SCHEDULE 14A / A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 ( Amendment No. 1 )
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MECHANICAL TECHNOLOGY INCORPORATED
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of filing fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.(Previously paid with original filing)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing,
(1) Amount previously paid:
------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------
(4) Date filed:
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<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED
968 ALBANY-SHAKER ROAD LATHAM, NEW YORK 12110
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Mechanical Technology Incorporated will
be held at the Company's corporate offices, 968 Albany-Shaker Road, Latham,
New York 12110, on Thursday, March 28, 1996, at 10:00 A.M. local time
(refreshments will be served at 9:15 A.M.) for the following
purposes:
1. To elect six Directors of the Company to hold office until the next Annual
Meeting of Shareholders of the Company.
2. To vote on the approval of Coopers & Lybrand as the auditors of the
Company.
3. To consider and transact such business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on February 13, 1996, are
entitled to notice of and to vote at the meeting or any adjournment. The
Proxy Statement and Annual Report of the Company for the fiscal year ended
September 30, 1995, are enclosed.
Whether or not you expect to attend the meeting in person, kindly mark, sign,
date and return the enclosed Proxy in the envelope provided so that your
stock will be represented. Your Proxy is revocable up to the time it is
voted, and you may vote in person at the Annual Meeting even though you have
previously submitted your Proxy.
John Recupero Latham, New York
Secretary February 16, 1996
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO MARK, DATE, SIGN, AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE
<PAGE>
MECHANICAL TECHNOLOGY INCORPORATED
968 ALBANY-SHAKER ROAD
LATHAM, NEW YORK 12110
PROXY STATEMENT
February 16, 1996
This Proxy Statement, first being mailed to shareholders on approximately
February 16, 1996, is furnished in connection with the solicitation by the
Board of Directors of proxies to be voted at the Annual Meeting of
Shareholders to be held on March 28, 1996, and at any adjournment thereof.
A proxy is enclosed for use at the meeting. The proxy may be revoked at any
time before it is exercised. If a shareholder specifies in this proxy how it
is to be voted on a matter as to which a choice is indicated, the proxy will
be voted in accordance with such specification. If no specification is made,
the proxy will be voted for the election of the nominees listed therein and
for approval of the auditors.
OUTSTANDING SHARES AND VOTING RIGHTS
All holders of Common Stock of record at the close of business on February
13, 1996, are entitled to notice of and to vote at the Annual Meeting of
Shareholders to be held on March 28, 1996, at the Corporate offices, 968
Albany-Shaker Road, Latham, New York 12110. At the close of business on
February 13, 1996, the Company had outstanding 3,568,868 shares of Common
Stock, which is the only class of securities entitled to vote at the meeting.
Each share of Common Stock entitles the holder thereof to one vote on the
matters to be voted upon by such shareholders.
ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, six Directors are to be elected, each
to hold office until the next Annual Meeting of Shareholders and until a
successor shall be elected and shall qualify.
Management's nominees for Director, together with certain information
concerning them, are on the following pages. All directors were elected at
the Annual Meeting of Shareholders held in 1995. In the event that any of
such nominees shall become unavailable for any reason, it is intended that
proxies will be voted for substitute nominees designated by management.
The number of shares voted "for" the election of each person nominated for
election as a Director, as well as the number of shares as to which authority
is withheld from the proxies to vote for any individual nominee or for all of
management's nominees as a group and the number of shares held for customers
by brokers (or their nominees) and represented at the meeting but not voted
with respect to the election of Directors, will be tabulated by inspectors of
election appointed in accordance with the applicable provisions of the New
York Business Corporation Law. The nominees for election as Director
receiving a plurality of the votes which are cast at the meeting with respect
to the election of Directors will be elected. Thus, except that such action
may reduce the number of shares which are voted "for" the election of any
person nominated for election as a Director and may reduce the number of
<PAGE>
votes which are cast at the meeting with respect to the election of
Directors, neither a shareholder's withholding of authority from the proxies
to vote his shares for any individual nominee or for all of management's
nominees as a group, nor the failure of brokers to vote, with respect to the
election of Directors, shares held by them (or their nominees) for customers,
will otherwise affect the vote required for the election of Directors; the
six nominees for election receiving the greatest number of votes will be
elected, without regard to the actual number of shares voted (or not voted)
for each or the total number of votes cast for all nominees.
<TABLE>
<CAPTION>
YEAR FIRST
PRINCIPAL OCCUPATION BECAME A
NAME AGE OR EMPLOYMENT DIRECTOR
- ------------------------ --- ------------------------------ ---------
<S> <C> <C> <C>
Harry Apkarian(1),(2) 73 Director and Former Chairman 1961
of the Board of Directors of
the Company
R. Wayne Diesel(2) 50 President and Chief Executive 1994
Officer of the Company
Stanley I. Landgraf(1) 70 Retired 1993
Albert W. Lawrence(2),(3) 67 Chairman of the Board of 1992
Directors and Chief Executive
Officer of Lawrence Group, Inc.
E. Dennis O'Connor(3) 56 Director-New Products and 1993
Technology, Masco Corporation
Lawrence A. Shore(1),(2),(3) 67 Chairman of the Board of 1992
Directors of the Company
</TABLE>
- --------------
(1)Member of the Compensation Committee of the Board of Directors
(2)Member of the Executive Committee of the Board of Directors
(3)Member of the Audit Committee of the Board of Directors
CERTAIN INFORMATION REGARDING NOMINEES
Mr. Apkarian, one of the founders of the Company, served as President from
the time it was organized in 1961 until 1984 and as Chief Executive Officer
from 1961 to 1991. He was Chairman of the Board of the Company from 1984
until August 1993; he continues as an employee of the Company.
Mr. Diesel was elected President and Chief Executive Officer of the Company
in February 1994. Prior to February 1994, he had been Chief Financial
Officer since 1991 and President since March 1993 of Lawrence Management
Group, and Treasurer of the Lawrence Insurance Group, Inc. from March 1993 to
December 1994. He remains a Director of Lawrence Insurance Group, Inc. and
its principal subsidiaries (see "Security Ownership of Certain Beneficial
Owners" in the section entitled "Additional Information", below). Lawrence
Group, Inc. owns and operates subsidiaries engaged principally in insurance
agency and brokerage operations and in insuring and reinsuring primarily
property, casualty, accident and health risks. From 1988 until his
association with Lawrence Group, Inc., Mr. Diesel was Administrative Vice
President responsible for corporate administration, human resources and
strategic planning at KeyCorp. Previously, he held various executive
positions with the State of New York.
<PAGE>
Following his election as President and Chief Executive Officer of the
Company in February 1994, Mr. Diesel was also elected Chairman of the Board
and Chief Executive Officer of the Corporation's United Telecontrol
Electronics, Inc. subsidiary ("UTE"). A few weeks later, UTE's request for
a $7.8 million equitable adjustment ("REA Claim") of the contract price on
its Advanced Medium Range Air-To-Air Missile ("AMRAAM") launcher contract was
denied; as a result, UTE was forced to seek protection from creditors under
Chapter 11 of the Federal Bankruptcy Code in April 1994. While Mr. Diesel
was Chairman of the Board and Chief Executive Officer of UTE at the time of
the UTE bankruptcy filing, the bankruptcy had its genesis in events that
occurred prior to Mr. Diesel's relationship with the Company or with UTE.
Mr. Landgraf is a Trustee of Rensselaer Polytechnic Institute ("RPI") in
Troy, New York; a Director of Albany International, Inc. in Albany, New York;
a Director of Elenel Industries, Inc. in Milford, Massachusetts; a Director
of Albany Molecular Research Co., in Albany, New York and a member of the
Trustees of the Victory Funds (mutual funds). Mr. Landgraf was Chairman and
Chief Executive Officer of Mohasco Corporation, in Amsterdam, New York, a
manufacturer of textile products, before retiring in 1985. Mr. Landgraf also
served as Acting President of RPI from March 1987 to March 1988.
Mr. Lawrence is the founder of Lawrence Group, Inc. and its subsidiaries. He
is Chairman of the Board and Chief Executive Officer of Lawrence Group, Inc.
and has held various offices in the subsidiaries of Lawrence Group, Inc.
since prior to 1986; he is Chairman of the Board of Lawrence Insurance Group,
Inc. (see "Security Ownership of Certain Beneficial Owners" in the section
entitled "Additional Information", below).
Mr. O'Connor has been the Director of New Products and Technology for Masco
Corporation, Taylor, Michigan, a diversified manufacturer of building and
home improvement, home furnishings, and other specialty products for the home
and family, since April 1984. He is a member of the Board of Directors of
the Metropolitan Center for High Technology and the Inventor's Council of
Michigan, both Michigan non-profit corporations. The Company understands
that Mr. O'Connor has been selected by Masco Corporation as its designee on
the Company's Board of Directors pursuant to agreements entered into in
connection with the transaction by which Masco sold 1,730,000 shares of the
Company's Common Stock to subsidiaries of the Lawrence Insurance Group, Inc.
(see "Security Ownership of Certain Beneficial Owners" in the section
entitled "Additional Information", below); the Lawrence Insurance Group, Inc.
subsidiaries agreed to vote their shares to elect a designee of Masco to the
Company's Board of Directors so long as Masco remains liable under a
guarantee it had executed in connection with the Company's obligations under
a line of credit.
Mr. Shore was President and Chief Executive Officer of the Company from July
1992 until he resigned from those positions in February 1993. He was
President of Lawrence Management Group from July 1990 and Treasurer of
Lawrence Insurance Group, Inc. from July 1991, until he resigned from those
positions in March, 1993. He retired from Lawrence Management Group in May
1993. He remains a Director of Lawrence Insurance Group, Inc. and its
principal subsidiaries (see "Security Ownership of Certain Beneficial Owners"
in the section entitled "Additional Information", below). Prior to July
1990, he served as President and Chief Executive Officer of Lawrence
<PAGE>
Insurance Group, Inc. and President of United Community Insurance Company (a
subsidiary of Lawrence Insurance Group, Inc.), offices which he had held
since September 1986 and September 1985, respectively.
Management recommends that you vote FOR election of the six nominees listed
above as Directors of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although
it is not involved in day-to-day operating details. Members of the Board are
kept informed of the Company's business by various reports sent to them, as
well as by operating and financial reports made at Board and Committee
meetings by the officers of the Company. The Board of Directors held five
meetings during fiscal 1995. All Directors attended at least 75% of all
meetings of the Board, and of all Board committees on which they serve, held
during fiscal 1995.
In addition to an Executive Committee and other committees it establishes
from time to time, the Company's Board of Directors has established Audit and
Compensation Committees, but not a nominating committee. The Audit Committee
reviews with the independent auditors the plan and results of the auditing
engagement including the auditors' assessment of internal accounting
controls; it also recommends the appointment of the public auditors to the
Board of Directors. One Audit Committee meeting was held during fiscal 1995.
The Compensation Committee determines compensation for officers and employee
Directors, and the aggregate amount to be disbursed as incentive compensation
to Director and non-Director officer employees. Two Compensation Committee
meetings were held during fiscal 1995.
APPROVAL OF AUDITORS
At the Annual Meeting, the shareholders will consider a proposal to ratify
the reappointment of Coopers & Lybrand as the auditors of the Company,
subject to the receipt of a satisfactory letter of engagement from such firm.
Coopers & Lybrand have been the Company's auditors since 1978. While
approval of auditors by the shareholders is not required by the By-Laws of
the Company, management believes that it is an appropriate matter for
shareholder consideration. Should the Board's appointment of the auditors
not be ratified, other auditors will be appointed by the Board of Directors.
Representatives of Coopers & Lybrand are expected to be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and
to be available to respond to appropriate questions.
The Board of Directors recommends that shareholders vote FOR the ratification
of the appointment of Coopers & Lybrand as independent public accountants for
1996.
<PAGE>
ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
for services to the Company and its subsidiaries, during the Company's fiscal
year ended September 30, 1995 (and during the Company's two prior fiscal
years), of each person who served as Chief Executive Officer during such
year, and of all other persons who served as executive officers of the
Company during such year whose total annual compensation exceeded $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------
Annual Long-Term
Compensation Compen-
sation
- ------------------------------------------------------------------------------
Name & Principal Fiscal Salary Bonus Other Restricted All
Position Year Annual Stock Other
Compen- Awards(1) Compen-
sation sation
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. Wayne Diesel 1995 $190,764 - - $ 12,500 $ 4,452(2)
President & CEO 1994 $129,744 - - $ 12,500 -
1993 - - - - -
- -------------------------------------------------------------------------------
Stephen Sullivan 1995 $139,617 - - - $ 5,306(2)
President, Ling 1994 $118,927 - - - $ 4,838(2)
Electronics, Inc. 1993 $121,828 - - - $ 5,384(2)
- -------------------------------------------------------------------------------
Douglas McCauley 1995 $100,152 - - $ 625 $ 1,669(2)
Vice-President 1994 $105,000 - - $ 6,250 $ 4,200(2)
Technology Group 1993 - - - - -
- -------------------------------------------------------------------------------
Denis P. Chaves 1995 $ 95,000 $ 7,500 - $ 625 $ 3,800(2)
Vice-President, 1994 $ 93,500 $ 6,000 - - $ 3,800(2)
LAB and Advanced 1993 $ 88,333 $ 3,000 - - $ 3,530(2)
Products Divisions
- -------------------------------------------------------------------------------
</TABLE>
(1) This column shows the market value on the date of grant of shares of the
Company's Common Stock awarded under the Company's Restricted Stock Incentive
Plan. The Plan expired on December 31, 1994. The restrictions on these
shares lapse on a scheduled basis as determined by the Board of Directors at
the time of grant or upon death. The recipient has voting and dividend rights
to the shares from the date of award. The aggregate holdings/value of shares
of Restricted Stock, as to which the restrictions have not lapsed, on
September 30, 1995, (based on a price on that date of $1.125 per share) by
the individuals listed in this table, including the awards shown in this
column, are: Mr. Diesel, 34,000 shares/$38,250; Mr. Sullivan, 1,500
shares/$1,688; Mr. McCauley, 7,000 shares/$7,875 and Mr. Chaves, 2,500
shares/$2,813.
(2) Represents Company matching contributions of $1.00 for each $1.00
contributed by the named individual to the 401(k) Savings Plan up to a
maximum of 4% of base pay.
<PAGE>
The Company has outstanding stock options which were granted under a 1982
Stock Option Plan. The Plan expired in 1992 and no further options may be
granted. At September 30, 1995, the following options were outstanding:
<TABLE>
-------------------------------------------------
NAME # OF SHARES UNDERLYING
UNEXERCISED OPTIONS AT
SEPTEMBER 30, 1995
-------------------------------------------------
<S> <C>
R. Wayne Diesel -
-------------------------------------------------
Stephen Sullivan 5,000
-------------------------------------------------
Douglas McCauley -
-------------------------------------------------
Denis P. Chaves -
-------------------------------------------------
</TABLE>
All options listed in the above table are presently exercisable, but the
exercise price of the options exceeded the market price of the Company's
Common Stock on September 30, 1995. No options were exercised by any of the
named persons during the fiscal year ended September 30, 1995.
COMPENSATION COMMITTEE REPORT
COMPENSATION POLICIES FOR OFFICERS. The Company's compensation program for
executive officers and employee directors currently consists of an annual
salary and bonus payments which are primarily designed to reward performance.
For the year 1995, the Committee used the following criteria in making
compensation decisions for executive officers:
* Company and individual affiliate financial performance.
* Implementation of programs to improve working capital and
cash flow, and to diversify the Company's product
offerings and strengthen its technology resources.
* Resolution of major outstanding issues with the U.S.
Government.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Diesel was appointed President and
CEO effective February 4, 1994. He was recruited from outside the Company and
had previously held senior management positions in the insurance and banking
industries, and with New York State. The compensation package offered Mr.
Diesel took into consideration his experience and expertise; the size,
diversity and needs of the business; and compensation levels at companies of
comparable size and industry. The compensation package included: (1) a base
salary, effective February 4, 1994; (2) the potential for cash incentive
bonuses based on performance; and (3) stock grants under the Company's
Restricted Stock Incentive Plan. For the period October 1, 1994 through
September 30, 1995 there were no changes to his annual compensation and no
cash incentive bonuses were paid. The Committee did, however, issue a stock
grant to Mr. Diesel effective December 28, 1994.
Compensation Committee
Stanley I. Landgraf, Chairman
Harry Apkarian
Lawrence A. Shore
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors ("Committee") approves
all of the policies under which compensation is paid or awarded to the
Company's officers and employee directors. The Committee consists of two
non-employee Directors (Mr. Landgraf and Mr. Shore) and one employee Director
(Mr. Apkarian). Mr. Shore and Mr. Apkarian are both former Chief Executive
Officers of the Company. Mr. Shore serves as the Chairman of the Board of
Directors and had served as the Company's Chief Executive Officer from July
1992 until February 1993. Mr. Apkarian was Chief Executive Officer of the
Company from 1961 until 1991 and was Chairman of the Board of Directors from
1984 until his resignation from this position in August 1993. Mr. Apkarian
does not vote on matters pertaining to his own compensation. During the
Company's last fiscal year, Mr. R. Wayne Diesel, President, Chief Executive
Officer and a Director of the Company, was a member of the Board of Directors
of Lawrence Insurance Group, Inc., and served on the Compensation Committee
of the Lawrence Insurance Group, Inc. Board; Mr. Albert W. Lawrence, Chairman
of the Board of Lawrence Insurance Group, Inc., is a Director of the Company.
See "Security Ownership of Certain Beneficial Owners" and "Certain
Relationships and Related Transactions", below, for information regarding the
relationship between the Company, Mr. Lawrence, and Lawrence Insurance Group,
Inc.
EMPLOYMENT AGREEMENTS
The Company has an agreement with Mr. Diesel which provides that Mr. Diesel
will receive an annual base salary of $200,000 and is eligible to receive
incentive compensation at the discretion of the Compensation Committee. Per
this agreement, Mr. Diesel was awarded an initial grant under the Company's
Restricted Stock Incentive Plan ("the Plan") of 10,000 shares; in December
1994, the Committee awarded Mr. Diesel an additional 25,000 shares under the
Plan. The agreement also states that if Mr. Diesel is removed from the
position of President and CEO for reasons other than cause during his first
three years of employment, the Company will pay him severance payments
equivalent to a maximum of one year's base salary plus insurance benefits.
The Company also has an agreement with Mr. Apkarian terminating on September
30, 1997 or upon Mr. Apkarian's retirement, whichever occurs first. This
agreement provides that Mr. Apkarian will continue as an employee and a
Director of the Company at an annual salary of $130,000. The agreement also
provides an annual bonus of $10,000 which he will use to purchase $250,000 of
term life insurance. Upon his retirement, an annual pension supplement of
$50,000 will be paid until September 30, 1997, and if Mr. Apkarian dies
during this period, a survivor's benefit payment of $25,000 per year will be
paid to his spouse, if then living, for the remainder of the payment period.
In addition, the agreement provides for the payment of club dues and the use
of a Company automobile for which Mr. Apkarian pays 50% of the lease
payments.
DIRECTORS COMPENSATION
Directors who are not officers or employees receive Director's fees of $750
for each Board meeting attended. Directors also are reimbursed for travel
expenses incurred in attending meetings.
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG MECHANICAL TECHNOLOGY
INCORPORATED (MTIX), S&P 500 INDEX, AND S&P HIGH TECH COMPOSITE INDEX (1)
<TABLE>
<CAPTION>
S&P
Measurement Period S&P High Tech
(Fiscal Year Covered) MTIX 500 Index Index
- --------------------- ------ --------- ---------
<S> <C> <C> <C>
Measurement Pt-9/30/90 $ 100 $ 100 $ 100
FYE 9/30/91 $ 77 $ 131 $ 123
FYE 9/30/92 $ 77 $ 146 $ 125
FYE 9/30/93 $ 54 $ 165 $ 151
FYE 9/30/94 $ 2 $ 171 $ 176
FYE 9/30/95 $ 35 $ 221 $ 277
</TABLE>
(1) Assumes that $100 was invested on September 30, 1990 in Mechanical
Technology Inc. Common Stock, the S&P 500 and the S&P High Tech composite
Index, and that all dividends were reinvested.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of December 29, 1995 in respect
of each person known by the Company to be the beneficial owner of more than
5% of its outstanding Common Stock.
<TABLE>
<CAPTION>
Amount of
Beneficial Percent
Name Address Ownership of Class
- ------------------ -------------------- ------------ --------
<S> <C> <C> <C>
Superintendent of 160 West Broadway 909,091(A) 25.5%
Insurance as New York, N.Y. 10013
Liquidator of United
Community Insurance
Company
Lawrence Insurance 500 Fifth Avenue 820,909(B) 23.0%
Group, Inc. New York, N.Y. 10110
Harry Apkarian 968 Albany-Shaker Road 288,001(C) 8.1%
Latham, N.Y. 12110
</TABLE>
(A) These shares are owned of record by United Community Insurance Company
(UCIC), a wholly-owned subsidiary of Lawrence Insurance Group, Inc. (See Note
(B) to this table, below.) In July 1994, upon application of the Superinten-
dent of Insurance of the State of New York ("Superintendent"), alleging that
UCIC was insolvent due to inadequate reserves, and with the consent of UCIC,
an Order of Rehabilitation was entered in the Supreme Court of the State of
New York, Schenectady County, with respect to UCIC. The Order of Rehabilita-
tion, among other things, authorized the Superintendent to take control of
all of UCIC's assets and to conduct its business and affairs. On November 9,
1995, with the consent of Lawrence Insurance Group, Inc. as the sole
shareholder of UCIC, an Order of Liquidation of UCIC was entered in the
Supreme Court of the State of New York, Schenectady County. The Order of
Liquidation determined that UCIC was insolvent, and appointed the Superinten-
dent as Liquidator of UCIC, with the authority to take possession of its
property and liquidate its business and affairs; the Superintendent's
<PAGE>
authority under the Order of Liquidation includes the authority to sell all
real or personal property of UCIC (including any stock or other securities,
such as the shares of the Company's Common Stock, owned by UCIC) on such
terms and conditions as in his discretion he deems to be in the best interest
of the creditors of UCIC.
By reason of the Order of Liquidation and the powers granted to the
Superintendent thereunder, Lawrence Insurance Group, Inc. no longer has the
power to vote or dispose of the 909,091 shares of the Company's Common Stock
owned by UCIC, and thus is no longer deemed to be the beneficial owner of
such shares (which represents about 25% of the Company's outstanding Common
Stock); pursuant to the authority granted to him by the Order of Liquidation,
the Superintendent (in his capacity as Liquidator under the Order, acting for
the benefit of the policyholders and other creditors of UCIC) is the
beneficial owner of the shares of the Company's Common Stock owned by UCIC.
In addition to the shares of the Company's Common Stock owned by UCIC of
record, the Superintendent may, by reason of UCIC's ownership of 21.4% of the
outstanding stock of the United Republic Insurance Company (URIC) subsidiary
of the Lawrence Insurance Group, Inc. also be deemed to be the beneficial
owner of a portion of the 820,909 shares of the Company's Common Stock owned
by URIC and its subsidiaries. (See Note (B) to this table, below.)
As a result of the matters referred to in the preceding paragraphs of this
Note (A), the Superintendent's exercise of the powers and authority granted
to him under the Order of Liquidation (including, among other things, the
sale of the shares of the Company's Common Stock owned by UCIC) could result
in a change in control of the Company.
At the time the Order of Rehabilitation with respect to UCIC was entered, and
for several years prior to that time, Albert Lawrence, a Director of the
Company, was Chairman of the Board of UCIC, and Messrs. R. Wayne Diesel,
President, Chief Executive Officer and a Director of the Company, and
Lawrence Shore, Chairman of the Board of Directors of the Company, were
members of the UCIC Board of Directors. Mr. Diesel was also Treasurer of
UCIC.
(B) 363,636 of these shares are owned of record by United Republic Insurance
Company (URIC), and the balance are owned of record by wholly-owned
subsidiaries of URIC as follows: Global Insurance Company (Global) - 349,068
shares; and Senate Insurance Company (Senate) - 108,205 shares. 78.6% of the
outstanding stock of URIC is owned by Lawrence Insurance Group, Inc.; the
remaining 21.4% is owned by United Community Insurance Company, another
subsidiary of Lawrence Group, Inc. which is under the control of the
Superintendent of Insurance of the State of New York and is undergoing a
court ordered liquidation. (See Note (A) to this table, above.)
According to the August 9, 1995 Proxy Statement of Lawrence Insurance Group,
Inc. for its August 29, 1995 Annual Meeting of Stockholders, Lawrence Group,
Inc. is the beneficial owner of approximately 93% of the outstanding shares
of the common stock of Lawrence Insurance Group, Inc. Albert W. Lawrence (a
Director of the Company) is, along with Barbara C. Lawrence, his wife, the
owner of 100% of the common stock of Lawrence Group,Inc.; as a result, Mr.
and Mrs. Lawrence may be deemed to be the beneficial owners of the shares of
the Company's Common Stock held of record by URIC and its subsidiaries and
referred to in the preceding paragraph. Mrs. Lawrence also owns beneficially
and of record an additional 100 shares of the Company's Common Stock; Mr.
Lawrence disclaims beneficial ownership of such shares.
In August 1995 URIC consented to the entry of an Order ("Consent Order")
issued by the Commissioner of Insurance of the State of Texas ("Commission-
<PAGE>
er") in connection with URIC's release from a June 1994 Order that had placed
URIC in a state of confidential supervision. The Consent Order, among other
things, required URIC to achieve certain levels of policyholders surplus by
various dates specified in the Consent Order and to solicit offers for the
sale of its Global and Senate subsidiaries. The Consent Order also contained
the consent of URIC to the entry of an order of conservatorship against URIC,
at the request of the Commissioner, if URIC failed to satisfy certain of the
requirements of the Consent Order; if the order of conservatorship is entered
against URIC, the Commissioner would be empowered to assume all control and
decision-making authority with respect to URIC's business and assets
(including the shares of the Company's Common Stock owned by URIC and its
Global and Senate subsidiaries).
The Company has been advised that URIC has not yet satisfied certain of the
requirements set forth in the Consent Order, although the specified dates for
doing so have passed; however, the Company also understands that to date the
Commissioner has taken no action to have the order of conservatorship entered
against URIC despite its failure to satisfy the requirements of the Consent
Order. If the Commissioner takes action to have an order of conservatorship
entered against URIC, the Commissioner would be empowered to vote or dispose
of the shares of the Company's Common Stock owned by URIC and its Global and
Senate subsidiaries; as a result of the authority that would be granted to
him under such an order, the Commissioner (in his capacity as Conservator
under such an order acting for the benefit of the policyholders and other
creditors of URIC) would be deemed the beneficial owner of the shares of the
Company's Common Stock owned by URIC and its Global and Senate subsidiaries.
Furthermore, the Commissioner's exercise of the power and authority that
would be granted to him under an order of conservatorship (such as, among
other things, the sale of the shares of the Company's Common Stock owned by
URIC and its Global and Senate subsidiaries) could result in a change in
control of the Company.
At the time the confidential order of supervision of URIC was entered in
1994, and for several years prior to that time, Albert Lawrence, a Director
of the Company, was Chairman of the Board of URIC, and Messrs. R. Wayne
Diesel, President, Chief Executive Officer and a Director of the Company, and
Lawrence Shore, Chairman of the Board of Directors of the Company, were
members of the URIC Board of Directors.
(C)Includes 2,000 shares issued under the Company's Restricted Stock
Incentive Plan which are still subject to forfeiture.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1993, the Company obtained an advance of $3 million from a
finance company pursuant to an agreement relating to a receivable of the
Company's UTE subsidiary. The funds advanced to the Company by the finance
company were provided to the finance company by UCIC (See "Security Ownership
of Certain Beneficial Owners", above ), and the finance company's obligation
to repay such funds to UCIC is secured by (and is dependent on payment of)
the Company's obligation to the finance company under the agreement. The due
date of the Company's obligation to repay the funds advanced to it by the
finance company has been extended by the finance company to December 31,
1996; until payment, the obligation bears interest at the rate of 15.2%.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock by (i) each
Director and nominee for Director of the Company (ii) each named executive
officer described in the section of this Proxy Statement captioned "Executive
Compensation", and (iii) all present Directors and Officers of the Company as
a group, as of December 29, 1995.
<TABLE>
<CAPTION>
Amount
Name of and Nature of
Beneficial Beneficial Percent of
Owner Ownership(1) Class
------------------- ------------- ----------
<S> <C> <C>
Harry Apkarian 288,001(2) 8.1%
Denis P. Chaves 2,600 *
R. Wayne Diesel 35,000(2),(5),(6) *
Douglas McCauley 8,000(2) *
Stanley I. Landgraf 1,000 *
Albert W. Lawrence 820,909(4) 23.0%
E. Dennis O'Connor -0- *
Lawrence A. Shore -0-(5) *
Stephen Sullivan 10,000(2),(3) *
All present Directors and 1,165,510(2),(3),(4),(6)
Officers as a group (10 persons)
</TABLE>
- -------------------------------------
* Percentage is less than 1.0% of the outstanding Common Stock.
(1)To the best of the Company's knowledge, based on information reported by
such Directors and officers or contained in the Company's shareholder
records. Except as otherwise indicated, each of the named persons is
presumed to have sole voting and investment power with respect to all shares
shown. None of the Company's present Directors or officers other than Mr.
Apkarian and Mr. Lawrence (see "Security Ownership of Certain Beneficial
Owners," above) beneficially own more than 1% of the Company's outstanding
Common Stock; all present Directors and officers as a group beneficially own,
in the aggregate, approximately 32.7% of the Company's outstanding Common
Stock.
(2)Includes shares granted under the Company's Restricted Stock Incentive
Plan which are still subject to forfeiture as follows: Mr. Apkarian, 2,000
shares; Mr. Chaves, 2,000 shares; Mr. Diesel, 29,000 shares; Mr. McCauley,
6,500 shares; and Mr. Sullivan, 1,000 shares. All present Directors and
officers as a group, 40,500 shares.
(3)Includes the right to purchase 5,000 shares pursuant to exercisable
options granted under the Company's stock option plan.
(4)Includes 820,909 shares owned by subsidiaries of Lawrence Insurance Group,
Inc. Albert W. Lawrence and his wife, Barbara, may be deemed to be the
beneficial owners of the Lawrence Insurance Group, Inc. shares. (See
"Security Ownership of Certain Beneficial Owners", above.) Excludes 100
shares owned by Barbara C. Lawrence, wife of Albert W. Lawrence. Mr.
Lawrence disclaims beneficial ownership of such shares.
<PAGE>
(5)Excludes shares owned by subsidiaries of Lawrence Insurance Group, Inc.;
Mr. Shore and Mr. Diesel, as Directors, share the power to vote and dispose
of such shares. Mr. Shore and Mr. Diesel disclaim beneficial ownership of
such shares.
(6)Does not include 100 shares held by Mr. Diesel's wife as custodian for
their minor child; Mr. Diesel disclaims beneficial ownership of such shares.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten percent sharehold-
ers are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based on Company records and other information, the Company believes that all
SEC filing requirements applicable to its directors and officers with respect
to the Company's fiscal year ended September 30, 1995 were complied with,
except that Stephen T. Wilson, Chief Financial Officer, was thirteen days
late in filing his initial report of ownership of MTI common stock after
becoming an officer of the Company in March 1995.
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report to Shareholders accompanies this Proxy Statement.
The Company's Annual Report on Form 10-K for the year ended September 30,
1995, as filed with the Securities and Exchange Commission, may be obtained
by addressing a written request to the Investor Relations Department at the
Company's corporate headquarters (968 Albany-Shaker Road, Latham, NY 12110).
PROPOSALS OF SECURITY HOLDERS
Proposals by security holders intended to be presented at the Company's
Annual Meeting of Shareholders held in 1997 must be received by the Company
before October 18, 1996, in order to qualify for inclusion in the Company's
Proxy Statement relating to that meeting.
<PAGE>
OTHER MATTERS
Management does not know of any matters which will be brought before the
meeting other than those specifically set forth in the notice thereof. If
any other matter properly comes before the meeting, however, it is intended
that the shares represented by proxies will be voted with respect thereto in
accordance with the best judgment of the persons voting them.
All expenses incurred in connection with this solicitation of proxies will
be borne by the Company.
By Order of the Board of Directors
John Recupero
Secretary
Latham, New York
February 16, 1996
<PAGE>
Appendix 1 - Proxy Card
MECHANICAL TECHNOLOGY INCORPORATED
968 Albany-Shaker Road Latham, New York 12110
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes any proxy heretofore given to vote such
shares, and hereby ratifies and confirms all that said proxies may do by
virtue hereof.
THIS PROXY WILL BE VOTED AS SPECIFIED BY THE SHAREHOLDER. IF AUTHORITY TO
VOTE FOR ITEM 1, ELECTION OF DIRECTORS, IS NOT SPECIFICALLY WITHHELD, THE
PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN THE PROXY STATEMENT. IF NO
CHOICE IS SPECIFIED WITH RESPECT TO ITEM 2, THE PROXY WILL BE VOTED FOR THIS
PROPOSAL.
The undersigned hereby appoints L. Shore and R. Diesel, or either of them, as
proxies to vote all the stock of the undersigned with all the powers which
the undesigned would possess if personally present at the Annual Meeting of
the Shareholders of Mechanical Technology Incorporated, to be held at the
Company's corporate offices, 968 Albany-Shaker Road, Latham, New York 12110,
at 10:00 a.m. on March 28, 1996, or any adjournment thereof, as follows:
1.ELECTION OF DIRECTORS:
FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Harry Apkarian Stanley I. Landgraf E. Dennis O'Connor
R. Wayne Diesel Albert W. Lawrence Lawrence A. Shore
2.PROPOSAL TO APPROVE THE REAPPOINTMENT OF COOPERS & LYBRAND AS AUDITORS.
FOR AGAINST ABSTAIN
3.IN THEIR DISCRETION, UPON ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE
THE MEETING.
Date------------,1996 -------------------------------------------
Please sign exactly as name appears on
this proxy. When shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee,
or guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized person.
---------------------------------------------
Please provide Social Security Number or Tax
Identification Number
Attendance at Meeting:
No---- Yes---- Number attending----
