SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 ( Amendment No. )
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ X ] Preliminary proxy statement [ ] Confidential, for Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[ ] 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 ] No fee required.
[ ] 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:
________________________________________________________________________
(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:
_________________________________________________________________________
<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 offices of First Albany Companies, Inc., 30 South Pearl
Street, Albany, New York, 12207 (directions enclosed), on April 15, 1998, at
10:00 A.M. local time (refreshments will be served at 9:15 A.M.) for the
following purposes:
1. Election of Directors;
2. Ratification of the appointment of Coopers & Lybrand L.L.P. as the
auditors of the Company.
3. Approval of the amendment and restatement of the Company's Certificate of
Incorporation.
4. Approval of the restatement of the Company's By-Laws.
5. Such other business as may properly come before the meeting or any
adjournment thereof.
Shareholders of record at the close of business on February 25, 1998 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, 1997, are enclosed.
By Order of the Board of Directors
John Recupero Latham, New York
Secretary March 9, 1998
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
This Proxy Statement, first being mailed to shareholders on approximately
March 9, 1998, is furnished in connection with the solicitation by the Board
of Directors of proxies to be voted at the Annual Meeting of Shareholders of
Mechanical Technology Incorporated to be held on April 15, 1998, and any
adjournment thereof at the offices of First Albany Companies, Inc., 30 South
Pearl Street, Albany, New York.
The shares represented by properly completed proxies received prior to the
vote will be voted FOR 1) the election of directors; 2) ratifying
appointment of auditors; 3) amendment and restatement of the Certificate of
Incorporation; and 4) restatement of the By-Laws, unless specific instructions
to the contrary are given or an abstention from voting is indicated by the
stockholder. The proxy may be revoked any time before it is exercised.
At the close of business on February 25, 1998 the Company had outstanding
5,905,761 shares of Common Stock. Each share of Common Stock entitles the
holder thereof to one vote on the matters to be voted upon by such shareholders.
A majority of the outstanding shares, present in person or by proxy, will
constitute a quorum at the meeting. Abstentions and broker non-votes are
counted for purposes of determining whether a quorum is present. A plurality
vote is required for the election of Directors. Accordingly, abstentions and
broker non-votes will not affect the outcome of the election of Directors.
Votes will be tabulated by inspectors of election appointed in accordance with
the applicable provisions of the New York Business Corporation Law.
ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, eight Directors are to be elected, each
to hold office until the expiration of his or her term and until a successor
shall be elected and qualify. Three Directors shall serve a three year term,
two Directors shall serve a two year term and three Directors shall serve a
one year term.
Alan Goldberg, Walter Robb and Beno Sternlicht are nominated to serve three
year terms; Dale Church and Edward Dohring are nominated to serve two year
terms; and George McNamee, Dennis O'Connor and Martin Mastroianni are nominated
to serve one year terms. Management's nominees for Directors, together with
certain information concerning them, are on the following pages. 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.
All eight nominees are presently serving as Directors of the Company. R.
Wayne Diesel, who has resigned as an officer of the Company, will not stand
for re-election to the Board of Directors.
<PAGE>
CERTAIN INFORMATION REGARDING NOMINEES
Mr. Church, 58, a Director since 1997, has practiced law in private practice,
government, and corporate environments for over 30 years with specialties in
U.S. and international government contracting, developing companies, mergers
and acquisitions, and joint ventures. He is currently the CEO of Ventures &
Solutions LLC, a Trustee of the National Security Industrial Association and
is a director of various private corporations. He has served as general
Counsel to the American Electronics Association. His previous experience
includes working for the U.S. government's Central Intelligence Agency and
Department of Defense and as corporate counsel to establish several companies
in the "Silicon Valley" of California.
Mr. Dohring, 64, a Director since 1997, has been Vice President of Silicon
Valley Group, Inc. ("SVG") since July 1992 and President of its SVG
Lithography Systems, Inc. unit since October 1994. From June 1992 to October
1994, he served as President of SVG's Track Systems Division. He joined SVG
from Rochester Instrument Systems, Inc., where he served as President from
April 1989 to June 1992. He has also held management positions with General
Signal, CVC Products, Bendix, Bell & Howell and Veeco Instruments.
Mr. Goldberg, 52, a Director since 1996, 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, and a Director of the Center for
Economic Growth and the Albany Symphony Orchestra.
Mr. McNamee, 51, a Director since 1996, 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 of Directors of MapInfo Corporation, The Meta Group, Inc., and Internet
Shopping Network, Inc. He also serves on the Board of Directors of the New
York State Science and Technology Foundation, and is Chairman of the Regional
Firms Advisory Committee to the Board of the New York Stock Exchange.
Dr. Mastroianni, 53, a Director since 1997, was elected President and Chief
Operating Officer of the Company in December 1996. Prior to joining the Company,
he served most recently as a Director of Transmission Power Delivery for the
Electric Power Research Institute, where he was employed since 1992. Previously,
from 1973 to 1992, he held senior management positions in the technology driven
test and measurement industries with Vacuum Components, Inc., Tenney
Engineering, Inland Vacuum Industries, Halocarbon Products, Inc., and Allied
Signal Corporation.
Mr. O'Connor, 58, a Director since 1993, is a registered patent attorney and
has, since April 1984, been the Director of New Products and Technology for
Masco Corporation, Taylor, Michigan, a diversified manufacturer of building
and home improvement, and other specialty products for the home and family.
He is a director of various private corporations. Mr. O'Connor originally
became a Director of the Company when he 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 in which Masco sold 1,730,000
shares of the Company's Common Stock to subsidiaries of the Lawrence Insurance
Group, Inc., a former majority shareholder of the Company. 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 remained
liable under a guarantee it had executed in connection with the Company's
<PAGE>
obligations under a line of credit.
Dr. Robb, 69, a Director since 1997, now a management consultant and
President of Vantage Management, Inc., was until December 31, 1992, General
Electric Company's("GE") Senior Vice President for corporate research and
development. He directed the GE Research and Development Center, one of the
world's largest and most diversified industrial laboratories, and served on
GE's Corporate Executive Council. He serves on the Board of Directors of
Marquette Medical Systems, Cree Research, Celgene and Neopath. He also
serves on the Advisory Council of the Critical Technology Institute and on
the Council of the National Academy of Engineering.
Dr. Sternlicht, 69, a Director since 1996, 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 held a number of
positions with the Company. At the time of his departure from the Company,
he served as Vice Chairman of the Board of Directors and Technical Director.
Management recommends that you vote FOR election of the eight nominees listed
above as Directors of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held nine (9) meetings during fiscal 1997. All
Directors attended at least 75% of all meetings of the Board, and of all
Board committees on which they serve, held during fiscal 1997.
The Company's Board of Directors has established Audit, Compensation and
Nominating Committees. The Audit Committee (consisting of Messrs. O'Connor,
Church and Goldberg) reviews with the independent auditors the plan and results
of the auditing engagement, the auditors' assessment of internal accounting
controls; and it also recommends the appointment of the public auditors
to the Board of Directors. One Audit Committee meeting was held during fiscal
1997. The Compensation Committee (consisting of Messrs. Apkarian, Landgraf and
Goldberg until April 16, 1997, and thereafter consisting of Mr. Goldberg and Dr.
Sternlicht) determines compensation and bonuses for officers and employee
Directors. One Compensation Committee meeting was held during fiscal 1997. The
Nominating Committee (consisting of Messrs. Goldberg, McNamee and Diesel) seeks
out and interviews qualified candidates for consideration as potential
Directors, and recommends candidates for election and to fill interim vacancies.
At the present time, the Nominating Committee has not established any procedures
for consideration of director-candidates submitted by shareholders. One
Nominating Committee meeting was held during fiscal 1997.
APPROVAL OF AUDITORS
The Board of Directors has recommended that the appointment of Coopers &
Lybrand L.L.P. as independent auditors for the year ending September 30, 1998
be ratified by the stockholders. Coopers & Lybrand L.L.P. have been the
Company's auditors since 1978. Representatives of Coopers & Lybrand L.L.P.
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 auditors.
<PAGE>
APPROVAL OF AMENDMENT AND RESTATEMENT OF THE
COMPANY'S CERTIFICATE OF INCORPORATION
In 1997, the New York State legislature revised the New York Business
Corporation Law. The Board of Directors has therefore approved, subject to
shareholder approval, amendment of the Company's Certificate of Incorporation
to include certain standard provisions that are now required by the New York
Business Corporation Law, provide for a classified board and staggered election
of Directors, provide for indemnification of the Company's Directors and
officers, and limit the personal liability of the Company's Directors, to the
fullest extent permitted by the New York Business Corporation Law. For purposes
of clarity and cohesiveness, the Board of Directors has approved, subject to
shareholder approval, the restatement of the Company's Certificate of
Incorporation, which restatement shall include, the foregoing amendments. As
so amended and restated, the Company's Certificate of Incorporation would read
as set forth on Exhibit A hereto.
Certain provisions of the Amended and Restated Certificate of Incorporation and
the Amended and Restated By-Laws of the Company could, together or separately,
discourage potential acquisition proposals or delay or prevent a change in
control of the Company. These provisions include a classified Board of
Directors, staggered election of Directors and super majority approval for the
removal of a Director.
Amendments to the Company's By-Laws creating a classified board, requiring
staggered election of Directors, and requiring super majority voting for the
removal of a Director became effective as of February 23, 1998. The
amendment and restatement of the Company's Certificate of Incorporation, if
approved by shareholders, will become effective when filed with the Secretary of
State of the State of New York. Accordingly, at the Annual Meeting of
Shareholders on April 15, 1998, three directors will be elected to serve a
three year term, two directors will be elected to serve a two year term and
three directors will be elected to serve a one year term. Directors will serve
until the expiration of his or her term and until their successors shall be
elected and shall qualify.
The Board of Directors recommends that shareholders vote FOR the amendment
and restatement of the Company's Certificate of Incorporation.
APPROVAL OF RESTATEMENT OF
OF THE COMPANY'S BY-LAWS
The Board of Directors amended of the By-Laws of the Company to incorporate the
most recent amendments to the New York Business Corporation Law, and update the
By-Laws such that they are consistent with the By-Laws of companies in like-
industries, effective February 23, 1998. For purposes of clarity and
cohesiveness, the Board of Directors has approved, subject to Shareholder
approval, the restatement of the Company's By-Laws, which restatement shall
include, the foregoing amendments. As so amended and restated, the Company's
By-Laws would read as set forth on Exhibit B hereto.
The Board of Directors recommends that shareholders vote FOR the restatement
of the Company's By-Laws.
<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, 1997 (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.
<PAGE>
<TABLE>
========================================================================================================
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NAME AND POSITION OF FISCAL SALARY BONUS OTHER RESTRICT- SECURITIES ALL
PRINCIPAL YEAR ANNUAL ED UNDER- OTHER
COMP STOCK LYING COMP
AWARDS OPTIONS
(1) (#)
- --------------------------------------------------------------------------------------------------------
R. Wayne Diesel 1997 $200,000 $15,000 - None 35,100 $6,605
CEO (2)
- --------------------------------------------------------------------------------------------------------
1996 $200,000 None - None None $8,000
(2)
- --------------------------------------------------------------------------------------------------------
1995 $190,764 None - 12,500 None $4,452
(2)
- --------------------------------------------------------------------------------------------------------
Martin J. Mastroianni, President 1997 $121,154 None - None 150,100 $-
& COO (3)
- --------------------------------------------------------------------------------------------------------
Stephen Sullivan, President, 1997 $62,828 None - None None $16,615
Ling Electronics, Inc. (2)(4)
- --------------------------------------------------------------------------------------------------------
1996 $130,310 None - None None $4,840
(2)
- --------------------------------------------------------------------------------------------------------
1995 $139,617 None - None None $5,306
(2)
- --------------------------------------------------------------------------------------------------------
James Clemens, Vice President, 1997 $57,501 None - None 30,000 $32,123
Ling Electronics, Inc. (5) (2)(6)
- --------------------------------------------------------------------------------------------------------
Douglas McCauley, Vice 1997 $115,000 $7,000 - None 15,100 $4,158
President, Technology Group (2)
- --------------------------------------------------------------------------------------------------------
1996 $110,807 $7,500 - None None None
- --------------------------------------------------------------------------------------------------------
1995 $100,152 $5,000 - 625 None $1,669
(2)
- --------------------------------------------------------------------------------------------------------
Stephen T. Wilson, Chief 1997 $110,000 $10,000 - None 10,100 $3,594
Financial Officer (2)
- --------------------------------------------------------------------------------------------------------
1996 $107,903 $10,000 - None None $2,620
(2)
- --------------------------------------------------------------------------------------------------------
1995 $60,846 None - None None $-
- --------------------------------------------------------------------------------------------------------
Denis P. Chaves, Vice President, 1997 $120,673 $37,000 - None 25,100 $4,233
LAB and Advanced Products (2)
- --------------------------------------------------------------------------------------------------------
1996 $99,167 $37,000 - None None $3,966
(2)
- --------------------------------------------------------------------------------------------------------
<PAGE>
1995 $95,000 $10,000 - 625 None $3,800
(2)
- --------------------------------------------------------------------------------------------------------
</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,
1997 (based on a price on that date of $3.47 per share) by the individuals
listed in this table, including the awards shown in this column, are: Mr.
Sullivan, 500 shares/$1,735; Mr. McCauley, 3,500 shares/$12,145. 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 and 500
shares held by Mr. Sullivan 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.
(3) Dr. Mastroianni replaced Mr. Diesel as President and became Chief Operating
Officer of the Company on December 20, 1996.
(4) Represents payout of vacation pay in lieu of time off.
(5) Mr. Clemens replaced Mr. Sullivan as president of Ling Electronics, Inc.
on March 24, 1997.
(6) Includes a $30,000 loan by the Company to Mr. Clemens. The loan is
repayable in three equal annual installments of $10,000 plus interest at the
rate of 6.5%. The Company has agreed to pay Mr. Clemens an annual bonus equal
to the principal plus interest due on the promissory note, if Mr. Clemens
continues to be employed by the Company on March 24 of 1998, 1999 and 2000,
respectively. The Company also agreed to repay the note in full if Mr. Clemens
dies or becomes permanently disabled prior to the due date of the final payment
on the note.
The following table sets forth information concerning the grant of stock
options during the Company's fiscal year ended September 30, 1997 to each
person who served as Chief Executive Officer during such year, and all other
persons who served as executive officers of the Company during such year
whose total annual compensation exceeded $100,000.
<PAGE>
OPTION GRANTS IN FISCAL 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable
Value at Assumed
Number of Percentage Annual Rates of
Shares of Total Stock Price
Underlying Options Exercise Appreciation for
Options Granted to Price Expiration Option Term
Name Granted Employees (per share) Date 5%($) 10%($)
- ---- ------- --------- ----------- ---- ----- ------
R. Wayne Diesel 35,000(1) 9.14% $3.44 06/30/00 $17,305 $36,180
100(2) 0.03% $2.44 12/20/06 $153 $389
Martin J. Mastroianni 30,000(3) 7.83% $2.44 12/20/06 $46,035 $116,662
100(2) 0.03% $2.44 12/20/06 $153 $389
120,000(3) 31.32% $2.50 07/15/07 $188,668 $478,123
James Clemens 15,000(4) 3.92% $3.44 08/27/07 $32,451 $82,237
15,000(5) 3.92% $2.44 03/24/07 $23,018 $58,331
Douglas McCauley 15,000(4) 3.92% $3.44 08/27/07 $32,451 $82,237
100(2) 0.03% $2.44 12/20/06 $153 $389
Stephen T. Wilson 10,000(6) 2.61% $3.44 12/20/99 $3,947 $8,148
100(2) 0.03% $2.44 12/20/06 $153 $389
Denis P. Chaves 25,000(7) 6.53% $3.44 08/27/07 $54,085 $137,062
100(2) 0.03% $2.44 12/20/06 $153 $389
</TABLE>
- -----------------------
(1) Options may be exercised until June 30, 2000.
(2) Options may be exercised after December 20, 1997 and prior to December 20,
1999.
(3) Dr. Mastroianni was originally granted qualified options for 150,000 shares;
30,000 of which vested 6,000 per year for each of five years and 120,000 of
which vested upon attainment of certain defined profit targets. As of July 15,
1997, Dr. Mastroianni's option agreement was amended to provide that Dr.
Mastroianni will receive a total of 150,000 qualified stock options that will
vest as follows: a) 30,000 will vest 20% per year commencing as of December
20, 1996; (b) 30,000 will vest at the rate of 33-1/3% per year beginning as of
July 15, 1997; c) 90,000 will vest, if certain profit targets are attained, at
the rate of 20,000 per year, for each of three years, commencing as of July 15,
1997, and 30,000 as of September 30, 2000.
(4) 25% or 3,750 shares are exercisable each year beginning on August 27, 1998.
(5) Options will vest and may be exercised based upon the attainment of certain
defined annual profit targets.
(6) Options may be exercised after December 20, 1997 and prior to December
20, 1999.
(7) 25% or 6,250 shares are exercisable each year beginning on August 27, 1998.
<PAGE>
<TABLE>
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
Value of
Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options at
Options at Fiscal Year Fiscal Year
End (#) End ($)
------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares
Acquired Value
on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----- ----------- ------------- ----------- -------------
R. Wayne Diesel 0 0 35,000 100 $1,050 $103
Martin J. Mastroianni 0 0 36,000 114,100 $25,580 $121,823
James Clemens 0 0 0 30,000 0 $15,900
Douglas McCauley 0 0 0 15,100 0 $553
Stephen T. Wilson 0 0 0 10,100 0 $403
Denis P. Chaves 0 0 0 25,100 0 $853
</TABLE>
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 that are primarily designed to reward
performance.
For the fiscal year 1997, the Committee used the following criteria in
making compensation decisions for executive officers:
* Company and individual affiliate financial performance.
* Identification and implementation of strategies and programs
that result in increased revenue, decreased cost or improved
share value.
* Implementation of programs to improve working capital
and cash flow, and to focus the Company's product
offerings such that they compliment the Company's
technology resources.
CHIEF EXECUTIVE OFFICER COMPENSATION. Effective July 1, 1997, Mr.
Diesel resigned as Chief Executive Officer and became special assistant
to the chairman of the Board of Directors. Effective June 30, 1998,
Mr. Diesel will resign from his position as special assistant. The office of
Chief Executive Officer was eliminated as of February 23, 1998. Mr. Diesel
was Chief Executive Officer from February 1994 to July 1997 and President from
February 1994 to December 1996. Mr. Diesel's compensation package reflected his
experience and expertise; the size, diversity and needs of the business; and
compensation levels at companies of comparable size and industry. For the period
<PAGE>
October 1, 1994 through September 30, 1997, Mr. Diesel's base salary of $200,000
did not change. In fiscal 1997, Mr. Diesel was awarded a bonus of $15,000. In
November 1996 restrictions on 23,000 shares of restricted stock held by Mr.
Diesel were removed. In addition, on August 27, 1997, Mr. Diesel was awarded
35,000 non-qualified options for the Company's common stock. The stock award
and bonus were based on Mr. Diesel's service to the Company and the Company's
improved financial condition. (see "Employment Agreements" in the section
entitled "Certain Relationships and Related Transactions", below).
Effective December 20, 1996, Dr. Martin Mastroianni replaced Mr. Diesel
as President and became Chief Operating Officer of the Company.
Dr. Mastroianni was recruited from outside the Company. His
compensation package includes an annual base salary of $150,000; the
potential for cash incentive bonuses based on performance; and option
grants under the Company's Incentive Stock Option Plan. For the period
December 20, 1996 through September 30, 1997, there were no changes to
Dr. Mastroianni's annual compensation of $150,000. A cash incentive
bonus of $50,000 was accrued but not paid as of September 30, 1997.
Dr. Mastroianni was, however, awarded qualified options for 30,000
shares, plus an additional 120,000 shares if certain performance
targets were met, at an exercise price of $2.44 per share. The award
was amended on July 15, 1997, to (1) redefine the profit targets; (2)
reprice the exercise price for the 120,000 shares at $2.50 per share;
and (3) permit vesting of 30,000 of the 120,000 shares based on the
Company's performance in fiscal 1997.
Compensation Committee
Mr. Alan P. Goldberg
Dr. Beno Sternlicht
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee ("Committee") approves all of the policies
under which compensation is paid or awarded to the Company's officers
and employee Directors. The Committee, in fiscal 1997, consisted of
Messrs. Goldberg, Landgraf and Apkarian, until April 16, 1997, and
thereafter consisted of Mr. Goldberg and Dr. Sternlicht.
Mr. Goldberg is Co-Chief Executive Officer of First Albany Companies,
Inc. ("FAC"). (See "Security Ownership of Certain Beneficial Owners"
in the section entitled "Additional Information" and "Certain
Relationship and Related Transactions", below).
Mr. Apkarian is a former Chief Executive Officer of the Company.
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 his position in August 1993. Mr. Apkarian has not
served on the Board or the Compensation Committee since April 1997.
Mr. Apkarian did not vote on matters pertaining to his own
compensation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At September 30, 1997, First Albany Companies, Inc. ("FAC") owned
approximately 32.3% of the Company's Common Stock.
<PAGE>
During fiscal 1997, First Albany Corporation, a wholly owned subsidiary
of FAC, provided financial advisory services in connection with the
sale of the L.A.B. Division, for which First Albany Corporation was
paid a $75,000 fee. During fiscal 1997, the Company and FAC 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 to FAC by First Commercial Credit
Corporation ("FCCC"), thereby extinguishing the Company's indebtedness
to FCCC under that certain Note Payable, due December 31, 1996 ("Note
Payable"); at December 27, 1996, the Note Payable to FCCC had an
outstanding principal balance of $3.0 million and accrued interest of
$1.1 million. On December 27, 1996, the last sale price of the
Company's Common Stock, as quoted on the OTC Bulletin Board, was $2.00
per share.
EMPLOYMENT AGREEMENTS
The Company had an employment agreement with Mr. Diesel which provided
that Mr. Diesel would receive an annual base salary of $200,000 and was
eligible to receive incentive compensation. This agreement expired in
February 1997. 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. In addition, on August 27,
1997 the Company awarded Mr. Diesel 35,000 options for shares, pursuant
to the Company's Incentive Stock Option Plan. Effective December 20,
1996, Mr. Diesel resigned as President of the Company. On December 19,
1997, the Company entered into an agreement with Mr. Diesel regarding
termination of his employment. The agreement provides that Mr. Diesel
will receive: a) total salary payments from the Company of $42,308, b)
401k matching payments of $4,615; c) insurance benefits through
December 31, 1997; d) a lump sum severance payment of $95,615; and e)
vesting of the 35,000 non-qualified stock options awarded to Mr. Diesel
on August 27, 1997.
The Company has an agreement with Dr. Mastroianni which provides that
Dr. Mastroianni will receive an annual base salary of $150,000 and be
eligible for incentive compensation and incentive stock options. The
agreement also states that if Dr. Mastroianni is removed from the
position of President 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. Per this agreement,
Dr. Mastroianni was awarded initial stock options under the Company's
Incentive Stock Option Plan for 30,000 shares plus up to 120,000
additional shares, based upon achievement of certain defined profit
targets for fiscal 1997. In July 1997, Dr. Mastroianni's Option
Agreement was amended to vest Dr. Mastroianni in an additional 30,000
shares, change the defined profit targets for the remaining 90,000
shares, and change the exercise price for the full 120,000 shares.
(See "Option Grants in Fiscal Year 1997" in the section entitled
"Executive Compensation", above).
The Company also entered into an agreement with Mr. James Clemens,
President of Ling Electronics, Inc. ("Ling"). The agreement provides
that Mr. Clemens' annual base salary will be $115,000, subject to
adjustment by the Committee, from time to time. In addition, Mr.
Clemens is eligible to receive incentive compensation of 3% of annual
pre-tax income of Ling up to $1,000,000, and 2% of annual pre-tax
<PAGE>
income of Ling in excess of $1,000,000. The agreement also grants Mr.
Clemens non-qualified stock options for 15,000 shares of the Company's
common stock. (See "Option Grants in Fiscal Year 1997" in the section
entitled "Executive Compensation, above). In addition, the Company
agreed to advance Mr. Clemens $30,000 pursuant to a promissory note,
payable in three annual installments of $10,000 plus interest at the
rate of 6.5%. The Company agreed to award Mr. Clemens an annual bonus
equivalent to the payments due on the note if Mr. Clemens is still
employed by the Company on March 24, 1998, 1999 and 2000, respectively.
If Mr. Clemens dies or is disabled prior to the due date of the note,
the full amount due on the note will be bonused to Mr. Clemens.
The Company also had an agreement with Mr. Apkarian. This agreement
provided that Mr. Apkarian would continue as an employee and a Director
of the Company at an annual salary of $130,000. The agreement also
provided an annual bonus of $10,000 which he would use to purchase
$250,000 of term life insurance. In addition, the agreement provided
for the payment of club dues and the use of a Company automobile for
which Mr. Apkarian paid 50% of the lease payments. As the result of
Mr. Apkarian's retirement on September 30, 1997, all obligations
pursuant to this agreement have terminated, however, the Company is
required to continue to pay 50% of Mr. Apkarian's lease payments on his
automobile until June 1998, at which time the Company will purchase the
automobile and give it to Mr. Apkarian.
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 TOTAL RETURN
AMONG MECHANICAL TECHNOLOGY INCORPORATED, THE S&P 500 INDEX
AND THE S&P TECHNOLOGY SECTOR INDEX (1)
S&P
Measurement Period S&P Technology
(Fiscal Year Covered) MKTY 500 Index Sector Index
- ---------------------- ---- --------- ------------
Measurement Pt-9/30/92 100 100 100
FYE 9/30/93 70 113 121
FYE 9/30/94 3 117 140
FYE 9/30/95 45 152 222
FYE 9/30/96 70 183 272
FYE 9/30/97 140 257 442
(1) Assumes that $100 was invested on September 30, 1992 in Mechanical
Technology Incorporated Common Stock, the S&P 500, and the S&P
Technology Sector Index, and that all dividends were reinvested.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
First Albany Companies, Inc. ("FAC"), 30 South Pearl Street, Albany, New York,
12207, are the beneficial owners of 2,035,698 shares, or 34.5%, of the
outstanding common stock of the Company. Messrs. McNamee and Goldberg may be
deemed the beneficial owners of at least a portion of the shares owned by FAC.
Messrs. McNamee and Goldberg disclaim such beneficial ownership. As discussed
more fully under "Certain Relationships and Related Transactions", above, FAC
acquired certain rights to a term loan due from FCCC (the finance company to
whom the Company was obligated under the Note Payable). Pursuant to an
agreement between FAC and the Company, dated December 27, 1996, the Company
issued 1.0 million shares of common stock of the Company to FAC, in full
satisfaction of the Note Payable.
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 shareholders
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 does not believe
that all SEC filing requirements applicable to its Directors and Officers with
respect to the Company's fiscal year ended September 30, 1997 were complied
with.
The Company believes that Dale Church and Beno Sternlicht, each a Director of
the Company, and Martin Mastroianni, a Director, President and Chief Operating
Officer of the Company, each failed to file one Section 16(a) form in a timely
manner. Each late filing set forth above was filed electronically in a
timely manner, however the electronic filings were rejected and the hard copy
filings, when made, were late. Mr. Church's and Dr. Mastroianni's form
reported one transaction. Dr. Sternlicht's form reported two transactions.
The Company further believes that the Lawrence Insurance Group, Inc. failed to
file at least one Section 16(a) form, reporting at least one transaction.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 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", (iii) all present Directors and
Officers of the Company as a group, and (iv) each person who is known
to the registrant to be the beneficial owner of more than 5% of any
class of the registrant securities as of February 12, 1998.
<PAGE>
Name of Amount and Nature of Percent of
Beneneficial Owner Beneficial Ownership(1)(2) Class
------------------ -------------------------- ----------
Denis P. Chaves 27,700(3) *
Dale W. Church 50,000(4) *
James R. Clemens 30,000(5) *
R. Wayne Diesel 70,200(6) 1.2%
Edward A. Dohring 15,000(4) *
Alan P. Goldberg 2,165,773(7) 36.7%
Douglas McCauley 15,100(8) *
George C. McNamee 2,245,698(7)(9) 38.0%
Martin J. Mastroianni 170,100(10) 2.9%
E. Dennis O'Connor 40,000 *
Dr. Walter L. Robb 24,500(4) *
Dr. Beno Sternlicht 273,050(4)(11) 4.6%
Stephen Sullivan 1,000(2) *
Stephen T. Wilson 10,100(12) *
All present Directors and
Officers as a group (12 persons) 3,091,423 52.3%
- ----------------------------
* 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, Dr. Mastroianni, Mr. Church and Dr. Sternlicht (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 52.3% 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. McCauley, 3,500 shares;
and Mr. Sullivan, 500 shares. All present Directors and Officers as a group,
3,500 shares.
(3) Includes an option for 25,000 shares granted on August 27, 1997 and an
option for 100 shares granted on December 20, 1996.
(4) Includes an option for 10,000 shares granted on April 16, 1997.
(5) Includes an option for 15,000 shares granted on August 27, 1997 and an
option for 15,000 shares granted on March 24, 1997.
(6) Includes 100 shares held by Mr. Diesel's wife as custodian for their minor
child; Mr. Diesel disclaims beneficial ownership of such shares. Includes an
option for 35,000 shares granted on August 27, 1997 and an option for 100 shares
granted on December 20, 1996.
(7) 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.
<PAGE>
(8) Includes an option for 15,000 shares granted on August 27, 1997 and an
option for 100 shares granted on December 20, 1996.
(9) Includes 10,000 shares owned by Mr. McNamee's wife. Mr. McNamee disclaims
beneficial ownership of such shares.
(10) Includes an option for up to 150,000 shares granted on December 20, 1996
as amended on July 15, 1997, and an option for 100 shares granted on December
20, 1996.
(11) Includes 26,650 shares owned by Dr. Sternlicht's wife and 10,150 shares
held by Dr. Sternlicht's wife as custodian for their children; Dr. Sternlicht
disclaims beneficial ownership of such shares.
(12) Includes an option for 10,000 shares granted on August 27, 1997 and an
option for 100 shares granted on December 20, 1996.
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,
1997, 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 1999 must be received by the Company before
October 6, 1998 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.
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 9, 1998
<PAGE>
Appendix A - 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 ITEMS 2, 3 or 4, THE PROXY WILL BE VOTED FOR THOSE
PROPOSALS.
The undersigned hereby appoints George C. McNamee and Alan Goldberg, or either
of them, as proxies to vote all the stock of the undersigned with all the powers
which the undersigned would possess if personally present at the Annual Meeting
of the Shareholders of Mechanical Technology Incorporated, to be held at the
offices of First Albany Companies Inc., 30 South Pearl Street, Albany, New York,
at 10:00 a.m. on April 15, 1998, 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.
One Year Term Two Year Term Three Year Term
_____________ _____________ _______________
Dr. Martin Mastroianni Dale W. Church Alan P. Goldberg
George C. McNamee Edward A. Dohring Dr. Walter L. Robb
E. Dennis O'Connor Dr. Beno Sternlicht
2.PROPOSAL TO APPROVE THE REAPPOINTMENT OF COOPERS & LYBRAND L.L.P. AS AUDITORS.
FOR ___ AGAINST ___ ABSTAIN ___
3.PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF
INCORPORATION.
FOR ___ AGAINST ___ ABSTAIN ___
4.PROPOSAL TO APPROVE THE RESTATEMENT OF THE BY-LAWS.
FOR ___ AGAINST ___ ABSTAIN ___
IN THEIR DISCRETION, UPON ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
MEETING.
Date,______________ 1998 __________________________________________________
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 ___
<PAGE>
EXHIBIT 1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MECHANICAL TECHNOLOGY INCORPORATED
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
The undersigned, being the President and the Secretary of MECHANICAL
TECHNOLOGY INCORPORATED, pursuant to Section 807 of the Business Corporation
law of the State of New York, do hereby restate, certify and set forth:
1. The name of the corporation is MECHANICAL TECHNOLOGY INCORPORATED.
2. The certificate of incorporation of the corporation was filed by
the Department of State on the 4th day of October, 1961.
3. The certificate of incorporation of the corporation, as amended
heretofore, is hereby further amended to effect the following amendment
authorized by the Business Corporation Law:
a. To amend the certificate of incorporation to add the
following provision regarding the location of the principal office
of the corporation as follows:
The principal office of the corporation shall be at such
place within the state of New York, county of Albany, or such
other place within the State of New York as the Board of Directors
shall determine from time to time.
b. To further amend the certificate of incorporation to add the
following provision regarding designation of an agent of the
corporation for purposes of service of process:
The Secretary of State is designated as agent of the
corporation upon whom process against it may be served. The post
office address to which the Secretary of State shall mail a copy
of any process against the corporation served upon him is: 968
Albany-Shaker Road, Latham, New York 12110.
c. To further amend the certificate of incorporation to restate
the purpose of the corporation as follows:
The purposes for which it is formed are: To engage in any
lawful act or activity for which corporations may be organized
under the New York Business Corporation Law.
d. To further amend the certificate of incorporation to add the
following provision to provide for a classified board and staggered
election of directors:
The number of directors constituting the entire Board shall be
not less than three nor more than nine as fixed from time to time
by vote of a majority of the entire Board, provided, however, that
the number of directors shall not be reduced so as to shorten the
term of any director at the time in office, and provided further,
<PAGE>
that the number of directors constituting the entire Board shall
be eight until otherwise fixed by a majority of the entire Board.
The Board of Directors shall be divided into three classes, as nearly
equal in numbers as the then total number of directors constituting
the entire Board permits with the term of office of one class
expiring each year. At the annual meeting of stockholders in April
1998, three directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, two directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and three directors
of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies
in the Board of Directors for any reason, and any directorships
resulting from any increase in the number of directors, may be
filled by the Board of Directors, acting by a majority of the
directors then in office, although less than a quorum, and any
directors so chosen shall hold office until the next election of
the class for which such directors shall have been chosen and
until their successors shall be elected and qualified. Subject
to the foregoing, at each annual meeting of stockholders the
successors to the class of directors whose term shall then expire
shall be elected to hold office for a term expiring at the third
succeeding annual meeting.
Notwithstanding any other provision of this Certificate of Incorporation
or the By-Laws of the corporation (and notwithstanding the fact that
some lesser percentage may be specified by law, this Certificate of
Incorporation or the By-Laws of the corporation), any director or the
entire Board of Directors of the corporation may be removed at any
time, but only for cause or after the affirmative vote of the
holders of 75% or more of the outstanding shares of stock entitled
to vote for the election of directors at a meeting called for that
purpose or after the affirmative vote of 75% of the entire Board.
e. To further amend the certificate of incorporation to add the
following provision regarding indemnification of the officers and
directors of the corporation:
The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, proceeding or suit
(including one by or in the right of the corporation to
procure a judgment in its favor), whether civil or criminal,
by reason of the fact that he, his testator or intestate is
or was a director or officer of the corporation, or is or was
serving any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any
capacity at the request of the corporation, against
judgments, fines, amounts paid in settlement and expenses,
including attorneys' fees, actually incurred as a result of
or in connection with any such action, proceeding or suit, or
any appeal therefrom, if such director or officer acted in
good faith for a purpose which he reasonably believed to be
in or not opposed to the best interests of the corporation
and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful;
provided, however, that no indemnification shall be made to
or on behalf of any director or officer if a judgment or
other final adjudication adverse to the director or officer
<PAGE>
establishes that his acts were committed in bad faith or were
the result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or that he
personally gained a financial profit or other advantage to
which he was not legally entitled.
f. To further amend the certificate of incorporation to add the
following provision regarding personal liability of the directors
of the corporation:
Directors of the corporation shall not be personally liable
to the corporation or its shareholders for any breach of duty
in such capacity; provided, however, that this provision
shall not operate so as to eliminate or limit (i) the
liability of any director if a judgment or other final
adjudication adverse to him establishes that his acts or
omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that he
personally gained in fact a financial profit or other
advantage to which he was not legally entitled or that his
acts violated Section 719 of the New York Business
Corporation Law, or (ii) the liability of any director for
any act or omission prior to the date on which this Article
became effective.
4. The amendment effected by Paragraph 3 of this Restated Certificate
of Incorporation and the restatement of the corporation's certificate of
incorporation set forth in Paragraph 4 of this Restated Certificate of
Incorporation were authorized by the affirmative vote of a majority of the
Board of Directors of the corporation, followed by the affirmative vote of
the holders of a majority of all outstanding shares of the corporation's
common stock entitled to vote at a meeting of shareholders.
5. The text of the certificate of incorporation of the corporation is
hereby restated, as amended hereby, to read as herein set forth in full:
FIRST: The name of the corporation is MECHANICAL TECHNOLOGY
INCORPORATED.
SECOND: The purposes for which it is formed are: To engage in any
lawful act or activity for which corporations may be organized under the New
York Business Corporation Law.
THIRD: The principal office of the corporation shall be at such place
within the state of New York, county of Albany, or such other place as the
Board of Directors shall determine from time to time.
FOURTH: The aggregate number of shares which the corporation shall
have authority to issue shall be Fifteen Million (15,000,000) shares, par
value $1.00 per share.
FIFTH: The number of directors constituting the entire Board shall
be not less than three nor more than nine as fixed from time to time by vote
of a majority of the entire Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any director at
the time in office, and provided further, that the number of directors
constituting the entire Board shall be eight until otherwise fixed by a majority
of the entire Board. The Board of Directors shall be divided into three classes,
as nearly equal in numbers as the then total number of directors constituting
<PAGE>
the entire Board permits with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1998, three directors of
the first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, two directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting and
three directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. Any vacancies in the Board of
Directors for any reason, and any directorships resulting from any increase in
the number of directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum, and any
directors so chosen shall hold office until the next election of the class for
which such directors shall have been chosen and until their successors shall be
elected and qualified. Subject to the foregoing, at each annual meeting of
stockholders the successors to the class of directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting.
Notwithstanding any other provision of this Certificate of Incorporation
or the By-Laws of the corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, this Certificate of Incorporation or the
By-Laws of the corporation), any director or the entire Board of Directors of
the corporation may be removed at any time, but only for cause or after
the affirmative vote of the holders of 75% or more of the outstanding shares
of stock entitled to vote for the election of directors at a meeting called
for that purpose or after the affirmative vote of 75% of the entire Board.
SIXTH: The Secretary of State is designated as agent of the
corporation upon whom process against it may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the corporation served upon him is: 968 Albany-Shaker Road, Latham,
New York 12110.
SEVENTH: The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, proceeding or suit (including one by or in the right of
the corporation to procure a judgment in its favor), whether civil or
criminal, by reason of the fact that he, his testator or intestate is or was
a director or officer of the corporation, or is or was serving any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity at the request of the corporation, against
judgments, fines, amounts paid in settlement and expenses, including
attorneys' fees, actually incurred as a result of or in connection with any
such action, proceeding or suit, or any appeal therefrom, if such director
or officer acted in good faith for a purpose which he reasonably believed to
be in or not opposed to the best interests of the corporation and, in
criminal actions or proceedings, in addition, had no reasonable cause to
believe that his conduct was unlawful; provided, however, that no
indemnification shall be made to or on behalf of any director or officer if
a judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained a financial profit or other
advantage to which he was not legally entitled.
EIGHTH: Directors of the corporation shall not be personally liable
to the corporation or its shareholders for any breach of duty in such
capacity; provided, however, that this provision shall not operate so as to
eliminate or limit (i) the liability of any director if a judgment or other
final adjudication adverse to him establishes that his acts or omissions
<PAGE>
were in bad faith or involved intentional misconduct or a knowing violation
of law or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled or that his acts violated
Section 719 of the New York Business Corporation Law, or (ii) the liability
of any director for any act or omission prior to the date on which this
Article became effective.
IN WITNESS WHEREOF, we have signed this certificate as of the _____ day
of April, 1998, and we affirm the statements contained herein as true under
penalties of perjury.
______________________________
Martin J. Mastroianni
President
______________________________
John Recupero
Secretary
<PAGE>
EXHIBIT 2
AMENDED AND RESTATED BY-LAWS
OF
MECHANICAL TECHNOLOGY INCORPORATED
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the corporation
shall be at such place within the State of New York as the Board of
Directors shall determine from time to time.
SECTION 2. OTHER OFFICES. The corporation may have other offices,
either within or without the State of New York, at such place or places as
the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without
the State of New York, and at such time and date as the Board of Directors,
by resolution, shall determine and as set forth in the notice of the
meeting.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next business day. At each annual meeting, the
stockholders entitled to vote shall elect a Board of Directors and they may
transact such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place,
within or without the State of New York, as shall be stated in the notice of
meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation and in accordance with
the provisions of these By-Laws shall be entitled to one vote, in person or
by proxy, for each share of stock entitled to vote held by such stockholder,
but no proxy shall be voted after eleven months from its date unless such
proxy provides for a longer period. Upon the demand of any stockholder, the
vote for directors and the vote upon any question before the meeting, shall
be by ballot. All elections for directors shall be decided by plurality vote;
all other questions shall be decided by majority vote of those stockholders
present in person or by proxy except as otherwise provided by the Certificate
of Incorporation or the laws of the State of New York.
<PAGE>
A complete list of the stockholders entitled to vote at the
ensuing election, arranged in alphabetical order, with the address of each,
and the number of shares held by each, shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the meeting and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
SECTION 4. QUORUM. Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or
by proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the
stockholders. In case a quorum shall not be present at any meeting, a
majority in interest of the stockholders entitled to vote thereat, present
in person or by proxy, shall have the power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote
shall be represented, any business may be transacted which might have been
transacted at the meeting as originally noticed; but only those stockholders
entitled to vote at the meeting as originally noticed shall be entitled to
vote at any adjournment or adjournments thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders
for any purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at
his address as it appears on the records of the corporation, not less than
ten nor more than sixty days before the date of the meeting. No business
other than that stated in the notice shall be transacted at any meeting
without the unanimous consent of all the stockholders entitled to vote
thereat.
SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual
or special meeting of stockholders, or any action which may be taken at any
annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action
so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. The number of directors constituting the
entire Board shall be not less than three nor more than nine as fixed from time
to time by vote of a majority of the entire Board, provided, however, that
the number of directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the number of
directors constituting the entire Board shall be eight until otherwise fixed
by a majority of the entire Board. The Board of Directors shall be divided
into three classes, as nearly equal in numbers as the then total number of
directors constituting the entire Board permits with the term of office of
one class expiring each year. At the annual meeting of stockholders in
1998, three directors of the first class shall be elected to hold office for a
term expiring at the next succeeding annual meeting, two directors of the
second class shall be elected to hold office for a term expiring at the second
succeeding annual meeting and three directors of the third class shall be
elected to hold office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any reason, and any
directorships resulting from any increase in the number of directors, may be
filled by the Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen shall hold
office until the next election of the class for which such directors shall have
been chosen and until their successors shall be elected and qualified. Subject
to the foregoing, at each annual meeting of stockholders the successors to the
class of directors whose term shall then expire shall be elected to hold office
for a term expiring at the third succeeding annual meeting.
Notwithstanding any other provision of this Certificate of Incorporation
or the By-Laws of the corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, this Certificate of Incorporation or the
By-Laws of the corporation), any director or the entire Board of Directors of
the corporation may be removed at any time, but only for cause or after
the affirmative vote of the holders of 75% or more of the outstanding shares
of stock entitled to vote for the election of directors at a meeting called
for that purpose or after the affirmative vote of 75% of the entire Board.
SECTION 2. RESIGNATIONS. Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in
writing, and shall take effect at the time specified therein, and if no time
is specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of a
committee or other office becomes vacant, the remaining directors in office,
though less than a quorum, by a majority vote, may appoint any qualified
person to fill such vacancy, who shall hold office for the unexpired term
and until his successor shall be duly chosen.
SECTION 4. REMOVAL. Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of all the shares of stock
outstanding and entitled to vote, at a special meeting of the stockholders
called for the purpose and the vacancies thus created may be filled, at the
meeting held for the purpose of removal, by the affirmative vote of a
majority in interest of the stockholders entitled to vote.
<PAGE>
SECTION 5. INCREASE OF NUMBER. The number of directors may be
fixed by a majority of the entire Board of Directors. The maximum number of
directors may be increased by amendment of these By-laws by the affirmative
vote of a majority of the directors, though less than a quorum, or, by the
affirmative vote of a majority of the stockholders, at the annual meeting or
at a special meeting called for that purpose. By like vote any additional
directors may be chosen to hold office for the unexpired term of such class
of directors and until their successors are elected and qualify.
SECTION 6. POWERS. The Board of Directors shall exercise all of the
powers of the corporation except such as are by law, or by the Certificate
of Incorporation of the corporation or by these By-Laws conferred upon or
reserved to the stockholders.
SECTION 7. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more directors of the
corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. In the absence or disqualification of any
member of such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he
or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
Any such committee, to the extent provided in the resolution of
the Board of Directors, or in these By-Laws, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the By-Laws of the corporation;
and, unless the resolution, these By-Laws, or the Certificate of
Incorporation expressly so provide, no such committee shall have the power
or authority to declare a dividend or to authorize the issuance of stock.
SECTION 8. MEETINGS. Regular meetings of the directors may be held
without notice at such places and times as shall be determined from time to
time by resolution of the directors.
Special meetings of the board may be called by the Chairman of the
Board, if elected, President or by the Secretary on the written request of any
two directors on at least two days notice to each director and shall be held
at such place or places as may be determined by the directors, or shall be
stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation or
by these By-Laws, members of the Board of Directors, or any committee
designated by the Board of Directors, may participate in a meeting of the
Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting
shall constitute presence in person at the meeting.
<PAGE>
SECTION 9. QUORUM. A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the board
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the
meeting which shall be adjourned.
SECTION 10. COMPENSATION. Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the board a fixed fee and expenses of attendance may be
allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation
therefor.
SECTION 11. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the board, or of such committee
as the case may be, and such written consent is filed with the minutes of
proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a
a President, a Chief Financial Officer, and a Secretary, all of whom shall be
elected by the Board of Directors and who shall hold office until their
successors are elected and qualified. In addition, the Board of Directors may
elect one or more Vice Presidents and such Assistant Secretaries and Assistant
Treasurers as they may deem proper. None of the officers of the corporation
need be directors. The officers shall be elected by the Board of Directors
from time to time. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such other officers and agents as it may deem advisable, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board of
Directors.
SECTION 3. PRESIDENT. The President shall have the general powers and
duties of supervision and management normally vested in the office of
President. He shall have general supervision, direction and control of the
business of the corporation. He shall preside at all meetings of the
stockholders if present thereat, and in the absence or non-election of the
Chairman of the Board of Directors, at all meetings of the Board of Directors,
and shall have general supervision, direction and control of the business of the
corporation. Except as the Board of Directors shall authorize the execution
thereof in some other manner, he shall execute bonds, mortgages and other
contracts in behalf of the corporation, and shall cause the seal to be
affixed to any instrument requiring it and when so affixed the seal shall be
attested by the signature of the Secretary or the Chief Financial Officer or
an Assistant Secretary or an Assistant Treasurer.
SECTION 4. VICE-PRESIDENT. Each vice-president shall have such
powers and shall perform such duties as shall be assigned to him by the
directors.
<PAGE>
SECTION 5. CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall have the custody of the corporate funds and securities and shall keep
full and accurate account of receipts and disbursements in books belonging
to the corporation. He shall deposit all moneys and other valuables in the
name and to the credit of the corporation in such depositories as may be
designated by the Board of Directors.
The Chief Financial Officer shall disburse the funds of the corporation as
may be ordered by the Board of Directors, or the President, taking proper
vouchers for such disbursements. He shall render to the President and Board of
Directors at the regular meetings of the Board of Directors, or whenever they
may request it, an account of all his transactions as Chief Financial Officer
and of the financial condition of the corporation. If required by the Board of
Directors, he shall give the corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the board shall prescribe.
SECTION 6. SECRETARY. The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and all other
notices required by law or by these By-Laws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by and person
thereunto directed by the President, or by the directors, or stockholders,
upon whose requisition the meeting is called as provided in these By-Laws.
He shall record all the proceedings of the meetings of the corporation and of
the directors in a book to be kept for that purpose, and shall perform such
other duties as may be assigned to him by the directors or the President. He
shall have the custody of the seal of the corporation and shall affix the same
to all instruments requiring it, when authorized by the directors or the
President, and attest the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall
have such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. Certificate of stock, signed by
the Chairman of the Board of Directors, if he be elected, President or Vice-
President, and the Chief Financial Officer or an Assistant Treasurer, or
Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the corporation. Any of or all
the signatures may be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be
issued in the place of any certificate theretofore issued by the corporation,
alleged to have been lost or destroyed, and the directors may, in their
discretion, require the owner of the lost or destroyed certificate, or his
legal representatives, to give the corporation a bond, in such sum as they may
direct, not exceeding double the value of the stock, to indemnify the
corporation against any claim that may be made against it on account of
the alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person
or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation
<PAGE>
by the delivery thereof to the person in charge of the stock and transfer
books and ledgers, or to such other person as the directors may designate,
by whom they shall be canceled, and new certificates shall thereupon be
issued. A record shall be made of each transfer and whenever a transfer
shall be made for collateral security, and not absolutely, it shall be so
expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action, the Board
of Directors may fix, in advance, a record date, which shall not be more
than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders
shall apply to any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. SEAL. The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL NEW YORK." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 6. FISCAL YEAR. The fiscal year of the corporation shall be
October 1 through September 30.
SECTION 7. CHECKS. All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of
the corporation, and in such manner as shall be determined from time to time
by resolutions of the Board of Directors.
SECTION 8. NOTICE AND WAIVER OF NOTICE. Whenever any notice is
required by these By-laws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be
sufficient if given by depositing the same in the United States mail,
postage prepaid, addressed to the person entitled thereto at his address as
it appears on the records of the corporation, and such notice shall be
deemed to have been given on the day of such mailing. Stockholders not
entitled to vote shall not be entitled to receive notice of any meetings
except as otherwise provided by Statute. Notice to Directors shall be
deemed to be sufficient if given by facsimile to a number provided by the
Director to the corporation, delivery to an overnight delivery service or
depositing the same in the United States mail, postage prepaid, addressed to
the person entitled thereto at his address as it appears on the records of
the corporation, and such notice shall be deemed to have been given on the
day such facsimile is sent or the day of such mailing.
Whenever any notice whatever is required to be given under the
provisions of the law, or under the provisions of the Certificate of
Incorporation of the corporation or these By-Laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed
equivalent thereto.
<PAGE>
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made
at any annual meeting of the stockholders or at any special meeting
thereof if notice of the proposed alteration or repeal or By-Law or By-
Laws to be made be contained in the notice of such special meeting, by
the affirmative vote of a majority of the stock issued and outstanding
and entitled to vote thereat, or by the affirmative vote of a majority
of the Board of Directors, at any regular meeting of the Board of
Directors, or at any special meeting of the Board of Directors, if
notice of the proposed alteration or repeal, or By-Law or By-Laws to be
made, be contained in the notice of such special meeting.
