Item
1.01. Entry into a Material Definitive Agreement.
On
May 4, 2021, Mechanical Technology, Incorporated, a Nevada corporation (“MTI” or the “Company”), by
and through its wholly-owned subsidiary EcoChain Block, LLC, a Delaware limited liability company (“ECB”), executed
a 25-year ground lease with a power-providing cooperative (“Landlord”) with respect to an existing building and certain
surrounding land (the “Building Lease”), and a 25-year ground lease with Landlord with respect to certain vacant land
adjacent thereto, both located in the Southeastern United States (the “Vacant Land Lease”, and together with the Building
Lease, the “Ground Leases”). In addition, ECB and Landlord have entered into a Power Supply Agreement (the “Power
Supply Agreement”) whereby Landlord has agreed to supply power to the building leased under the Building Lease (the “Building
Lease Premises”) and to the premises leased under the Vacant Land Lease (the “Vacant Land Premises”), some of
which power, under certain circumstances, may be terminated by Landlord, on at least 6 months prior notice, any time after 12
months after the Building Commencement Date (as hereafter defined), in which case Landlord is required to reimburse ECB for all
of its construction costs, subject to certain exceptions, relating to buildings and other improvements developed by ECB on the
Vacant Land Premises.
ECB
has agreed to pay rent to Landlord of $500,000 on the effective date of the Building Lease (such date, the “Building Commencement
Date”) and the sum of $4,000,000 in periodic payments (the “Vacancy Payments”). MTI has executed a guaranty
in favor of Landlord with respect to the Vacancy Payments (the “Guaranty of Rent”). The amount of each Vacancy Payment
is determined based on the percentage of the building that has been vacated by existing tenants and available for use by ECB.
The final Vacancy Payment is due within 60 days after the building has been completely vacated by the existing tenants, which
date is contractually scheduled to be no later than March 31, 2022. ECB has the option of making the Vacancy Payments in cash
or by having MTI issue its common stock in an amount that equals the Vacancy Payment then due based on the prior day’s closing
price (any such shares, “Vacancy Payment Shares”). If ECB elects to make any payment in Vacancy Payment Shares, then
Landlord has an option to accept such Vacancy Payment Shares or require such shares to be converted to cash as more fully provided
in the Building Lease. The Building Lease also includes provisions relating to the issuance of additional shares of MTI’s
common stock, which may be applied as an advance against future Vacancy Payments, all as fully provided in the Building Lease.
ECB
has agreed to cause MTI to issue to Landlord 100,000 shares of its common stock, in connection with the Vacant Land Lease, upon
the effective date of the Vacant Land Lease, which may not occur prior the Building Commencement Date. In addition, ECB and Landlord
have entered into a memorandum of understanding providing ECB with a six-month exclusivity period to expand the Vacant Land Premises,
including the obtaining additional power, in connection therewith. ECB and Landlord have not agreed on any of the terms of such
expansion other than the exclusivity period previously described. ECB and Landlord have also entered into a transition services
agreement (the “Transition Services Agreement”) by which Landlord will provide certain transition services to ECB
at a fee to be mutually agreed by Landlord and ECB. The Transition Services Agreement also requires Landlord to pay ECB an amount
approximately equal to Landlord’s net profits received from Landlord’s other tenants operating out of the Building
Lease Premises.
The
foregoing description of the transactions described herein are qualified in their entirety by reference to the full text of the
Building Lease, the Vacant Land Lease, the Power Supply Agreement, the Transition Services Agreement, and the Guaranty of Rent,
forms of which are attached as Exhibits 10.1, 10.2, 10.3, 10.4 and, 10.5, respectively, to this Current Report on Form 8-K (this
“Form 8-K”), and each of which is incorporated herein in its entirety by reference. Certain identified information
has been redacted from Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 because it is both not material and is the type that the Company
treats as private or confidential.
We
have omitted from the above-description of the transactions certain information relating to the identity of the Landlord and the
specific location of the premises related to the Ground Leases, as we believe that providing such information, at this time, would
likely cause competitive harm to the Company and ECB if publicly disclosed. We intend to provide this information as an exhibit
in a future periodic report filed with the Securities and Exchange Commission.