EXHIBIT 10.16
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is made as of December
27, 1996, by and between Mechanical Technology, Inc. ("MTI") and First Albany
Companies Inc. ("First Albany").
RECITALS
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WHEREAS, United Telecontrol Electronics, Inc. ("UTE") became indebted to
First Commercial Credit Corporation ("FCCC") pursuant to a certain Claim
Participation Agreement dated December 21, 1993, as amended by a certain
Modification of Claim Participation Agreement dated December 14, 1994 and
various letters between MTI and FCCC extending the due date for repayment of
the principal amount of this indebtedness until December 31, 1996 (collectively,
the "Claim Participation Agreement"); and
WHEREAS, MTI succeeded to UTE's obligations to FCCC under the Claim
Participation Agreement pursuant to a certain Settlement and Claims Agreement,
and the Order of the United States Bankruptcy Court for the District of New
Jersey approving the same, rendered by the Xxx. Xxxxxxx X. Xxxxxx, U.S.B.J.
dated August 18, 1995; and
WHEREAS, FCCC became indebted to United Community Insurance Company ("UCIC")
pursuant to a certain Term Loan and Security Agreement dated December 21, 1993
(the "Security Agreement"); and
WHEREAS, FCCC's indebtedness pursuant to the Security Agreement is evidenced
by that certain Term Note dated December 21, 1993 payable to UCIC in the
principal sum of $5,000,000.00 (the "Term Note"); and
WHEREAS, pursuant to the Security Agreement, the Term Note is secured by a
security interest in all of FCCC's right, title and interest in its accounts,
inventory, general intangibles, chattel paper, cash equivalents, documents and
instruments, including MTI's debt to FCCC under the Claim Participation
Agreement ("MTI Collateral"); and
WHEREAS, by that certain Order of Liquidation of UCIC entered in the Supreme
Court of the State of New York, Schenectady County on November 10, 1995 ("Order
of Liquidation"), UCIC was ordered to liquidate and the New York State
Superintendent of Insurance was appointed as UCIC's Liquidator (the
"Liquidator"); and
WHEREAS, by that certain letter agreement between First Albany and the
Liquidator dated May 7, 1996, as supplemented by a letter dated October 30,
1996, from First Albany to the Liquidator and written notice from First Albany
to the Liquidator dated December 23, 1996 (collectively, the "Participation
Agreement"), First Albany and the Liquidator represent that First Albany has
acquired all of the Liquidator's rights, as a secured party, to the MTI
Collateral; and
WHEREAS, by that certain Notice from First Albany to MTI dated December 27,
1996, First Albany notified MTI to make all of its payments due and owing
pursuant to the Claim Participation Agreement to First Albany; and
WHEREAS, each of the undersigned parties has determined that it is desirable
to settle, compromise and resolve all claims against each other arising from
MTI's indebtedness pursuant to the Claim Participation Agreement; and
WHEREAS, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the undersigned agree as
follows:
1. In full satisfaction of all of its indebtedness and obligations under
the Claim Participation Agreement, MTI shall issue to First Albany One Million
(1,000,000) shares of MTI common stock, the receipt and sufficiency of which is
hereby acknowledged.
2. First Albany acknowledges that the shares of MTI common stock being
issued to it pursuant to this Agreement have not been registered under the
Securities Act of 1933 for issuance to it and are being purchased by it solely
for its own account for investment and not for the account of any other person
and not for distribution, assignment or resale to others. First Albany further
understands that it cannot, and agrees that it will not, transfer the MTI common
stock unless the MTI common stock is registered under all applicable securities
laws, or unless an exemption from such registration is available. First Albany
also understands that MTI is under no obligation to register the MTI common
stock on its behalf or to assist it in complying with any exemption from
registration, and that a legend will be placed upon the certificates for the
shares of MTI common stock issued to it to indicate that the shares may not be
sold or transferred unless registered under all applicable securities laws, or
unless an exemption from such registration is available.
3. First Albany hereby releases and forever discharges MTI, its
subsidiaries, partners, agents, employees, successors, assigns, heirs,
executors and administrators from any and all claims, demands, actions, causes
of action, liability suits, debts, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, promises, damages, judgments,
claims and demands whatsoever, state and federal, in law or equity, whether
known or unknown, asserted or unasserted, suspended or unsuspended, which First
Albany may now or hereafter have, or claim to have, for upon or reason by any
matter, event, cause or thing whatsoever arising out of, based in whole or in
part, relating to or existing by reason of the Claim Participation Agreement.
4. MTI hereby releases and forever discharges First Albany, its
subsidiaries, partners, agents, employees, successors, assigns, heirs, executors
and administrators from any and all claims, demands, actions, causes of action,
liability suits, debts, sums of money, accounts, bonds, bills, covenants,
contracts, controversies, agreements, promises, damages, judgments, claims and
demands whatsoever, state and federal, in law or equity, whether known or
unknown, asserted or unasserted, suspended or unsuspended, which MTI may now or
hereafter have, or claim to have, for upon or reason by any matter, event, cause
or thing whatsoever arising out of, based in whole or in part, relating to or
existing by reason of the Claim Participation Agreement.
5. First Albany agrees that it shall contribute to amounts paid or payable
by MTI, and its officers and directors, in respect of any losses, expenses,
claims, proceedings, judgments or settlements related to or arising out of the
transactions described herein ("Losses"), in an amount equal to the amount of
such Losses multiplied by forty-five percent (45%). First Albany's obligation
pursuant to this paragraph will be limited to a maximum of One Million Five
Hundred Thousand Dollars ($1,500,000.00). As used herein, the term Losses does
not include any amounts paid or payable by MTI with respect to any adverse
state or federal tax rulings, judgments, claims or settlements related to or
arising out of the transactions described herein.
6. Each party represents and declares that in executing this Agreement,
the party has relied solely upon the party's own judgment, belief and knowledge,
and the advice and recommendation of the party's own independently selected
counsel concerning the nature, extent and duration of the party's rights and
claims, and that the party has not been influenced to any extent whatsoever in
executing this Agreement by any representations or statements not expressly
contained or referred to herein.
7. The parties hereto acknowledge and agree that this Agreement contains,
embodies and constitutes the parties' entire agreement and that this Agreement
supersedes all prior understandings and discussions, written or oral, related
thereto. In the event of breach of the terms of this Agreement, either party
shall have such remedies as may be available for a breach of contract,
including an action for specific performance.
8. No change, addition, deletion or any other modification, oral or
written of this Agreement shall be binding upon any of the parties hereto unless
and until each party to this Agreement executes a written agreement.
9. No breach of any provision hereto can be waived by any party, unless
in writing. Waiver of any provision hereof cannot be made unless in writing.
Waiver of any one breach by a party shall not be deemed to be a waiver of any
other breach of the same or any other provision hereof.
10. The undersigned parties have reviewed this Agreement and the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement.
11. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of New York.
12. This Agreement may be executed in counterparts, each of which shall be
deemed to be one and the same instrument. The parties shall exchange among
themselves original counterparts.
Dated: December 31, 1996 MECHANICAL TECHNOLOGY, INC.
By: /s/ R. Wayne Diesel
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Name: R. Wayne Diesel
Title: Chief Executive Officer
FIRST ALBANY COMPANIES INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Assistant Secretary
