STOCK PLEDGE AGREEMENT
THIS AGREEMENT, dated as of November 1, 1999 (herein as amended or otherwise
modified, "this Agreement"), by MECHANICAL TECHNOLOGY INCORPORATED, a New York
corporation (herein, together with its successors and assigns, the "Pledgor" or
the "Borrower"), with KEYBANK NATIONAL ASSOCIATION, a national banking
association (herein, together with its successors and assigns, the "Lender"):
PRELIMINARY STATEMENTS:
(1) The Lender has entered into a Credit Agreement, dated as of the date
hereof (said Agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "Credit Agreement", the terms defined therein and
not otherwise defined herein being used herein as therein defined), with the
Borrower.
(2) The Pledgor is the owner of membership interests in Plug Power, LLC
(the "Membership Interests"). Proceeds of the Loans incurred by the Pledgor
under the Credit Agreement, in the amount of $20,500,000, are being used to
make a capital contribution to Plug Power, LLC in exchange for additional
Membership Interests. The balance of the proceeds of the Loans under the Credit
Agreement are being used to finance a $2,000,000 capital contribution which the
Pledgor recently made in Plug Power, LLC in exchange for additional Membership
Interests.
(3) After the execution and delivery of this Agreement, and pursuant to a
merger agreement between Plug Power, LLC and Plug Power Inc., a Delaware
corporation (herein, togetherwith its successors and assigns, the "Company"),
the Membership Interests owned by the Pledgor will be converted into the shares
(the "Pledged Shares") of stock described in Schedule I hereto and issued by
the Company.
(4) It is a condition precedent to the making of Loans by the Lender under
the Credit Agreement that the Pledgor shall have made the pledge contemplated
by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender to make Loans under the Credit Agreement, the Pledgor hereby agrees as
follows:
1. Pledge. The Pledgor hereby pledges to the Lender, and grants to the
Lender a security interest in, the following (the "Pledged Collateral"):
(a) the Membership Interests owned by the Pledgor, the Pledged Shares into
which such Membership Interests will be converted upon the merger of Plug
Power, LLC into the Company, as described above, and the certificates
representing the Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;
(b) all additional shares of stock of any issuer of the Pledged Shares from
time to time acquired by the Pledgor in any manner, and the certificates
representing such additional shares, and all dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such shares; and
(c) all proceeds of any and all of the foregoing Collateral (including,
without limitation, proceeds that constitute property of the types described
above).
2. Security for Secured Obligations. This Agreement secures the payment of
(i) all obligations of the Borrower now or hereafter existing under the Credit
Agreement and the Note, whether for principal, interest, fees, expenses or
otherwise, (ii) all obligations of the Pledgor now or hereafter existing under
this Agreement, and (iii) all obligations of the Borrower now or hereafter
existing in favor of the Lender or any of its Affiliates which the Lender may
from time to time designate in writing to the Pledgor as being entitled to the
benefits of the security hereof (all such obligations of the Borrower referred
to in this section 2 being the "Secured Obligations"). Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
which constitute part of the Secured Obligations and would be owed by the
Borrower but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Borrower.
3. Delivery of Pledged Collateral; Removal of Legends; Use of Securities
Account. (a) The Pledgor shall instruct the Company and its transfer agent to
physically deliver directly to the Lender all certificates for the Pledged
Shares which are issuable to the Pledgor upon conversion of the Membership
Interests owned by the Pledgor into the Pledged Shares in connection with the
merger of Plug Power, LLC into the Company as described above. All certificates
or instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of the Lender pursuant hereto and shall
be in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Lender. The Lender shall have the right, in its
discretion, at any time during the continuance of an Event of Default and
without notice to the Pledgor, to transfer to or to register in the name of the
Lender or any of its nominees any or all of the Pledged Collateral, subject
only to the revocable rights specified in section 6(a). In addition, the Lender
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments
of smaller or larger denominations.
(b) If any Pledged Collateral is subject to any contractual restriction on
transfer arising under any agreement to which the Pledgor is a party with the
issuer, other shareholders and/or any underwriters, and any certificate or
certificates for such Pledged Collateral contain a legend which makes reference
to such restrictions, the Pledgor will, from time to time and as promptly as
circumstances permit, take all such actions as are within its power to request
and obtain the removal of such legend from certificates for the maximum number
of shares as to which it is entitled to have such legend removed.
(c) If after the date hereof any or all of the Pledged Collateral may be
held in book entry form and the Pledgor desires that such Pledged Collateral be
held in such form in an account which the Pledgor has with a broker which is a
member firm of the National Association of Securities Dealers, then the Lender
will cooperate with the Pledgor in transferring such Pledged Collateral to such
account, provided that there is in place an "account control agreement"
reasonably satisfactory to the Lender which is sufficient to perfect its
security interest in the Pledged Collateral held in such account and all
proceeds thereof.
4. Representations and Warranties. The Pledgor represents and warrants
that upon completion of the merger of Plug Power, LLC into the Company as
described above:
(a) The Pledged Shares will have been duly authorized and validly issued
and will be fully paid and non-assessable.
(b) The Pledgor will be the legal and beneficial owner of the Pledged
Collateral free and clear of any lien, security interest, option or other
charge or encumbrance except for the security interest created by this
Agreement.
(c) The pledge of the Pledged Shares pursuant to this Agreement will create
a valid and perfected first priority security interest in the Pledged
Collateral, securing the payment of the Secured Obligations.
(d) No consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required (i) for the pledge by the Pledgor of
the Pledged Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Pledgor, (ii) for the
perfection or maintenance of the security interest created hereby (including
the first priority nature of such security interest) or (iii) for the exercise
by the Lender of the voting or other rights provided for in this Agreement or
the remedies in respect of the Pledged Collateral pursuant to this Agreement
(except as may be required in connection with any disposition of any portion of
the Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) The Pledged Shares identified on Schedule I represent all of the equity
interests in the issuer of the Pledged Shares which are owned by the Borrower
or any of its Subsidiaries as of the date of completion of the merger of Plug
Power, LLC into the Company. The Pledged Shares constitute as of such date the
percentage of the issued and outstanding shares of stock of the issuer thereof
indicated on Schedule I.
(f) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(g) The Pledgor has, independently and without reliance upon the Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.
5. Further Assurances. The Pledgor agrees that at any time and from time
to time, at the expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Lender may reasonably request,
in order to perfect and protect any security interest granted or purported to
be granted hereby or to enable the Lender to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.
6. Voting Rights; Dividends; etc. (a) So long as no Event of Default shall
have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise or refrain from exercising
any and all voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Credit Agreement; provided, however, that the Pledgor
shall not exercise or refrain from exercising any such right if, in the
Lender's judgment, such action would have a material adverse effect on the
value of the Pledged Collateral or any part thereof, and, provided, further,
that the Pledgor shall give the Lender at least five days' written notice of
the manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right.
(ii) The Pledgor shall be entitled to receive and retain any and all
dividends and distributions paid in respect of the Pledged Collateral,
provided, however, that any and all
(A) dividends and distributions paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, and Pledged
Collateral, and
(B) dividends and other distributions paid or payable in cash in respect of
any Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus,
shall be, and shall be forthwith delivered to the Lender to hold as, Pledged
Collateral and shall, if received by the Pledgor, be received in trust for the
benefit of the Lender, be segregated from the other property or funds of the
Pledgor, and be forthwith delivered to the Lender as Pledged Collateral in the
same form as so received (with any necessary indorsement or assignment).
(iii) The Lender shall execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies and other instruments as the Pledgor
may reasonably request for the purpose of enabling the Pledgor to exercise the
voting and other rights which it is entitled to exercise pursuant to paragraph
(i) above and to receive the dividends or distributions which it is authorized
to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of the Pledgor (x) to exercise or refrain from exercising
the voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to section 6(a)(i) shall, upon notice to the Pledgor by the
Lender, cease and (y) to receive the dividends and distributions which it would
otherwise be authorized to receive and retain pursuant to section 6(a)(ii)
shall automatically cease, and all such rights shall thereupon become vested in
the Lender who shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and hold as
Pledged Collateral such dividends and distributions.
(ii) All dividends and distributions which are received by the Pledgor
contrary to the provisions of paragraph (i) of this section 6(b) shall be
received in trust for the benefit of the Lender, shall be segregated from other
funds of the Pledgor and shall be forthwith paid over to the Lender as Pledged
Collateral in the same form as so received (with any necessary indorsement).
7. Transfers and Other Liens. The Pledgor agrees that it will not (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, except for
sales of the Pledged Collateral made in accordance with the provisions of
section 7.2(c) of the Credit Agreement; or (ii) create or permit to exist any
lien, security interest, option or other charge or encumbrance upon or with
respect to any of the Pledged Collateral, except for the security interest
under this Agreement.
8. Lender Appointed Attorney-in-Fact. The Pledgor hereby appoints the
Lender the Pledgor's attorney-in-fact, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor or otherwise, from time to
time in the Lender's discretion to take any action and to execute any
instrument which the Lender may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Pledgor under section
6), including, without limitation, to receive, indorse and collect all
instruments made payable to the Pledgor representing any dividend[, interest
payment] or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same.
9. Lender May Perform. If the Pledgor fails to perform any agreement
contained herein, the Lender may itself perform, or cause performance of, such
agreement, and the expenses of the Lender incurred in connection therewith
shall be payable by the Pledgor under section 13.
10. The Lender's Duties. The powers conferred on the Lender hereunder are
solely to protect its interest in the Pledged Collateral and shall not impose
any duty upon it to exercise any such powers. Except for the safe custody of
any Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Lender shall have no duty as to any Pledged
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Lender has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Pledged Collateral. The Lender shall be deemed to have exercised reasonable
care in the custody and preservation of any Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially equal
to that which the Lender accords its own property.
11. Remedies upon Default. If any Event of Default shall have occurred and
be continuing:
(a) The Lender may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code in effect in the State of New York at that
time (the "Code") (whether or not the Code applies to the affected Collateral),
and may also, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Lender's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Lender may deem commercially reasonable. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten days'
notice to the Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Lender may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) Any cash held by the Lender as Pledged Collateral and all cash proceeds
received by the Lender in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of the Lender, be held by the Lender as collateral for, and/or then
or at any time thereafter be applied (after payment of any amounts payable to
the Lender pursuant to section 13) in whole or in part by the Lender against,
all or any part of the Secured Obligations in such order as the Lender shall
elect. Any surplus of such cash or cash proceeds held by the Lender and
remaining after payment in full of all the Secured Obligations shall be paid
over to the Pledgor or to whomsoever may be lawfully entitled to receive such
surplus.
12. Registration Rights. If the Lender shall determine to exercise its
right to sell all or any of the Pledged Collateral pursuant to section 11, the
Pledgor agrees that, upon request of the Lender, the Pledgor will, at its own
expense:
(a) execute and deliver, and cause each issuer of the Pledged Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts and things, as may be necessary or, in the opinion of the
Lender, advisable to register such Pledged Collateral under the provisions of
the 1933 Act, and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of the Lender, are
necessary or advisable, all in conformity with the requirements of the 1933 Act
and the rules and regulations of the SEC applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Pledged Collateral, as requested by the Lender;
(c) cause each such issuer to make available to its security holders, as
soon as practicable, an earning statement which will satisfy the provisions of
section 11(a) of the 1933 Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof
valid and binding and in compliance with applicable law.
13. Expenses. The Pledgor will upon demand pay to the Lender the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the Lender may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of the Lender hereunder or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
14. Amendments, etc. No amendment or waiver of any provision of this
Agreement, and no consent to any departure by the Pledgor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
15. Addresses for Notices. All notices and other communications provided
for hereunder shall be in writing (including telecopier, electronic e-mail,
telegraphic, telex or cable communication) and mailed, telecopied, e-mailed,
telegraphed, telexed, cabled or delivered to it, at its address specified in
the Credit Agreement, or, as to either party, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and other communications shall be effective when received.
16. Pursuant to the terms hereof and execute and deliver to the Pledgor
such documents as the Pledgor shall reasonabl Continuing Security Interest;
Assignments under Credit Agreement. This Agreement shall create a continuing
security interest in the Pledged Collateral and shall (i) remain in full force
and effect until the later of (x) the payment in full of the Note and all other
amounts payable under this Agreement and (y) the expiration or termination of
the Commitment, (ii) be binding upon the Pledgor, its successors and assigns,
and (iii) inure to the benefit of, and be enforceable by, the Lender and its
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), the Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Loans and the
Note) to any other person or entity, and such other person or entity shall
thereupon become vested with all the benefits in respect thereof granted to the
Lender herein or otherwise. Upon the later of the payment in full of the Note
and all other amounts payable under this Agreement and the expiration or
termination of the Commitment, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to the Pledgor.
Upon any such termination, the Lender will, at the Pledgor's expense, return to
the Pledgor such of the Pledged Collateral as shall not have been sold or
otherwise applied pury request to evidence such termination.
17. Governing Law; UCC Terms. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York. Unless
otherwise defined herein or in the Credit Agreement, terms defined in Article 9
of the Code are used herein as therein defined.
18. Counterparts. This Agreement may be executed in any number of
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one agreement.
IN WITNESS WHEREOF, the Pledgor and the Lender have caused this Agreement to be
duly executed and delivered as of the date first above written.
MECHANICAL TECHNOLOGY
INCORPORATED,
as Pledgor
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
& Chief Financial Officer
KEYBANK NATIONAL ASSOCIATION,
as Lender
By:___________________________________
_ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
SCHEDULE I
Stock Percentage
Certificate Number of of Outstanding
Stock Issuer Class of Stock Nos. Par Value Shares Shares
Plug Power Common Stock Various $0.01 13,704,315 Approx. 32.5%
Inc.
