Exhibit 10.1

AMENDMENT NO. 2

 

TO LEASE AGREEMENT

 

BETWEEN

 

MTI INSTRUMENTS INC.

 

AND

 

CARL E. TOUHEY

 

This Amendment to Lease is made and entered into this 2 ^nd day of May 2014 by and between MTI Instruments Inc. (“Tenant”), and Carl E. Touhey (“Landlord”). 

 

Whereas, Tenant and the Landlord entered into a Lease on August 10, 1999 with respect to a portion of the building known as 325 Washington Avenue Extension Albany, NY 12205 (the “Lease”), as amended on September 29, 2009.

 

Whereas, the parties hereto wish to further amend the Lease as hereinafter provided.

 

Now, therefore, in consideration of One Dollar ($1.00) each to the other paid, receipt of

which is hereby acknowledged, the Lease is amended as follows:

 

1) The Lease term shall be extended for Five (5) years from December 1, 2014 – November 30, 2019.

 

2) The Tenant shall pay monthly rent to the Landlord according to the following schedule:

 

            Year 1 - $213,444.00/year; $17,787.00/month; $12.25/square foot

            Year 2 - $213,444.00/year; $17,787.00/month; $12.25/square foot  

            Year 3 - $217,800.00/year; $18,150.00/month; $12.50/square foot

            Year 4 - $217,800.00/year; $18,150.00/month; $12.50/square foot

            Year 5 - $222,156.00/year; $18,513.00/month; $12.75/square foot

 

3) The Tenant’s new base year for Property and School Taxes in Article 5 shall be: December 1, 2014 – November 30, 2015.

 

4) Tenant shall have an option to terminate this Lease as of December 1, 2016 with written notice to the Landlord on or before December 31, 2015. If Tenant elects this option, Tenant shall reimburse Landlord for all unamortized fit-up costs at the time of termination. The amortization of all costs will be on a five (5) year, straight-line basis. The actual unamortized costs will be identified prior to April 1, 2015, or a date mutually agreed upon by both parties, with reasonable detail.  In addition, Tenant will reimburse Landlord for the discounted rent offered in the first two (2) years of the amended term to the average of $12.45/square foot.

 

5) Landlord agrees to perform the improvements outlined in Exhibit B at no cost to the Tenant.

 

 

 

 

 

 

 

 

 

 

 

 

 

1                                                   Initial_ RJ ______

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In all other respects the Lease, as amended, shall remain in full force and effect, and is hereby ratified and confirmed.

 

 

 

	LANDLORD:
	CARL E. TOUHEY
/s/ Maureen Latniak _____	By: /s/ Charles Touhey
Witness	Charles Touhey, Executor
	TENANT:
	MTI INSTRUMENTS INC.
/s/ Pat Phillips	By: /s/ Rick Jones __________
Witness
	Its: Vice President & Chief Financial Officer   _

                                               

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

                                                   Initial_ RJ ______

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EXHIBIT A

 

 

 

 

 

 

 

 

 

3

                                                   Initial_ RJ ______

 

 

 

 

 

EXHIBIT B

 

WORKLETTER

 

 

This Exhibit is attached to and forms a part of the certain Amendment dated May 2, 2014 (“the Amendment”) pursuant to which the Landlord has leased to Tenant space in the building known as 325 Washington Avenue Extension Albany, NY 12205:

 

The Landlord will make, at Landlord’s sole cost, the following alterations to the premises:

 

• Build up to five (5) offices in the Northwest corner of the building described as ‘NEW OFFICES’ in Exhibit A. These offices will be complete with walls, ceiling, flooring, electrical, and proper HVAC.
• Interior walls will be removed in the production area, outlined in yellow, from Exhibit A. The removal of these walls includes the relocation of any electrical needs, switches, outlets, emergency lights, etc.
• Interior walls in the production area, outlined in red, from Exhibit A will also be removed if requested by Tenant.
• Replace flooring in the production area with conductive VCT where needed, up to 360 square feet.
• Clean, strip, and wax entire production area VCT floor with approved polish for conductive area.
• Make HVAC adjustments in the production area to equalize temperature as needed.
• Repair emergency exit door at the Northwest corner of the building to include a crash bar to bring the door up to local code.
• Replace carpet in front office. 

 

 

 

 

 

 

 

 

 

 

 

4                                                   Initial_ RJ ______

 

 

 

 

Exhibit 10.2

Bank of America

Loan Agreement

Date of Agreement:    May 5, 2014

Principal  Amount:

$1,000,000.00

Account  Number:

18-0000305276

 

Introduction.       This  Agreement  dated  and effective  as of  May 5, 2014,  is entered  into between  Mechanical  Technology, Incorporated  (the  "Borrower")  and  Bank of America,  N.A. (the "Bank").   The Borrower agrees to the following terms and conditions:

1.     LINE OF CREDIT

 

1.1         Line of Credit Amount.

(a)            During  the availability  period  described  below,  the  Bank will  provide  a line of credit  to the  Borrower  (the "Line         of Credit").   The  amount  of the  Line of Credit  (the "Commitment")   is One  Million  and 00/100    Dollars ($1,000,000.00).

(b)           This  is a revolving  line of credit.   During the  availability  period,  the  Borrower  may  repay  principal  amounts  and reborrow  them.

(c)            The  Borrower  agrees  not to  permit  the principal  balance  outstanding  to exceed  the  Commitment.   If the Borrower exceeds  this  limit, the  Borrower  will  immediately  pay the excess  to the Bank  upon  the Bank's  demand.

1.2         Availability Period.    The  Line of Credit  is available  between  the date  of this Agreement  and July 31J     2015,  or such  earlier  date  as the availability  may terminate  as provided  in this Agreement   (the  "Expiration  Date").

The  availability  period  for this  Line  of Credit will  be considered   renewed  if and only  if the  Bank has sent  to the  Borrower  a written  notice  of renewal  for the  Line  of Credit  (the  "Renewal  Notice").   If this  Line  of Credit  is renewed,  it will  continue  to be subject  to all the terms  and conditions  set forth  in this  Agreement  except  as  modified  by the  Renewal  Notice.   If this Line of Credit  is renewed,  the term  "Expiration  Date" shall  mean the date  set forth  in the  Renewal  Notice  as the  Expiration Date, and all outstanding  principal  plus all accrued  interest shall  be paid on the  Expiration  Date.  The  same  process  for renewal  will apply  to any  subsequent  renewal  of this  Line of Credit.   A  renewal  fee  may  be charged  at the  Bank's  option. The  amount  of the  renewal  fee will  be specified  in the  Renewal  Notice.   If this  Line  of Credit  is not renewed,  the  Bank  in its sole discretion  may allow  the outstanding  balance  to be repaid  in installments  over  a term specified  by the  Bank at the time.   The  Borrower  specifically  understands  that the  interest  rate applicable  to the  Line  of Credit  may be increased  upon term-out  and that the new interest  rate will  apply to the entire  outstanding  principal  balance  due  hereunder.   A transaction fee  may  be charged  at the  Bank's  option.   If so, the amount  will  be specified  in the  term-out  notice.

1.3         Repayment Terms.

(a)            The  Borrower  will  pay interest  on May  30, 2014,  and then  on the  last day of each  month  thereafter  until payment in full of any principal  outstanding  under this Agreement.

(b)           The  Borrower  will  repay  in full any  principal,  interest or other  charges  outstanding  under this Agreement   no later than the  Expiration  Date.

1.4         Prepayments.      The  Borrower  may  prepay  principal  in full or in part at any time without  the  payment  of a prepayment  fee or premium.   The  prepayment  will  be applied  to the most  remote  payment  of principal  due  under this Agreement.

Ref#: 1001553577 : - MECHANICAL TECHNOLOGY, INCORPORATED

AFS Loan Agreement

 

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1.5        Interest Rate.

(a)         The  interest  rate is a rate per year equal  to the UBOR  Daily  Floating  Rate plus 2.75 percentage  point(s).

(b)        The  UBOR  Daily  Floating  Rate  is a fluctuating  rate of interest which  can change  on each  banking  day.   The rate     will  be adjusted  on each  banking  day  to equal  the British  Bankers Association   UBOR  Rate (or any  successor thereto  approved  by the  Bank  if the  British  Bankers  Association  is no longer  making  a USOR  rate available)  for U.S.  Dollar  deposits  for delivery  on the  date  in question  for a one month  term  beginning  on that date.   The  Bank will  use the UBOR  Rate as published  by Reuters  (or other  commercially  available  source  providing  quotations  of such  rate as selected  by the  Bank from time  to time)  as determined  at approximately   11:00 a.m.  London  time two (2) London  Banking  Days  prior to the date  in question,  as adjusted  from time  to time  in the Bank's  sole discretion for  reserve  requirements,  deposit  insurance  assessment  rates and other  regulatory  costs.   If such  rate is not available  at such  time for  any reason,  then  the  rate will  be determined  by such  alternate  method  as reasonably selected  by the  Bank.  A "London  Banking  Day"  is a day on which  banks  in London  are open for business  and dealing  in offshore  dollars.

2.     COLLATERAL

 

2.1         Personal Property.   The  personal  property  listed  below  now owned  or owned  in the future  by the parties  listed below  will secure  Borrower's  obligations  to the Bank  under this Agreement.   The collateral  is further  defined  in security agreement(s}   executed  by the owners  of the collateral.   In addition,  all personal  property  collateral  owned  by the Borrower securing  this Agreement  shall also  secure  all other  present  and future obligations  of the  Borrower  to the  Bank and to any affiliate  of the  Bank  (excluding  any consumer  credit  covered  by the federal  Truth  in Lending  law,  unless the  Borrower  has otherwise  agreed  in writing  or received  written  notice thereof).   All personal  property  collateral  securing  any other  present or future  obligations  of the  Borrower  to the  Bank shall  also secure  this Agreement.

(a)         Equipment and fixtures  owned  by the  Borrower.

(b)         Inventory owned  by the Borrower.

(c)         Receivables owned  by the  Borrower.

3.     LOAN ADMINISTRATION AND FEES

 

3.1         Fees.

(a)         The  Borrower  will  pay to the Bank the fees  set forth on Schedule  A.

3.2        Collection of Payments.

(a)         Payments  will  be made  by debit to a deposit  account,  if direct  debit  is provided  for  in this  Agreement  or is otherwise  authorized  by the  Borrower.   For payments  not made  by direct  debit,  payments  will be made  by mail to the address  shown  on the  Borrower's  statement,  or by such other  method  as may  be permitted  by the  Bank.

(b)         Each disbursement   by the  Bank and each  payment  by the  Borrower will  be evidenced  by records  kept  by the Bank which will, absent  manifest  error,  be conclusively  presumed  to be correct  and accurate  and constitute  an account  stated  between  the Borrower  and the  Bank.

3.3        Borrower's Instructions.

(a)         Subject  to the terms,  conditions  and  procedures  stated  elsewhere  in this Agreement,  the  Bank may  honor instructions  for advances  or repayments  and any  other  instructions  under  this Agreement  given by the  Borrower (if an individual),  or by anyone   of the individuals  the  Bank reasonably  believes  is authorized  to sign loan agreements  on behalf of the  Borrower,  or any other  individual(s)  designated  by anyone   of such  authorized signers  (each  an "Authorized  Individual").   The  Bank  may honor any such  instructions  made  by anyone   of the Authorized  Individuals,  whether  such  instructions  are given in writing  or by telephone,  telefax  or Internet  and intranet websites  designated  by the Bank with  respect to separate  products  or services  offered  by the  Bank.

Ref#: 1001553577 : - MECHANICAL TECHNOLOGY, INCORPORATED

AFS Loan Agreement

 

 

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3.4         Direct Debit.

(a)            The  Borrower  agrees  that on the  due date  of any amount  due under this Agreement,  the  Bank will debit  the amount  due from deposit  account  number  NY-483043595490    with the  Bank  owned  by Mechanical  Technology, Incorporated  and MTllnstruments,    Inc. (the "Designated  Account").   Should  there  be insufficient  funds  in the Designated  Account  to pay all such  sums when  due, the full amount  of such  deficiency  shall  be immediately  due and payable  by the  Borrower.

(b)           The  Borrower  may terminate  this  direct  debit  arrangement  at any time  by sending  written  notice  to the  Bank.   If the  Borrower  terminates  this arrangement,   then the  principal  amount  outstanding  under this Agreement  will  at the option  of the  Bank bear  interest at a rate  per annum  which  is one (1.0)  percentage  point higher  than  the rate  of interest  otherwise  provided  under this Agreement  and the amount  of each  payment  will  be increased  accordingly.

3.5         Banking   Days.    Unless otherwise  provided  in this Agreement,  a banking  day  is a day other  than  a Saturday, Sunday  or other  day on which  commercial  banks  are authorized  to close,  or are  in fact closed,  in the  state where  the Bank's  lending  office  is located,  and, if such day  relates  to amounts  bearing  interest  at an offshore  rate  (if any),  means any such  day on which dealings  in dollar  deposits  are conducted  among  banks  in the offshore  dollar  interbank  market.   All payments  and disbursements   which  would  be due or which  are received  on a day which  is not a banking  day will  be due or applied,  as applicable,  to the  credit  on the  next  banking  day.

3.6         Interest   Calculation.      Except as otherwise  stated  in this Agreement,  all interest  and fees,  if any,  will  be computed on the  basis of a 360-day  year and the actual  number  of days  elapsed.  This  results  in  more  interest  or a higher  fee than  if a 365-day  year  is used.  Installments  of principal  which  are not  paid when  due under this  Agreement  shall  continue  to bear interest  until  paid.

3.7         Default   Rate.    Upon the  occurrence  of any default  or after  maturity  or after judgment  has been  rendered  on any obligation  under this Agreement,  all amounts  outstanding  under this Agreement,  including  any  unpaid  interest,  fees, or costs,  will at the option  of the Bank  bear  interest at a rate which  is 6.0 percentage  point(s)  higher  than the  rate of  interest otherwise  provided  under this Agreement.    This  may  result  in compounding   of interest.   This  will  not constitute  a waiver  of any default.

4.            CONDITIONS

 

Before  the  Bank  is required  to extend  any credit  to the Borrower  under this Agreement,  it must  receive  any documents and other  items  it may  reasonably  require,  in form  and content  acceptable  to the  Bank, including  any  items specifically listed  below.

 

4.1         Authorizations.       If the  Borrower  or any guarantor  is anything  other  than  a natural  person,  evidence  that the execution,  delivery  and performance  by the  Borrower  and/or  such guarantor  of this Agreement  and any  instrument  or agreement  required  under this Agreement   have been  duly authorized.

4.2         Governing Documents.    If required by the Bank, a copy  of the Borrower's  organizational   documents,

4.3         Guaranties.    Guaranty signed by MTI Instruments, Inc. ("MTI Instruments, Inc.").

4.4         Security Agreements.     Signed  original  security  agreements  covering  the  personal  property  collateral  which  the Bank  requires.

4.5         Perfection and Evidence of Priority.      Evidence  that the  security  interests  and liens  in favor  of the  Bank are valid,  enforceable,  properly  perfected  in a manner  acceptable  to the  Bank and  prior to  all others'  rights  and interests, except  those  the  Bank consents  to  in writing.   All title  documents  for  motor vehicles  which  are part of the collateral  must show  the  Bank's  interest.

4.6         Payment of Fees.    Payment of all fees,  expenses  and other amounts  due and owing  to the  Bank.   If any fee  is not  paid in cash,  the  Bank may,  in its discretion,  treat  the fee as a principal  advance  under  this Agreement  or deduct  the fee  from the  loan  proceeds.

5.            REPRESENTATIONS    AND  WARRANTIES

 

Ref#: 1001553577 : - MECHANICAL TECHNOLOGY, INCORPORATED

AFS Loan Agreement

 

 

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When  the  Borrower  signs  this Agreement,  and until the Bank  is repaid  in full, the Borrower  makes the following representations  and warranties.   Each  request  for an extension  of credit  constitutes  a renewal  of these  representations and warranties  as of the date of the  request:

 

5.1         Formation.     If the  Borrower  is anything  other than a natural  person,  it is duly formed  and existing  under  the laws of the state  or other jurisdiction  where  organized.

 

5.2         Authorization.       This Agreement,  and any  instrument  or agreement  required  under this Agreement,  are within  the

Borrower's  powers,  have  been  duly authorized,  and do not conflict  with any of  its organizational   papers.

5.3         Good  Standing.      In each state  in which  the  Borrower  does  business,  it is properly  licensed,  in good  standing, and, where  required,  in compliance  with fictitious  name  statutes.

5.4         Financial   Information.     All financial  and other  information  that  has been  or will  be supplied  to the  Bank is sufficiently  complete  to give the Bank accurate  knowledge  of the  Borrower's  (and any guarantor's)  financial  condition, including  all material  contingent  liabilities.   Since  the date  of the most  recent financial  statement  provided  to the  Bank, there  has been  no material  adverse  change  in the business  condition  (financial  or otherwise),  operations,  properties  or prospects  of the  Borrower  (or any guarantor).   If the  Borrower  is comprised  of the trustees  of a trust,  the above representations   shall also  pertain  to the trustor(s)  of the trust.

5.5         Lawsuits.      There  is no lawsuit,  tax claim  or other  dispute  pending  or threatened  against  the Borrower  which,  if lost, would  impair  the Borrower's  financial  condition  or ability  to repay  the loan, except  as have  been  disclosed  in writing  to the  Bank.

5.6         Other Obligations.      The  Borrower  is not in default  on any obligation  for  borrowed  money,  any  purchase  money obligation  or any other  material  lease,  commitment,  contract,  instrument  or obligation,  except  as have  been disclosed  in writing  to the  Bank.

5.7         Tax Matters.    The  Borrower  has no knowledge  of any pending  assessments  or adjustments  of its income  tax for any year and all taxes due  have been  paid, except  as have  been  disclosed  in writing  to the  Bank.

5.8         No Event  of  Default.     There  is no event which  is, or with  notice or lapse  of time  or both would  be, a default  under this Agreement.

5.9         Collateral.     All collateral  required  in this Agreement  is owned  by the grantor  of the security  interest  free  of any title defects  or any  liens  or interests  of others,  except  those which  have  been approved  by the  Bank  in writing.

5.10       ERISA Plans.

(a)          Each  Plan (other  than a multiemployer  plan)  is in compliance  in all material  respects  with  ERISA,  the Code and other  federal  or state  law, including  all applicable  minimum  funding  standards  and there  have been  no prohibited transactions  with  respect  to any Plan (other  than  a multiemployer   plan), which  has resulted  or could  reasonably be expected  to  result  in a material  adverse  effect.

(b)         With respect to any Plan subject  to Title  IV of ERISA:

(i)           No reportable  event  has occurred  under Section  4043(c)  of ERISA which  requires  notice.

(ii)          No action  by the  Borrower  or any  ERISA  Affiliate  to terminate  or withdraw  from  any  Plan has  been  taken and no notice of intent to terminate  a Plan has  been filed  under Section  4041  or 4042  of ERISA.

(c)            The following  terms  have the meanings  indicated  for purposes  of this Agreement:

(i)           "Code"  means the Internal  Revenue  Code  of 1986, as amended.

(ii)         "ERISA"  means the  Employee  Retirement  Income  Security  Act of  1974, as amended.

(iii)         "ERISA  Affiliate"  means  any trade  or business  (whether  or not incorporated)   under common  control  with the  Borrower  within  the meaning  of Section  414(b)  or (c) of the Code.

 

Ref#: 1001553577 : - MECHANICAL TECHNOLOGY, INCORPORATED

AFS Loan Agreement

 

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(iv)        "Plan"  means  a plan within the  meaning  of Section  3(2) of ERISA  maintained  or contributed  to  by the Borrower  or any  ERISA Affiliate,  including  any  multiemployer   plan within the  meaning  of Section 4001(a)(3)  of  ERISA.

6.             COVENANTS

 

The  Borrower  agrees,  so long  as credit  is available  under  this Agreement  and until the  Bank  is repaid  in full:

 

6.1         Use of Proceeds.     To  use the proceeds  of the credit  only for business  purposes.

6.2         Financial Information.      To  provide the  following  financial  information  and  statements  in form and content acceptable  to the  Bank, and such additional  information  as  requested  by the  Bank from time  to time. The  Bank reserves the  right,  upon written  notice  to the Borrower,  to require  the  Borrower  to deliver  financial  information  and statements  to the Bank  more frequently  than  otherwise  provided  below,  and to use such  additional  information  and statements  to measure any applicable  financial  covenants  in this Agreement.

(a)         Within  120 days  of Borrower's  fiscal  year end:

(i)          The  annual  financial  statements  of the Borrower,  certified  and dated  by an authorized  financial  officer. These  financial  statements  must be reviewed  by a Certified  Public Accountant  acceptable  to the  Bank. The  statements  shall  be prepared  on a consolidated   basis.

(ii)         A detailed  aging  of the  Borrower's  receivables  by invoice or a summary  aging  by account  debtor,  as specified  by the  Bank. The statements  shall  be prepared  on a consolidated  basis.

(iii)        A detailed  aging  of the  Borrower's  payables  by invoice,  or a summary  aging  by vendor,  as specified  by the  Bank. The statements  shall  be prepared  on a consolidated   basis.

6.3         Out of Debt  Period.    To  reduce  the amount  of advances  outstanding  under this Agreement  to not more  than zero dollars  for a period  of at least  30 consecutive  days  in each  Line-Year.   "Line-Year"  means  the  period  between  the date  of this Agreement  and July 31,  2015, and each  subsequent  one-year  period  (if any).

6.4         Other Debts.     Not to have  outstanding  or incur any direct  or contingent  liabilities  or lease obligations  (other  than those  to the  Bank  or to any affiliate  of the  Bank), or become  liable  for the liabilities  of others, without  the  Bank's written consent.   This  does  not prohibit:

(a)         Acquiring  goods,  supplies,  or merchandise  on normal trade  credit.

(b)           Liabilities,  lines of credit  and  leases  in existence  on the date  of this  Agreement  disclosed  in writing  to the  Bank.

(c)           If the  Borrower  is a natural  person,  additional  debts  of the Borrower  as an individual  for consumer  purposes.

6.5          Other Liens.     Not to create,  assume,  or allow  any security  interest  or lien  (including  judicial  liens)  on property  the Borrower  now or later owns,  except:

(a)           Liens and security  interests  in favor  of the Bank  or any affiliate  of the  Bank.

(b)           Liens outstanding  on the date  of this Agreement  disclosed  in writing  to the  Bank.

6.6          Maintenance of Assets.

(a)           Not to sell, assign,  lease,  transfer  or otherwise  dispose  of any  part of the  Borrower's  business  or the Borrower's assets  except  inventory  sold  in the ordinary  course  of the Borrower's  business.

(b)           Not to sell,  assign,  lease,  transfer  or otherwise  dispose  of any  assets  for less than  fair market  value,  or enter  into any agreement  to do so.

(c)           Not to enter  into any  sale and leaseback  agreement  covering  any of its fixed  assets.

Ref#: 1001553577 : - MECHANICAL TECHNOLOGY, INCORPORATED

AFS Loan Agreement

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(d)          To  maintain  and preserve  all rights,  privileges,  and franchises  the  Borrower  now has.

(e)          To  make any repairs,  renewals,  or replacements  to keep the  Borrower's  properties  in good  working  condition.

6.7         Loans.     Not to make any  loans,  advances  or other  extensions  of credit  to any individual  or entity  except  for extensions  of credit  in the  nature  of accounts  receivable  or notes  receivable  arising  from the sale or lease  of goods  or services  in the ordinary  course  of business  to non-affiliated  entities.

6.8         Change of Management.     Not to make  any substantial  change  in the  present  executive  personnel  of the Borrower.

6.9         Change of Ownership.      If the  Borrower  is anything  other  than  a natural  person,  not to cause,  permit,  or suffer any change  in capital  ownership  such that there  is a material  change,  as determined  by the  Bank in its sale discretion,  in the direct  or indirect  capital  ownership  of the  Borrower.

6.10       Additional Negative Covenants.      Not to, without  the  Bank's written  consent:

(a)          Enter into any consolidation,   merger,  or other  combination,  or become  a partner  in a partnership,  a member  of a joint  venture,  or a member  of a limited  liability  company.

(b)         Acquire  or purchase  a business  or its assets.

(c)          Engage  in any  business  activities  substantially  different  from the  Borrower's  present  business.

(d)         Liquidate  or dissolve  the  Borrower's  business.

6.11      Notices to Bank.    To promptly  notify the  Bank in writing  of:

(a)        Any  event  of default  under this Agreement,  or any event  which,  with  notice or lapse of time  or both, would constitute  an event  of default.

(b)        Any  change  in the Borrower's  name,  legal structure,  principal  residence,  or name  on any driver's  license  or special  identification  card  issued  by any state  (for an individual),  state  of registration  (for a registered  entity),  place of business,  or chief executive  office  if the  Borrower  has more than  one place of business.

6.12       Insurance

(a)         General Business  Insurance.   To  maintain  insurance  as is usual for the business  it is in.

(b)         Insurance Covering  Collateral.    To  maintain  all risk property  damage  insurance  policies  (including  without limitation  windstorm  coverage,  and hurricane  coverage  as applicable)  covering  the tangible  property  comprising the  collateral.   Each  insurance  policy  must be ***Ins covering  collateral  MC***.   The  insurance  must be issued  by an insurance  company  acceptable  to the Bank and must  include  a lender's  loss  payable  endorsement   in favor  of the  Bank  in a form  acceptable  to the  Bank.

(c)         Evidence of Insurance.    Upon the  request  of the Bank, to deliver  to the  Bank a copy  of each  insurance  policy,  or, if permitted  by the  Bank, a certificate  of insurance  listing all insurance  in force.

6.13     Compliance with Laws.    To comply  with  the laws (including  any fictitious  or trade  name statute),  regulations,  and orders  of any  government  body with  authority  over the Borrower's  business.   The  Bank shall have  no obligation  to make any advance  to the  Borrower  except  in compliance  with all applicable  laws and regulations  and the  Borrower  shall fully cooperate  with  the Bank  in complying  with  all such  applicable  laws and  regulations.

6.14     Books and  Records.     To maintain  adequate  books  and records.

6.15     Audits.     To allow  the  Bank and its agents  to inspect  the  Borrower's  properties  and examine,  audit,  and make copies  of books  and records  at any  reasonable  time.   If any of the Borrower's  properties,  books  or records  are in the possession  of a third party,  the  Borrower  authorizes  that third  party  to permit  the  Bank or its agents  to have access  to perform  inspections  or audits  and to  respond  to the Bank's  requests  for  information  concerning  such  properties,  books and  records.

 

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6.16     Perfection of  Liens.    To help  the  Bank  perfect and  protect its security  interests  and liens, and reimburse  it for related  costs  it incurs  to protect  its security  interests  and liens.

6.17     Cooperation.      To take  any action  reasonably  requested  by the  Bank  to carry  out the intent  of this  Agreement.

6.18     Bank as  Principal   Depository.      To  maintain  the  Bank or one of its affiliates  as  its principal  depository  bank, including  for the  maintenance  of business,  cash  management,  operating  and administrative   deposit  accounts.

7.         HAZARDOUS  SUBSTANCES

 

7.1       Indemnity    Regarding   Hazardous   Substances.      The  Borrower  will  indemnify  and hold  harmless  the  Bank  from any loss or liability  the  Bank  incurs  in connection  with  or as a result  of this Agreement,  which  directly  or indirectly  arises out of the use,  generation,  manufacture,  production,  storage,  release,  threatened   release,  discharge,  disposal  or presence of a hazardous  substance.   This  indemnity  will  apply whether  the  hazardous  substance  is on,  under or about  the Borrower's  property  or operations  or property  leased  to the  Borrower.   The  indemnity  includes  but is not limited  to attorneys'  fees  (including  the reasonable  estimate  of the allocated  cost of  in-house  counsel  and staff).   The  indemnity extends  to the  Bank,  its parent, subsidiaries  and all of their directors,  officers,  employees,  agents,  successors,  attorneys and  assigns.

7.2       Compliance    Regarding   Hazardous   Substances.      The  Borrower  represents  and warrants  that the  Borrower  has complied  with all  current and future  laws,  regulations  and ordinances  or other  requirements  of any governmental   authority relating to or imposing  liability  or standards  of conduct  concerning  protection  of  health or the  environment  or hazardous substances.

7.3         Notices   Regarding   Hazardous   Substances.      Until full repayment  of the  loan, the  Borrower  will  promptly  notify the  Bank  in writing  of any threatened  or pending  investigation  of the Borrower  or its operations  by any governmental agency  under any current  or future law,  regulation  or ordinance  pertaining  to any  hazardous  substance.

7.4         Site Visits,   Observations and  Testing.     The  Bank and its agents  and representatives  will  have the  right at any reasonable  time,  after giving  reasonable  notice  to the Borrower,  to  enter  and visit  any  locations  where  the collateral securing  this  Agreement  (the "Collateral")  is located  for the  purposes  of observing  the Collateral,  taking  and  removing environmental   samples,  and conducting  tests.   The  Borrower  shall  reimburse  the  Bank  on demand  for  the costs  of any such  environmental   investigation  and testing.   The  Bank will  make  reasonable  efforts  during  any site visit,  observation  or testing  conducted  pursuant  to this  paragraph  to avoid  interfering  with  the  Borrower's  use of the Collateral.   The  Bank  is under  no duty  to observe  the Collateral  or to conduct  tests,  and any such  acts by the  Bank will  be solely  for the  purposes of protecting  the  Bank's security  and preserving  the Bank's  rights  under this Agreement.    No site visit, observation  or testing  or any report  or findings  made  as a result  thereof  ("Environmental   Report")  (1) will  result  in a waiver  of any default of the  Borrower;  (ii) impose  any  liability  on the Bank;  or (iii)  be a representation  or warranty  of  any kind regarding  the Collateral  (including  its condition  or value  or compliance  with  any laws)  or the  Environmental   Report  (including  its accuracy  or completeness).    In the event  the  Bank  has a duty  or obligation  under applicable  laws,  regulations  or other requirements  to disclose  an Environmental  Report  to the  Borrower  or any other  party, the  Borrower  authorizes  the  Bank  to make  such  a disclosure.   The  Bank  may also disclose  an Environmental   Report  to any regulatory  authority,  and to any other  parties  as  necessary  or appropriate  in the  Bank's judgment.   The  Borrower  further  understands  and agrees  that any Environmental   Report  or other  information  regarding  a site visit, observation  or testing  that is disclosed  to the  Borrower  by the  Bank  or its agents  and representatives   is to  be evaluated  (including  any reporting  or other disclosure  obligations  of the Borrower)  by the  Borrower  without  advice  or assistance  from the  Bank.

7.5         Definition of  Hazardous Substances.      "Hazardous  substances"   means  any substance,  material  or waste  that is or becomes  designated  or regulated  as "toxic,"  "hazardous,"  "pollutant,"  or "contaminant"   or a similar  designation  or regulation  under any current  or future federal,  state  or local  law (whether  under common  law, statute,  regulation  or otherwise)  or judicial  or administrative  interpretation   of such,  including  without  limitation  petroleum  or natural gas.

7.6         Continuing  Obligation.      The  Borrower's  obligations  to the  Bank under  this Article,  except  the obligation  to give notices  to the  Bank,  shall  survive  termination  of this Agreement  and  repayment  of the  Borrower's  obligations  to the  Bank under this Agreement.

8.           DEFAULT  AND  REMEDIES

 

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Without  limiting  any of the  Bank's  rights and  remedies  in this Agreement,  if any of the following  events  of default  occurs, the Bank  may do one or more  of the following  without  prior  notice:  declare  the Borrower  in default,  stop  making  any additional  credit  available  to the Borrower,  and require  the  Borrower  to repay  its entire  debt  immediately.   If an event which,  with  notice or the passage  of time,  will constitute  an event  of default  has occurred  and  is continuing,  the  Bank has no obligation  to make advances  or extend  additional  credit  under this Agreement.   In addition,  if any event  of default occurs,  the  Bank shall  have all  rights, powers  and  remedies  available  under any instruments  and agreements  required  by or executed  in connection  with this Agreement,  as well  as all rights  and remedies  available  at law or in equity.   If an event of default  occurs  under the paragraph  entitled  "Bankruptcy/Receivers,"    below, with respect  to the Borrower,  then the entire  debt  outstanding  under this Agreement  will automatically   be due immediately.

8.1         Failure to Pay.    The  Borrower  fails to make  a payment  under this Agreement  when  due.

8.2         Covenants.    Any  default  in the  performance  of or compliance  with  any obligation,  agreement  or other  provision contained  in this  Agreement  (other  than  those  specifically  described  as an event  of default  in this Article).

 

8.3         Other Bank  Agreements.      Any default  occurs  under any guaranty,  subordination  agreement,  security  agreement, deed  of trust,  mortgage,  or other document  required  by or delivered  in connection  with  this Agreement  or any such document  is no longer  in effect,  or any guarantor  purports  to revoke  or disavow  the guaranty;  or any  representation  or warranty  made  by any guarantor  is false when  made  or deemed  to be made;  or any default  occurs  under any  other agreement  the  Borrower  (or any Obligor)  has with  the  Bank or any affiliate  of the  Bank.   For purposes  of this Agreement, "Obligor"  shall  mean  any guarantor,  any  party  pledging  collateral  to the  Bank, or, if the  Borrower  is comprised  of the trustees  of a trust,  any trustor.

8.4         Cross-default.      Any  default  occurs  under  any agreement  in connection  with  any credit  the  Borrower  (or any Obligor)  has obtained  from  anyone  else or which  the  Borrower  (or any Obligor)  or any  of the Borrower's  related  entities  or affiliates  has guaranteed.

8.5         False Information.      The  Borrower  or any Obligor  has given the  Bank false  or misleading  information  or representations.

8.6         Bankruptcy/Receivers.        The  Borrower,  any Obligor,  or any general  partner  of the  Borrower  or of any Obligor  files a bankruptcy  petition,  a bankruptcy  petition  is filed  against  any of the foregoing  parties  and  such  petition  is not dismissed within  a period  of forty-five  (45) days after  the filing,  or the  Borrower,  any Obligor,  or any  general  partner  of the Borrower or of any  Obligor  makes  a general  assignment  for the benefit  of creditors;  or a receiver  or similar  official  is appointed  for a substantial  portion  of Borrower's  or any Obligor's  business;  or the  business  is terminated,  or such Obligor  is liquidated  or dissolved.

8.7         Revocation or Termination.      If the  Borrower  is comprised  of the trustee(s)  of a trust,  the trust  is revoked  or otherwise  terminated  or all or a substantial  part of the  Borrower's  assets  are distributed  or otherwise  disposed  of.

8.8         Lien Priority.    The  Bank fails to have an enforceable  first  lien (except  for any prior  liens  to which  the  Bank has consented  in writing)  on or security  interest  in any  property  given  as security  for this Agreement   (or any guaranty).

8.9         Judgments.     Any judgments  or arbitration  awards  are entered  against  the  Borrower  or any Obligor.

8.10       Death.    If the  Borrower  or any Obligor  is a natural  person,  the  Borrower  or such  Obligor  dies or becomes  legally incompetent;  if the Borrower  or any  Obligor  is a trust,  a trustor  dies or becomes  legally  incompetent;   if the Borrower  or any Obligor  is a partnership,  any general  partner  dies  or becomes  legally  incompetent.

8.11       Material Adverse Change.    A material  adverse  change  occurs,  or is reasonably  likely  to occur,  in the  Borrower's (or any  Obligor's)  business  condition  (financial  or otherwise),  operations,  or properties,  or ability to repay  the credit.

8.12       Government Action.     Any  government  authority  takes  action  that the Bank believes  materially  adversely  affects the  Borrower's  or any Obligor's  financial  condition  or ability  to repay.

8.13       ERISA Plans.   A reportable  event  occurs  under  Section  4043(c)  of ERISA,  or any Plan termination  (or commencement   of proceedings  to terminate  a Plan) or the full or partial withd rawal from  a Plan under  Section  4041  or 4042  of ERISA  occurs;  provided  such event  or events  could  reasonably  be expected,  in the judgment  of the  Bank, to have a material  adverse  effect.

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9.         ENFORCING THIS AGREEMENT;  MISCELLANEOUS

 

9.1         GAAP.   Except  as otherwise  stated  in this Agreement,  all financial  information  provided  to the  Bank and all financial  covenants  will be made  under generally  accepted  accounting  principles,  consistently   applied  or another  basis acceptable  to the  Bank.

9.2         Governing Law.    Except  to the extent that  any law  of the  United States  may  apply,  this Agreement  shall  be governed  and  interpreted  according  to the laws of  New York  (the "Governing  Law State"), without  regard  to any  choice  of law, rules  or principles  to the  contrary.   Nothing  in this  paragraph  shall  be construed  to limit or otherwise  affect  any rights or remedies  of the  Bank  under federal  law.

9.3         Venue and Jurisdiction.       The  Borrower  agrees  that any action  or suit against  the  Bank  arising  out of or relating to this  Agreement  shall  be filed  in federal  court  or state court  located  in the Governing  Law State.  The  Borrower  agrees that the  Bank  shall  not be deemed  to  have waived  its  rights to enforce  this section  by filing  an action or suit against  the Borrower  in a venue  outside  of the Governing  Law State.   If the Bank  does commence  an action  or suit  arising out  of or relating to this  Agreement,  the Borrower  agrees  that the case  may be filed  in federal  court  or state  court  in the  Governing Law State.   The  Bank reserves  the right  to commence  an action  or suit  in any other jurisdiction  where  the Borrower,  any Guarantor,  or any collateral  has any presence  or is located.   The  Borrower  consents  to personal  jurisdiction  and venue  in such  forum  selected  by the  Bank and waives  any right to contest  jurisdiction  and venue  and the convenience  of any such forum.   The  provisions  of this section  are material  inducements  to the  Bank's acceptance  of this Agreement.

9.4        Successors and Assigns.      This Agreement   is binding  on the  Borrower's  and the Bank's  successors  and assignees.   The  Borrower  agrees  that it may  not assign  this  Agreement  without  the  Bank's  prior consent.

9.5        Waiver   of  Jury  Trial .    EACH  PARTY  HERETO  HEREBY  IRREVOCABLY   WAIVES,  TO THE  FULLEST EXTENT  PERMITTED  BY  APPLICABLE    LAW  ANY  RIGHT  IT MAY  HAVE  TO A TRIAL  BY JURY  IN ANY  LEGAL PROCEEDING   DIRECTLY  OR  INDIRECTLY   ARISING   OUT OF OR  RELATING  TO THIS  AGREEMENT   OR ANY OTHER  DOCUMENT  EXECUTED  IN CONNECTION   HEREWITH  OR THE TRANSACTIONS    CONTEMPLATED HEREBY  OR THEREBY  (WHETHER   BASED  ON  CONTRACT,   TORT  OR ANY  OTHER  THEORY).   EACH  PARTY HERETO  (a) CERTIFIES  THAT  NO  REPRESENTATIVE,    AGENT  OR ATTORNEY   OF ANY  OTHER  PERSON  HAS REPRESENTED,   EXPRESSLY  OR  OTHERWISE,  THAT  SUCH  OTHER  PERSON  WOULD  NOT, IN THE  EVENT  OF LITIGATION,   SEEK  TO  ENFORCE  THE  FOREGOING  WAIVER,   (b) ACKNOWLEDGES    THAT  IT AND  THE OTHER PARTIES  HERETO  HAVE  BEEN  INDUCED  TO  ENTER  INTO THIS  AGREEMENT   AND  THE  OTHER  DOCUMENTS CONTEMPLATED    HEREBY  BY, AMONG  OTHER  THINGS,  THE  MUTUAL  WAIVERS  AND  CERTIFICATIONS   IN THIS SECTION  AND  (c)  CERTIFIES  THAT  THIS WAIVER   IS  KNOWINGLY,  WILLINGLY   AND  VOLUNTARILY    MADE.

9.6         Severability; Waivers.     If any  part of this Agreement  is not enforceable,  the  rest of the Agreement  may  be enforced.   The  Bank retains  all rights,  even  if it makes a roan after  default.   If the  Bank waives  a default,  it may  enforce  a later  default.   Any  consent  or waiver  under  this Agreement   must be in writing.

9.7         Expenses.

(a)          The  Borrower  shall  pay to the  Bank immediately  upon  demand  the full amount  of all payments,  advances, charges,  costs and expenses,  including  reasonable  attorneys'  fees, expended  or incurred  by the  Bank  in connection  with  (a) the negotiation  and preparation  of this Agreement  and any related  agreements,  the  Bank's continued  administration  of this Agreement  and such  related  agreements,  and the preparation  of any amendments   and waivers  related  to this Agreement  or such  related agreements,   (b) filing,  recording  and search fees,  appraisal  fees,  field examination  fees,  title  report  fees,  and documentation   fees  with  respect  to any collateral and  books  and records  of the  Borrower  or any  Obligor,  (c) the  Bank's costs  or losses  arising from any  changes  in law which  are allocated  to this Agreement  or any credit  outstanding  under this Agreement,   and (d) costs  or expenses  required to be paid  by the  Borrower  or any Obligor  that are  paid, incurred  or advanced  by the  Bank.

 (b)         The  Borrower  will  indemnify  and hold  the Bank  harmless  from any loss,  liability,  damages,  judgments,   and costs of any  kind relating to or arising  directly  or indirectly  out of  (a) this Agreement  or any document  required hereunder,  (b) any credit  extended  or committed  by the  Bank to the  Borrower  hereunder,  and (c) any  litigation  or proceeding  related to or arising  out of this  Agreement,  any such  document,  or any such  credit,  including,  without limitation,  any act  resulting  from the  Bank  complying  with  instructions  the  Bank  reasonably  believes  are  made  by any Authorized  Individual.   This  paragraph  will  survive  this Agreement's  termination,  and will  benefit  the  Bank and its officers,  employees,  and agents.

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(c)         The  Borrower  shall  reimburse  the Bank for any  reasonable  costs  and attorneys'  fees  incurred  by the Bank  in connection  with  (a) the enforcement  or preservation  of the  Bank's  rights and  remedies  and/or  the collection  of any obligations  of the  Borrower  which  become  due to the Bank  and in connection  with any  "workout"  or restructuring, and (b) the prosecution  or defense  of any action  in any way  related  to this Agreement,  the credit  provided hereunder  or any related  agreements,  including  without  limitation,  any action for declaratory  relief,  whether incurred  at the trial  or appellate  level,  in an arbitration  proceeding  or otherwise,  and including  any of the foregoing incurred  in connection  with  any bankruptcy  proceeding  (including  without  limitation,  any adversary  proceeding, contested  matter  or motion  brought  by the Bank  or any other  person)  relating  to the  Borrower  or any other  person or entity.

9.8        Individual Liability.      If the  Borrower  is a natural  person,  the  Bank  may proceed  against  the  Borrower's  business and non-business  property  in enforcing  this and other  agreements  relating to this  loan.   If the  Borrower  is a partnership, the Bank  may  proceed  against  the  business  and non-business   property  of each  general  partner  of the Borrower  in enforcing  this and other  agreements  relating  to this loan.

9.9        Joint and Several  Liability.      If two or more  Borrowers  sign this Agreement,  each  Borrower  agrees  that  it is jointly and severally  liable  to the  Bank for the payment  of all obligations  arising  under this Agreement,  and that  such  liability  is independent  of the obligations  of the other  Borrowers.

9.10      Set-Off.     Upon and after  the occurrence  of an event  of default  under this Agreement,  (a) the Borrower  hereby authorizes  the  Bank, at any time and from time  to time, without  notice, which  is hereby  expressly  waived  by the  Borrower, and whether  or  not the  Bank shall  have declared  any credit  subject  hereto to  be due and payable  in accordance  with  the terms  hereof,  to set  off against,  and to appropriate  and apply  to the  payment  of, the Borrower's  Obligations  (whether matured  or unmatured,  fixed or contingent,  liquidated  or unliquidated),  any and all amounts  owing  by the  Bank to the Borrower  (whether  payable  in U.S.  dollars or any other currency,  whether  matured  or unmatured,  and in the case  of deposits,  whether  general  or special  (except  trust and escrow  accounts),  time  or demand  and however  evidenced),  and (b) pending  any  such action,  to the extent  necessary,  to  hold such  amounts  as collateral  to  secure  such  Obligations  and to return  as unpaid  for  insufficient  funds  any and all checks  and other  items drawn  against  any deposits  so held  as the  Bank, in its sole discretion,  may  elect.  The  Borrower  hereby  grants  to the  Bank a security  interest  in all deposits  and accounts maintained  with  the  Bank to secure  the payment  of all Obligations  of the Borrower  to the  Bank under this  Agreement  and all agreements,  instruments  and documents  related  to this Agreement.  "Obligations"  means  all obligations,   now or hereafter  existing,  of the  Borrower  to the  Bank under this Agreement  and  under any other agreement  or instrument executed  in connection  with  this Agreement.

9.11      One Agreement.      This Agreement  and any  related  security  or other  agreements  required  by this Agreement constitute  the entire  agreement  between  Borrower  and Bank with  respect  to each  credit subject  hereto  and supersede  all prior negotiations,  communications,   discussions  and correspondence   concerning  the subject  matter  hereof.

In the event  of any conflict  between  this Agreement  and any other  agreements  required  by this Agreement,  this Agreement  will  prevail.

9.12      Notices.    Unless otherwise  provided  in this Agreement   or in another  agreement  between  the  Bank and the Borrower,  all  notices  required  under this Agreement  shall  be personally  delivered  or sent by first class  mail, postage prepaid,  or by overnight  courier  to the  addresses  on the  signature  page  of this Agreement,  or to such  other  addresses  as the  Bank and the  Borrower  may  specify from  time to time  in writing.   Notices  and other  communications   shall  be effective (l) if mailed,  upon  the earlier  of  receipt  or five  (5) days  after deposit  in the  U.S. mail, first class,  postage  prepaid,  or  (ii) if hand-delivered,   by courier  or otherwise  (including  telegram,  lettergram  or mailgram),  when  delivered.

9.13      Headings.     Article  and paragraph  headings  are for  reference  only and shall  not affect  the  interpretation  or meaning  of any  provisions  of this Agreement.

9.14       Counterparts .      This Agreement  may be executed  in any  number  of counterparts,  each  of which,  when  so executed,  shall  be deemed  to be an original,  and all of which  when  taken  together  shall  constitute  one and the same Agreement.    Delivery  of an executed  counterpart  of this Agreement  (or of any agreement  or document  required  by this Agreement  and any amendment  to this  Agreement)  by telecopy  or other  electronic  imaging  means  shall  be as effective  as delivery  of a manually  executed  counterpart  of this Agreement;   provided,  however,  that the telecopy  or other  electronic image  shall  be promptly  followed  by an original  if required  by the Bank.

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  9.15     Borrower   Information; Reporting  to  Credit  Bureaus.    The  Borrower  authorizes  the  Bank at any time  to verify  or check  any information  given  by the  Borrower  to the  Bank, check  the  Borrower's  credit  references,  verify  employment,   and obtain  credit  reports.   The  Borrower  agrees  that the Bank shall  have the right  at all times to disclose  and report  to credit reporting  agencies  and credit  rating  agencies  such information  pertaining  to the  Borrower  and/or  all guarantors  as  is consistent  with  the  Bank's  policies  and  practices  from time to time  in effect.

9.16     Customary    Advertising    Material.     The  Borrower  and each  Obligor  consent  to the publication  by the  Bank  of customary  advertising  material  relating  to the transactions  contemplated   hereby  using the name,  product  photographs, logo  or trademark  of the Borrower  or such  Obligor.

9.17     Amendments .     This Agreement  may  be amended  or modified  only in writing  signed  by each  party  hereto.

9.18     Limitation of  Interest and Other Charges.     If, at any time, the  rate of interest,  together  with all  amounts  which constitute  interest  and which  are reserved,  charged  or taken  by the  Bank as compensation  for fees,  services  or expenses incidental  to the making,  negotiating  or collection  of the loan evidenced  hereby,  shall  be deemed  by any competent  court of law,  governmental  agency  or tribunal  to exceed  the maximum  rate of interest  permitted  to be charged  by the  Bank to the  Borrower  under  applicable  law, then,  during  such time  as such  rate of interest  would  be deemed  excessive,  that portion  of each  sum  paid attributable  to that portion  of such  interest  rate that exceeds  the maximum  rate of interest  so permitted  shall  be deemed  a voluntary  prepayment  of principal.   As  used  herein,  the term  "applicable  law" shall  mean  the law in effect  as of the date hereof;  provided,  however,  that in the event  there  is a change  in the law which  results  in a higher  permissible  rate of interest,  then this Agreement  shall  be governed  by such  new law as of its effective  date.

The  Borrower  executed  this Agreement  as of the  date stated  at the top of the first  page, intending  to create  an instrument executed  under seal.

Bank:

Bank  of America,  N.A.

 

By: /s/ Scott L. Card

Scott  L. Card,  Senior  Vice  President

 

Borrower:

Mechanical Technology, Incorporated

 

By: /s/ Rick Jones                                                       (Seal)

Rick Jones, Chief Financial Officer

 

 

 

Address where notices to Mechanical Technology,	Address where notices to the Bank are to be sent:
Incorporated are to be sent:
325 Washington Avenue Ext	Doc Retention - GCF
Albany, NY 12205	CT2-515-BB-03
	70 Batterson Park Road
	Farmington, CT  06032

 

 

 

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Federal law requires Bank of America, N.A. (the  "Bank") to provide the  following   notice.   The notice is not  part  of the foregoing agreement  or  instrument   and may  not  be  altered.   Please read the notice  carefully.

(1)          USA PATRIOT ACT NOTICE

Federal  law  requires  all financial  institutions  to obtain,  verify and record  information  that  identifies  each  person who  opens an account  or obtains  a loan.  The  Bank will ask for the  Borrower's  legal  name,  address,  tax  ID number  or social  security number  and other  identifying  information.   The  Bank  may  also ask for additional  information  or documentation   or take other  actions  reasonably  necessary  to verify the  identity  of the  Borrower,  guarantors  or other  related  persons.

 

 

 

 

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SCHEDULE A

FEES

(a)           Waiver Fee .   If the Bank, at  its discretion,  agrees  to waive  or amend  any terms  of this Agreement,  the  Borrower will,  at the  Bank's option,  pay the  Bank a fee for each waiver  or amendment  in an amount  advised  by the  Bank at the time the  Borrower  requests  the waiver  or amendment.    Nothing  in this  paragraph  shall  imply that the  Bank  is obligated  to agree to any waiver  or amendment  requested  by the  Borrower.   The  Bank  may  impose additional requirements  as a condition  to any waiver  or amendment.

(b)           Late Fee .  To the extent  permitted  by law, the  Borrower  agrees  to pay a late fee in an amount  not to exceed  four percent  (4%) of any payment  that  is more than  fifteen  (15) days  late;  provided  that such  late fee shall  be reduced to two  percent  (2%) of any  required  principal  and  interest  payment  that is not paid within  fifteen  (15) days  of the date  it is due  if the  loan  is secured  by a mortgage  on an owner-occupied   residence.   The  imposition  and payment of a late fee shall  not constitute  a waiver  of the  Bank's  rights with  respect  to the default.

 

 

 

 

 

 

 

 

 

Exhibit 10.3

 

 

 

 

 

 

Bank of America   

 

SECURITY  AGREEMENT
(Multiple Use)

 

 

1.  THE SECURITY.   The  undersigned Mechanical Technology, Incorporated  ( the "Pledgor")  hereby  assigns  and grants  to Bank  of America,  NA,    its successors  and assigns  ("BANA"),  and to Bank of America  Corporation   and  its subsidiaries  and affiliates  (BANA  and  all such  secured  parties, collectively,  the "Bank")  a security  interest  in the following  described  property  now owned  or hereafter acquired  by the  Pledgor  (the "Collateral"):

 

(a)  All  accounts,  and all chattel  paper,  instruments,  deposit  accounts,  letter of credit  rights,  and general  intangibles  related thereto;  and all returned  or repossessed  goods which,  on sale or lease,  resulted  in an account.

 

(b)  All  inventory.

 

(c)  All equipment  and fixtures  now owned  or hereafter  acquired  by the  Pledgor, (including,  but  not limited  to, the equipment  described  in the attached  Equipment  Description,  if any).

(d)  All  negotiable  and nonnegotiable  documents  of title  covering  any Collateral.

(e)  All  accessions,  attachments  and other  additions  to the  Collateral,  and all tools,  parts  and equipment  used  in connection  with the  Collateral.

 

(f)  All  substitutes  or replacements  for any Collateral,  all cash  or non-cash proceeds  (including  insurance  proceeds),  products,  rents and profits  of the  Collateral,  and all income,  benefits  and property  receivable  on account  of the  Collateral,  and all supporting obligations  covering  any Collateral.

 

(g)  All books,  data and  records  pertaining  to any Collateral,  whether  in the form of a writing,  photograph,   microfilm  or electronic  media,  including  but  not  limited  to any computer- readable  memory  and any computer  software  necessary  to process  such  memory  ("Books  and Records").

 

2.  THE  INDEBTEDNESS.    The obligations  secured  by this Agreement   are the  payment and performance  of (a) all present  and future  Indebtedness  of the  Pledgor  to the  Bank;  (b) all obligations of the Pledgor  and rights  of the  Bank  under  this Agreement;  and  (c)  all present  and future  obligations  of the  Pledgor  to the  Bank  of other  kinds.  Each  party obligated  under  any Indebtedness   is referred  to in this Agreement  as a "Debtor:   "Indebtedness"   is used  in its most comprehensive   sense  and includes  any and all advances,  debts.  obligations  and liabilities  of the  Debtor,  now or hereafter  existing,  absolute  or contingent.  liquidated  or unliquidated,  determined  or undetermined,  voluntary  or  involuntary,  including under  any swap.  derivative,  foreign  exchange,  hedge,  or other  arrangement   ("Swap"),  deposit.  treasury management  or other  similar  transaction  or arrangement,  and whether  the  Debtor  may be liable individually  or jointly  with  others.  or whether  recovery  upon such  Indebtedness   may be or hereafter becomes  unenforceable.   "Indebtedness"   secured  by the  Collateral  of such  Pledgor  shall  not  include obligations  arising  under  any Swap  to which  it is not party  if, and to the extent  that,  all or a portion of the

 

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guaranty  by such  Pledgor  to the  Bank of, or the grant  by such  Pledgor  of a security  interest  to the  Bank to secure,  such  Swap,  would  violate  the  Commodity  Exchange  Act   (7 U.S.C.,  Sec.  1. et. seq.)  by virtue  of such  Pledgor's  failure  to constitute  an "eligible  contract  participant"  as defined  in the  Commodity

Exchange  Act  at the  time  such guaranty  or grant  of such  security  interest  becomes  effective  with  respect to such Swap.

 

Except as otherwise  agreed  in writing  by the  Bank and the  Pledgor,  if the  Indebtedness   includes,  now or hereafter,  any Special  Flood  Zone  Loan,  then the following  shall  apply:  The  Special  Flood  Zone  Loan shall  not be secured  under  this Agreement  by any Collateral  which  would  constitute  "contents"  located within  the  Flood  Zone  Improvements.

 

3.  PLEDGOR'S   COVENANTS.    The Pledgor  represents,  covenants  and warrants  that unless compliance  is waived  by the  Bank  in writing:

 

(a)  The  Pledgor  agrees:  (i) to indemnify  the  Bank  against  all losses,  claims, demands,  liabilities  and expenses  of every  kind caused  by any  Collateral;  (ii) to permit the  Bank to exercise  its rights  under  this Agreement;   (iii) to execute  and deliver  such documents  as the

Bank deems  necessary  to create,  perfect  and continue  the  security  interests  contemplated  by this Agreement;   (iv)  not to change  its name  (including,  for  an individual,  the  Pledgor's  name on any driver's  license  or special  identification  card issued  by any state),  and as applicable,  its chief executive  office,  its principal  residence  or the jurisdiction  in which  it is organized  andlor  registered or its business  structure  without  giving  the  Bank at least  30 days  prior written  notice;  (v) not to change  the  places  where  the  Pledgor  keeps  any Collateral  or the  Pledgor's  Books  and Records concerning  the  Collateral  without  giving  the  Bank prior written  notice  of the  address  to which  the Pledgor  is moving  same;  and  (vi) to cooperate  with the  Bank  in perfecting  all security  interests granted  by this Agreement   and in obtaining  such  agreements  from  third  parties  as the  Bank

deems  necessary,  proper  or convenient  in connection  with  the  preservation,  perfection  or enforcement  of any of its rights  under  this Agreement.

 

(b)   The Pledgor  agrees  with  regard  to the  Collateral,  unless  the  Bank agrees otherwise  in writing:   (i) that the  Bank  is authorized  to file financing  statements  in the  name of the Pledgor  to perfect  the  Bank's  security  interest  in the Collateral;  (ii) that the  Bank is authorized  to notify any account  debtors,  any buyers  of the Collateral,  or any other  persons  of the  Bank's interest  in the  Collateral,  (iii) where  applicable,  to operate  the  Collateral  in accordance  with all applicable  statutes,  rules  and regulations  relating  to the  use and control  of the  Collateral,  and not to use any Collateral  for any  unlawful  purpose  or in any way that would  void  any insurance required  to be carried;  (iv)  not to  remove the  Collateral  from the  Pledgor's  premises  except  in the ordinary  course  of the  Pledgor's  business;  (v) to pay when  due all  license  fees,  registration  fees and other  charges  in connection  with  any Collateral;  (vi) not to permit  any  lien on the  Collateral, including  without  limitation,  liens arising  from  repairs to or storage  of the  Collateral,  except  in favor  of the  Bank;  (vii)  not to sell,  hypothecate  or dispose  of,  nor permit  the transfer  by operation of law of, any Collateral  or any  interest  in the Collateral,  except  sales  of inventory  to buyers  in the ordinary  course  of the  Pledgor's  business;  (viii) to permit  the  Bank to inspect  the Collateral  at any time;  (ix) to  keep,  in accordance  with generally  accepted  accounting  principles,  complete  and accurate  Books  and  Records  regarding  all the  Collateral,  and to permit  the  Bank to inspect the same  and make  copies  at any reasonable  time;   (x)  if requested  by the  Bank,  to receive  and use reasonable  diligence  to collect  the  Collateral  consisting  of accounts  and other  rights to payment and proceeds,  in trust  and  as the  property  of the Bank,  and to immediately  endorse  as appropriate  and deliver  such  Collateral  to the  Bank daily  in the  exact  form  in which  they are received  together  with  a collection  report  in form  satisfactory  to the  Bank;  (xi) not to commingle the Collateral,  or collections  with  respect  to the  Collateral,  with other  property;  (xii) to give only normal allowances  and credits  and to advise  the  Bank thereof  immediately  in writing  if they affect any rights to payment  or proceeds  in any material  respect;  (xiii) from time  to time,  when requested  by the  Bank, to  prepare  and deliver  a schedule  of all the  Collateral  subject  to this Agreement  and to assign  in writing  and deliver to the Bank  all accounts,  contracts,  leases  and

 

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other  chattel  paper,  instruments,  and documents;  (xiv)  in the  event  the  Bank  elects  to receive payments  or rights to payment  or proceeds  hereunder,  to pay all expenses  incurred  by the  Bank, including  expenses  of accounting,  correspondence,   collection  efforts,  reporting  to account  or contract  debtors,  filing,  recording,  record  keeping  and other  expenses;  and (xv) to provide  any service  and do any other  acts which  may  be necessary  to maintain,  preserve  and protect  all the Collateral  and,  as appropriate  and  applicable,  to keep  all the  Collateral  in good  and saleable condition,  to deal with  the  Collateral  in accordance  with  the standards  and practices  adhered  to generally  by users  and manufacturers   of like property,  and to keep  all the  Collateral  free and clear of all defenses,  rights  of offset  and counterclaims.

 

(c)   If any Collateral  is or becomes  the  subject  of any registration  certificate, certificate  of deposit  or  negotiable  document  of title,  including  any warehouse   receipt or bill of lading, the  Pledgor  shall  immediately  deliver  such document  to the  Bank,  together  with  any necessary  endorsements.

 

(d)  The  Pledgor  will  maintain  and keep  in force  all  risk insurance  covering  the Collateral  against  fire, theft,  liability and extended  coverages  (including  without  limitation  flood, windstorm  coverage  and  hurricane  coverage  as applicable),  to the  extent  that  any Collateral  is of a type which  can  be so  insured.  Such  insurance  shall  be in form,  amounts,  coverages  and basis reasonably  acceptable  to the  Bank,  shall  require  losses  to be paid on a replacement  cost basis, shall be issued  by insurance  companies  acceptable  to the  Bank  and include  a lender  loss

payable  endorsement   and additional  insured  endorsement  in favor  of the  Bank  in a form acceptable  to the  Bank.   Upon the  request  of the  Bank, the  Pledgor  will  deliver  to the Bank a copy of each  insurance  policy,  or,  if permitted  by the  Bank,  a certificate  of insurance  listing all

insurance in force.

 

(e)   The Pledgor  will  not attach  any Collateral  to any  real property  or fixture  in a manner  which  might  cause  such  Collateral  to become  a part thereof  unless  the  Pledgor  first obtains  the written  consent  of any owner,  holder  of any lien on the  real property  or fixture,  or other person  having  an  interest  in such  property  to the  removal  by the  Bank  of the  Collateral  from  such real property  or fixture.   Such written  consent  shall  be in form and  substance  acceptable  to the Bank and shall  provide  that  the  Bank  has no liability to such owner,  holder  of any lien, or any

other person.

 

4.   BANK  RIGHTS.   The Pledgor  appoints  the  Bank  its attorney  in fact  to perform  any of the following  rights, which  are coupled  with  an interest,  are  irrevocable  until termination  of this Agreement and may be exercised  from time  to time by the  Bank's officers  and employees,  or any of them,  whether  or not the  Pledgor  is in default:  (a) to perform  any obligation  of the  Pledgor  hereunder  in the  Pledgor's  name or otherwise;  (b) to release  persons  liable  on the  Collateral  and to give  receipts  and acquittances  and compromise  disputes;  (c) to release  or substitute  security;  (d) to prepare,  execute,  file,  record  or deliver notes, assignments,  schedules,  designation  statements,  financing  statements,  continuation  statements, termination  statements,  statements  of assignment,  applications  for  registration  or like documents  to perfect,  preserve  or release  the  Bank's  interest  in the  Collateral;  (e) to take  cash,  instruments  for the payment  of money  and other  property  to which  the  Bank  is entitled;  (f) to verify  facts  concerning  the Collateral  by inquiry of obligors  thereon,  or otherwise,  in its own  name  or a fictitious  name;  (g) to endorse, collect,  deliver  and receive  payment  under  instruments  for the payment  of money  constituting  or relating

to the Collateral;  (h) to prepare,  adjust,  execute,  deliver  and  receive  payment  under  insurance  claims,  and to collect  and receive  payment  of and endorse  any instrument  in payment  of loss or returned  premiums  or any other  insurance  refund  or return,  and to apply  such amounts  received  by the  Bank,  at the  Bank's sole option, toward  repayment  of the  Indebtedness  or, where  appropriate,  replacement  of the Collateral;  (i) to enter onto the  Pledgor's  premises  in inspecting  the  Collateral;  (j) to make  withdrawals  from  and to close

deposit  accounts  or other  accounts  with  any financial  institution,  wherever  located,  into which  proceeds may have been  deposited,  and to apply  funds  so withdrawn  to payment  of the  Indebtedness;   (j) to preserve  or release  the  interest  evidenced  by chattel  paper  to which  the  Bank  is entitled  and to endorse and deliver any evidence  of title;  and (k) to do all acts and things  and execute  all documents  in the name

 

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of the  Pledgor  or otherwise,  deemed  by the  Bank as necessary,  proper  and convenient   in connection  with the  preservation,  perfection  or enforcement  of its rights.

 

5.  DEFAULTS.   Anyone   or more of the following  shall  be a default  hereunder:

 

(a)  The occurrence  of any defined  or described  event  of default  under,  or any default  in the  performance  of or compliance  with any obligation,  agreement,   representation,   warranty,  or other  provision  contained  in (i) this Agreement,   or (ii) any other  contract  or instrument  evidencing  the Indebtedness.

 

(b)   Any  involuntary  lien of any kind or character  attaches  to any Collateral, except  for liens for taxes  not yet  due.

 

6.   BANK'S  REMEDIES  AFTER  DEFAULT.   In the  event  of any default,  the  Bank may do anyone   or more of the  following,  to the  extent  permitted  by law:

 

(a)    Declare any Indebtedness immediately due and payable, without notice or        demand.

 

(b)   Enforce  the  security  interest  given  hereunder  pursuant  to the  Uniform

Commercial  Code  and any other  applicable  law.

 

(c)   Enforce  the  security  interest  of the  Bank  in any deposit  account  of the

Pledgor  maintained  with the  Bank  by applying  such  account  to the  Indebtedness.

 

(d) Require  the  Pledgor  to obtain  the  Bank's  prior written  consent  to any sale, lease,  agreement  to sell  or lease,  or other  disposition  of any Collateral  consisting  of inventory.

 

(e)   Require  the  Pledgor  to segregate  all collections  and proceeds  of the Collateral  so that they  are  capable  of identification  and deliver  daily  such  collections  and proceeds  to the  Bank  in kind.

 

(f)   Require  the  Pledgor  to direct  all account  debtors  to forward  all payments  and proceeds  of the Collateral  to a post office  box under the  Bank's  exclusive  control.

 

(g)   Give  notice  to others  of the  Bank's  rights  in the  Collateral,  to enforce  or forebear  from  enforcing  the  same  and make  extension  and modification  agreements.

 

(h)   Require  the  Pledgor  to assemble  the  Collateral,  including  the  Books and

Records,  and make  them  available  to the  Bank at a place  designated  by the  Bank.

 

(i)  Enter  upon the  property  where  any Collateral,  including  any Books  and Records,  are  located  and take  possession  of such  Collateral  and  such  Books  and Records,  and use such  property  (including  any buildings  and facilities)  and any of the  Pledgor's  equipment,  if the  Bank deems  such  use necessary  or advisable  in order  to take  possession  of, hold, preserve, process,  assemble,  prepare  for  sale or lease,  market for  sale or lease,  sell or lease,  or otherwise dispose  of, any  Collateral.

 

(j)  Demand  and collect  any payments  on and  proceeds  of the  Collateral.   In connection  therewith  the  Pledgor  irrevocably  authorizes  the  Bank to endorse  or sign the  Pledgor's name  on all checks,  drafts,    collections,  receipts  and other  documents,  and to take  possession  of and open the  mail  addressed  to the  Pledgor  and remove  therefrom  any payments  and proceeds

of the Collateral.

 

 

 

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(k)   Grant  extensions  and compromise  or settle  claims  with  respect  to the

Collateral  for  less than face  value,  all without  prior notice  to the  Pledgor.

 

(l)  Use or transfer  any of the  Pledgor's  rights and  interests  in any Intellectual Property  now owned  or hereafter  acquired  by the  Pledgor,  if the  Bank  deems  such use or transfer necessary  or advisable  in order  to take  possession  of, hold,  preserve,  process,  assemble,

prepare  for  sale or lease,  market  for sale or lease,  sell or lease,  or otherwise  dispose  of, any Collateral.   The Pledgor agrees  that any such  use or transfer  shall  be without  any additional consideration  to the  Pledgor.   As  used  in this  paragraph,  "Intellectual  Property"  includes,  but is not limited  to, all trade  secrets,  computer  software,  service  marks,  trademarks,  trade  names, trade  styles,  copyrights,  patents,  applications  for any of the  foregoing,  customer  lists, working drawings,  instructional  manuals,  and rights  in processes  for technical  manufacturing,   packaging and labeling,  in which  the  Pledgor  has any right or interest,  whether  by ownership,  license, contract  or otherwise.

 

(m)   Have  a receiver  appointed  by any court of competent  jurisdiction  to take possession  of the  Collateral.  The Pledgor hereby consents  to the appointment  of such a receiver and agrees  not to oppose  any such  appointment.

 

(n)  Take  such  measures  as the  Bank may deem  necessary  or advisable  to take possession  of,  hold,  preserve,  process,  assemble,  insure,  prepare  for  sale or lease,  market for sale or lease,  sell  or lease,  or otherwise  dispose  of, any Collateral,  and the  Pledgor  hereby irrevocably  constitutes  and appoints  the  Bank as the  Pledgor's  attorney-in-fact   to perform  all acts and execute  all documents  in connection  therewith.

 

(o)  Without  notice  or demand  to the  Pledgor,  set off and apply  against  any and all of the  Indebtedness   any and all deposits  (general  or special,  time  or demand,  provisional  or final)  and any other  indebtedness,   at any time  held or owing  by the  Bank or any of the  Bank's agents  or affiliates  to or for the  credit  of the account  of the  Pledgor  or any guarantor  or endorser of the  Pledgor's  Indebtedness.

 

(p)   Exercise  all rights,  powers  and remedies  which  the  Pledgor  would  have,  but for this Agreement,  with  respect  to all Collateral.

 

(q)   Receive,  open  and read mail addressed  to the  Pledgor.

 

(r)   Resort  to the  Collateral  under this  Agreement,  and any other  collateral  related to the  Indebtedness,   in any order.

 

(s)   Exercise  any other  remedies  available  to the  Bank at law or in equity.

 

7.  ENVIRONMENTAL  MATTERS.

 

(a)  The Pledgor  represents  and warrants:  (i) it is not in violation  of any health, safety,  or environmental   law or regulation  regarding  hazardous  substances   and (ii) it is not the subject  of any claim,  proceeding,   notice,  or other  communication   regarding  hazardous substances.   "Hazardous  substances"  means any substance,  material  or waste  that  is or becomes  designated  or regulated  as "toxic,"  "hazardous,"  "pollutant,"  or "contaminant"  or a similar  designation  or regulation  under  any current  or future  federal,  state  or local  law (whether under common  law, statute,  regulation  or otherwise)  or judicial  or administrative   interpretation  of such,  including  without  limitation  petroleum  or natural gas.

 

(b)  The Pledgor shall deliver  to the  Bank,  promptly  upon  receipt,  copies  of all notices,  orders,  or other  communications   regarding  (i) any enforcement  action  by any governmental   authority  relating  to health,  safety,  the  environment,  or any  hazardous  substances

 

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with  regard  to the  Pledgor's  property,  activities,  or operations,  or  (ii) any claim  against  the  Pledgor regarding  hazardous  substances.

 

(c)  The Bank and its agents  and representatives  will  have the  right at any reasonable  time,  after  giving  reasonable  notice to the  Pledgor,  to enter  and visit  any locations where  the  Collateral  is located  for the  purposes  of observing  the  Collateral,  taking  and removing environmental   samples,  and conducting  tests. The Pledgor shall reimburse the Bank on demand for the costs of any such environmental  investigation and testing.  The Bank will  make  reasonable efforts  during  any site visit,  observation  or testing  conducted  pursuant  to this  paragraph  to avoid interfering  with  the  Pledgor's  use of the Collateral.   The Bank is under  no duty to observe  the Collateral  or to conduct  tests,  and any such  acts by the  Bank will  be solely  for the  purposes  of protecting  the  Bank's  security  and preserving  the  Bank's  rights  under  this Agreement.   No site visit, observation   or testing  or any  report  or findings  made  as a result  thereof  ("Environmental Report")  will  (i) result  in a waiver  of any default  of the  Pledgor;  (ii) impose  any liability  on the Bank;  or (iii) be a representation   or warranty  of any kind regarding  the  Collateral  (including  its condition  or value  or compliance  with  any laws) or the  Environmental   Report  (including  its accuracy  or completeness).   In the event  the  Bank  has a duty  or obligation  under  applicable  laws, regulations  or other  requirements  to disclose  an Environmental   Report  to the  Pledgor  or any other party,  the  Pledgor  authorizes  the  Bank to make  such a disclosure.   The Bank may also disclose an Environmental  Report to any regulatory authority, and to any other parties as necessary or appropriate  in the Bank's judgment.   The Pledgor further  understands  and agrees  that any Environmental   Report  or other  information  regarding  a site visit,  observation  or testing  that is disclosed  to the  Pledgor  by the  Bank or its agents  and representatives   is to be evaluated

(including  any reporting  or other  disclosure  obligations  of the  Pledgor)  by the  Pledgor  without advice  or assistance  from  the  Bank.

 

(d) The Pledgor will  indemnify  and hold harmless  the  Bank from  any loss or liability the  Bank  incurs  in connection  with  or as a result of this Agreement,   which  directly  or indirectly  arises  out of the  use, generation,  manufacture,  production,  storage,  release,  threatened release,  discharge,  disposal  or presence  of a hazardous  substance.  This  indemnity  will  apply whether  the  hazardous  substance  is on,  under or about the  Pledgor's  property  or operations  or property  leased  to the  Pledgor.  The  indemnity  includes  but  is not  limited  to attorneys'  fees (including  the  reasonable  estimate  of the allocated  cost of in-house  counsel  and staff).  The indemnity  extends  to the  Bank,  its parent,  subsidiaries  and all of their  directors,  officers, employees,  agents,  successors,   attorneys  and assigns.

 

8.  WAIVER   OF JURY  TRIAL .    EACH  PARTY  HERETO  HEREBY  IRREVOCABLY WAIVES,  TO  THE  FULLEST   EXTENT  PERMITTED  BY APPLICABLE    LAW  ANY  RIGHT  IT MAY  HAVE TO A TRIAL  BY JURY  IN ANY  LEGAL   PROCEEDING  DIRECTLY  OR  INDIRECTLY   ARISING  OUT OF OR RELATING   TO THIS  AGREEMENT   OR ANY  OTHER  DOCUMENT  EXECUTED   IN CONNECTION HEREWITH  OR THE TRANSACTIONS    CONTEMPLATED   HEREBY  OR  THEREBY  (WHETHER BASED  ON CONTRACT,   TORT  OR ANY  OTHER  THEORY).   EACH  PARTY  HERETO  (a) CERTIFIES THAT  NO REPRESENTATIVE,    AGENT  OR ATTORNEY   OF ANY  OTHER  PERSON  HAS REPRESENTED,   EXPRESSLY   OR OTHERWISE,   THAT  SUCH  OTHER  PERSON  WOULD  NOT, IN THE  EVENT OF  LITIGATION,   SEEK  TO  ENFORCE  THE  FOREGOING  WAIVER,  (b) ACKNOWLEDGES    THAT  IT AND  THE  OTHER  PARTIES  HERETO  HAVE  BEEN  INDUCED  TO ENTER INTO THIS  AGREEMENT   AND  THE  OTHER  DOCUMENTS  CONTEMPLATED    HEREBY  BY,  AMONG OTHER  THINGS,  THE  MUTUAL  WAIVERS  AND  CERTIFICATIONS   IN THIS  SECTION  AND  (c) CERTIFIES  THAT  THIS  WAIVER   IS KNOWINGLY,   WILLINGLY   AND  VOLUNTARILY    MADE.

 

9.  MISCELLANEOUS.

 

(a)  Any waiver,  express  or implied,  of any provision  hereunder  and any delay  or failure  by the  Bank  to enforce  any provision  shall not  preclude  the  Bank  from  enforcing  any such provision  thereafter.

 

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(b)  The Pledgor  shall, at the  request  of the  Bank,  execute  such  other agreements,  documents,   instruments,  or financing  statements  in connection  with  this Agreement as the  Bank  may  reasonably  deem  necessary.

 

(c)  All  notes,  security  agreements,  subordination  agreements  and other documents  executed  by the  Pledgor  or furnished  to the  Bank  in connection  with  this Agreement must  be in form  and substance  satisfactory  to the  Bank.

 

(d)  Governing  Law.   Except to the  extent  that  any law of the  United  States  may apply,  this Agreement   shall  be governed  and interpreted  according  to the  laws of New York (the "Governing  Law  State"),  without  regard  to any choice  of law, rules  or principles  to the contrary. Nothing  in this  paragraph  shall  be construed  to limit or otherwise  affect  any rights  or remedies  of the  Bank  under  federal  law.

 

(e)  All  rights  and remedies  herein  provided  are  cumulative  and  not exclusive  of any rights  or remedies  otherwise  provided  by law. Any single  or partial  exercise  of any right or remedy  shall  not preclude  the further  exercise  thereof  or the  exercise  of any other  right or remedy.

 

 (f)   All terms not defined herein are used as set forth in the Uniform Commercial     Code.

(g)  The  Pledgor  shall pay to the  Bank immediately   upon demand  the full amount of all payments,  advances,  and expenses,  including  reasonable  attorneys'  fees,  expended  or incurred  by the  Bank  in connection  with  (a) the  perfection  and  preservation  of the  Collateral  or the Bank's  interest  therein,  and (b) the  realization,  enforcement  and exercise  of any  right, power, privilege  or remedy  conferred  by this  Agreement,  relating  to the  Pledgor,  or in any way affecting any of the  Collateral  or the  Bank's  ability  to exercise  any of its rights  or remedies  with  respect to the Collateral.

 

(h)  In the  event  the  Bank seeks  to take  possession  of any or all of the Collateral by judicial  process,  the  Pledgor  irrevocably  waives  any bonds  and any surety  or security  relating thereto  that  may be required  by applicable  law as an incident  to such  possession,  and waives  any demand  for possession   prior to the  commencement  of any such  suit  or action.

 

(i)  This Agreement   shall constitute  a continuing  agreement,   applying  to all future as well  as existing  transactions.

 

(j)  This Agreement   shall be binding  upon and  inure to the  benefit  of the  heirs, executors,  administrators,   legal representatives,   successors  and assigns  of the  parties,  and may be amended  or modified  only  in writing  signed  by the Bank  and the  Pledgor.

 

(k)   The secured  parties  covered  by this Agreement   include  BANA  as well as Bank  of America  Corporation  and its subsidiaries  and affiliates.  Such  secured  parties  are collectively  referred  to as the "Bank."  If, from time to time,  any of the  Indebtedness  covered  by

this Agreement  includes  obligations  to entities  other than  BANA,  then  BANA  shall  act as collateral

agent for  itself and all such  other  secured  parties.  BANA  shall  have the  right to apply  proceeds  of the Collateral  against  debts,  obligations  or liabilities  constituting  all or part of the  Indebtedness  in such order  as BANA  may determine  in its sole discretion,  unless  otherwise  agreed  by BANA  and one or more  of the  other  secured  parties.

 

(l)  The  Pledgor  agrees  that the Collateral  may be sold as provided  for in this Security  Agreement  and expressly  waives  any rights of notice  of sale,  advertisement   procedures, or related  provisions  granted  under  applicable  law, including  the  New York  Lien Law.

 

 

 

 

7

 

 

 

10.  FINAL  AGREEMENT .    BY SIGNING  THIS  DOCUMENT  EACH  PARTY REPRESENTS  AND  AGREES  THAT:   (A)  THIS  DOCUMENT  REPRESENTS   THE  FINAL  AGREEMENT BETWEEN  THE  PARTIES  WITH  RESPECT  TO THE SUBJECT   MATTER  HEREOF,  (B)  THIS DOCUMENT  SUPERSEDES   ANY  COMMITMENT   LETTER,  TERM  SHEET,  OR  OTHER  WRITTEN OUTLINE  OF  TERMS  AND  CONDITIONS   RELATING  TO THE  SUBJECT   MATTER  HEREOF,  UNLESS SUCH  COMMITMENT   LETTER,  TERM  SHEET,  OR OTHER  WRITTEN  OUTLINE  OF  TERMS  AND CONDITIONS  EXPRESSLY   PROVIDES  TO THE CONTRARY,   (C) THERE  ARE  NO UNWRITTEN ORAL  AGREEMENTS   BETWEEN  THE  PARTIES,  AND  (D) THIS  DOCUMENT  MAY  NOT  BE CONTRADICTED   BY  EVIDENCE  OF ANY  PRIOR,  CONTEMPORANEOUS,    OR  SUBSEQUENT   ORAL AGREEMENTS   OR  UNDERSTANDINGS    OF THE  PARTIES.

 

The  parties executed  this  Agreement  as of May 5, 2014,  intending  to create  an instrument  executed under  seal.

 

 BANK OF AMERICA, N.A.

 

 

By: /s/ Scott L. Card                             

Scott  L. Card,  Senior  Vice  President

 

Address  for  Notices:
Bank of America,  N.A.
Doc Retention  - GCF
CT2-515-BB-03
70 Batterson Park Road

Farmington, CT 06032

 

 

 

Mechanical Technology, Incorporated

 

 

    By: /s/ Rick Jones                                     (Seal)

    Rick Jones, Chief Financial Officer

 

Pledgor's  Location  (principal  residence,
if the  Pledgor  is an individual;

chief  executive  office,  if

the  Pledgor  is not an individual):

 

325 Washington  Avenue  Ext

Albany, NY 12205

 

Pledgor's  state of incorporation

or organization  (if the  Pledgor  is a corporation,  partnership, limited  liability company  or other  registered  entity):  New York

 

 

 

 

 

 

 

Ref#: 1001553582 :. -  MECHANICAL TECHNOLOGY, INCORPORATED

8

 

 

 

 

 

 

 

Exhibit 10.4

Bank of America

CONTINUING  AND  UNCONDITIONAL  GUARANTY

1.  The  Guaranty .   For valuable  consideration,   the undersigned  ("Guarantor")  hereby unconditionally  guarantees  and promises  to pay  promptly  to Bank of America,  N.A.,  its subsidiaries  and affiliates (collectively,  "Bank"),  or order,  in lawful  money  of the United  States,  any and all Indebtedness  of Mechanical Technology,   Incorporated  ("Borrower')   to  Bank when  due, whether  at stated  maturity,  upon acceleration  or otherwise,  and at all times  thereafter.   The  liability  of Guarantor  under this Guaranty  is not limited  as to the principal  amount  of the Indebtedness  guaranteed  and includes,  without  limitation,  liability  for all interest,  fees, indemnities,  and other  costs  and expenses  relating  to or arising  out of the Indebtedness  and for  all swap, derivative,  foreign  exchange  or hedge  or other  similar  transaction  or arrangement   ("Swap  Obligations")  now or hereafter  owing  from  Borrower  to  Bank.  No Guarantor  will  be deemed  to be a guarantor  of any Swap  Obligation  to the  extent  that such Guarantor  is not an Eligible  Contract  Participant  at the time  such  guaranty  becomes  effective with  respect  to such  Swap  Obligations  as set forth  in the  Commodities  Exchange  Act  (7 U.S.C.,  Sec. 1, et. seq.). The  liability  of Guarantor  is continuing  and relates  to any Indebtedness,  including  that arising  under successive transactions  which  shall  either continue  the  Indebtedness  or from time to time  renew  it after it has been satisfied. This  Guaranty  is cumulative  and does  not supersede  any  other  outstanding  guaranties,  and the  liability  of Guarantor  under this  Guaranty  is exclusive  of Guarantor's  liability  under any other  guaranties  Signed by Guarantor.  If multiple  individuals  or entities  sign this  Guaranty,  their  obligations  under this  Guaranty  shall  be joint and several.   "Indebtedness"   shall  mean  and  includes  any and all advances,  debts,  obligations  and liabilities  of Borrower,  or any of them,  previously,  now or later  made,  incurred  or created,  whether  voluntary  or involuntary  and however  arising,  whether  due or not due, absolute  or contingent,  liquidated  or unliquidated,  determined  or undetermined,   including  Swap  Obligations  and obligations  under any deposit,  treasury  management  or other similar  transaction  or arrangement,  and whether  any of the  Borrowers  may be liable  individually  or jointly  with others,  or whether  recovery  upon  such  Indebtedness  may be or later  becomes  unenforceable.

2.  Obligations Independent .   The obligations  under  this Guaranty  are  independent  of the obligations  of Borrower  or any other  guarantor,  and a separate  action  or actions  may  be brought  and prosecuted against  Guarantor  whether  action  is brought  against  Borrower  or any other  guarantor  or whether  Borrower  or any other  guarantor  be joined  in any such  action  or actions.

3.  Rights of Bank .   Guarantor  authorizes  Bank, without  notice  or demand  and without  affecting  its liability  hereunder,  from time  to time  to:

(a)   renew,  compromise,  extend,  accelerate,  or otherwise  change  the time  for  payment, or otherwise  change  the  terms,  of the  Indebtedness  or any  part thereof,  including  increase  or decrease  of the rate of interest,  or otherwise  change  the terms  of any Bank Agreements;

(b)   receive  and  hold security  for the payment  of this  Guaranty  or any  Indebtedness  and exchange,  enforce,  waive,  release,  fail to perfect,  sell, or otherwise  dispose  of any  such security;

(c)   apply  such security  and direct  the order  or manner  of sale thereof  as Bank in its discretion  may  determine;                                                                                                                       

(d)   release  or substitute  any Guarantor  or anyone   or more  of any endorsers  or other guarantors  of any of the  Indebtedness;  and

 

Ref#: 1001553576 - MTI INSTRUMENTS, INC.

Continuing and Unconditional Guaranty

 

 

1

 

 

 

(e)   permit the  Indebtedness  to exceed  Guarantor's  liability  under this Guaranty,  and Guarantor  agrees  that any amounts  received  by Bank from  any source  other  than  Guarantor  shall  be deemed  to be applied  first to any portion  of the  Indebtedness  not guaranteed  by Guarantor.

4.  Guaranty to be Absolute .   Guarantor  agrees  that until the Indebtedness   has been  paid  in full in immediately  available  funds  and any commitments   of  Bank or facilities  provided  by Bank with  respect  to the Indebtedness  have been  terminated,  Guarantor  shall  not be released  by or because  of the taking,  or failure  to take, any  action  that might  in any manner  vary,  discharge  or otherwise  reduce,  limit,  or modify  Guarantor's obligations  under  this Guaranty.   Guarantor  waives  and surrenders  any defense  to any liability  under this Guaranty  based  upon any such  action,  including  but not  limited to any action  of Bank  described  in the immediately  preceding  paragraph  of this Guaranty.    It is the express  intent  of Guarantor  that Guarantor's obligations  under  this Guaranty  are and shall  be absolute  and unconditional.    If this  Guaranty  is revoked, returned,  or canceled,  and subsequently  any  payment  or transfer  of any interest  in property  by Borrower  to Bank is rescinded  or must  be returned  by Bank to  Borrower,  this Guaranty  shall  be reinstated  with  respect  to any such payment  or transfer,  regardless  of any such  prior revocation,  return, or cancellation;  and any guaranty  of any indemnities,  shall  survive  any termination  of this  Guaranty.  In the event  of the death  of a Guarantor,  the  liability  of the estate of the  deceased  Guarantor  shall  continue  in full force  and effect  as to  (i) the Indebtedness  existing  at the date of death,  and any renewals  or extensions,  and (ii) loans or advances  made to or for the  account  of Borrower  after the  date of the death of the deceased  GUarantor  pursuant  to a commitment  made by  Bank to Borrower  prior to the date  of such death.   As to all surviving  Guarantors,  this Guaranty  shall continue  in full force and effect  after  the death  of a Guarantor,  not only as to the  Indebtedness  existing  at that time,  but also as to the Indebtedness  later  incurred  by Borrower  to Bank.  In the event  that acceleration  of the time  for  payment  of any of the  Indebtedness  is stayed  upon  the  insolvency,  bankruptcy,  Of  reorganization  of  Borrower  or otherwise,  all such Indebtedness  guaranteed  by Guarantor  shall  nonetheless  be payable  by Guarantor  immediately  if requested  by Bank.

5.  Guarantor's Waivers  of Certain  Rights and Certain  Defenses .   Guarantor  waives:

(a)  any right to require  Bank to:

(i)   proceed  against  Borrower  or any other  person;

(ii)   marshal  assets  or proceed  against  or exhaust  any security  held from  any of the Borrowers  or any other  person;

(iii)  give notice  of the terms,  time  and place of any public  or private  sale or other disposition  of personal  property  security  held  from  Borrower  or any other  person;

(iv)  take  any  other  action  or pursue any other  remedy  in  Bank's power;  or

(v)  make  any presentment  or demand  for  performance,  or give any  notice of nonperformance,  acceleration,   protest,  notice of protest  Of  notice  of dishonor  hereunder  or in connection  with  any obligations  or evidences  of indebtedness  held  by Bank as security  for  or which  constitute  in whole  or in part the  Indebtedness  guaranteed  hereunder,  or in connection  with the creation  of new or additional  Indebtedness,  or give any  notice  of acceptance  of this Guaranty, or notices  of any fact that might  increase  Guarantor's  risk.

(b)  any defense  to its obligations  under this Guaranty  based  upon or arising  by reason of:

(i)  any disability  or other  defense  of  Borrower  or any other  person;

(ii)  the cessation  or limitation  from any cause  whatsoever,  other  than  payment  in full, of the Indebtedness  of  Borrower  or any other  person;

 

 Ref#: 1001553576 - MTI INSTRUMENTS, INC.

Continuing and Unconditional Guaranty

 

2

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(iii)  any lack of authority  of any officer,  director,  partner,  agent  or any other person  acting or purporting  to act on behalf  Borrower  which  is a corporation,  partnership  or other type of entity, or any defect  in the  formation  of Borrower;

(iv)  the application   by Borrower  of the proceeds  of any Indebtedness   for purposes  other  than the  purposes  represented  by Borrower  to, or intended  or understood  by, Bank or Guarantor;

(v)  any act  or omission  by Bank which  directly  or indirectly  results  in or aids the discharge  of Borrower  or any  portion  of the  Indebtedness  by operation  of  law or otherwise,  or which  in any way  impairs  or suspends  any rights  or remedies  of Bank against  Borrower;

(vi)  any  impairment  of the value  of any interest  in any security  for the Indebtedness,  including  without  limitation,  the failure  to obtain  or maintain  perfection  or recordation  of any  interest  in any such  security,  the  release  of any such  security  without substitution,  and/or  the failure  to preserve  the value  of, or to comply  with  applicable  law in disposing  of, any such  security;

(vii)  any  modification  of the  Indebtedness,  in any form Whatsoever,  including  any modification  made after  revocation  hereof to any Indebtedness   incurred  prior to such  revocation, and including  without  limitation  the  renewal,  extension,  acceleration  or other  change  in time  for payment  of, or other  change  in the terms  of, the  Indebtedness,  including  increase  or decrease  of the  rate of interest;

(viii)             any requirement  that  Bank give any notice  of acceptance  of this  Guaranty;

(ix)  any defense  based on any claim that Guarantor's  obligations  exceed  or are more  burdensome  than those of Borrower;

(x) the benefit of any  statute  of limitations  affecting  Guarantor's  liability  under  this Guaranty;  or

(xi)   any election  of remedies  by Bank,  even  though  that election  of remedies, such as a non-judicial  foreclosure  with  respect  to any  security  for any portion  of the Indebtedness, destroys  Guarantor's  rights  of subrogation  or Guarantor's  rights  to proceed  against  Borrower  for reimbursement.

(c)  until the  Indebtedness   has been  paid  in full and any commitments   of Bank  or facilities provided  by Bank with respect  to the  Indebtedness   have been  terminated,  even though  the  Indebtedness may  be in excess  of Guarantor's  liability  hereunder,  to the extent  permitted  by applicable  law, any  right of subrogation,   reimbursement,  indemnification,   and contribution  (contractual,  statutory,  or otherwise).

No provision  or waiver  in this Guaranty  shall  be construed  as limiting  the generality  of any  other waiver  contained in this  Guaranty.

6.   Lien and Setoff .   Guarantor  grants  to Bank a continuing  lien, security  interest,  and  right  of setoff  as security  for all of Guarantor's  liabilities  and obligations  to Bank, whether  now existing  or later arising, upon  and  against  all the deposits,  credits,  collateral  and property  of Guarantor  (other than  clients'  trust  and other fiduciary  accounts  or escrows)  now or hereafter  in the possession,  custody,  or control  of Bank or any entity  under the control  of Bank of America  Corporation  and  its successors  and assigns  or in transit  to any of them.   At any time, without  further  demand  or notice  (any such  notice  being  expressly  waived  by Guarantor),  Bank  may set off the same  or any  part thereof  and apply  the same  to  any liability  or obligation  of Guarantor  even  though  unmatured and  regardless  of the adequacy  of any  other  collateral  securing  this Guaranty.   TO THE  EXTENT  PERMITTED BY  LAW,  ANY  AND  ALL  RIGHTS  TO  REQUIRE  BANK  TO EXERCISE  ITS  REMEDIES  WITH  RESPECT  TO ANY  OTHER  COLLATERAL   WHICH  SECURES  THE  LIABILITIES   PRIOR  TO  EXERCISING  ITS  RIGHT  OF

 

Ref#: 1001553576 - MTI INSTRUMENTS, INC.

Continuing and Unconditional Guaranty

 

3

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SET OFF WITH  RESPECT  TO SUCH  DEPOSITS,  CREDITS  OR  OTHER  PROPERTY  OF GUARANTOR,   ARE VOLUNTARILY,   INTENTIONALLY,   AND  IRREVOCABLY   WAIVED.

7.  Subordination .    Any  obligations  of Borrower  to Guarantor,  now or hereafter  existing,  including but not limited  to any obligations  to Guarantor  as subrogee  of  Bank or resulting  from Guarantor's  performance under this  Guaranty,  are hereby  subordinated  to the  Indebtedness.   Guarantor  agrees that,  if Bank  so requests, Guarantor  shall  not demand,  take,  or receive from  Borrower,  by setoff  or in any other  manner,  payment  of any other obligations  of Borrower  to Guarantor  until the Indebtedness   has been  paid  in full and any commitments   of Bank or facilities  provided  by Bank with  respect  to the Indebtedness  have  been  terminated.   If any  payments  are received  by Guarantor  in violation  of such waiver  or agreement,  such  payments  shall  be received  by Guarantor  as trustee  for  Bank  and shall  be paid  over to Bank on account  of the  Indebtedness,  but without  reducing  or affecting in any  manner  the  liability  of Guarantor  under the other  provisions  of this  Guaranty.   Any  security  interest,  lien, or other  encumbrance  that Guarantor  may now or hereafter  have on any property  of Borrower  is hereby subordinated  to any  security  interest,  lien, or other  encumbrance  that Bank  may  have on any such  property.

8.  Revocation of Guaranty .

(a)  This  Guaranty  may  be revoked  at any time  by Guarantor  in respect to future transactions.    Such  revocation  shall  be effective  upon actual  receipt  by Bank, at the address  shown  below or at such  other  address  as may  have been  provided  to Guarantor  by Bank, of written  notice  of revocation.   Revocation  shall  not affect any of Guarantor's  obligations  or Bank's  rights with  respect  to transactions  committed  or entered  into prior to  Bank's  receipt  of such  notice,  nor shall  it affect  Guarantor's obligations  with  respect  to any indemnities,  executed  prior to Bank's  receipt  of such  notice.

(b)   Guarantor  acknowledges  and agrees  that this  Guaranty  may  be revoked  only in accordance  with  the foregoing  provisions  of this paragraph  and shall  not be revoked  simply  as a result  of any change  in name,  location,  ownership  or composition  or structure  of Borrower,  or the dissolution  of Borrower.

9.  Extent of Guaranty .   If Guarantor  is a subsidiary  or affiliate  of Borrower,  Guarantor's  liability hereunder  shall  not exceed  at anyone   time  the largest  amount  during  the  period  commencing  with  Guarantor's execution  of this Guaranty  and thereafter  that would  not render Guarantor's  obligations  hereunder  subject  to avoidance  under Section  548 of the  Bankruptcy  Code (Title  11, United States  Code) or any comparable provisions  of any applicable  state  law.

10.  Taxes .

(a)  Guarantor  represents  and warrants  that  it is organized  and resident  in the United States  of America.   All payments  by Guarantor  hereunder  shall  be paid  in full, without  setoff  or counterclaim  or any deduction  or withholding  whatsoever,  including,  without  limitation,  for any and all present  and future  taxes.   If Guarantor  must  make a payment  under this Guaranty,  Guarantor  represents and warrants  that it will  make the  payment from  one of its U.S.  resident  offices to  Bank so that no withholding  tax is imposed  on the  payment.   Notwithstanding  the  foregoing,  if Guarantor  makes a payment  under this Guaranty  to which  withholding  tax  applies  or if any taxes  (other  than taxes  on net income  (i) imposed  by the country  or any subdivision  of the country  in which  Bank's  principal  office or actual  lending  office  is located  and (ii) measured  by the  United  States  taxable  income  Bank would  have received  if all payments  under or in respect of this  Guaranty  were  exempt from taxes  levied  by Guarantor's  country)  are at any time  imposed  on any payments  under or in respect of this  Guaranty including,  but not limited  to, payments  made  pursuant  to  this paragraph,  Guarantor  shall  pay all such taxes to the  relevant  authority  in accordance  with  applicable  law such  that Bank  receives  the sum  it would have  received  had no such  deduction  or withholding  been  made (or,  if Guarantor  cannot  legally  comply with  the foregoing,  Guarantor  shall  pay to  Bank such  additional  amounts  as will  result  in Bank  receiving the sum  it would  have received  had no such deduction  or withholding  been  made).   Further,  Guarantor shall  also pay to Bank,  on demand,  all additional  amounts  that Bank  specifies  as necessary  to  preserve the after-tax  yield  Bank would  have received  if such taxes  had not  been  imposed.

  Ref#: 1001553576 - MTI INSTRUMENTS, INC.

Continuing and Unconditional Guaranty

 

4

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(b)   Guarantor  shall  promptly  provide  Bank with  an original  receipt  or certified  copy  issued by the  relevant  authority  evidencing  the  payment of any such  amount  required  to be deducted  or withheld.

11.  Information Relating to  Borrower .   Guarantor  acknowledges  and agrees  that  it has made such  independent  examination,  review,  and investigation  of the  Bank  Agreements  as Guarantor  deems  necessary and appropriate,  and shall  have sole  responsibility  to obtain from  Borrower  any  information  required  by Guarantor about  any  modifications  to the  Bank Agreements.  Guarantor  further  acknowledges   that Bank  has no duty,  and Guarantor  is not  relying on Bank, at any time  to disclose  to Guarantor  any  information  relating  to the business operations  or financial  condition  of Borrower.  "Bank  Agreements"  shall  mean  all agreements,  documents,  and instruments  evidencing  any of the  Indebtedness,  including  but not  limited to all loan  agreements  between Borrower  and Bank and  promissory  notes  from  Borrower  in favor  of Bank,  and all deeds of trust,  mortgages, security  agreements,  and other  agreements,  documents,  and  instruments  executed  by Borrower  in connection with  the  Indebtedness,  all  as now in effect  and as hereafter  amended,  restated,  renewed,  or superseded.

12.  Borrower's Authorization .   Where  Borrower  is a corporation,   partnership,  or limited  liability company,  it is not necessary  for  Bank to inquire  into the  powers  of  Borrower  or of the officers,  directors,  partners, members,  managers,  or agents  acting  Of  purporting  to act  on its behalf,  and any  Indebtedness  made  or created  in reliance  upon  the  professed  exercise  of such  powers  shall  be guaranteed  under this  Guaranty,  subject  to any limitations  on Guarantor's  liability  set forth  in this Guaranty.

13.  Guarantor  Information:  Reporting  to Credit  Bureaus .   Guarantor  authorizes  Bank to verify  or check  any information  given  by Guarantor  to Bank, check  Guarantor's  credit  references,  verify  employment,  and obtain  credit  reports.   Guarantor  shall  provide  such financial  statements   and other financial  information  about Guarantor  as Bank  may  request  from  time to time.   Guarantor  agrees  that  Bank shall  have the  right at all times  to disclose  and report  to credit  reporting  agencies  and credit  rating  agencies  such  information  pertaining  to the Indebtedness  and/or  Guarantor  as is consistent  with  Bank's  policies  and practices  from time  to time  in effect. Guarantor  acknowledges   and agrees  that the authorizations  provided  in this  paragraph  apply to any individual general  partner  of Guarantor  and to Guarantor's  spouse  and any such  general  partner's  spouse  if Guarantor  or such  general  partner  is married  and lives in a community  property  state.

14.  Change of Status .   Any  Guarantor  that is a business  entity shall  not enter  into any consolidation,  merger,  or other  combination  unless  Guarantor  is the surviving  business  entity.   Further,  Guarantor shall  not change  its legal structure  unless  (a) Guarantor  obtains  the  prior written  consent  of Bank  and (b) all Guarantor's  obligations  under this  Guaranty  are assumed  by the  new business  entity.

15.  Remedies .   If Guarantor  fails to fulfill  its duty  to pay all Indebtedness  guaranteed   hereunder or shall  breach or fail to comply  with  any term or provision  of this Guaranty,  Bank  shall  have all of the  remedies  of a creditor  and, to the extent  applicable,  of a secured  party,  under  all applicable  law.   Without  limiting  the foregoing to the extent  permitted  by law, Bank  may, at its option and without  notice  or demand:

(a)   declare  any Indebtedness  due and payable  at once;

(b)  take  possession  of any collateral  pledged  by Borrower  or Guarantor,  wherever located,  and sell,  resell,  assign,  transfer,  and deliver all or any  part of the collateral  at any public  or private sale or otherwise  dispose  of any or all of the collateral  in its then  condition,  for cash  or on credit  or for future  delivery,  and in connection  therewith  Bank may  impose  reasonable  conditions  upon  any such  sale. Further,  Bank, unless  prohibited  by law the  provisions  of which  cannot  be waived,  may  purchase  all or any part  of the collateral  to be sold, free  from and discharged  of all trusts,  claims,  rights  of redemption and equities  of  Borrower  or Guarantor  whatsoever.    Guarantor  acknowledges   and agrees  that the  sale of any collateral  through  any nationally  recognized  broker-dealer,   investment  banker,  or any other  method common  in the  securities  industry  shall  be deemed  a commercially   reasonable  sale under the  Uniform Commercial  Code  or any  other equivalent  statute  or federal  law, and  expressly  waives  notice  thereof except as  provided  in this  Guaranty;  and

 

Ref#: 1001553576 - MTI INSTRUMENTS, INC.

Continuing and Unconditional Guaranty

5

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(c)  set off and apply  any and all deposit  accounts  of Guarantor  held  by Bank or its affiliates  against  any and  all obligations  of Guarantor  owing  to Bank.   The  set-off  may be made irrespective  of whether  or not Bank  shall  have made demand  under  this Guaranty,  and although  such obligations  may  be contingent  or unmatured  or denominated  in a currency  different  from  that of the applicable  deposit  accounts  and without  regard  for the availability  or adequacy  of other  collateral.   If exercised  by Bank,  Bank shall  be deemed  to  have exercised  such  right of setoff  and to have made  a charge  against  any such  money  immediately  upon  the occurrence  of  such default  although  made  or entered  on the  books  after such  default.

16.  Notices .   All notices  required  under this  Guaranty  shall  be personally  delivered  or sent  by first class  mail,  postage  prepaid,  or by overnight  courier,  to the addresses  on the  signature  page  of this  Guaranty,  or sent  by facsimile  to the fax numbers  listed  on the signature  page,  or to such  other  addresses  as Guarantor  may specify  from  time to time  in writing.   Notices  and other  communications   shall  be effective  (i) if mailed,  upon  the earlier  of receipt  or five (5) days after  deposit  in the  U.S. mail, first  class,  postage  prepaid,  (ii) if telecopied,  when transmitted,  or (iii) if hand-delivered,   by courier  or otherwise  (including  telegram,  lettergram  or mailgram),  when delivered.

17.  Successors and Assigns .   This  Guaranty  (a) binds Guarantor  and Guarantor's  executors, administrators,   successors,  and assigns,  provided  that Guarantor  may not assign  its rights or obligations  under this Guaranty  without  the prior written  consent  of Bank, and (b) inures to the  benefit  of Bank  and Bank's indorsees,  successors,  and assigns.  Bank  may, without  notice  to Guarantor  and without  affecting  Guarantor's obligations,  sell  participations  in, or assign  the  Indebtedness  and this  Guaranty,  in whole  or in part and may exchange  information  about  Guarantor  to any actual or potential  participants  or assignees.

18.  Amendments, Waivers, and Severability .   No provision  of this  Guaranty  may be amended  or waived  except  in writing.   No failure  by Bank to exercise,  and  no delay in exercising,  any of its rights,  remedies,  or powers  shall  operate  as a waiver  of such  rights, remedies  or powers,  and no single  or partial  exercise  of any such right,  remedy,  or power  shall  preclude  any  other or further  exercise  thereof  or the  exercise  of any other  right, remedy,  or power.  The  unenforceability   or invalidity  of any  provision  of this Guaranty  shall  not affect  the enforceability  or validity  of any other  provision  of this Guaranty.

19.  Costs and Expenses .   Guarantor  agrees  to pay all reasonable  attorneys'  fees  and all other costs and expenses  that may  be incurred  by  Bank (a) in the enforcement  of this Guaranty  or (b) in the preservation,   protection,  or enforcement  of any rights  of Bank  in any case commenced   by or against  Guarantor under the  Bankruptcy  Code  (Title  11, United  States  Code)  or any similar  or successor  statute .

20.   Representations and Warranties .   When  Guarantor  signs  this Guaranty,  and until the Indebtedness  is repaid  in full and any  commitments  or facilities  provided  by Bank with  respect  to the Indebtedness  have  been terminated,  Guarantor  makes the following  representations   and warranties:

(a)   If Guarantor  is anything  other  than  a natural  person,  it is duly  formed  and existing under the laws of the state  or other jurisdiction  where  organized.

(b)  This  Guaranty,  and any instrument  or agreement  required  hereunder,  are within Guarantor's  powers,  have  been duly  authorized,  and do not conflict  with  any of its organizational   papers.

(c)  In each  state  in which  Guarantor  does  business,  it is properly  licensed,  in good standing,  and, where  required,  in compliance  with  fictitious  name  statutes.

(d)  All financial  and other  information  that  has been  or will  be supplied  to Bank  is sufficiently  complete  to give Bank  accurate  knowledge  of Guarantor's  financial  condition,  including  all material  contingent  liabilities.   Since  the date of the most  recent  financial  statement  provided  to Bank, there  has been  no material  adverse  change  in the  business  condition  (financial  or otherwise),  operations, properties  or prospects  of Guarantor.   If Guarantor  is comprised  of the trustees  of a trust,  the foregoing representations  shall also  pertain  to the trustor(s)  of the trust.

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(e)  There  is no lawsuit,  tax  claim or other  dispute  pending  or threatened  against Guarantor  which,  if lost, would  impair  Guarantor's  financial  condition  or ability to  repay the Indebtedness, except  as have been  disclosed  in writing  to  Bank.

(f)   Guarantor  is not in default  on any obligation  for  borrowed  money, any  purchase money  obligation  or any other  material  lease, commitment,  contract,  instrument  or obligation,  except  as have  been disclosed  in writing  to Bank.

(g)  Guarantor   has no knowledge  of any pending  assessments  or adjustments  of its income  tax for any year  and all taxes  due have been  paid, except as  have been  disclosed  in writing  to Bank.

(h)  There  is no event  which  is, or with  notice or lapse  of time  or both would  be, a default by Guarantor  under this  Guaranty  or under any other  instrument  or agreement  executed  in connection with the  Indebtedness  or this  Guaranty.

(i)  Guarantor  will  not be rendered  insolvent  by the execution,  delivery,  and  performance of its obligations  under this  Guaranty.

(j)  Guarantor,  if a natural  person,  has obtained  any spousal  or other  consents  or waivers which  may be required  by applicable  law.

21.  Governing Law .  Except  to the extent  that any law of the  United  States  may apply, this Guaranty  shall  be governed  and  interpreted  according  to the laws of  New York  (the "Governing  Law State"), without  regard to any choice  of law,  rules or principles  to the contrary.   Nothing  in this  paragraph  shall  be construed  to limit or otherwise  affect  any  rights  or remedies  of  Bank under  federal  law.

22.  Venue  and Jurisdiction .   Guarantor  agrees  that any action  or suit  against  Bank arising  out of or relating  to this  Guaranty  shall  be filed  in federal  court  or state court  located  in the Governing  Law State. Guarantor  agrees  that Bank  shall  not  be deemed  to  have waived  its rights  to enforce  this section  by filing  an action  or suit  against  Guarantor  in a venue  outside  of the Governing  Law State.   If Bank does  commence  an action  or suit  arising out of or relating  to this Guaranty,  Guarantor  agrees  that the case  may  be filed in federal court  or state  court  in the Governing  Law State.   Bank reserves  the  right to commence  an action  or suit  in any other jurisdiction  where  Borrower,  any Guarantor,  or any collateral  has any presence  or is located.   Guarantor consents  to personal jurisdiction   and venue  in such forum  selected  by Bank and waives  any right to contest jurisdiction   and venue  and the convenience   of any such forum.  The  provisions  of this section  are material inducements  to Bank's  acceptance  of this  Guaranty.

23.  Waiver of Jury Trial .     EACH  PARTY  HERETO  HEREBY  IRREVOCABLY   WAIVES,  TO THE  FULLEST   EXTENT  PERMITTED   BY APPLICABLE    LAW  ANY  RIGHT  IT MAY  HAVE  TO A TRIAL  BY JURY  IN ANY  LEGAL  PROCEEDING   DIRECTLY  OR INDIRECTLY   ARISING   OUT  OF OR  RELATING  TO  THIS GUARANTY   OR ANY  OTHER  DOCUMENT   EXECUTED  IN CONNECTION   HEREWITH  OR THE TRANSACTIONS    CONTEMPLATED    HEREBY  OR THEREBY  (WHETHER   BASED  ON  CONTRACT,  TORT  OR ANY  OTHER  THEORY).   EACH  PARTY  HERETO  (a) CERTIFIES  THAT  NO  REPRESENTATIVE,   AGENT  OR ATTORNEY   OF ANY  OTHER  PERSON  HAS  REPRESENTED,   EXPRESSLY   OR  OTHERWISE,  THAT  SUCH OTHER  PERSON  WOULD  NOT, IN THE  EVENT  OF  LITIGATION,   SEEK  TO  ENFORCE  THE FOREGOING WAIVER,  (b) ACKNOWLEDGES    THAT  IT AND  THE  OTHER  PARTIES  HERETO  HAVE  BEEN  INDUCED  TO ENTER  INTO  THIS GUARANTY   AND  THE  OTHER  DOCUMENTS  CONTEMPLATED    HEREBY  BY, AMONG OTHER  THINGS,  THE MUTUAL  WAIVERS  AND  CERTIFICATIONS   IN THIS  SECTION  AND  (c)  CERTIFIES THAT  THIS  WAIVER  IS KNOWINGLY,   WILLINGLY   AND  VOLUNTARILY   MADE.

24.  Application of Singular  and Plural .   In all cases  where  there  is but a single  Borrower,  then  all words  used herein  in the  plural  shall  be deemed  to have  been  used  in the singular  where  the context  and construction  so require;  and when  there  is more than  one  Borrower,  or when  this  Guaranty  is executed  by more

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than one Guarantor,  the word  "Borrower"  or "Borrowers"  and the word "Guarantor"  respectively  shall  mean  all or anyone   or more of them  as the context  requires.

25.   Final Agreement .   This  Agreement  and any  related  security  agreements  or other  agreements required  by this Agreement  constitute  the  entire  agreement  between  Guarantor  and Bank with  respect  to the subject  matter  of this Guaranty  and with  respect  to the credit  facilities  provided  by Bank to Borrower  and supersede  all  prior negotiations,  communications,   discussions  and correspondence   concerning  the subject  matter hereof.  In the event of any conflict  between  this Agreement  and any other agreements  required  by this Agreement, this Agreement  will  prevail.

 

The parties executed this agreement as of May 5, 2014, intending  to create  an instrument  executed  under  seal.

 

MTI Instruments, Inc.

 

By: /s/ Rick Jones                              (Seal)                      

Rick Jones, Chief Financial Officer

 

Address for notices to Bank:

Doc Retention - GCF

CT2-515-BB-03

70 Batterson Park Road

Farmington, CT 06032

 

Address for notices to Guarantor:

MTI Instruments, Inc.

325 Washington Ave Ext

Albany, NY 12205

 

 

 

 

 

 

 

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Continuing and Unconditional Guaranty

 

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