
reasonable attorney's fees, cause notice of such proposed amendment, change or
modification to be given in the same manner as provided by Section 702 hereof
with respect to supplemental indentures. Such notice shall briefly set forth
the nature of such proposed amendment, change or modification and shall state
that copies of the instrument embodying the same are on file at the Office of
the Trustee for inspection by all Bondholders.
SECTION 903. AMENDMENTS TO INSTALLMENT SALE AGREEMENT, MORTGAGE OR OTHER
FINANCING DOCUMENTS; CONSENT OF BANK. Notwithstanding anything to the contrary
herein contained, the Issuer and the Trustee shall in no event consent to any
amendment, change or modification of the Installment Sale Agreement or any
other Financing Document (other than the Indenture) without the prior written
consent of the Bank and such other assurance from the Bank as counsel to the
Trustee may require that the Bank's obligations under the Letter of Credit have
not been diminished or otherwise affected by such amendment, change or
modification of the Installment Sale Agreement. The Issuer and the Trustee
shall be entitled to rely upon such certificates or opinions delivered by the
Bank or its counsel to such effect.
SECTION 904. AMENDMENTS TO LETTER OF CREDIT. The Trustee shall not consent or
agree to the amendment to or substitution of any provision of the Letter of
Credit which alters, to the detriment of the Bondholders, the security intended
to be provided thereby to the Bondholders, and shall strictly enforce all of
the provisions thereof.
SECTION 905. AMENDMENTS REQUESTED BY BANK. The Issuer, the Company and the
Trustee may, without the consent of or notice to the Bondholders, consent to
any amendment, change or modification of the Installment Sale Agreement, the
Mortgage or any other Financing Document (other than the Indenture) requested
by the Bank, but only if such amendment, change or modification is requested in
writing by the Bank, the Bank has not failed to make any payment required to be
made by it under the Letter of Credit and the Trustee shall receive such
assurance from the Bank as counsel to the Trustee may require that the Bank's
obligations under the Letter of Credit have not been diminished or otherwise
affected by such amendment, change or modification.
<PAGE>
ARTICLE X
SATISFACTION AND DISCHARGE OR ASSIGNMENT OF INDENTURE
SECTION 1001. SATISFACTION AND DISCHARGE OR ASSIGNMENT OF LIEN. (A) If the
Issuer (1) shall pay or cause to be paid, from sources other than the proceeds
of a draw under the Letter of Credit, but in all events in Non-Preference
Moneys, to the holders and owners of the Bonds, the principal of the Bonds and
premium, if any, due on the Bonds, at the times and in the manner stipulated
therein and herein, (2) shall pay or cause to be paid from any source, but in
all events in Non-Preference Moneys, to the holders and owners of Bonds, the
interest to become due on the Bonds at the times and in the manner stipulated
therein and herein, (3) shall have paid all fees, costs and expenses including,
but not limited to, reasonable attorney's fees of the Trustee and each paying
agent, and (4) shall pay or cause to be paid to the Bank any and all sums due
under the Reimbursement Agreement, then these presents and the trust and rights
hereby granted shall cease, determine and be void, and thereupon the Trustee
shall (a) cancel and discharge the Lien of the Indenture upon the Trust Estate
and the Trustee's rights under the other Financing Documents and execute and
deliver to the Issuer such instruments in writing as shall be requisite to
satisfy same, (b) reconvey to the Issuer the Installment Sale Agreement and the
trust hereby conveyed, (c) assign and deliver to the Company any interest in
Property at the time subject to the Lien of the Indenture which may then be in
its possession, except amounts held by the Trustee for the payment of principal
of, interest and premium, if any, on the Bonds, and (d) deliver to the Bank the
Letter of Credit for cancellation.
(B) If the Trustee draws on the Letter of Credit for payment of the entire
principal of, premium, if any, and interest on the Bonds Outstanding in
accordance with the provisions of the Indenture, then, simultaneously with the
delivery to the Bank of a sight draft and required accompanying documentation,
the Trustee shall deliver to the Bank, in escrow, an instrument or instruments
in form for recording, executed by the Trustee evidencing the assignment to the
Bank without recourse of the Lien of the Indenture and the rights of the
Trustee under the other Financing Documents, together with instructions to the
Bank that such instrument or instruments be released from escrow upon
confirmation from a member bank of the Federal Reserve wire system that same
day funds in the amount of the Trustee's draw on the Letter of Credit have been
transmitted for the account of the Trustee, and the amount paid by the Bank
under the Letter of Credit and any additional sums due the Bank pursuant to the
Reimbursement Agreement shall thereafter constitute the debt secured by the
Indenture.
(C) All Outstanding Bonds shall, prior to the maturity or redemption date
thereof and after the Bonds have been converted to the Fixed Rate, be deemed to
have been paid within the meaning and with the effect expressed in Section
1001(A) if, the following conditions shall have been fulfilled: (1) in case any
of the Bonds are to be redeemed on any date prior to their maturity, the
provisions in Article III hereof relating to such redemption shall have been
satisfied; and (2) there shall be on deposit with the Trustee Non-Preference
Moneys, which shall be either cash or Government Obligations, in an amount
sufficient, without the need for further investment or reinvestment, but
including any scheduled interest on or increment to such obligations, to pay
when due the principal, premium, if any, and interest due and to become due on
<PAGE>
the Bonds on and prior to the redemption date or maturity date thereof, as the
case may be, and to pay the Trustee for its Ordinary Services and Ordinary
Expenses and for its Extraordinary Services and Extraordinary Expenses. The
Trustee may rely upon an opinion of an Accountant as to the sufficiency of the
cash or such Government Obligations on deposit.
ARTICLE XI
MISCELLANEOUS
SECTION 1101. CONSENTS AND OTHER INSTRUMENTS OF BONDHOLDERS. Any consent,
request, direction, approval, waiver, objection, appointment or other
instrument required by the Indenture to be signed and executed by the
Bondholders may be signed and executed in any number of concurrent writings of
similar tenor and may be signed or executed by such Bondholders in person or by
agent appointed in writing. Proof of the execution of any such instrument, if
made in the following manner, shall be sufficient for any of the purposes of
the Indenture, and shall be conclusive in favor of the Trustee with regard to
any action taken under such instrument, namely:
(A) The fact and date of the execution by any Person of any such instrument
may be proved by the affidavit of a witness of such execution or by the
certificate of any notary public or other officer of any jurisdiction,
authorized by the laws thereof to take acknowledgements of deeds, certifying to
the execution thereof. Where such execution is by an officer of a corporation
or association or a member of a partnership on behalf of such corporation,
association or partnership, such affidavit or certificate shall also constitute
sufficient proof of his authority.
(B) The ownership of Bonds shall be proven by the bond register.
(C) Any request, consent or vote of the holder of any Bond shall bind every
future holder of the same Bond and the holder of every Bond issued in exchange
therefor or in lieu thereof, in respect of anything done or permitted to be
done by the Trustee or the Issuer pursuant to such request, consent or vote.
(D) In determining whether the holders of the requisite aggregate principal
amount of Bonds have concurred in any demand, request, direction, consent or
waiver under the Indenture, Bonds which are owned by the Issuer, the Company,
the Bank or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer, the Bank or the
Company shall be disregarded and deemed not to be Outstanding for the purposes
of determining whether the Trustee shall be protected in relying on any such
demand, request, direction, consent or waiver. Only Bonds which the Trustee
knows to be so owned shall be disregarded. Bonds so owned which have been
pledged in good faith may be regarded as Outstanding for the purposes of this
Section 1101 if the pledgee shall establish to the satisfaction of the Trustee
the pledgee's right to vote such Bonds. In case of a dispute as to such right,
any decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
SECTION 1102. LIMITATION OF RIGHTS. With the exception of rights herein
expressly conferred, nothing expressed or to be implied from the Indenture or
the Bonds is intended or shall be construed to give to any person other than
the parties hereto and the holders of the Bonds, any legal or equitable right,
remedy or claim under or in respect to the Indenture or any covenants,
conditions and provisions hereof.
<PAGE>
SECTION 1103. NOTICES. (A) All notices, certificates or other communications
hereunder shall be in writing and shall be sufficiently given and shall be
deemed given when (1) delivered to the applicable address stated below by
registered or certified mail, return receipt requested, or by such other means
as shall provide the sender with documentary evidence of such delivery, or (2)
delivery is refused by the addressee, as evidenced by the Person who attempted
to effect such delivery. The addresses to which notices, certificates and other
communications hereunder shall be delivered are as follows:
IF TO THE ISSUER:
Town of Colonie Industrial Development Agency 347 Old Niskayuna Road Latham,
New York 12110 Attention: Chairman
WITH A COPY TO:
Robert L. Sweeney, Esq. Shanley, Sweeney, Reilly & Allen, PC The Castle at Ten
Thurlow Terrace Albany, New York 12203
IF TO THE COMPANY:
Cynthia Scheuer, Vice President Mechanical Technology Incorporated 968
Albany-Shaker Road Latham, New York 12110
WITH A COPY TO:
Harry D'Agostino, Esq. D'Agostino, Hoblock, Greisler & Siegal 39 North Pearl
Street Albany, New York 12207
IF TO THE TRUSTEE:
Leslie A. Boynton, Vice President Manufacturers and Traders Trust Company One M
& T Plaza, 7th Floor Buffalo, New York 14203
WITH A COPY TO:
Timothy R. McGill, Esq. St. John & Curtin, LLC 1530 First Federal Plaza
Rochester, New York 14614
IF TO THE BANK:
William B. Palmer, Vice President KeyBank National Association 66 South Pearl
Street Albany, New York 12207
(B) A duplicate copy of each notice, certificate and other communication
given hereunder by (1) the Company or the Issuer shall also be given to the
Trustee, and (2) the Company, the Issuer or the Trustee shall also be given to
the Bank. The Issuer, the Company, the Bank and the Trustee may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificate or other communications shall be sent.
SECTION 1104. TRUSTEE AS PAYING AGENT AND BOND REGISTRAR. The Trustee is hereby
designated and agrees to act as paying agent and the Bond Registrar for and in
respect to the Bonds.
SECTION 1105. COUNTERPARTS. The Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
<PAGE>
SECTION 1106. SUCCESSORS AND ASSIGNS. All the covenants and representations
contained in the Indenture, by or on behalf of the Issuer, shall bind and inure
to the benefit of its successors and assigns, whether so expressed or not.
SECTION 1107. INFORMATION UNDER UNIFORM COMMERCIAL CODE. The Issuer is the
Debtor. The Trustee is the Secured Party. The address of the Trustee from which
information concerning the security interest may be obtained and the address of
the Issuer are set forth in Section 1103 of this Indenture.
SECTION 1108. APPLICABLE LAW. The Indenture shall be governed exclusively by
the applicable laws of the State.
SECTION 1109. NO RECOURSE; SPECIAL OBLIGATION. (A) The obligations and
agreements of the Issuer contained herein and in the other Financing Documents
and any other instrument or document executed in connection therewith, and any
other instrument or document supplemental hereto or thereto, shall be deemed
the obligations and agreements of the Issuer, and not of any member, officer,
director, agent (other than the Company) or employee of the Issuer in his
individual capacity, and the members, officers, directors, agents (other than
the Company) and employees of the Issuer shall not be liable personally hereon
or be subject to any personal liability or accountability based upon or in
respect hereof or thereof or of any transaction contemplated hereby or thereby.
(B) The obligations and agreements of the Issuer contained herein shall not
constitute or give rise to any obligations of the Town of Colonie, New York or
the State and neither the Town of Colonie, New York nor the State shall be
liable thereon, and further, such obligations and agreements shall not
constitute or give rise to a general obligation of the Issuer, but rather shall
constitute limited obligations of the Issuer payable solely from the revenues
of the Issuer derived and to be derived from the sale or other disposition of
the Project Facility (except for revenues derived by the Issuer with respect to
the Unassigned Rights).
(C) No order or decree of specific performance with respect to any of the
obligations of the Issuer hereunder (other than pursuant to Section 602 hereof,
and then only to the extent of the Issuer's obligations thereunder) shall be
sought or enforced against the Issuer unless the party seeking such order or
decree shall first have complied with Section 516 hereof.
(D) The Issuer shall be entitled to the advice of counsel (who may be
counsel to any party or to any Bondholder) and shall be wholly protected as to
any action taken or omitted to be taken in good faith in reliance on such
advice. The Issuer may rely conclusively on any notice, certificate or other
document furnished to it under any Financing Document and reasonably believed
by it to be genuine. The Issuer shall not be liable for any action taken by it
in good faith and reasonably believed by it to be within the discretion or
power conferred upon it, or in good faith omitted to be taken by it and
reasonably believed to be beyond such discretion or power, or taken by it
pursuant to any direction or instruction by which it is governed under any
Financing Document, or omitted to be taken by it by reason of the lack of
direction or instruction required for such action under any Financing Document,
and shall not be responsible for the consequences of any error of judgment
reasonably made by it. When any payment, consent or other action by the Issuer
is called for by the Indenture, the Issuer may defer such action pending an
investigation or inquiry or receipt of such evidence, if any, as it may require
in support thereof. A permissive right or power to act shall not be construed
<PAGE>
as a requirement to act, and no delay in the exercise of a right or power shall
affect the subsequent exercise thereof. The Issuer shall in no event be liable
for the application or misapplication of funds or for other acts or defaults by
any Person except by its own members, officers and employees.
(E) In approving, concurring in or consenting to any action or in
exercising any discretion or in making any determination under the Indenture,
the Issuer may consider the interests of the public, which shall include the
anticipated effect of any transaction on tax revenues and employment, as well
as the interests of the other parties hereto and the Bondholders; provided,
however, that nothing herein shall be construed as conferring on any Person
other than the Trustee, the Bank and the Bondholders any right to notice,
hearing or participation in the Issuer's consideration, and nothing in this
Section 1109 shall be construed as conferring on any of them any right
additional to those conferred elsewhere herein. Subject to the foregoing, the
Issuer shall not unreasonably withhold any approval or consent to be given by
it hereunder.
SECTION 1110. ASSIGNMENT TO BANK. In the event the Trustee receives moneys
drawn under the Letter of Credit in an amount sufficient to pay in full the
principal of, premium, if any, and interest on the Bonds then Outstanding, the
Trustee shall execute and deliver to the Bank an instrument assigning the Bank
all of its right, title and interest to, in and under the Financing Documents.
SECTION 1111. NOTICES TO RATING AGENCY.
(A) The Trustee shall immediately notify Standard & Poor's if any of the
following events occur:
(1) any expiration, termination, substitution or extension relating to the
Letter of Credit or any Substitute Letter of Credit;
(2) any redemption or purchase of all Outstanding Bonds;
(3) any amendment to any Financing Document entered into or consented to by
the Trustee pursuant to Article VIII or Article IX hereof; or
(4) the exercise by the Company of the Conversion Option.
(B) All notices to Standard & Poor's required by this Section 1111 shall be
sent to the following address:
Standard & Poor's 25 Broadway, 13th Floor New York, New York 10004 Attention:
LOC Surveillance Group
Standard & Poor's may, by notice in writing to the Trustee, designate any
further or different address to which subsequent notices under this Section
1111 shall be sent.
IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in its
name and behalf by its Chairman, and to evidence its acceptance of the trusts
hereby created, the Trustee has caused these presents to be signed in its name
and behalf by one of its duly authorized trust officers, all as of the day and
year first hereinabove written.
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY
BY: (Vice) Chairman
<PAGE>
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
BY: Authorized Officer
The Company hereby approves, consents to and agrees to be bound by all of the
terms and provisions of the Indenture insofar as such terms or provisions,
directly or indirectly, relate to, apply to, require or prohibit action by or
deal with the Company, or Property of the Company, including, without
limitation, the Project Facility, and including, but not limited to, all
provisions for the deposit or payment of moneys to funds held by the Trustee
under the Indenture. The Company hereby agrees, at its own expense, to do all
things and take all actions as shall be necessary to enable the Issuer to
perform its obligations under the Indenture. This paragraph shall bind the
Company and its successors and assigns.
MECHANICAL TECHNOLOGY INCORPORATED
BY: Authorized Representative
STATE OF NEW YORK ) ) ss: COUNTY OF ALBANY )
On the 14th day of December in the year 1998 before me, the undersigned, a
notary public in and for said state, personally appeared PETER J. HESS,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual or the person upon behalf of which
the individual acted, executed the instrument.
____________________________________ Notary Public
STATE OF NEW YORK ) ) ss: COUNTY OF ALBANY )
On the 16th day of December in the year 1998 before me, the undersigned, a
notary public in and for said state, personally appeared NANCY L. GEORGE,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that she executed the same in her capacity, and that by her
signature on the instrument, the individual or the person upon behalf of which
the individual acted, executed the instrument.
____________________________________ Notary Public
STATE OF NEW YORK ) ) ss: COUNTY OF ALBANY )
On the 16th day of December in the year 1998 before me, the undersigned, a
notary public in and for said state, personally appeared CYNTHIA A. SCHEUER,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual or the person upon behalf of which
the individual acted, executed the instrument.
____________________________________ Notary Public
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY (a public benefit corporation of
the State of New York)
<PAGE>
TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BOND
(MECHANICAL TECNOLOGY INCORPORATED PROJECT - LETTER OF CREDIT SECURED), SERIES
1998A
NO.: R-1 $6,000,000
MATURITY DATE: December 1, 2013
DATED: December 17, 1998 CUSIP: 196210 GN2
Town of Colonie Industrial Development Agency, a public benefit corporation of
the State of New York (the "Issuer"), for value received, hereby promises to
pay, solely from the sources hereinafter described, to Cede & Co. or registered
assigns, on the Maturity Date identified above (subject to any right of prior
redemption hereinafter provided for), the principal sum of Six Million Dollars
(subject to reduction as hereinafter provided) and interest thereon (computed
on the basis of a 365 or 366-day year for the actual number of days elapsed)
from the date set forth above, or from the most recent Interest Payment Date to
which interest has been paid, to the Maturity Date identified above (or such
earlier date on which the principal hereof has been paid or duly provided for),
at the rate described below, on the first Thursday of each month (each an
"Interest Payment Date"), commencing January 7, 1999. The principal of this
Bond shall be paid on the Maturity Date upon presentation and surrender hereof
at the Office of Manufacturers and Traders Trust Company, as trustee (together
with its successors in trust, the "Trustee") under the trust indenture dated as
of December 1, 1998 (from time to time, as amended or supplemented, the
"Indenture") by and between the Issuer and the Trustee, or at the duly
designated office of any successor trustee under the Indenture. The
installments of interest described above shall, as provided in the Indenture,
be paid to the Person in whose name this Bond (or one or more Predecessor
Bonds, as defined in the Indenture) is registered at the close of business on
the Business Day next preceding any Interest Payment Date (the "Regular Record
Date"), and shall be paid by check or draft of the Trustee mailed by the
Trustee on such Interest Payment Date to such registered owner at his address
appearing on the registration books of the Issuer, or at the option of any
holder of Bonds in an aggregate principal amount of $250,000 or greater be
transmitted on such Interest Payment Date by wire transfer at such owner's
written request to the bank account number on file with the Trustee. Any such
interest not so punctually paid or duly provided for shall forthwith cease to
be payable to the registered owner on such Regular Record Date, and may be paid
to the Person in whose name this Bond (or one or more Predecessor Bonds) is
registered at the close of business on a date for the payment of such defaulted
interest to be fixed by the Trustee (the "Special Record Date"), notice whereof
being given to registered owners of the Bonds not less than ten (10) days prior
to such Special Record Date, or may be paid in any other lawful manner as shall
be determined by the Trustee. The principal of, premium, if any, on and
interest on this Bond are payable in lawful money of the United States of
America.
(Calculation of Interest)
This Bond shall bear interest as follows:
(a) From the Closing Date through and including December 23, 1998, the
Bonds shall bear interest at a rate per annum equal to five and fifty-five
hundredths percent (5.55%).
<PAGE>
(b) Thereafter, except as provided in (e) below, this Bond (other than
Pledged Bonds) shall bear interest at the "Adjustable Rate".
(i) The Adjustable Rate shall be the rate of interest established by the
Remarketing Agent on the first Business Day prior to each Adjustment Date,
which in the Remarketing Agent's reasonable judgment would result, as nearly as
practicable, in the market value of this Bond on an Adjustment Date being equal
to one hundred percent (100%) of the principal amount thereof. The Adjustable
Rate so determined shall be adjusted in accordance with the directions of the
Remarketing Agent on the Adjustment Date and shall remain in effect through and
including the day prior to the next following Adjustment Date.
(ii) In determining the Adjustable Rate pursuant to the foregoing paragraph
(b)(i), the Remarketing Agent shall take into account, to the extent
applicable, (A) the market interest rates for comparable securities held by
open-end municipal or other fixed income bond funds or other institutional or
private investors with substantial portfolios (w) with interest rate adjustment
periods and demand purchase options substantially identical to the Bonds, (x)
bearing interest at a variable rate intended to maintain par value, (y) rated
by a national credit rating agency in the same category as the Bonds or, if not
rated, secured by substantially the same level of security as the Bonds, and
(z) the interest on which is included in gross income of the holders thereof
for federal income taxation purposes; (B) other financial market rates and
indices which may have a bearing on the Adjustable Rate (including, but not
limited to rates borne by commercial paper, commercial paper, Treasury bills,
commercial bank prime rates, certificate of deposit rates, federal funds rates,
the London Interbank Offered Rate, indices maintained by The Bond Buyer, and
other publicly available taxable interest rate indices); (C) general financial
market conditions (including current forward supply); (D) factors particular to
the Project or the credit standing of the Company and the Bank; and (E) such
other factors which the Remarketing Agent deems appropriate.
(iii) On the Business Day prior to each Adjustment Date, the Remarketing
Agent shall notify the Trustee, by Immediate Notice, of the Adjustable Rate.
(c) If for any reason the position of Remarketing Agent is vacant or the
Remarketing Agent fails to act, the Adjustable Rate shall be determined by a
third party selected by the Company at the Company expense and shall be equal
to one hundred percent (100%) of the yield applicable to 13 week United States
Treasury bills determined by such third party on the basis of the average per
annum discount rate at which such 13- week Treasury bills shall have been sold
(1) at the most recent Treasury auction conducted during the immediately
preceding Adjustment Period, (2) if no such auction shall have been conducted
during the immediately preceding Adjustment Period, at the most recent Treasury
auction conducted prior to such preceding Adjustment Period, plus fifty (50)
basis points; provided, however, that in the event the Company notifies the
Trustee that an index (as published in The Wall Street Journal) of seven-day
yield evaluations at par of issuers of securities, the interest on which is
includable in gross income for federal income tax purposes, and of comparable
rating to the rating on the Bonds, published by any nationally recognized
municipal securities evaluation service is available, the Adjustable Rate shall
be determined by the Trustee and shall be equal to such index.
(d) The Adjustable Rate shall be calculated based on a 365 or 366- day year
for the actual number of days elapsed. Further, each determination of the
Adjustable Rate pursuant to and in accordance with the foregoing terms of the
Indenture and the terms of this Bond shall be conclusive and binding on the
Issuer, the Trustee, the Company, the Bank, and the holder of this Bond.
<PAGE>
(e) (i) From and after the Conversion Date through the maturity or earlier
redemption of the Bonds, this Bond shall bear interest at the Fixed Rate, which
shall be a fixed rate (or rates) of interest established by the Remarketing
Agent at least fifteen (15), but not more than thirty (30) days prior to the
Conversion Date, which in the reasonable judgment of the Remarketing Agent
would result, as nearly as practicable, in the market value of this Bond on the
Conversion Date being equal to one hundred percent (100%) of the principal
amount thereof.
(ii) (A) At the Remarketing Agent's discretion, after the exercise of the
Conversion Option, the Bonds may be converted into serial bonds, with a
principal amount of Bonds maturing on a Principal Payment Date each year equal
to the principal amount required to be redeemed as set forth in Section 301(E)
of the Indenture. In such event, each maturity of Bonds may bear a different
interest rate, each of which shall be determined by the Remarketing Agent in
the same manner as the Fixed Rate (for convenience each such rate shall be
referred to as the Fixed Rate); provided, however, that in no event shall the
Remarketing Agent be permitted to convert the Bonds into serial bonds as
described above without delivering to the Trustee an opinion of Bond Counsel
that such conversion is lawful under the Act and permitted under the Indenture.
(B) The Interest Payment Dates after the exercise of the Conversion Option
shall be semi-annual, with one Interest Payment Date being the first day of the
month preceding the Fixed Rate Conversion Date and the other Interest Payment
Date being the first day of the month six (6) months later. Principal shall be
payable annually thereafter in the amounts and the years set forth in Section
301(E) hereof on the Principal Payment Dates.
(iii) In determining the Fixed Rate, the Remarketing Agent shall take into
account, to the extent applicable, (A) market interest rates for comparable
securities which are held by open-end municipal or other fixed income bond
funds or other institutional or private investors with substantial portfolios
(w) with a term equal to the period to maturity remaining on the Bonds, (x) the
interest on which is included in the gross income of the holders thereof for
federal income tax purposes, (y) rated by a national credit rating agency in
the same rating category as the Bonds, or, if not rated, secured by
substantially the same level of security as the Bonds, and (z) with redemption
provisions similar to those which have bearing on the Fixed Rate; (B) other
financial market rates and indices (including but not limited to rates borne by
industrial development bonds, other taxable revenue bonds, Treasury
obligations, commercial bank prime rates, certificate of deposit rates, federal
funds rates, indices maintained by The Bond Buyer and other publicly available
taxable interest rates and indices); (C) general financial market conditions
(including current forward supply); (D) factors particular to the Project or
the credit standing of the Company and the Bank; and (E) such other factors
which the Remarketing Agent deems appropriate.
(iv) The Fixed Rate shall be calculated based on a 360-day year of twelve
30-day months. The determination of the Fixed Rate by the Remarketing Agent
pursuant to and in accordance with the terms of the Indenture and the terms of
this Bond shall be conclusive and binding on the Issuer, the Trustee, the
Company, the Bank and the holder of this Bond.
(v) To exercise the Conversion Option, the Company shall deliver at least
sixty (60) days prior to the Conversion Date, written notice to the Trustee,
the Issuer and the Bank of its election of the Conversion Option. On the
Conversion Date, this Bond shall be subject to a Mandatory Tender for purchase
as provided in Section 304 of the Indenture. Notwithstanding anything to the
<PAGE>
contrary contained herein, such notice shall not be effective unless the Bank
shall have consented thereto in writing and such notice is accompanied by:
(A) a Substitute Letter of Credit with an expiration date of not earlier
than fifteen (15) days following the Principal Payment Date which is at least
three (3) years after the next succeeding Principal Payment Date and in an
amount equal to the sum of the aggregate principal amount of the Bonds then
Outstanding, 210 days' interest thereon computed at the Fixed Rate, together
with the Optional Redemption Premium; provided, however, that if the Letter of
Credit then in place has an expiration date of not earlier than fifteen (15)
days following the Principal Payment Date which is at least three (3) years
after the next succeeding Principal Payment Date and in an amount equal to the
aggregate principal amount of the Bonds then Outstanding, 210 days' interest
thereon computed at the Fixed Rate, together with the Optional Premium, no
Substitute Letter of Credit need be obtained;
(B) a statement as to whether the Bonds shall be serial bonds as set forth
in paragraph (e)(ii) above; and
(C) an opinion of Bond Counsel reasonably satisfactory to the Trustee, the
Issuer and the Bank to the effect that the exercise of the Conversion Option is
lawful under the Act and permitted by the Indenture.
(f) Notwithstanding anything herein to the contrary, any Pledged Bond shall
bear interest at a rate equal to the Bank Rate, as such rate shall change from
time to time; provided, however, that at no time shall the interest rate in
effect for any Pledged Bond exceed the maximum rate permitted by applicable
usury laws.
(g) Notwithstanding anything herein to the contrary, in no event will the
rate of interest borne by any Bond (except any Bond constituting a Pledged
Bond) exceed fifteen percent (15%) per annum.
(h) The Issuer hereby appoints the Company to act as agent of the Issuer
for purposes of exercising the Conversion Option, all as set forth in the
Indenture, and subject to compliance with the terms and provisions of the
Indenture.
(Conversion Option)
In the event the Company exercises the Conversion Option with respect to the
Bonds, on the Conversion Date all Bonds which have not been called for
redemption shall be subject to Mandatory Tender by the owners thereof on the
Conversion Date. Notwithstanding the foregoing, each Bondholder may, by
delivery to the Trustee for receipt at least twenty (20) days immediately
preceding the Conversion Date of an irrevocable election not to tender, elect
to continue to hold its Bonds (or portions thereof) past the Conversion Date at
a Fixed Rate to be in effect at such time. Such notice shall be in
substantially the form of Exhibit C-2 attached to the Indenture. Not earlier
than sixty (60) days prior to the Conversion Date or later than thirty (30)
days prior to the Conversion Date, the Trustee shall send a notice to the
owners of all Outstanding Bonds which have not been called for redemption, in
substantially the form of Exhibit C-1 attached to the Indenture. Such notice
shall describe (a) the terms of the Mandatory Tender, (b) the right of the
owner to elect not to tender, (c) the Letter of Credit to be in effect
following the Mandatory Tender, (d) the right of the owner of Bonds in an
aggregate amount of $200,000 or more to elect not to tender the total principal
amount and to continue to hold a portion of its Bonds (but in no event may
<PAGE>
either the amount tendered or the amount not tendered be any amount other than
$100,000, or any integral multiple of $5,000 in excess thereof), and (e) that
the rating then in effect with respect to the Bonds, if any, may be withdrawn
or lowered.
In the event that prior to the Conversion Date of the Bonds the Company shall
deliver notice to the Trustee at least sixty (60) days prior to the expiration
of the Letter of Credit or Substitute Letter of Credit securing such Bonds of
its intent to deliver an Alternate Letter of Credit in substitution for such
Letter of Credit or Substitute Letter of Credit, all Bonds secured by such
Letter of Credit which have not been called for redemption shall be subject to
Mandatory Tender by the owner thereof on the Alternate Security Date.
Notwithstanding the foregoing, each Bondholder may, by delivery to the Trustee
for receipt at least twenty (20) days immediately preceding any Alternate
Security Date of an irrevocable election not to tender, elect to continue to
hold its Bonds past the respective Alternate Security Date. Such notice shall
be in substantially the form of Exhibit C-4 attached to the Indenture.
Not earlier than sixty (60) days prior to the Alternate Security Date or later
than thirty (30) days prior to the Alternate Security Date, the Trustee shall
send a notice to the owners of all Outstanding Bonds which have not been called
for redemption, in substantially the form of Exhibit C-3 attached to the
Indenture. Such notice shall describe (1) the terms of the Mandatory Tender,
(2) the right of the owner to elect not to tender, (3) a brief description of
the Alternate Letter of Credit and the identity of the Substitute Bank issuing
the Alternate Letter of Credit, (4) the right of the owner of Bonds in an
aggregate amount of $200,000 or more to elect not to tender the total principal
amount and to continue to hold a portion of its Bonds (but in no event may
either the amount tendered or the amount not tendered be any amount other than
$100,000, or any integral multiple of $5,000 in excess thereof) and (5) that
the rating then in effect with respect to the Bonds secured by such Alternate
Letter of Credit will be withdrawn or lowered.
Owners of Bonds required to be tendered who do not provide the Trustee with the
notice of their election not to tender as described above shall be required to
deliver their Bonds to the Trustee for purchase at the Purchase Price on the
Conversion Date or the Alternate Security Date, as the case may be, with an
appropriate endorsement for transfer or accompanied by a bond power endorsed in
blank. Any such Bonds not so delivered on such Conversion Date or the Alternate
Security Date, as the case may be ("Undelivered Bonds"), for which there has
been irrevocably deposited in trust with the Trustee an amount of moneys
sufficient to pay the Purchase Price of the Undelivered Bonds, shall be deemed
to have been purchased.
IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS REQUIRED TO BE TENDERED (OTHER
THAN AN OWNER OF BONDS WHO HAS GIVEN NOTICE OF ITS ELECTION NOT TO TENDER AS
PROVIDED ABOVE) TO DELIVER ITS BONDS ON OR PRIOR TO THE CONVERSION DATE OR THE
ALTERNATE SECURITY DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT
(INCLUDING ANY INTEREST TO ACCRUE ON OR SUBSEQUENT TO SUCH CONVERSION DATE OR
THE ALTERNATE SECURITY DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED
BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF
THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE
THEREFOR.
(Demand Purchase Option)
<PAGE>
This Bond shall be purchased, at the option ("Demand Purchase Option") of the
Owner hereof, at a price (the "Purchase Price") equal to one hundred percent
(100%) of the principal amount hereof plus accrued and unpaid interest hereon
to the Repurchase Closing Date (as hereinafter defined), upon:
(A) Delivery to, and receipt by, the Tender Agent at its designated
address, or the Trustee at the address set forth herein on a Business Day of a
written notice ("Bondholder's Tender Notice") which requests the purchase of
the Bond. The Tender Notice shall be in substantially the form of Exhibit C-5
to the Indenture. Such Tender Notice shall provide the following information:
(1) the principal amount of such Bond or portion thereof to be purchased (the
"Tendered Bond"), which portion shall be $100,000 or an integral multiple of
$5,000 in excess thereof; provided, however, that no portion of a Tendered Bond
shall be purchased if it results in the unpurchased portion of the Tendered
Bond being less than $100,000, (2) the number of the Tendered Bond, (3) the
date on which the Tendered Bond shall be purchased, which date shall be a
Business Day at least seven (7) calendar days following the receipt by the
Trustee or the Tender Agent of the Bondholder's Tender Notice (the "Repurchase
Closing Date"), (4) the name and address of the Bondholder, (5) an irrevocable
request of such purchase, and (6) an undertaking of the Bondholder to deliver
the Bond to the Tender Agent or the Trustee in accordance with (B) below; and
(B) Delivery of the Tendered Bond, at the office of the Trustee or Tender
Agent at or prior to 10:00 a.m., New York City time, on the Repurchase Closing
Date with an appropriate endorsement for transfer or accompanied by a bond
power endorsed in blank; provided, however, the Tendered Bond shall only be
deemed properly tendered hereunder if the Tendered Bond delivered to the Tender
Agent or the Trustee conforms in all respects to the description thereof in the
Bondholder's Tender Notice; and
(C) In the event the Tender Agent or the Trustee, as the case may be,
determines that the Bondholder's Tender Notice is defective in any respect
whatsoever, the Tender Agent or the Trustee, as the case may be, shall
immediately notify the Bondholder tendering the Bond; and
(D) Bonds which are the subject of a Bondholder's Tender Notice described
in (A) above, but which are not tendered in accordance with (B) above, shall be
deemed tendered and all rights of the holder thereof shall be satisfied from
the deposit with the Tender Agent or the Trustee of the Purchase Price thereof
and the Tender Agent or the Trustee, as the case may be, shall hold such
Purchase Price in trust for the benefit of such holder until the Bonds
purchased with such moneys shall have been delivered to or for the account of
such Holder. Holders of Tendered Bonds to be tendered which are not delivered
to the Tender Agent or the Trustee by the holder thereof shall have no further
rights with respect to such Bonds except to receive payment of the Purchase
Price therefor upon surrender of such Bonds to the Tender Agent or the Trustee.
Notwithstanding the foregoing, the Bondholders shall have no Demand Purchase
Option described herein if (A) there shall have occurred and be continuing an
Event of Default under the Indenture, except for an Event of Default under
Section 601(I) of the Indenture or (B) the Fixed Rate is in effect for the
Bonds being held by such Bondholder.
Furthermore, no Bondholder shall have the right to exercise a Demand Purchase
Option with respect to those Bonds for which a notice of redemption has been
mailed by the Trustee.
(Project Description)
<PAGE>
This Bond is one of a duly authorized issue of bonds of the Issuer designated
"Town of Colonie Industrial Development Agency Taxable Industrial Development
Revenue Bonds (Mechanical Technology Incorporated Project - Letter of Credit
Secured), Series 1998A" in the aggregate principal amount of $6,000,000 (the
"Bonds"). The Bonds are issued for the purpose of assisting in providing
financing to the Issuer for a project (the "Project") consisting of the
following: (A) (1) the acquisition of a leasehold interest in a parcel of land
containing approximately 35.6 acres located at 968 Albany-Shaker Road in the
Town of Colonie, Albany County, New York (the "Land"), together with the
existing buildings located thereon which contain approximately 98,000 square
feet in the aggregate (such buildings known individually as Building I,
Building II and Building III and hereinafter collectively referred to as the
"Existing Facility"), (2) the demolition of Building I which contains
approximately 14,105 square feet of space, (3) the construction of a new
building to replace Building I and which will contain approximately 32,000
square feet of space (the "New Facility") (the Existing Facility and the New
Facility hereinafter collectively referred to as the "Facility"), (4) the
renovation of Building III and (5) the acquisition of and installation therein
and thereon of certain machinery and equipment (the "Equipment") (the Land, the
Facility and the Equipment being hereinafter collectively referred to as the
"Project Facility"), all of the foregoing to be occupied by Mechanical
Technology Incorporated (the "Company") and operated as a manufacturing
facility, a portion of which will be leased by the Company to Plug Power, LLC
and operated as a facility for the manufacture, research and development of
fuel cells for residential and automotive applications and related products and
any other related activities; (B) the financing of all or a portion of the
costs of the foregoing by the issuance of the Bonds; (C) the granting of
certain other "financial assistance" (within the meaning of Section 854(14) of
the Act) with respect to the foregoing, including exemption from certain sales
taxes, deed transfer taxes, mortgage recording taxes and real property taxes
(collectively with the Bonds, the "Financial Assistance"); and (D) the lease
(with an obligation to purchase) or sale of the Project Facility to the Company
or such other person as may be designated by the Company and agreed upon by the
Agency. The Project Facility is to be sold by the Issuer to the Company
pursuant to the provisions of an installment sale agreement dated as of
December 1, 1998 (the "Installment Sale Agreement") by and between the Issuer
and the Company.
The Bonds are issued under and are equally and ratably secured by the
Indenture. The Indenture grants the Trustee a first security interest in the
Trust Revenues (as defined in the Indenture).
In order to provide additional security for the Bonds, the Company has entered
into an irrevocable letter of credit and reimbursement agreement dated as of
December 1, 1998 (the "Reimbursement Agreement") with KeyBank National
Assocation (the "Bank"), pursuant to which the Bank has issued in favor of the
Trustee an irrevocable transferable direct pay letter of credit (the "Letter of
Credit"), issued in an amount equal to the Credit Amount (as defined in the
Reimbursement Agreement). Under the Letter of Credit, the Bank is obligated to
pay to the Trustee, upon presentation of a sight draft and required
accompanying documentation, the amount necessary to pay, the principal of, and
interest on the Bonds then due and payable (whether by mandatory redemption or
by maturity due to acceleration or otherwise). On each Bond Payment Date and
immediately upon (1) a declaration that all the Bonds have become due and
payable by acceleration, or (2) a mandatory redemption of all the Bonds
Outstanding, the Trustee shall present to the Bank a sight draft and required
accompanying documentation and draw upon the Letter of Credit for the principal
amount, if any and accrued interest then due on the Bonds. The Letter of Credit
<PAGE>
provides that it shall expire on December 15, 2013 or earlier under certain
circumstances. The Company may provide for delivery to the Trustee of a
Substitute Letter of Credit or an Alternate Letter of Credit issued by another
banking institution as provided in the Installment Sale Agreement.
As additional security for the payment of principal of and interest on the
Bonds, the Issuer has assigned to the Trustee all of the Issuer's rights and
remedies under the Installment Sale Agreement (except the Unassigned Rights, as
therein defined), including the right to receive installment purchase payments
and other amounts payable thereunder pursuant to a pledge and assignment dated
as of December 1, 1998 (the "Pledge and Assignment") from the Issuer to the
Trustee. Further security for the payment of principal of and interest on the
Bonds is provided by a guaranty dated as of December 1, 1998 (the "Guaranty")
from Ling Electronics, Inc. (the "Corporate Guarantor") to the Trustee. The
Assignment of Rents, the Pledge and Assignment and a memorandum relating to the
Installment Sale Agreement are to be recorded in the office of the County Clerk
of Albany County, New York.
Reference is hereby made to the Indenture, the Installment Sale Agreement, the
Reimbursement Agreement, the Pledge and Assignment, the Guaranty and the Letter
of Credit, and to all amendments and supplements thereto, for a description of
the nature and extent of the security for the Bonds, the terms and conditions
upon which the Bonds are issued and secured and the rights, duties and
obligations of the Issuer, the Trustee, the Company, the Bank and the
Bondholders. Copies of such documents are on file in the Office of the Trustee.
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM PAYMENTS
MADE BY THE BANK UNDER THE LETTER OF CREDIT AND BY THE COMPANY UNDER THE
INSTALLMENT SALE AGREEMENT, MONEYS AND SECURITIES HELD BY THE TRUSTEE UNDER THE
INDENTURE, AND THE SECURITY PROVIDED BY THE PLEDGE AND ASSIGNMENT AND THE
GUARANTY.
(Extraordinary Redemption Without Premium)
The Bonds are subject to redemption prior to maturity (1) as a whole, without
premium, in the event of (a) a taking in Condemnation of, or failure of title
to, all or substantially all of the Project Facility, (b) damage to or
destruction of part or all of the Project Facility and election by the Company
to redeem the Bonds, or (c) a taking in Condemnation of part of the Project
Facility and election by the Company to redeem the Bonds, or (2) in part,
without premium in the event that (a) to the extent excess moneys remain in the
Insurance and Condemnation Fund following damage or condemnation of a portion
of the Project Facility and completion of the repair, rebuilding or restoration
of the Project Facility by the Company and, pursuant to the Indenture, such
excess moneys are not paid to the Company or (b) in the event that excess
moneys remain in the Project Fund after the Completion Date. In any such event,
the Bonds shall be redeemed, as a whole or in part, at such time as the Trustee
determines, at a redemption price equal to the principal amount thereof, plus
accrued interest to the redemption date, without premium.
(Redemption Without Premium for Failure to Obtain a Substitute Letter of
Credit)
The Bonds are also subject to redemption prior to maturity in the event of
failure by the Company to provide a Substitute Letter of Credit at least
forty-five (45) days prior to the Interest Payment Date immediately preceding
the expiration date of the Letter of Credit then in effect. In any such event,
the Bonds shall be redeemed, as a whole, on such Interest Payment Date, at a
<PAGE>
redemption price equal to the principal amount to be redeemed, plus accrued
interest to the redemption date, without premium.
(Extraordinary Redemption Without Premium at Election of Bank)
The Bonds are also subject to redemption prior to maturity upon receipt by the
Trustee of a written notice from the Bank of the occurrence and continuance of
a default by the Company under the Reimbursement Agreement and the Bank's
election to compel redemption of the Bonds. In such event, the Bonds shall be
redeemed, as a whole, in the manner provided in Article III of the Indenture,
on the earliest date for which the Trustee can give notice of redemption
pursuant to Section 303 of the Indenture, at a redemption price equal to the
principal amount thereof, plus accrued interest to the redemption date, without
premium.
(Redemption at Company's Option)
The Bonds are also subject to redemption prior to maturity in denominations of
$5,000 or any integral multiple of $5,000 in excess thereof at the option of
the Company by exercise of its right to prepay the installment purchase
payments payable under the Installment Sale Agreement as provided in Section
5.5 of the Installment Sale Agreement, on any Interest Payment Date, in the
manner provided in this Article III, at a redemption price equal to the
principal amount thereof, plus accrued interest to the redemption date, without
premium.
(Scheduled Mandatory Redemption Without Premium)
The Bonds are also subject to scheduled mandatory redemption prior to maturity,
commencing December 1, 1999 and on each December 1 thereafter, by the
application of Sinking Fund Payments at a redemption price equal to the
principal amount thereof, plus accrued interest to the redemption date, without
premium, on December 1 of the years and in the principal amounts set forth
below:
YEAR SINKING FUND PAYMENT YEAR SINKING FUND PAYMENT
1999 $285,000 2006 $385,000
2000 $275,000 2007 $410,000
2001 $290,000 2008 $435,000
2002 $310,000 2009 $460,000
2003 $325,000 2010 $485,000
2004 $345,000 2011 $515,000
2005 $365,000 2012 $540,000
Following retirement by mandatory sinking fund redemption prior to their Stated
Maturity, there will remain $575,000 principal amount of the Bonds maturing on
December 1, 2013 to be paid at maturity.
(Procedures for Redemption)
Notice of the intended redemption of each Bond subject to redemption shall be
given not less than thirty (30) days nor more than forty-five (45) days prior
to the redemption date by the Trustee one time by first class mail postage
prepaid to the registered owner at the address of such owner shown on the
Trustee's bond register. The failure to give any such notice, or any defect
therein, shall not affect the validity of any proceeding for the redemption of
any Bond with respect to which no such failure to give notice, or defect
therein, has occurred.
<PAGE>
In the event of any partial redemption, the particular Bonds or portions
thereof to be redeemed shall be selected by the Trustee not more than sixty
(60) days prior to the redemption date in order of maturity, and within each
maturity by lot or by such other such method as the Trustee shall deem fair and
appropriate. The Trustee may provide for the redemption of portions (equal to
$5,000 or any whole multiple thereof) of Outstanding Bonds. In no event shall
the principal amount of Bonds subject to any partial redemption be other than a
whole multiple of $5,000; provided, however, that no $5,000 portion of a Bond
shall be redeemed if it results in the unredeemed portion of the Bond being
less than $100,000.
Bonds (or portions thereof as aforesaid) for whose redemption and payment
provision is made in accordance with the Indenture shall thereupon cease to be
entitled to the Lien of the Indenture and shall cease to bear interest from and
after the date fixed for redemption.
The owner of this Bond shall have no right to enforce the provisions of the
Indenture or to institute action to enforce the covenants therein, or to take
any action with respect to any Event of Default under the Indenture, or to
institute, appear in or defend any suit or other proceeding with respect
thereto, except as provided in the Indenture.
Modifications or alterations of the Indenture or of any indenture supplemental
thereto may be made only to the extent and in the circumstances permitted by
the Indenture.
The principal hereof may be declared or may become due on the conditions and in
the manner and at the time set forth in the Indenture upon the occurrence of an
Event of Default as provided in the Indenture.
The Bonds are issuable in the denomination of $100,000 or any multiple of
$5,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, this Bond, upon surrender for transfer at the
principal office of the Trustee as Bond Registrar, is transferable upon an
assignment duly executed by the registered owner hereof or his duly authorized
legal representative, and, upon such transfer, one or more new Bonds of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
No service charge shall be made for any transfer or exchange of Bonds, but the
Issuer or the Trustee may make a charge for transfer or exchange of Bonds
sufficient to reimburse them for any tax, fee or other governmental charge
required to be paid with respect to such transfer or exchange, and such charge
shall be paid before any new Bond shall be delivered.
NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR REDEMPTION
PRICE OF OR THE INTEREST ON THIS BOND OR FOR ANY CLAIM BASED HEREON OR ON THE
INDENTURE, AGAINST ANY PAST, PRESENT OR FUTURE MEMBER, OFFICER, DIRECTOR,
EMPLOYEE OR AGENT (EXCEPT THE COMPANY), AS SUCH, OF THE ISSUER OR OF ANY
PREDECESSOR OR SUCCESSOR CORPORATION, EITHER DIRECTLY OR THROUGH THE ISSUER OR
OTHERWISE, WHETHER BY VIRTUE OF ANY CONSTITUTION, STATUTE OR RULE OF LAW, OR BY
THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY, OR OTHERWISE, ALL SUCH LIABILITY
BEING, BY THE ACCEPTANCE HEREOF, EXPRESSLY WAIVED AND RELEASED.
Capitalized terms used in this Bond and not defined herein shall have the
meaning ascribed to such terms in the Indenture.
<PAGE>
This Bond shall not be entitled to any benefit under the Indenture or become
valid or obligatory for any purpose until the certificate of the Trustee shall
be endorsed hereon.
THE BONDS DO NOT CONSTITUTE AND SHALL NOT BE A DEBT OF THE STATE OF NEW YORK OR
THE TOWN OF COLONIE, NEW YORK AND NEITHER THE STATE OF NEW YORK NOR THE TOWN OF
COLONIE, NEW YORK SHALL BE LIABLE THEREON. THE BONDS DO NOT GIVE RISE TO A
PECUNIARY LIABILITY OR CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF
THE STATE OF NEW YORK OR THE TOWN OF COLONIE, NEW YORK.
It is hereby certified, recited and declared that all acts, conditions and
things required to exist, happen and be performed precedent to and in the
execution and delivery of the Indenture, and the issuance of this Bond, do
exist, have happened and have been performed in the time, form and manner as
required by law, and that the issuance of the Bonds does not violate any
constitutional or statutory limitation.
IN WITNESS WHEREOF, Town of Colonie Industrial Development Agency has caused
this Bond to be duly executed in its name by the manual or facsimile signature
of its Chairman and its corporate seal to be impressed or reproduced hereon,
attested by the manual or facsimile signature of its Secretary, all as of the
date identified above.
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY
BY: (Vice) Chairman
(SEAL)
ATTEST:
______________________________ Secretary
Certificate of Authentication
This Bond is one of the Bonds of the issue described in the within- mentioned
Indenture.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
BY: Authorized Officer
______________________ Date of Authentication
[Form of Assignment for Transfer]
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto (please
insert name, address and social security or tax identification number of
assignee):
the within Bond and does hereby irrevocably constitute and appoint to transfer
the said Bond on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ____________________
NOTICE: The signature(s) on this assignment must correspond with the name(s) as
it (they) appear(s) on the face of the within Bond in every particular.
<PAGE>
In the presence of:
______________________________
EXHIBIT B
FORM OF BOND AFTER CONVERSION DATE
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY (a public benefit corporation of
the State of New York)
TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BOND
(MECHANICAL TECHNOLOGY INCORPORATED PROJECT - LETTER OF CREDIT SECURED), SERIES
1998A
NO.: R-__ $_________
RATE: ___% per annum MATURITY DATE: December 1, ____
DATED: __________________ CUSIP: __________
Town of Colonie Industrial Development Agency, a public benefit corporation of
the State of New York (the "Issuer"), for value received, hereby promises to
pay, solely from the sources hereinafter described, to ________________ or
registered assigns, on the Maturity Date identified above (subject to any right
of prior redemption hereinafter provided for), the principal sum of Six Million
Dollars (subject to reduction as hereinafter provided) and interest thereon
(computed on the basis of a 360-day year of twelve 30-day months) from the date
set forth above, or from the most recent Interest Payment Date to which
interest has been paid, to the Maturity Date identified above (or such earlier
date on which the principal hereof has been paid or duly provided for), at the
rate identified above, on the first days of June and December of each year
(each an "Interest Payment Date"), commencing _______________. The principal of
this Bond shall be paid on the Maturity Date upon presentation and surrender
hereof at the Office of Manufacturers and Traders Trust Company, as trustee
(together with its successors in trust, the "Trustee") under the trust
indenture dated as of December 1, 1998 (from time to time, as amended or
supplemented, the "Indenture") by and between the Issuer and the Trustee, or at
the duly designated office of any successor trustee under the Indenture. The
installments of interest described above shall, as provided in the Indenture,
be paid to the Person in whose name this Bond (or one or more Predecessor
Bonds, as defined in the Indenture) is registered at the close of business on
the Business Day next preceding any Interest Payment Date (the "Regular Record
Date"), and shall be paid by check or draft of the Trustee mailed by the
Trustee on such Interest Payment Date to such registered owner at his address
appearing on the registration books of the Issuer, or at the option of any
holder of Bonds in an aggregate principal amount of $250,000 or greater be
transmitted on such Interest Payment Date by wire transfer at such owner's
written request to the bank account number on file with the Trustee. Any such
interest not so punctually paid or duly provided for shall forthwith cease to
be payable to the registered owner on such Regular Record Date, and may be paid
to the Person in whose name this Bond (or one or more Predecessor Bonds) is
registered at the close of business on a date for the payment of such defaulted
interest to be fixed by the Trustee (the "Special Record Date"), notice whereof
being given to registered owners of the Bonds not less than ten (10) days prior
to such Special Record Date, or may be paid in any other lawful manner as shall
be determined by the Trustee. The principal of, premium, if any, on and
<PAGE>
interest on this Bond are payable in lawful money of the United States of
America.
(Project Description)
This Bond is one of a duly authorized issue of bonds of the Issuer designated
"Town of Colonie Industrial Development Agency Taxable Industrial Development
Revenue Bonds (Mechanical Technology Incorporated Project - Letter of Credit
Secured), Series 1998A" in the aggregate principal amount of $6,000,000 (the
"Bonds"). The Bonds are issued for the purpose of assisting in providing
financing to the Issuer for a project (the "Project") consisting of the
following: (A) (1) the acquisition of a leasehold interest in a parcel of land
containing approximately 35.6 acres located at 968 Albany-Shaker Road in the
Town of Colonie, Albany County, New York (the "Land"), together with the
existing buildings located thereon which contain approximately 98,000 square
feet in the aggregate (such buildings known individually as Building I,
Building II and Building III and hereinafter collectively referred to as the
"Existing Facility"), (2) the demolition of Building I which contains
approximately 14,105 square feet of space, (3) the construction of a new
building to replace Building I and which will contain approximately 32,000
square feet of space (the "New Facility") (the Existing Facility and the New
Facility hereinafter collectively referred to as the "Facility"), (4) the
renovation of Building III and (5) the acquisition of and installation therein
and thereon of certain machinery and equipment (the "Equipment") (the Land, the
Facility and the Equipment being hereinafter collectively referred to as the
"Project Facility"), all of the foregoing to be occupied by Mechanical
Technology Incorporated (the "Company") and operated as a manufacturing
facility, a portion of which will be leased by the Company to Plug Power, LLC
and operated as a facility for the manufacture, research and development of
fuel cells for residential and automotive applications and related products and
any other related activities; (B) the financing of all or a portion of the
costs of the foregoing by the issuance of the Bonds; (C) the granting of
certain other "financial assistance" (within the meaning of Section 854(14) of
the Act) with respect to the foregoing, including exemption from certain sales
taxes, deed transfer taxes, mortgage recording taxes and real property taxes
(collectively with the Bonds, the "Financial Assistance"); and (D) the lease
(with an obligation to purchase) or sale of the Project Facility to the Company
or such other person as may be designated by the Company and agreed upon by the
Agency. The Project Facility is to be sold by the Issuer to the Company
pursuant to the provisions of an installment sale agreement dated as of
December 1, 1998 (the "Installment Sale Agreement") by and between the Issuer
and the Company.
The Bonds are issued under and are equally and ratably secured by the
Indenture. The Indenture grants the Trustee a first security interest in the
Trust Revenues (as defined in the Indenture).
In order to provide additional security for the Bonds, the Company has entered
into an irrevocable letter of credit and reimbursement agreement dated as of
________________ (the "Reimbursement Agreement") with
___________________________ (the "Bank"), pursuant to which the Bank has issued
in favor of the Trustee an irrevocable transferable direct pay letter of credit
(the "Letter of Credit"), issued in an amount equal to the aggregate principal
amount of the Bonds Outstanding, plus at least 210 days' interest on the Bonds,
computed at the Fixed Rate in effect, together with the Optional Redemption
Premium. Under the Letter of Credit, the Bank is obligated to pay to the
Trustee, upon presentation of a sight draft and required accompanying
documentation, the amount necessary to pay, the principal of, and interest on
<PAGE>
the Bonds then due and payable (whether by mandatory redemption or by maturity
due to acceleration or otherwise). On each Bond Payment Date and immediately
upon (1) a declaration that all the Bonds have become due and payable by
acceleration, or (2) a mandatory redemption of all the Bonds Outstanding, the
Trustee shall present to the Bank a sight draft and required accompanying
documentation and draw upon the Letter of Credit for the principal amount, if
any and accrued interest then due on the Bonds. The Letter of Credit provides
that it shall expire on _____________ or earlier under certain circumstances.
The Company may provide for delivery to the Trustee of a Substitute Letter of
Credit or an Alternate Letter of Credit issued by another banking institution
as provided in the Installment Sale Agreement.
As additional security for the payment of principal of and interest on the
Bonds, the Issuer has assigned to the Trustee all of the Issuer's rights and
remedies under the Installment Sale Agreement (except the Unassigned Rights, as
therein defined), including the right to receive installment purchase payments
and other amounts payable thereunder pursuant to a pledge and assignment dated
as of December 1, 1998 (the "Pledge and Assignment") from the Issuer to the
Trustee. Further security for the payment of principal of and interest on the
Bonds is provided by a guaranty dated as of December 1, 1998 (the "Guaranty")
from _______________ (the "Corporate Guarantor") to the Trustee. The Assignment
of Rents, the Pledge and Assignment and a memorandum relating to the
Installment Sale Agreement are to be recorded in the office of the County Clerk
of Albany County, New York.
Reference is hereby made to the Indenture, the Installment Sale Agreement, the
Reimbursement Agreement, the Pledge and Assignment, the Guaranty and the Letter
of Credit, and to all amendments and supplements thereto, for a description of
the nature and extent of the security for the Bonds, the terms and conditions
upon which the Bonds are issued and secured and the rights, duties and
obligations of the Issuer, the Trustee, the Company, the Bank and the
Bondholders. Copies of such documents are on file in the Office of the Trustee.
THE BONDS ARE LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM PAYMENTS
MADE BY THE BANK UNDER THE LETTER OF CREDIT AND BY THE COMPANY UNDER THE
INSTALLMENT SALE AGREEMENT, MONEYS AND SECURITIES HELD BY THE TRUSTEE UNDER THE
INDENTURE, AND THE SECURITY PROVIDED BY THE PLEDGE AND ASSIGNMENT AND THE
GUARANTY.
(Extraordinary Redemption Without Premium)
The Bonds are subject to redemption prior to maturity (1) as a whole, without
premium, in the event of (a) a taking in Condemnation of, or failure of title
to, all or substantially all of the Project Facility, (b) damage to or
destruction of part or all of the Project Facility and election by the Company
to redeem the Bonds, or (c) a taking in Condemnation of part of the Project
Facility and election by the Company to redeem the Bonds, or (2) in part,
without premium in the event that (a) to the extent excess moneys remain in the
Insurance and Condemnation Fund following damage or condemnation of a portion
of the Project Facility and completion of the repair, rebuilding or restoration
of the Project Facility by the Company and, pursuant to the Indenture, such
excess moneys are not paid to the Company or (b) in the event that excess
moneys remain in the Project Fund after the Completion Date. In any such event,
the Bonds shall be redeemed, as a whole or in part, at such time as the Trustee
determines, at a redemption price equal to the principal amount thereof, plus
accrued interest to the redemption date, without premium.
<PAGE>
(Redemption Without Premium for Failure to Obtain a Substitute Letter of
Credit)
The Bonds are also subject to redemption prior to maturity in the event of
failure by the Company to provide a Substitute Letter of Credit at least
forty-five (45) days prior to the Interest Payment Date immediately preceding
the expiration date of the Letter of Credit then in effect. In any such event,
the Bonds shall be redeemed, as a whole, on such Interest Payment Date, at a
redemption price equal to the principal amount to be redeemed, plus accrued
interest to the redemption date, without premium.
(Extraordinary Redemption Without Premium at Election of Bank)
The Bonds are also subject to redemption prior to maturity upon receipt by the
Trustee of a written notice from the Bank of the occurrence and continuance of
a default by the Company under the Reimbursement Agreement and the Bank's
election to compel redemption of the Bonds. In such event, the Bonds shall be
redeemed, as a whole, in the manner provided in Article III of the Indenture,
on the earliest date for which the Trustee can give notice of redemption
pursuant to Section 303 of the Indenture, at a redemption price equal to the
principal amount thereof, plus accrued interest to the redemption date, without
premium.
(Redemption at Company's Option)
The Bonds are subject to redemption, at the option of the Company by exercise
of its right to prepay the installment purchase payments under the Installment
Sale Agreement as provided in Section 5.5 of the Installment Sale Agreement, as
a whole or in part on any Interest Payment Date occurring after the end of the
applicable call protection period at the redemption prices, expressed as
percentages of unpaid principal amount to be redeemed, plus accrued interest to
the redemption date. The call protection period and redemption prices shall be
determined by the Remarketing Agent, after taking into account the factors
described in Section 209(B)(2)(e) of the Indenture and such other factors which
the Remarketing Agent deems appropriate. The determination of the call
protection period and redemption prices by the Remarketing Agent pursuant to
and in accordance with the terms of the Indenture shall be conclusive and
binding on the Issuer, the Trustee, the Company, the Bank and the Holders of
the Bonds.
(Scheduled Mandatory Redemption Without Premium)
The Bonds are also subject to scheduled mandatory redemption prior to maturity,
commencing December 1, 1999 and on each December 1 thereafter, by the
application of Sinking Fund Payments at a redemption price equal to the
principal amount thereof, plus accrued interest to the redemption date, without
premium, on December 1 of the years and in the principal amounts set forth
below:
YEAR SINKING FUND PAYMENT YEAR SINNKING FUND PAYMENT
1999 $285,000 2006 $385,000
2000 $275,000 2007 $410,000
2001 $290,000 2008 $435,000
2002 $310,000 2009 $460,000
2003 $325,000 2010 $485,000
2004 $345,000 2011 $515,000
2005 $365,000 2012 $540,000
<PAGE>
Following retirement by mandatory sinking fund redemption prior to their Stated
Maturity, there will remain $575,000 principal amount of the Bonds maturing on
December 1, 2013 to be paid at maturity.
(Procedures for Redemption)
Notice of the intended redemption of each Bond subject to redemption shall be
given not less than thirty (30) days nor more than forty-five (45) days prior
to the redemption date by the Trustee one time by first class mail postage
prepaid to the registered owner at the address of such owner shown on the
Trustee's bond register. The failure to give any such notice, or any defect
therein, shall not affect the validity of any proceeding for the redemption of
any Bond with respect to which no such failure to give notice, or defect
therein, has occurred.
In the event of any partial redemption, the particular Bonds or portions
thereof to be redeemed shall be selected by the Trustee not more than sixty
(60) days prior to the redemption date in order of maturity, and within each
maturity by lot or by such other such method as the Trustee shall deem fair and
appropriate. The Trustee may provide for the redemption of portions (equal to
$5,000 or any whole multiple thereof) of Outstanding Bonds. In no event shall
the principal amount of Bonds subject to any partial redemption be other than a
whole multiple of $5,000; provided, however, that no $5,000 portion of a Bond
shall be redeemed if it results in the unredeemed portion of the Bond being
less than $100,000.
Bonds (or portions thereof as aforesaid) for whose redemption and payment
provision is made in accordance with the Indenture shall thereupon cease to be
entitled to the Lien of the Indenture and shall cease to bear interest from and
after the date fixed for redemption.
The owner of this Bond shall have no right to enforce the provisions of the
Indenture or to institute action to enforce the covenants therein, or to take
any action with respect to any Event of Default under the Indenture, or to
institute, appear in or defend any suit or other proceeding with respect
thereto, except as provided in the Indenture.
Modifications or alterations of the Indenture or of any indenture supplemental
thereto may be made only to the extent and in the circumstances permitted by
the Indenture.
The principal hereof may be declared or may become due on the conditions and in
the manner and at the time set forth in the Indenture upon the occurrence of an
Event of Default as provided in the Indenture.
The Bonds are issuable in the denomination of $100,000 or any multiple of
$5,000 in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, this Bond, upon surrender for transfer at the
principal office of the Trustee as Bond Registrar, is transferable upon an
assignment duly executed by the registered owner hereof or his duly authorized
legal representative, and, upon such transfer, one or more new Bonds of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
No service charge shall be made for any transfer or exchange of Bonds, but the
Issuer or the Trustee may make a charge for transfer or exchange of Bonds
<PAGE>
sufficient to reimburse them for any tax, fee or other governmental charge
required to be paid with respect to such transfer or exchange, and such charge
shall be paid before any new Bond shall be delivered.
NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OF OR REDEMPTION
PRICE OF OR THE INTEREST ON THIS BOND OR FOR ANY CLAIM BASED HEREON OR ON THE
INDENTURE, AGAINST ANY PAST, PRESENT OR FUTURE MEMBER, OFFICER, DIRECTOR,
EMPLOYEE OR AGENT (EXCEPT THE COMPANY), AS SUCH, OF THE ISSUER OR OF ANY
PREDECESSOR OR SUCCESSOR CORPORATION, EITHER DIRECTLY OR THROUGH THE ISSUER OR
OTHERWISE, WHETHER BY VIRTUE OF ANY CONSTITUTION, STATUTE OR RULE OF LAW, OR BY
THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY, OR OTHERWISE, ALL SUCH LIABILITY
BEING, BY THE ACCEPTANCE HEREOF, EXPRESSLY WAIVED AND RELEASED.
Capitalized terms used in this Bond and not defined herein shall have the
meaning ascribed to such terms in the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become
valid or obligatory for any purpose until the certificate of the Trustee shall
be endorsed hereon.
THE BONDS DO NOT CONSTITUTE AND SHALL NOT BE A DEBT OF THE STATE OF NEW YORK OR
THE TOWN OF COLONIE, NEW YORK AND NEITHER THE STATE OF NEW YORK NOR THE TOWN OF
COLONIE, NEW YORK SHALL BE LIABLE THEREON. THE BONDS DO NOT GIVE RISE TO A
PECUNIARY LIABILITY OR CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS OF
THE STATE OF NEW YORK OR THE TOWN OF COLONIE, NEW YORK.
It is hereby certified, recited and declared that all acts, conditions and
things required to exist, happen and be performed precedent to and in the
execution and delivery of the Indenture, and the issuance of this Bond, do
exist, have happened and have been performed in the time, form and manner as
required by law, and that the issuance of the Bonds does not violate any
constitutional or statutory limitation.
IN WITNESS WHEREOF, Town of Colonie Industrial Development Agency has caused
this Bond to be duly executed in its name by the manual or facsimile signature
of its Chairman and its corporate seal to be impressed or reproduced hereon,
attested by the manual or facsimile signature of its Secretary, all as of the
date identified above.
TOWN OF COLONIE INDUSTRIAL DEVELOPMENT AGENCY
BY: (Vice) Chairman
(SEAL)
ATTEST:
______________________________ Secretary
Certificate of Authentication
This Bond is one of the Bonds of the issue described in the within- mentioned
Indenture.
MANUFACTURERS AND TRADERS TRUST COMPANY, as Trustee
BY: Authorized Officer
______________________ Date of Authentication
[Form of Assignment for Transfer]
<PAGE>
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto (please
insert name, address and social security or tax identification number of
assignee):
the within Bond and does hereby irrevocably constitute and appoint to transfer
the said Bond on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ____________________
NOTICE: The signature(s) on this assignment must correspond with the name(s) as
it (they) appear(s) on the face of the within Bond in every particular.
In the presence of:
______________________________
EXHIBIT C-1
(Form of Notice of Mandatory Tender on Conversion Date)
NOTICE OF MANDATORY TENDER WITH RESPECT TO TOWN OF COLONIE INDUSTRIAL
DEVELOPMENT AGENCY TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS (MECHANICAL
TECHNOLOGY INCORPORATED PROJECT - LETTER OF CREDIT SECURED), SERIES 1998A
DATE:_________________
TO: ________________________
FROM: MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee (the "Trustee")
under the trust indenture dated as of December 1, 1998 by and between Town of
Colonie Industrial Development Agency (the "Issuer") and the Trustee, securing
the Issuer's $6,000,000 aggregate principal amount Taxable Industrial
Development Revenue Bonds (Mechanical Technology Incorporated Project - Letter
of Credit Secured), Series 1998A (the "Bonds")
Notice is hereby given in accordance with Section 304 of the Indenture that the
Bonds with respect to which you are the registered owner are subject to
mandatory tender as a result of the exercise by the Company (as defined in the
Indenture) of the Conversion Option (as defined in the Indenture) to convert
the interest rate on the Bonds to a fixed rate, and must be presented to the
undersigned trustee for purchase at its office at _________________,
__________________, on or before [Conversion Date], UNLESS, on or before
[Twenty (20) days prior to the Conversion Date] at 5:00 p.m., New York time, we
receive written notice of your election not to tender and to continue holding
such Bonds using the form attached to this notice.
If you own one or more Bonds having an aggregate total principal amount of
$200,000 or more, you may elect not to tender the total principal amount of
your Bonds and to continue to hold only a portion of your Bonds (but in no
event any amount other than $100,000, or any integral multiple of $5,000 in
excess thereof).
If you elect not to tender and to continue to hold your Bonds, the interest
rate on the Bonds is subject to change on [Conversion Date].
<PAGE>
Pursuant to the terms of the Indenture, the Conversion Option has been elected.
The rate established on the Bonds on [Conversion Date] will remain in effect
from such date through the maturity of the Bonds. THE HOLDERS OF THE BONDS WILL
NO LONGER HAVE THE RIGHT TO DEMAND PURCHASE OF THEIR BONDS.
Pursuant to the terms of the Bonds and the Indenture, at least fifteen (15)
days prior to [Conversion Date] the Remarketing Agent (as defined in the
Indenture) will establish the rate of interest on the Bonds for the period
beginning [Conversion Date] and ending on the Maturity Date (the "Fixed Rate").
The Fixed Rate to be established will be that rate which in the reasonable
judgment of the Remarketing Agent is the minimum interest rate necessary to
sell the Bonds at a price of 100% of the principal amount thereof, plus accrued
interest.
The determination of the Fixed Rate by the Remarketing Agent pursuant to and in
accordance with the terms of the Indenture shall be conclusive and binding on
the Bondholders.
Pursuant to Section 5.8 of the Installment Sale Agreement, the Company has
delivered a Substitute Letter of Credit issued by ____________________ which
has an expiration date of ______________________________, [the existing rating
on the Bonds has been withdrawn, however, [Standard & Poor's Corporation or
Moody's Investors Service, Inc.] has delivered a notice to the Trustee
indicating that such Letter of Credit would cause the Bonds to have a rating of
__________.]
MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee
BY: Authorized Representative
EXHIBIT C-2
(Form of Notice of Bondholder's Election Regarding Conversion Date)
TO: MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee (the "Trustee")
under the trust indenture dated as of December 1, 1998 by and between Town of
Colonie Industrial Development Agency (the "Issuer") and the Trustee, securing
the Issuer's $6,000,000 aggregate principal amount Taxable Industrial
Development Revenue Bonds (Mechanical Technology Incorporated Project - Letter
of Credit Secured), Series 1998A (the "Bonds")
The undersigned hereby gives notice to you of its intention to tender on
[Repurchase Closing Date] the following Bonds:
Column Column Column (1) (2) (3)
Total Principal Total Principal Amount Amount Not To Be To Be Bond No.
Tendered Tendered
(Please note that, if you wish to tender all of your Bonds, you must show the
full principal amount of each Bond under column (2) above.)
In making this election to tender the Bonds described above, the undersigned
certifies the following:
(1) the current interest rate on the Bonds is subject to adjustment on
[Conversion Date];
<PAGE>
(2) twenty (20) days prior to [Conversion Date], the Remarketing Agent will
establish the interest rate on the Bonds for the period from [Conversion Date]
through the maturity of the Bonds, as the interest rate at which the Bonds
could be sold at 100% of the principal amount thereof, plus accrued interest.
THE HOLDERS OF THE BONDS WILL NO LONGER HAVE THE RIGHT TO DEMAND PURCHASE OF
THEIR BONDS AND THE RATE ESTABLISHED AS DESCRIBED IN THE PREVIOUS SENTENCE WILL
REMAIN IN EFFECT THROUGH THE MATURITY OF THE BOND;
(3) the determination of the Remarketing Agent as to the interest rate on
the Bonds during such period shall be conclusive and binding upon the
undersigned; and
(4) that the rating then in effect with respect to the Bonds, if any, may
be withdrawn or lowered.
Dated: ______________________ ____________________________________
____________________________________ NOTICE: The signature(s) on this notice
must correspond with the name(s) as it (they) appear(s) on the face of the
Bonds in every particular.
EXHIBIT C-3
(Form of Notice of Mandatory Tender on Alternate Security Date)
NOTICE OF MANDATORY TENDER WITH RESPECT TO TOWN OF COLONIE INDUSTRIAL
DEVELOPMENT AGENCY TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BONDS (MECHANICAL
TECHNOLOGY INCORPORATED PROJECT - LETTER OF CREDIT SECURED), SERIES 1998A
DATE:_________________
TO: ________________________
FROM: MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee (the "Trustee")
under the trust indenture dated as of December 1, 1998 by and between Town of
Colonie Industrial Development Agency (the "Issuer") and the Trustee, securing
the Issuer's $6,000,000 aggregate principal amount Taxable Industrial
Development Revenue Bonds (Mechanical Technology Incorporated Project - Letter
of Credit Secured), Series 1998A (the "Bonds")
Notice is hereby given in accordance with Section 304 of the Indenture that the
Bonds with respect to which you are the registered owner are subject to
mandatory tender as a result of the delivery by the Company (as defined in the
Indenture) of an Alternate Letter of Credit (as defined in the Indenture)
pursuant to Section 5.8 of the Installment Sale Agreement (as defined in the
Indenture) and must be presented to the undersigned trustee for purchase at its
office at _________________, __________________, on or before [Alternate
Security Date], UNLESS, on or before [Twenty (20) days prior to the Conversion
Date] at 5:00 p.m., New York time, we receive written notice of your election
not to tender and to continue holding such Bonds using the form attached to
this notice.
If you own one or more Bonds having an aggregate total principal amount of
$__________ or more, you may elect not to tender the total principal amount of
your Bonds and to continue to hold only a portion of your Bonds (but in no
event any amount other than $100,000, or any integral multiple of $5,000 in
excess thereof).
<PAGE>
If you elect not to tender and to continue to hold your Bonds, the credit
rating on the Bonds is subject to change on [Alternate Security Date].
Pursuant to Section 5.8 of the Installment Sale Agreement, the Company has
delivered a Alternate Letter of Credit issued by ____________________ which has
an expiration date of ______________________________. [The existing rating on
the Bonds has been withdrawn.] [Standard & Poor's Corporation or Moody's
Investors Service, Inc.] has delivered a notice to the Trustee indicating that
such Alternate Letter of Credit would cause the Bonds to have a rating of
__________.]
MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee
BY: Authorized Representative
EXHIBIT C-4
(Form of Notice of Bondholder's Election Regarding Alternate Letter of Credit)
TO: MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee (the "Trustee")
under the trust indenture dated as of December 1, 1998 by and between Town of
Colonie Industrial Development Agency (the "Issuer") and the Trustee, securing
the Issuer's $6,000,000 aggregate principal amount Taxable Industrial
Development Revenue Bonds (Mechanical Technology Incorporated Project - Letter
of Credit Secured), Series 1998A (the "Bonds")
The undersigned hereby gives notice to you of its intention not to tender on
[Alternate Security Date] and to continue to hold beyond that date, the
following Bonds:
Column Column Column (1) (2) (3)
Total Principal Total Principal Amount Amount Not To Be To Be Bond No.
Tendered Tendered
(Please note that, if you wish not to tender and to continue to hold all or a
portion of your Bonds, you must show the full principal amount of each Bond
under column (3) above.)
In making this election not to tender and to continue to hold the Bonds
described above, the undersigned recognizes that:
(1) the current interest rate on the Bonds is subject to adjustment on
[Alternate Security Date]; and
(2) that the rating then in effect with respect to the Bonds, if any, will
be withdrawn or lowered.
Dated: ______________________ _____________________________________
_____________________________________ NOTICE: The signature(s) on this notice
must correspond with the name(s) as it (they) appear(s) on the face of the
Bonds in every particular.
IMPORTANT: To be effective, this notice must be received by the Trustee no
later than 5:00 p.m., New York time, on _____________ (or, if ___________ is
not a Business Day, on the next following Business Day).
<PAGE>
EXHIBIT C-5
(Form of Tender Notice)
TO: MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee (the "Trustee")
under the trust indenture dated as of December 1, 1998 by and between Town of
Colonie Industrial Development Agency (the "Issuer") and the Trustee, securing
the Issuer's $6,000,000 aggregate principal amount Taxable Industrial
Development Revenue Bonds (Mechanical Technology Incorporated Project - Letter
of Credit Secured), Series 1998A (the "Bonds")
The undersigned hereby gives notice to you of its intention to tender on
[Repurchase Closing Date] the following Bonds:
Column Column Column (1) (2) (3)
Total Principal Total Principal Amount Amount Not To Be To Be Bond No.
Tendered Tendered
(Please note that, if you wish to tender all of your Bonds, you must show the
full principal amount of each Bond under column (2) above.)
In making this election to tender the Bonds described above, the undersigned
certifies the following:
(1) the principal amount of the Bonds to be tendered, the number of the
Bonds to be tendered, and the Repurchase Closing Date are as described above;
(2) the name and address of the Bondholder is described as follows:
;
(3) the undersigned by delivery of this notice irrevocably requests the
purchase of the Bonds described above; and
(4) the undersigned undertakes to deliver the Bonds described above to the
Tender Agent (as defined in the Indenture) or the Trustee in accordance with
Section 305(A) of the Indenture.
Dated: ______________________ ____________________________________
____________________________________ NOTICE: The signature(s) on this notice
must correspond with the name(s) as it (they) appear(s) on the face of the
Bonds in every particular.
EXHIBIT D
DESCRIPTION OF LAND
EXHIBIT E
DESCRIPTION OF EQUIPMENT
All articles of personal property and all appurtenances acquired with the
proceeds of the Bonds or any payment made by Mechanical Technology Incorported
(the "Company") pursuant to Section 4.5 of the installment sale agreement dated
as of December 1, 1998 (the "Installment Sale Agreement") by and between Town
of Colonie Industrial Development Agency and the Company and now or hereafter
<PAGE>
attached to, contained in or used in connection with the Land (as defined in
the Installment Sale Agreement) or placed on any part thereof, though not
attached thereto, including, but not limited to, pipes, screens, fixtures,
heating, lighting, plumbing, ventilation, air conditioning, compacting and
elevator plants, call systems, stoves, ranges, refrigerators and other lunch
room facilities, rugs, movable partitions, cleaning equipment, maintenance
equipment, shelving, flagpoles, signs, waste containers, outdoor benches,
drapes, blinds and accessories, sprinkler systems and other fire prevention and
extinguishing apparatus and materials, motors, machinery; and together with any
and all products of any of the above, all substitutions, replacements,
additions or accessions therefor, and any and all cash proceeds or non-cash
proceeds realized from the sale, transfer or conversion of any of the above.
EXHIBIT F
FORM OF REQUEST FOR DISBURSEMENT
To: Manufacturers and Traders Trust Company, as Trustee One M&T Plaza
Buffalo, New York 14203 Attention: Corporate Trust Department
Re: The Mechanical Technology Incorporated - Letter of Credit Secured
Project
Requisition Number: _______
Dated: _____________
You are hereby authorized and directed to make the following disbursement from
the Project Fund as defined in the trust indenture dated as of December 1, 1998
(the "Indenture") by and between Town of Colonie Industrial Development Agency
(the "Issuer") and Manufacturers and Traders Trust Company, as trustee:
(A) (i) Name and address of the person to whom disbursement is to be
made, and the amount to be paid:
See Schedule A attached.
(ii) Description of purpose for which the requested disbursement from the
Project Fund is to be made.
See Schedule A attached.
(B) The disbursement is for a proper expenditure of moneys in the Project
Fund under Section 4.3 of the Installment Sale Agreement (as defined in the
Indenture);
(C) With respect to the item(s) for which payment is to be made, the
undersigned has no knowledge of any Lien (as defined in the Indenture) which
should be satisfied or discharged before the payment as requested is made;
(D) _______ percent of the work on the construction of the Facility (as
defined in the Indenture) and the acquisition and installation of the Equipment
(as defined in the Indenture) has been completed, and such percentage exceeds
the percentage which all advances made to the date hereof represent of the
total of Bond proceeds which can be disbursed from the Project Fund (as defined
in the Indenture);
<PAGE>
(E) If the amount requested is to reimburse to the Company for costs or
expenses of the Company incurred by reason of work performed or supervised by
officers or employees of the Company, (1) such officers or employees were
specifically employed or designated by the Company for such purpose, (2) the
amount to be paid does not exceed the actual cost thereof to the Company, and
(3) such costs or expenses will be treated by the Company on its books as
capital expenditures in conformity with generally accepted accounting
principles applied on a consistent basis (or would have been so treated either
with an election by the Company or but for an election by the Company to deduct
the amount of such payment);
(F) No item(s) for which payment is requested has (have) been the basis for
any prior disbursement from the Project Fund (requests for disbursement of
retainage amounts under any contract relating to the construction of the
Facility shall not be deemed made for an item which has been the basis of a
prior disbursement by virtue of requests for disbursement of amounts covering
the cost of such construction, less the retainage amounts);
(G) All of the conditions set forth in the Indenture and the Reimbursement
Agreement have been satisfied;
(H) As of the date of this Request for Disbursement, the representations
and covenants made in Section 2.2 of the Installment Sale Agreement are true
and correct, there is no Event of Default (as defined in the Indenture) under
any of the Financing Documents (as defined in the Indenture), nor any event,
condition or act that, with the passage of time or the giving of notice or
both, would ripen into such an event of default;
(I) The Facility (as defined in the Indenture) has not been materially
injured or damaged by fire or other casualty;
(J) All sums due workmen and materialmen have been paid or will be paid
from the proceeds of this disbursement; and
(K) None of the items for which requisition is made constitutes personal
property (including, without limitation, fixtures and equipment) other than
that listed on all accompanying schedules sufficient for identification
purposes in connection with the filing of UCC-1 and/or UCC-3 financing
statements.
MECHANICAL TECHNOLOGY INCORPORATED
BY: Authorized Representative
APPROVAL BY KEYBANK NATIONAL ASSOCIATION
_________________________________
BY:______________________________ Authorized Representative
<PAGE>
SCHEDULE A
Name and Address of Person to Whom Disbursement is Description to be Made
Amount of Purpose
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
<PAGE>
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
12050.0009/03:110172_5/01-28-99
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-25-1998
<CASH> 6,617
<SECURITIES> 0
<RECEIVABLES> 3,796
<ALLOWANCES> 108
<INVENTORY> 3,720
<CURRENT-ASSETS> 15,146
<PP&E> 13,491
<DEPRECIATION> 7,549
<TOTAL-ASSETS> 21,332
<CURRENT-LIABILITIES> 5,482
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0
0
<COMMON> 7,183
<OTHER-SE> 2,345
<TOTAL-LIABILITY-AND-EQUITY> 21,332
<SALES> 2,710
<TOTAL-REVENUES> 2,710
<CGS> 1,711
<TOTAL-COSTS> 3,059
<OTHER-EXPENSES> 1,190
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58
<INCOME-PRETAX> (1,597)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,597)
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<EXTRAORDINARY> 0
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<NET-INCOME> (1,597)
<EPS-PRIMARY> (.22)
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</TABLE>
