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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-2
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended September 30, 1996
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period from __________ to __________
Commission file number 0-6890
MECHANICAL TECHNOLOGY INCORPORATED
(Exact name of registrant as specified in its charter)
New York 14-1462255
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
968 Albany-Shaker Rd, Latham, New York 12110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518)785-2211
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act
$1.00 Par Value Common Stock
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this form 10-K. [ X ]
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
The aggregate market value of the registrant's Common Stock held by
nonaffiliates of the registrant on December 31, 1996 (based on the
last sale price of $2.00 per share for such stock reported by
NASDAQ for that date) was approximately $6,503,172.
As of December 31, 1996, the registrant had 5,899,201 shares of
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Where Incorporated into Form 10-K Report
-------- ----------------------------------------
Proxy Statement for Part III
Annual Meeting of Shareholders
to be held on April 16, 1997
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<PAGE>
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Executive Officers" in Item
1 of this Form 10-K Report, and the information set forth in the section
entitled "Election of Directors", and under the captions "Security
Ownership of Certain Beneficial Owners" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the section entitled "Additional
Information", in the Draft, dated January 27, 1997 of the Proxy Statement
to be filed by the registrant, pursuant to Regulation 14A, for its Annual
Meeting of Shareholders to be held on April 16, 1997 (the "1997 Proxy
Statement Draft", a copy of which is included as Exhibit 99.1 hereto), is
incorporated herein by reference.
ITEM 11: EXECUTIVE COMPENSATION
The information set forth under the captions "Executive Compensation",
"Compensation Committee Report", "Compensation Committee Interlocks and
Insider Participation", "Employment Agreements", and "Directors Compensa-
tion", in the section entitled "Additional Information" in the
registrant's 1997 Proxy Statement Draft, is incorporated herein by refer-
ence.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information set forth under the captions "Security Ownership of
Certain Beneficial Owners" and "Security Ownership of Management" in the
section entitled "Additional Information" in the registrant's 1997 Proxy
Statement Draft, is incorporated herein by reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Certain Information
Regarding Directors" in the section entitled "Election of Directors", and
under the captions "Directors Compensation", "Security Ownership of
Certain Beneficial Owners", and "Compensation Committee Interlocks and
Insider Participation", in the section entitled "Additional Information",
in the registrant's 1997 Proxy Statement Draft, is incorporated herein by
reference.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The financial statements filed herewith are set forth on the Index
to Consolidated Financial Statements on page F-1 of the separate
financial section which accompanies this Report, which is incorporated by
reference.
<PAGE>
The following exhibits are filed as part of this Report:
Exhibit
Number Description
------- -----------
2.1 Purchase Agreement, dated as of November 23,
1994, among the Registrant, ProQuip Inc. and
Phase Metrics.(7)
3.1 Certificate of Incorporation of the registrant,
as amended.(1)
3.2 By-Laws of the registrant, as amended.
4.1 Certificate of Amendment of the Certificate
of Incorporation of the registrant, filed
on March 6, 1986 (setting forth the provisions
of the Certificate of Incorporation,as amended,
relating to the authorized shares of the
registrant's Common Stock) - included in the
copy of the registrant's Certificate of
Incorporation, as amended, filed as Exhibit 3.1
hereto.
4.20 Loan Agreement, dated as of June 1, 1987,
between the registrant and Chase Lincoln
First Bank, N.A. ("Chase Lincoln"), relating to
a $20,000,000 term loan to finance the
registrant's acquisition of United
Telecontrol Electronics, Inc. (the "UTE Loan
Agreement").(1)
4.21 First Amendment to Loan Agreement, dated as
of September 30, 1988, amending certain
provisions of the UTE Loan Agreement.(1)
4.22 Second Amendment to Loan Agreement, dated as of
February 21, 1990, amending certain provisions
of the UTE Loan Agreement.(1)
4.24 Third Amendment to Loan Agreement, dated as
of January 1, 1991, amending certain
provisions of the UTE Loan Agreement.(2)
4.25 Form of Note, in the amount of $9,181,700,
executed by the registrant on January 1,
1991 to evidence its indebtedness under the
UTE Loan Agreement.(2)
4.26 Form of Note, in the amount of $2,000,000,
executed by the registrant on January 1,
1991 to evidence its indebtedness under the
UTE Loan Agreement.(2)
4.27 Form of Note, in the amount of $1,000,000,
<PAGE>
executed by the registrant on January 1,
1991 to evidence its indebtedness under the
UTE Loan Agreement.(2)
4.28 Mortgage, dated January 31, 1991, executed
by the registrant in favor of Chase Lincoln
and securing the registrant's obligation to
Chase Lincoln, including those under the
UTE and ProQuip Loan Agreements.(2)
4.30 Loan Agreement, dated as of September 30,
1988, between the registrant and Chase
Lincoln relating to an $8,000,000 term loan
to finance the registrant's acquisition of
ProQuip, Inc. (the "ProQuip Loan
Agreement").(1)
4.31 Negative Pledge Agreement, dated as of
September 30, 1988, executed by the
registrant in favor of Chase Lincoln in
connection with the ProQuip Loan
Agreement.(1)
4.32 Security Agreement, dated as of September
30, 1988, executed by the registrant in
favor of Chase Lincoln and securing the
registrant's obligations to Chase Lincoln,
including those under the UTE and ProQuip
Loan Agreements (the "Chase Lincoln
Security Agreement").(1)
4.33 First Amendment to Loan Agreement, dated as
of February 21, 1990, amending certain
provisions of the ProQuip Loan Agreement.(1)
4.34 Form of Note, in the amount of
$3,375,817.80, executed by the registrant
on February 21, 1990 to evidence its
indebtedness under the ProQuip Loan
Agreement.(1)
4.35 Amendment Number One to Security Agreement,
executed by the registrant on February 21,
1990, amending the Chase Lincoln Security
Agreement.(1)
4.36 Mortgage, dated February 21, 1990, executed
by the registrant in favor of Chase Lincoln
and securing the registrant's obligations
to Chase Lincoln, including those under the
UTE and ProQuip Loan Agreements.(1)
4.37 Second Amendment to Loan Agreement, dated
as of January 1, 1991, amending certain
provisions of the ProQuip Loan
Agreement.(2)
<PAGE>
4.38 Mortgage Modification and Allocation
Agreement, dated January 1, 1991, executed
by the registrant and Chase Lincoln.(2)
4.40 Form of Payment Guaranty, dated as of
September 1, 1988 [as of September 30,
1988, in the case of ProQuip, Inc.],
executed by the subsidiaries of the
registrant in favor of Chase Lincoln and
guaranteeing payment of the registrant's
obligations to Chase Lincoln, including
those under the UTE and ProQuip Loan
Agreements.(1)
4.41 Form of Negative Pledge Agreement, dated as
of September 30, 1988, executed by the
subsidiaries of the registrant in favor of
Chase Lincoln in connection with the
ProQuip Loan Agreement.(1)
4.42 Form of Security Agreement, dated as of
September 30, 1988, executed by the
subsidiaries of the registrant in favor of
Chase Lincoln and securing the registrant's
obligations to Chase Lincoln, including
those under the UTE and ProQuip Loan
Agreements.(1)
4.43 Acknowledgment, Confirmation and Further
Agreement, made as of February 21, 1990,
executed by the subsidiaries of the
registrant in favor of Chase Lincoln with
respect to the registrant's obligations
under the UTE and ProQuip Loan
Agreements.(1)
4.50 Debt Restructure Agreement, made as of
February 21, 1990, between the registrant,
Chase Lincoln, and Manufacturers Hanover
Trust Company ("Manufacturers Hanover"),
providing for a restructuring of the
registrant's indebtedness to Chase Lincoln
under the UTE and ProQuip Loan Agreements
and of the registrant's outstanding
indebtedness to Manufacturers Hanover (the
"MHTCo. Existing Debt"), among other
things.(1)
4.55 Second Amendment to Debt Restructure
Agreement, made as of January 1, 1991,
between the registrant, Chase Lincoln, and
Manufacturers Hanover, amending certain
provisions of the Debt Restructure
Agreement.(2)
<PAGE>
4.56 Second Debt Restructure Agreement, as of
July 22, 1992, between the registrant,
Chase Lincoln First Bank, N. A. ("CLFB"),
and Chemical Bank ("Chemical"), as
successor in interest to Manufacturers
Hanover Trust Company, providing for a
restructuring of the registrant's
indebtedness to CLFB under the UTE and
ProQuip Loan Agreements and of the
registrant's outstanding indebtedness to
Chemical, among other things.(3)
4.63 Promissory Note, in the amount of
$4,000,000 and dated July 22, 1992,
executed by the registrant to evidence its
indebtedness to Chemical from time to time
with respect to a line of credit in such
amount (The Chemical Line of Credit).(3)
4.64 Form of Payment Guaranty, dated as of July
24, 1992, executed by Masco Corporation in
favor of Chemical and guaranteeing payment
of the registrant's obligations to Chemical
under the Chemical Line of Credit.(3)
4.65 Promissory Note, in the amount of
$4,000,000 and dated October 31, 1994,
extending the maturity date of the
Promissory note dated July 22, 1992,
executed by the registrant to evidence its
indebtedness to Chemical under The Chemical
Line of Credit.(8)
4.66 Promissory Note, in the amount of $4,000,000
and dated October 31, 1995, extending the
maturity date of the Promissory note dated
October 31, 1994, executed by the registrant to
evidence its indebtedness to Chemical under The
Chemical Line of Credit.(9)
4.67 Form of Payment Guaranty, dated October 31,
1995 executed by Masco Corporation in favor of
Chemical and guaranteeing payment of the
registrant's obligations to Chemical under the
Chemical Line of Credit.(9)
4.80 Amended and Restated Loan Agreement, dated
as of July 22, 1992, between the registrant
and Chase Lincoln First Bank, N.A., which
amends, restates, combines, and supersedes
in full the UTE and the ProQuip loan
agreements.(3)
4.81 Form of Note, in the amount of $5,000,000,
executed by the registrant on July 24, 1992
to evidence its indebtedness to CLFB under
<PAGE>
the July 22, 1992 Loan Agreement.(3)
4.82 Form of Note, in the amount of $7,984,770,
executed by the registrant on July 24, 1992
to evidence its indebtedness to CLFB under
the July 22, 1992 Loan Agreement.(3)
4.83 Additional Mortgage Note, dated July 24,
1992, executed by the registrant in favor
of CLFB and securing the registrant's
obligation to CLFB under the Loan Agreement.(3)
4.84 Additional Mortgage and Security Agreement,
dated as of July 22, 1992, executed by the
registrant in favor of CLFB and securing
the registrant's obligations to CLFB.(3)
4.85 Mortgage Consolidation, Spreader, Modification
Extension and Security Agreement, dated July
22, 1992, executed by the registrant and
CLFB.(3)
4.86 Confirmation of Guaranties and Security
Agreements, dated July 22, 1992, executed
by subsidiaries of the registrant in favor
of CLFB with respect to the registrant's
obligations to CLFB.(3)
4.87 Consent and waiver, dated December 21, 1993,
from CLFB to the registrant with respect to the
Amended and Restated Loan Agreement.(5)
4.88 Amendment One to Amended and Restated Loan
Agreement, dated as of August 1, 1994, between
the registrant and Chase Manhattan Bank, N. A.
which amends the Amended and Restated Loan
Agreement to defer the payment due on June 30,
1994.(6)
4.89 Amendment Two to Amended and Restated Loan
Agreement with waiver, dated as of November
22,1994, between the registrant and Chase
Manhattan Bank, N. A. which amends the Amended
and Restated Loan Agreement and waives any
existing defaults.(8)
4.90 Additional Mortgage and Security Consolidation
Agreement, dated as of October 6, 1995 executed
by the registrant in favor of Chase Manhattan
Bank, N.A. and securing the registrant's
obligations to Chase Manhattan Bank, N.A.(9)
4.91 Form of Note, in the amount of $340,000,
executed by the registrant on October 6, 1995
to evidence its indebtedness to Chase
Manhattan Bank, N.A. under the July 22, 1992
<PAGE>
Loan Agreement.(9)
4.92 Amendment Three to Amended and Restated Loan
Agreement with waiver, dated as of November
30, 1995, between the registrant and Chase
Manhattan Bank, N. A. which amends the Amended
and Restated Loan Agreement and waives any
existing defaults.(9)
10.1 Mechanical Technology Incorporated Restricted
Stock Incentive Plan - filed as Exhibit 28.1 to
the registrant's Form S-8 Registration
Statement No. 33-26326 and incorporated herein
by reference.
10.3 MTI Employee 1982 Stock Option Plan.(1)
10.4 Agreement, dated December 21, 1993, between
UTE, First Commercial Credit Corporation
("FCCC") and the registrant, relating to an
advance against certain receivables.(5)
10.6 Agreement, dated June 2, 1993, between the
registrant and Mr. Harry Apkarian, Director,
regarding his employment.(5)
10.7 Agreement, dated February 22, 1994, between
the registrant and Mr. R. Wayne Diesel,
President and Chief Executive Officer,
regarding his employment.(8)
10.8 Agreement, dated December 14, 1994, between
FCCC and the registrant, modifying the
Agreement dated December 21, 1993 relating to
an advance against certain receivables.(8)
10.9 Agreement, dated May 30, 1995, between FCCC
and the registrant, extending the maturity of
the Agreement dated December 14, 1994 relating
to an advance against certain receivables.(9)
10.10 Agreement, dated June 28, 1995, between FCCC
and the registrant, extending the maturity of
the Agreement dated December 14, 1994 relating
to an advance against certain receivables.(9)
10.11 Agreement, dated September 21, 1995, between
FCCC and the registrant, extending the
maturity of the Agreement dated December 14,
1994 relating to an advance against certain
receivables.(9)
10.12 Agreement, dated October 25, 1995, between FCCC
and the registrant, extending the maturity of
the Agreement dated December 14, 1994 relating
to an advance against certain receivables.(9)
<PAGE>
10.13 Agreement, dated December 27, 1995, between
FCCC and the registrant, extending the maturity
of the Agreement dated December 14, 1994
relating to an advance against certain
receivables.(9)
10.14 Mechanical Technology Incorporated Stock
Incentive Plan - included as Appendix A to the
registrant's Proxy Statement, filed pursuant to
Regulation 14A, for its December 20, 1996
Special Meeting of Shareholders and
incorporated herein by reference.
10.15 Agreement, dated December 6, 1996, between
the registrant and Mr. Martin J. Mastroianni,
President and Chief Operating Officer,
regarding his employment.
10.16 Settlement Agreement and Release, dated as of
December 27, 1996, between First Albany
Companies Inc. and the registrant, with respect
to the registrant's indebtedness and
obligations under the Agreement dated December
14, 1994 between FCCC and the registrant
relating to an advance against certain
receivables.
21 Subsidiaries of the registrant.
99.1 Draft, dated January 27, 1997, of the Proxy
Statement to be filed by the registrant,
pursuant to Regulation 14A, for its Annual
Meeting of Shareholders scheduled to be held on
April 16, 1997.
- ----------------------------------
Certain exhibits were previously filed (as indicated below) and are
incorporated herein by reference. All other exhibits for which no
other filing information is given are filed herewith:
(1) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-K Report, as amended, for its fiscal year ended
September 30, 1989.
(2) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-Q Report for its fiscal quarter ended December
29, 1990.
(3) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-Q Report for its fiscal quarter ended June 27,
1992.
(4) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-K Report for its fiscal year ended September
30, 1991.
<PAGE>
(5) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-K Report for its fiscal year ended September
30, 1993.
(6) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-Q Report for its fiscal quarter ended July 2,
1994.
(7) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 8-K Report dated November 23, 1994.
(8) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-K Report for its fiscal year ended September
30, 1994.
(9) Filed as an Exhibit (bearing the same exhibit number) to the
registrant's Form 10-K Report for its fiscal year ended September
30, 1995.
(b) No reports on Form 8-K were filed by the registrant during the last
quarter of the period covered by this Form 10-K Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MECHANICAL TECHNOLOGY INCORPORATED
Date: January 28, 1997 By: /s/ R. Wayne Diesel
---------------- -----------------------------------
R. Wayne Diesel
Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
-----------------
2.1 Purchase Agreement, dated as of November 23,
1994, among the Registrant, ProQuip Inc. and
Phase Metrics.
3.1 Certificate of Incorporation of the registrant,
as amended.
3.2 By-Laws of the registrant, as amended.
4.1 Certificate of Amendment of the Certificate
of Incorporation of the registrant, filed
on March 6, 1986 (setting forth the provisions
of the Certificate of Incorporation,as amended,
relating to the authorized shares of the
registrant's Common Stock) - included in the
copy of the registrant's Certificate of
Incorporation, as amended, filed as Exhibit 3.1
hereto.
4.20 Loan Agreement, dated as of June 1, 1987,
between the registrant and Chase Lincoln
First Bank, N.A. ("Chase Lincoln"), relating to
a $20,000,000 term loan to finance the
registrant's acquisition of United
Telecontrol Electronics, Inc. (the "UTE Loan
Agreement").
4.21 First Amendment to Loan Agreement, dated as
of September 30, 1988, amending certain
provisions of the UTE Loan Agreement.
4.22 Second Amendment to Loan Agreement, dated as of
February 21, 1990, amending certain provisions
of the UTE Loan Agreement.
4.24 Third Amendment to Loan Agreement, dated as
of January 1, 1991, amending certain
provisions of the UTE Loan Agreement.
4.25 Form of Note, in the amount of $9,181,700,
executed by the registrant on January 1,
1991 to evidence its indebtedness under the
UTE Loan Agreement.
4.26 Form of Note, in the amount of $2,000,000,
executed by the registrant on January 1,
1991 to evidence its indebtedness under the
UTE Loan Agreement.
4.27 Form of Note, in the amount of $1,000,000,
executed by the registrant on January 1,
I-1
<PAGE>
1991 to evidence its indebtedness under the
UTE Loan Agreement.
4.28 Mortgage, dated January 31, 1991, executed
by the registrant in favor of Chase Lincoln
and securing the registrant's obligation to
Chase Lincoln, including those under the
UTE and ProQuip Loan Agreements.
4.30 Loan Agreement, dated as of September 30,
1988, between the registrant and Chase
Lincoln relating to an $8,000,000 term loan
to finance the registrant's acquisition of
ProQuip, Inc. (the "ProQuip Loan
Agreement").
4.31 Negative Pledge Agreement, dated as of
September 30, 1988, executed by the
registrant in favor of Chase Lincoln in
connection with the ProQuip Loan
Agreement.
4.32 Security Agreement, dated as of September
30, 1988, executed by the registrant in
favor of Chase Lincoln and securing the
registrant's obligations to Chase Lincoln,
including those under the UTE and ProQuip
Loan Agreements (the "Chase Lincoln
Security Agreement").
4.33 First Amendment to Loan Agreement, dated as
of February 21, 1990, amending certain
provisions of the ProQuip Loan Agreement.
4.34 Form of Note, in the amount of
$3,375,817.80, executed by the registrant
on February 21, 1990 to evidence its
indebtedness under the ProQuip Loan
Agreement.
4.35 Amendment Number One to Security Agreement,
executed by the registrant on February 21,
1990, amending the Chase Lincoln Security
Agreement.
4.36 Mortgage, dated February 21, 1990, executed
by the registrant in favor of Chase Lincoln
and securing the registrant's obligations
to Chase Lincoln, including those under the
UTE and ProQuip Loan Agreements.
4.37 Second Amendment to Loan Agreement, dated
as of January 1, 1991, amending certain
provisions of the ProQuip Loan
Agreement.
I-2
<PAGE>
4.38 Mortgage Modification and Allocation
Agreement, dated January 1, 1991, executed
by the registrant and Chase Lincoln.
4.40 Form of Payment Guaranty, dated as of
September 1, 1988 [as of September 30,
1988, in the case of ProQuip, Inc.],
executed by the subsidiaries of the
registrant in favor of Chase Lincoln and
guaranteeing payment of the registrant's
obligations to Chase Lincoln, including
those under the UTE and ProQuip Loan
Agreements.
4.41 Form of Negative Pledge Agreement, dated as
of September 30, 1988, executed by the
subsidiaries of the registrant in favor of
Chase Lincoln in connection with the
ProQuip Loan Agreement.
4.42 Form of Security Agreement, dated as of
September 30, 1988, executed by the
subsidiaries of the registrant in favor of
Chase Lincoln and securing the registrant's
obligations to Chase Lincoln, including
those under the UTE and ProQuip Loan
Agreements.
4.43 Acknowledgment, Confirmation and Further
Agreement, made as of February 21, 1990,
executed by the subsidiaries of the
registrant in favor of Chase Lincoln with
respect to the registrant's obligations
under the UTE and ProQuip Loan
Agreements.
4.50 Debt Restructure Agreement, made as of
February 21, 1990, between the registrant,
Chase Lincoln, and Manufacturers Hanover
Trust Company ("Manufacturers Hanover"),
providing for a restructuring of the
registrant's indebtedness to Chase Lincoln
under the UTE and ProQuip Loan Agreements
and of the registrant's outstanding
indebtedness to Manufacturers Hanover (the
"MHTCo. Existing Debt"), among other
things.
4.55 Second Amendment to Debt Restructure
Agreement, made as of January 1, 1991,
between the registrant, Chase Lincoln, and
Manufacturers Hanover, amending certain
provisions of the Debt Restructure
Agreement.
I-3
<PAGE>
4.56 Second Debt Restructure Agreement, as of
July 22, 1992, between the registrant,
Chase Lincoln First Bank, N. A. ("CLFB"),
and Chemical Bank ("Chemical"), as
successor in interest to Manufacturers
Hanover Trust Company, providing for a
restructuring of the registrant's
indebtedness to CLFB under the UTE and
ProQuip Loan Agreements and of the
registrant's outstanding indebtedness to
Chemical, among other things.
4.63 Promissory Note, in the amount of
$4,000,000 and dated July 22, 1992,
executed by the registrant to evidence its
indebtedness to Chemical from time to time
with respect to a line of credit in such
amount (The Chemical Line of Credit).
4.64 Form of Payment Guaranty, dated as of July
24, 1992, executed by Masco Corporation in
favor of Chemical and guaranteeing payment
of the registrant's obligations to Chemical
under the Chemical Line of Credit.
4.65 Promissory Note, in the amount of
$4,000,000 and dated October 31, 1994,
extending the maturity date of the
Promissory note dated July 22, 1992,
executed by the registrant to evidence its
indebtedness to Chemical under The Chemical
Line of Credit.
4.66 Promissory Note, in the amount of $4,000,000
and dated October 31, 1995, extending the
maturity date of the Promissory note dated
October 31, 1994, executed by the registrant to
evidence its indebtedness to Chemical under The
Chemical Line of Credit.
4.67 Form of Payment Guaranty, dated October 31,
1995 executed by Masco Corporation in favor of
Chemical and guaranteeing payment of the
registrant's obligations to Chemical under the
Chemical Line of Credit.
4.80 Amended and Restated Loan Agreement, dated
as of July 22, 1992, between the registrant
and Chase Lincoln First Bank, N.A., which
amends, restates, combines, and supersedes
in full the UTE and the ProQuip loan
agreements.
I-4
<PAGE>
4.81 Form of Note, in the amount of $5,000,000,
executed by the registrant on July 24, 1992
to evidence its indebtedness to CLFB under
the July 22, 1992 Loan Agreement.
4.82 Form of Note, in the amount of $7,984,770,
executed by the registrant on July 24, 1992
to evidence its indebtedness to CLFB under
the July 22, 1992 Loan Agreement.
4.83 Additional Mortgage Note, dated July 24,
1992, executed by the registrant in favor
of CLFB and securing the registrant's
obligation to CLFB under the Loan Agreement.
4.84 Additional Mortgage and Security Agreement,
dated as of July 22, 1992, executed by the
registrant in favor of CLFB and securing
the registrant's obligations to CLFB.
4.85 Mortgage Consolidation, Spreader, Modification
Extension and Security Agreement, dated July
22, 1992, executed by the registrant and
CLFB.
4.86 Confirmation of Guaranties and Security
Agreements, dated July 22, 1992, executed
by subsidiaries of the registrant in favor
of CLFB with respect to the registrant's
obligations to CLFB.
4.87 Consent and waiver, dated December 21, 1993,
from CLFB to the registrant with respect to the
Amended and Restated Loan Agreement.
4.88 Amendment One to Amended and Restated Loan
Agreement, dated as of August 1, 1994, between
the registrant and Chase Manhattan Bank, N. A.
which amends the Amended and Restated Loan
Agreement to defer the payment due on June 30,
1994.
4.89 Amendment Two to Amended and Restated Loan
Agreement with waiver, dated as of November
22,1994, between the registrant and Chase
Manhattan Bank, N. A. which amends the Amended
and Restated Loan Agreement and waives any
existing defaults.
4.90 Additional Mortgage and Security Consolidation
Agreement, dated as of October 6, 1995 executed
by the registrant in favor of Chase Manhattan
Bank, N.A. and securing the registrant's
obligations to Chase Manhattan Bank, N.A.
I-5
<PAGE>
4.91 Form of Note, in the amount of $340,000,
executed by the registrant on October 6, 1995
to evidence its indebtedness to Chase
Manhattan Bank, N.A. under the July 22, 1992
Loan Agreement.
4.92 Amendment Three to Amended and Restated Loan
Agreement with waiver, dated as of November
30, 1995, between the registrant and Chase
Manhattan Bank, N. A. which amends the Amended
and Restated Loan Agreement and waives any
existing defaults.
10.1 Mechanical Technology Incorporated Restricted
Stock Incentive Plan - filed as Exhibit 28.1 to
the registrant's Form S-8 Registration
Statement No. 33-26326 and incorporated herein
by reference.
10.3 MTI Employee 1982 Stock Option Plan.
10.4 Agreement, dated December 21, 1993, between
UTE, First Commercial Credit Corporation
("FCCC") and the registrant, relating to an
advance against certain receivables.
10.6 Agreement, dated June 2, 1993, between the
registrant and Mr. Harry Apkarian, Director,
regarding his employment.
10.7 Agreement, dated February 22, 1994, between
the registrant and Mr. R. Wayne Diesel,
President and Chief Executive Officer,
regarding his employment.
10.8 Agreement, dated December 14, 1994, between
FCCC and the registrant, modifying the
Agreement dated December 21, 1993 relating to
an advance against certain receivables.
10.9 Agreement, dated May 30, 1995, between FCCC
and the registrant, extending the maturity of
the Agreement dated December 14, 1994 relating
to an advance against certain receivables.
10.10 Agreement, dated June 28, 1995, between FCCC
and the registrant, extending the maturity of
the Agreement dated December 14, 1994 relating
to an advance against certain receivables.
10.11 Agreement, dated September 21, 1995, between
FCCC and the registrant, extending the
maturity of the Agreement dated December 14,
1994 relating to an advance against certain
receivables.
I-6
<PAGE>
10.12 Agreement, dated October 25, 1995, between FCCC
and the registrant, extending the maturity of
the Agreement dated December 14, 1994 relating
to an advance against certain receivables.
10.13 Agreement, dated December 27, 1995, between
FCCC and the registrant, extending the maturity
of the Agreement dated December 14, 1994
relating to an advance against certain
receivables.
10.14 Mechanical Technology Incorporated Stock
Incentive Plan - included as Appendix A to the
registrant's Proxy Statement, filed pursuant to
Regulation 14A, for its December 20, 1996
Special Meeting of Shareholders and
incorporated herein by reference.
10.15 Agreement, dated December 6, 1996, between
the registrant and Mr. Martin J. Mastroianni,
President and Chief Operating Officer,
regarding his employment.
10.16 Settlement Agreement and Release, dated as of
December 27, 1996, between First Albany
Companies Inc. and the registrant, with respect
to the registrant's indebtedness and
obligations under the Agreement dated December
14, 1994 between FCCC and the registrant
relating to an advance against certain
receivables.
21 Subsidiaries of the registrant.
99.1 * Draft, dated January 27, 1997, of the Proxy
Statement to be filed by the registrant,
pursuant to Regulation 14A, for its Annual
Meeting of Shareholders scheduled to be held on
April 16, 1997.
* Filed with this Amendment No. 2 to the Form 10-K Report; all other
exhibits were previously filed (as indicated in Item 14) and are
incorporated herein by reference.
I-7
<PAGE>
Draft dated: 1-27-97 EXHIBIT 99.1
------------
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 Desmond, 660 Albany-Shaker Road, Albany, New York, on
Wednesday, April 16, 1997, at 10:00 A.M. local time (refreshments will be
served at 9:15 A.M.) for the following purposes:
1. To elect [____] 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 other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 3, 1997, 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, 1996, 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 March 10, 1997
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO MARK, DATE, SIGN, AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE
<PAGE>
Draft dated: 1-27-97
MECHANICAL TECHNOLOGY INCORPORATED
968 ALBANY-SHAKER ROAD
LATHAM, NEW YORK 12110
PROXY STATEMENT
March 10, 1997
This Proxy Statement, first being mailed to shareholders on approximately
March 10, 1997, 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 April 16, 1997, 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 March 3,
1997, are entitled to notice of and to vote at the Annual Meeting of
Shareholders to be held on April 16, 1997, at the Desmond, 660 Albany-Shaker
Road, Albany, New York. At the close of business on March 3, 1997, the
Company had outstanding 5,899,201 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
[THIS DRAFT OF THE PROXY STATEMENT CONTAINS INFORMATION ON THE COMPANY'S
CURRENT DIRECTORS ONLY. THE COMPANY'S BOARD OF DIRECTORS HAS NOT YET
TAKEN ACTION TO DESIGNATE ITS NOMINEES FOR ELECTION TO THE BOARD OF
DIRECTORS AT THE FORTHCOMING ANNUAL MEETING, OR THE NUMBER OF DIRECTORS
TO BE ELECTED THEREAT.]
<PAGE>
Draft dated: 1-27-97
YEAR FIRST
PRINCIPAL OCCUPATION BECAME A
NAME AGE OR EMPLOYMENT DIRECTOR
- ---------------------- --- ----------------------------- ---------
Harry Apkarian(1) 74 Director and Former Chairman 1961
of the Board of Directors of
the Company
R. Wayne Diesel (3) 51 Chief Executive Officer 1994
of the Company
Alan P. Goldberg (1),(3) 51 President & Co-Chief Executive 1996
Officer First Albany Companies
Inc.
Stanley I. Landgraf(1),(2) 71 Retired 1993
George C. McNamee (3) 50 Chairman of the Board of the 1996
Company and Chairman & Co-Chief
Executive Officer First Albany
Companies Inc.
E. Dennis O'Connor(2) 57 Director-New Products and 1993
Technology, Masco Corporation
Dr. Beno Sternlicht(2) 69 President Benjosh 1996
Management Corporation
- --------------
(1)Member of the Compensation Committee.
(2)Member of the Audit Committee.
(3)Member of the Nominating Committee.
CERTAIN INFORMATION REGARDING DIRECTORS
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 Chief Executive Officer of the Company in February
1994 and prior to December 1996 also held the title of President. 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. since March 1993. 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. 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
<PAGE>
Draft dated: 1-27-97
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. Goldberg is the President & Co-Chief Executive Officer and a Director of
First Albany Companies Inc. ("FAC", see "Securities Ownership of Certain
Beneficial Owners" in the section entitled "Additional Information", below).
He is Chairman of the Board of Trustees of the Albany Institute of History
and Art, is Chairman of the Albany -Colonie Chamber of Commerce and a
Director of the Center for Economic Growth and the Albany Symphony Orchestra.
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
Board of 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. McNamee, Chairman of the Company's Board of Directors, is the Chairman &
Co-Chief Executive Officer and a Director of FAC (see "Securities Ownership
of Certain Beneficial Owners" in the section entitled "Additional
Information", below). Mr. McNamee is a member of the Board Directors of
MapInfo Corporation, The Meta Group, Inc., and Internet Shopping Network,
Inc. He also serves on the Board Directors of the New York State Science and
Technology Foundation, and is a member of the Regional Firms Advisory
Committee to the Board of the New York Stock Exchange.
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 Inventor's Council of Michigan, a Michigan non-profit corporation. The
Company understands that Mr. O'Connor was selected by Masco Corporation as
its designee on the Company's Board of Directors pursuant to agreements
entered into in connection with the 1992 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.
Dr. Sternlicht, also one of the founders of the Company, has been President
of Benjosh Management Corporation, a management firm in New York, New York,
since 1976. He previously served as a Director of the Company from 1961 to
1992. Prior to 1985, he had held a number of positions with the Company. At
the time of his departure he served as Vice Chairman of the Board of
Directors and Technical Director.
<PAGE>
Draft dated: 1-27-97
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 eight
meetings during fiscal 1996. All Directors attended at least 75% of all
meetings of the Board, and of all Board committees on which they serve, held
during fiscal 1996.
The Company's Board of Directors has established Audit, Compensation and
Nominating Committees. 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 1996. 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 1996. The Nominating Committee considers the performance of
incumbent Directors, seeks out and interviews qualified candidates for
consideration as potential Directors, and recommends candidates for
designation by the full Board as the Board's nominees to stand for election
at the Annual Meeting of Shareholders and for election by the Board to fill
interim vacancies on the Board. At the present time, the Nominating Committee
has not established any procedures for consideration of director-candidates
submitted by shareholders. No meetings of the Nominating Committee were held
during Fiscal 1996.
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
1997.
<PAGE>
Draft dated: 1-27-97
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, 1996 (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.
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
- -------------------------------------------------------------------------------
R. Wayne Diesel 1996 $200,000 $ - - $ - $ 8,000(2)
President & CEO 1995 $190,764 $ - - $ 12,500 $ 4,452(2)
1994 $129,744 $ - - $ 12,500 $ -
- -------------------------------------------------------------------------------
Stephen Sullivan 1996 $130,310 $ - - $ - $ 4,840(2)
President, Ling 1995 $139,617 $ - - $ - $ 5,306(2)
Electronics, Inc. 1994 $118,927 $ - - $ - $ 4,838(2)
- -------------------------------------------------------------------------------
Douglas McCauley 1996 $110,807 $ 7,000 - $ - $ -
Vice-President 1995 $100,152 $ 5,000 - $ 625 $ 1,669(2)
Technology Group 1994 $105,000 $ - - $ 6,250 $ 4,200(2)
- -------------------------------------------------------------------------------
Stephen T. Wilson 1996 $107,903 $10,000 - $ - $ 2,620(2)
Chief Financial 1995 $ 60,846 $ - - $ - $ -
Officer 1994 $ - $ - - $ - $ -
- -------------------------------------------------------------------------------
Denis P. Chaves 1996 $ 99,167 $37,000 - $ - $ 3,966(2)
Vice-President, 1995 $ 95,000 $10,000 - $ 625 $ 3,800(2)
LAB and Advanced 1994 $ 93,500 $ 7,500 - $ - $ 3,800(2)
Products Divisions
- -------------------------------------------------------------------------------
(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, 1996, (based on a price on that date of $1.75 per share) by the
individuals listed in this table, including the awards shown in this column,
are: Mr. Diesel, 28,000 shares/$49,000; Mr. Sullivan, 1,000 shares/$1,750;
<PAGE>
Draft dated: 1-27-97
Mr. McCauley, 6,000 shares/$10,500 and Mr. Chaves, 2,000 shares/$3,500. In
November 1996, the Board of Directors took action to accelerate the vesting
of shares held by Messrs. Diesel (23,000 shares), McCauley (1,500 shares),
and Chaves (1,500 shares) that were still subject to restrictions under the
Plan; as a result, all restrictions under the Plan have lapsed as to all
shares held by Messrs. Diesel and Chaves, while 4,000 shares held by Mr.
McCauley remain subject to restrictions under the Plan.
(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.
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 1996, 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 Chief
Executive Officer effective February 1994 and prior to December 1996, also
held the title of President. 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, 1996 there were no changes to his annual compensation and no
cash incentive bonuses were paid. The Committee did, however, take action in
November 1996 to accelerate the vesting of 23,000 shares held by Mr. Diesel
that were still subject to restrictions under the Restricted Stock Incentive
Plan; as a result, all restrictions under the Plan have lapsed as to all
shares held by Mr. Diesel.
Compensation Committee
Stanley I. Landgraf, Chairman
Harry Apkarian
Alan P. Goldberg
<PAGE>
Draft dated: 1-27-97
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. Goldberg) and one employee
Director (Mr. Apkarian). Mr. Lawrence A. Shore, formerly a Director of the
Company who was not re-elected at the Company's 1996 Annual Meeting of
Shareholders on May 16, 1996, also served on the Compensation Committee while
he was a member of the Board.
Mr. Shore and Mr. Apkarian are both former Chief Executive Officers of the
Company. Mr. Shore 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.
Mr. Goldberg is Co-Chief Executive Officer of First Albany Companies, Inc.
("FAC") (see "Security Ownership of Certain Beneficial Owners", below).
During fiscal 1996, First Albany Corporation, a wholly-owned subsidiary of
FAC, acted as placement agent in connection with a private placement of
1,333,333 shares of the Company's Common Stock, pursuant to which the Company
raised approximately $1.9 million of additional capital (net of expenses of
the offering), for which First Albany Corporation was paid a fee.
During fiscal 1996, FAC purchased 909,091 shares of the Company's Common
Stock from the New York State Superintendent of Insurance as the court-
ordered liquidator of United Community Insurance Company ("UCIC"). In
connection with this purchase, FAC also acquired certain rights to an
obligation ("Term Loan") due from the same finance company ("FCCC") to whom
the Company is obligated under the Note Payable, due December 31, 1996; at
September 30, 1996, the Note Payable had an outstanding principal balance of
$3.0 million and accrued interest of $1.1 million. FCCC is in default of its
Term Loan to UCIC. FAC, as the owner of the rights to the Term Loan, filed
suit seeking payment. Collateral for the FCCC Term Loan includes the
Company's Note Payable to FCCC. FAC has exercised its rights to the
collateral securing the Term Loan, including the right to obtain payment on
the Note Payable directly from the Company. The Company and FAC have entered
into an agreement dated as of December 27, 1996 under which the Company
issued to FAC 1.0 million shares of Common Stock in full satisfaction
of the Note Payable. On December 27, 1996, the last sale price of the
Company's Common Stock, as reported by NASDAQ, was $2.00 per share.
Until his resignation from such positions in March 1996, 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, formerly a Director of the Company who was not
re-elected at the Company's 1996 Annual Meeting of Shareholders on May 16,
1996, is Chairman of the Board of Lawrence Insurance Group, Inc. (see
"Security Ownership of Certain Beneficial Owners").
<PAGE>
Draft dated: 1-27-97
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 of 10,000 shares; in December 1994, the
Committee awarded Mr. Diesel an additional 25,000 shares under such 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.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG MECHANICAL TECHNOLOGY
INCORPORATED (MTIX), S&P 500 INDEX, AND S&P HIGH TECH COMPOSITE INDEX (1)
S&P
Measurement Period S&P High Tech
(Fiscal Year Covered) MTIX 500 Index Index
- --------------------- ------ --------- ---------
Measurement Pt-9/30/91 $ 100 $ 100 $ 100
FYE 9/30/92 $ 100 $ 111 $ 102
FYE 9/30/93 $ 70 $ 125 $ 123
FYE 9/30/94 $ 3 $ 130 $ 143
FYE 9/30/95 $ 45 $ 169 $ 226
FYE 9/30/96 $ 70 $ 203 $ 277
(1) Assumes that $100 was invested on September 30, 1991 in Mechanical
Technology Inc. Common Stock, the S&P 500 and the S&P High Tech composite
Index, and that all dividends were reinvested.
<PAGE>
Draft dated: 1-27-97
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of December 31, 1996 in respect
of each person known by the Company to be the beneficial owner of more than
5% of its outstanding Common Stock.
Amount of
Beneficial Percent
Name Address Ownership of Class
- ------------------ -------------------- ------------ --------
First Albany 30 South Pearl St. 2,035,698(A) 34.5%
Companies Inc. Albany, N.Y. 12207
Lawrence Insurance 500 Fifth Avenue 820,909(B) 13.9%
Group, Inc. New York, N.Y. 10110
(A) On May 7, 1996, First Albany Companies, Inc. ("FAC") purchased 909,091
shares of the Company's Common Stock previously owned by United Community
Insurance Company ("UCIC", a subsidiary of Lawrence Insurance Group, Inc.
("LIG") which is undergoing a court-ordered liquidation). According to the
Schedule 13D Amendment No. 3, dated May 8, 1996, filed by FAC with respect to
the purchase of these shares, FAC paid $1.50 per share (a total of
$1,363,637) for the shares previously owned by UCIC; also according to FAC's
Schedule 13D Amendment No. 3, the funds for its purchase of the 909,091
shares previously owned by UCIC came from working capital. In addition, in
connection with FAC's purchase of the shares previously owned by UCIC, FAC
was granted an irrevocable proxy to vote those shares at the Company's Annual
Meeting of Shareholders held on May 16, 1996.
The purchase by FAC of the shares previously owned by LIG's UCIC subsidiary,
when combined with shares previously purchased by FAC in open-market
transactions, gave FAC ownership of 1,035,698 shares of the Company's Common
Stock (approximately 29% of the then outstanding shares), and resulted in FAC
becoming the Company's largest shareholder.
At the Company's Annual Shareholders' Meeting held on May 16, 1996 Messrs.
George C. McNamee and Alan P. Goldberg, Co-Chief Executive Officers of FAC,
were elected to the Company's Board of Directors. Incumbent Directors Albert
W. Lawrence and Lawrence A. Shore (who were among the nominees for re-
election to the Board proposed in the Proxy Statement for the Meeting
prepared by the Company's management but whose re-election was opposed by FAC
in its Proxy Statement for solicitation of proxies in opposition to
management's solicitation) were not re-elected to the Board, and accordingly
their terms as Directors of the Company expired at the Meeting; all other
incumbent Directors (i.e., Messrs. R. Wayne Diesel, Harry Apkarian, Stanley
I. Landgraf, and E. Dennis O'Connor), whose re-election was supported by FAC
in its Proxy Statement, were re-elected to the Board.
At its organizational meeting following the Shareholders' Meeting, the newly-
constituted Board elected George C. McNamee as its Chairman, and re-elected
R. Wayne Diesel as President and Chief Executive Officer. In addition, the
<PAGE>
Draft dated: 1-27-97
Board voted to increase the number of Directors from 6 to 7, and elected Dr.
Beno Sternlicht, a co-founder of the Company, to fill the newly-created
position.
As a result of the foregoing share purchases and elections, a change in
control of the Company may be deemed to have occurred.
As discussed more fully under "Compensation Committee Interlocks and Insider
Participation", above, FAC acquired certain rights to the Term Loan due from
FCCC (the finance company to whom the Company is obligated under the Note
Payable), and the Company and FAC have entered into an agreement dated as of
December 27, 1996 under which the Company issued to FAC 1.0 million shares
of Common Stock in full satisfaction of the Note Payable
Messrs. McNamee and Goldberg may be deemed the beneficial owners of at least
a portion of the shares owned by FAC. However, Messrs. McNamee and Goldberg
disclaim such beneficial ownership.
(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 - 349,068 shares;
and Senate Insurance Company - 108,205 shares. 78.6% of the outstanding stock
of URIC is owned by Lawrence Insurance Group, Inc. ("LIG"); the remaining
21.4% is owned by United Community Insurance Company, another subsidiary of
LIG which is under the control of the Superintendent of Insurance of the
State of New York and is undergoing a court ordered liquidation. While the
shares of the Company's Common Stock owned by URIC and its subsidiaries are
still held of record as set forth previously, the SEC Form 10-Q Report of LIG
for the quarter ended March 31, 1996 discloses that LIG disposed of those
shares during that quarter by selling them to Lawrence Group, Inc.; to date,
however, no transfer of such shares on the Company's records has been made,
nor has such a transfer been requested.
According to the April 22, 1996 Proxy Statement of Lawrence Insurance Group,
Inc. for its May 23, 1996 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. The Company understands
that Albert W. Lawrence (formerly 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.
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 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
31, 1996.
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Draft dated: 1-27-97
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(1) Class
------------------- ------------- ----------
Harry Apkarian 288,001(2) 4.9%
Denis P. Chaves 2,600 *
R. Wayne Diesel 35,000(3) *
Alan P. Goldberg 2,097,364(4) 35.6%
Stanley I. Landgraf 1,000 *
Douglas McCauley 8,000(2) *
George C. McNamee 2,135,698(4) 36.2%
E. Dennis O'Connor -0- *
Dr. Beno Sternlicht 126,250(5) 2.1%
Stephen Sullivan 5,000(2) *
Stephen T. Wilson -0- *
All present Directors and 2,663,215(2),(3),(4),(5) 45.1%
Officers as a group (12 persons)
- -------------------------------------
* 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
Messrs. Goldberg and McNamee (see "Security Ownership of Certain Beneficial
Owners," above), Mr. Apkarian, and Dr. Sternlicht 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 45.1%
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, 1,500
shares; Mr. McCauley, 4,000 shares; and Mr. Sullivan, 500 shares. All
present Directors and officers as a group, 6,000 shares.
(3)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.
(4)Includes 2,035,698 shares owned by First Albany Companies Inc.; see
"Security Ownership of Certain Beneficial Owners". However, Messrs. McNamee
and Goldberg disclaim beneficial ownership of such shares.
(5)Does not include 26,650 shares owned by Dr. Sternlicht's wife or 18,150
shares held by Dr. Sternlicht's wife as custodian for their children; Dr.
Sternlicht disclaims beneficial ownership of such shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
<PAGE>
Draft dated: 1-27-97
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, 1996 were complied with.
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,
1996, 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 1998 must be received by the Company
before October 10, 1997, in order to qualify for inclusion in the Company's
Proxy Statement relating to that meeting.
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.
In June 1996 the Board of Directors adopted amendments to the Company's By-
Laws relating to the indemnification of the Company's officers and
Directors against claims asserted against them in their capacities as such.
As amended, the By-Laws require the Company to indemnify its Directors and
officers against such claims to the fullest extent permitted by the New
York Business Corporation Law ("BCL"), obligate the Company to advance such
persons the costs of their defense against such claims, and contain other
provisions designed to ensure for such persons the maximum protection
possible against such claims. Prior to these amendments, the By-Laws
contained only limited indemnity protection for such persons. In addition
to indemnification by the Company under these By-Law provisions, the
Company continues to maintain indemnification insurance covering all
officers and Directors of the Company and its subsidiaries, as permitted by
BCL Section 726. The current policy has an annual premium cost of $88,000,
and is written by Continental Casualty Company and Royal Indemnity Company.
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
March 10, 1997
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