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:
_________________________________________________________________________
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,Mechanical Technology Incorporated, 968 Albany-
Shaker Road, Latham, New York 1220712110 (directions enclosed), on April 15, 1998,March 18,
1999, 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.PricewaterhouseCoopers LLP as the
auditors of the Company.
3. Approval of the amendmentAdoption and restatementapproval of the Company's Certificate of
Incorporation.1999 Employee Stock Incentive
Plan.
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, 1998January 29, 1999 are
entitled to notice of and to vote at the meeting or any adjournment.meeting. The Proxy Statement and
Annual Report of the Company for the fiscal year ended September 30, 1997,1998,
are enclosed.
By Order of the Board of Directors
John Recupero Latham, New York
Secretary March 9, 1998February 12, 1999
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO MARK, DATE, SIGN, AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE
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,February 12, 1999, 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,March 18,
1999, and any adjournment thereof, at the offices of First Albany Companies, Inc., 30 South
Pearl Street, Albany,Mechanical Technology
Incorporated, 968 Albany-Shaker Road, Latham, New York.
The shares represented by properly completed proxies received prior to the
vote will be voted FOR 1) the election of directors; and 2) ratifying
appointment of auditors; 3) amendment and restatement of the Certificate of
Incorporation; and 4) restatement of the By-Laws,auditors, unless specific instructions to the contrary are
given or an abstention from voting is indicated by the stockholder.shareholder. The
proxy may be revoked any time before it is exercised.
At the close of business on February 25, 1998January 29, 1999 the Company had outstanding
5,905,7617,178,270 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-votesnon-
votes are counted for purposes of determining whether a quorum is present.present
but do not affect the outcome of the election. 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, eighttwo 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 shall qualify. ThreeThe Directors shall serve a three year term,
two Directors shallstaggered terms.
George McNamee and Dennis O'Connor are nominated to serve a two year term and three Directors shall serve a
one year term.three-year terms.
Alan Goldberg, Walter Robb and Beno Sternlicht are nominated to serve threein the second year of
three-year terms; Dale Church and Edward Dohring are nominated to serve twoin the second year terms; and George McNamee, Dennis O'Connor and Martin Mastroianni are nominated
to serve one yearof
two-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 eightBoth 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.
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,McNamee, 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 from 1996 through April 1998, and Chief Executive Officer since
April 1998, is the Chairman &of the Board and 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 and The Meta Group, Inc. and is
Chairman of the Company's joint venture with Edison Development Corp., and Internet
Shopping Network, Inc.a
subsidiary of DTE Energy, Corp., Plug Power, L.L.C. He also serves on the
Board of Directors of the New York State Science and Technology Foundation,
and is Chairmana member 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, 58,59, 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 obligations under a line of credit. This
Agreement with Masco terminated when Mr. Lawrence lost control of his shares
in 1996. Furthermore, the guarantee was released on October 15, 1998 after
the Company replaced its existing line of credit with a line of credit from
KeyBank, N.A.
Management recommends that you vote FOR election of the two nominees listed
above as Directors of the Company.
CERTAIN INFORMATION REGARDING INCUMBENT DIRECTORS
Mr. Church, 59, 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 Defense
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, 65, 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, 53, 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.
Dr. Robb, 69,70, 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, 69,70, a Director since 1996, one of the foundersco-founder of the Company, has
been President of Benjosh Management Corporation, a management firm in New
York, New York, since 1976.1976 and has been President of Arben International
since 1994, with offices in Moscow and New York City. 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 in 1985, 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)seven (7) meetings during fiscal 1997.1998. All
Directors attended at least 75% of all meetings of the Board, and of all
Board committees on which they serve, held during fiscal 1997.1998.
The Company's Board of Directors has established Audit Compensation and NominatingCompensation
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 1997.1998. 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.
OneTwo Compensation Committee meeting wasmeetings were held during fiscal 1997.1998.
PROPOSAL TO ADOPT AND APPROVED THE MECHANICAL TECHNOLOGY INCORPORATED
1999 EMPLOYEE STOCK INCENTIVE PLAN
The NominatingBoard of Directors expects to approve, subject to approval by the
stockholders, a new employee stock incentive plan ("the 1999 Plan")
intended to attract or encourage officers and other key employees of the
Company and its subsidiaries to remain in the employ of the Company and to
reward other individuals or entities who make significant contributions to
the Company's success. A copy of the 1999 Plan is attached to this Proxy
Statement as Exhibit A. The following description of the 1999 Plan is in
all respects qualified by reference to Exhibit A:
ADMINISTRATION: The 1999 Plan will be administered by the Compensation
Committee (consisting of Messrs. Goldberg, McNameethe Board of Directors.
SHARES SUBJECT TO PLAN: The 1999 Plan authorizes the grant of options to
purchase a number of shares of Common Stock equal to 1,000,000. If options
granted under the 1999 Plan expire or are terminated or surrendered without
having been exercised, the shares of Common Stock subject thereto may again
be optioned.
PARTICIPATION: Options may be granted by the Committee to officers,
directors and Diesel) seeks
outother key employees of the Company and interviews qualified candidatesits subsidiaries.
Approximately 115 persons would be potentially eligible to receive options
under the 1999 Plan.
TERM OF OPTIONS: The Committee will determine the term of each option,
which may not exceed 10 years. The Committee also has the power to shorten
the term of an option and to determine the effect on any option of the
holder's termination of employment or of any conduct or activity of the
holder.
EXERCISE PRICE: The per share exercise price of an option will be
determined by the Committee at the time of granting the option but may not
be less than 100% of the fair market value (determined by the Committee) of
a share of Common Stock on the date of grant. The exercise price shall be
paid in cash. The proceeds received by the Company on the exercise of
options will be used for considerationgeneral corporate purposes.
EXERCISE OF OPTIONS: The times at which an option granted under the 1999
Plan will become exercisable will be determined by the Committee at the
time of grant. In the past options granted under the Company's option
plans have become exercisable as potentialto either 25% of the shares covered
thereby on each of the first four anniversaries of the date of grant, or
immediately vested. The Committee has indicated its intention to continue
this practice, but will not be obligated to do so.
RECAPITALIZATION, ETC.: In the event of a stock dividend,
recapitalization, merger, consolidation, combination or exchange of shares,
or the like, the Committee will be empowered, but not obligated, to make
appropriate adjustments in the number and class of shares subject to the
1999 Plan, in the number of shares subject to options granted thereunder
and in the exercise prices of such options.
TRANSFERABILITY: The options granted under the 1999 Plan shall not be
transferable other than by will or the laws of descent and distribution.
AMENDMENT AND TERMINATION: The Board of Directors may at any time
terminate or amend the 1999 Plan in any respect, except that, without the
approval of the stockholders, no amendment may (1) increase the number of
shares for which options may be granted under the 1999 Plan; (2) change the
minimum option exercise price; (3) change eligibility for awards; (4)
extend the award period; or (5) materially modify eligibility for
participation. Unless the 1999 Plan is previously terminated, options may
be granted under the 1999 Plan through March 18, 2009.
TAX AND ACCOUNTING CONSEQUENCES: The 1999 Plan permits grants of incentive
stock options, intended to meet the requirements of Section 422 of the
Internal Revenue Code, as well as of non-qualified options.
Incentive Stock Options
The Company has been advised that the federal income tax consequences to
the Company and the optionee of the grant and exercise of incentive stock
options under the 1999 Plan, under the current provisions of the Internal
Revenue Code, are substantially as follows: Generally a person who is
granted an incentive stock option is not required to recognize taxable
income at the time of the grant or at the time of exercise and the Company
is not entitled to a deduction at the time of grant or at the time of
exercise. Under certain circumstances, however, an optionee may be subject
to alternative minimum tax with respect to the exercise of his or her
incentive stock options. Generally, the gain realized, but not recognized,
upon the exercise of an incentive stock option (equal to the difference
between the fair market value of the shares received upon exercise of the
incentive stock option and the purchase price paid for such shares) is
included in the optionee's alternative minimum tax income and, depending
upon the optionee's overall tax situation, he or she may be required to pay
alternative minimum tax on such gain.
If an optionee does not dispose of the shares acquired pursuant to the
exercise of an incentive stock option before the later of two years from
the date of grant and one year from the date of exercise, any gain or loss
realized on a subsequent disposition of the shares will be treated as
capital gain or loss. Under such circumstances, the Company will not be
entitled to any deduction for federal income tax purposes. An optionee
must also own the shares of stock acquired upon exercise of an incentive
stock option for more than eighteen months for the gain or loss realized on
the sale to qualify as long-term capital gain or loss.
If an optionee disposes of the shares received upon the exercise of an
incentive stock option either (1) within one year of the exercise date or
(2) within two years after the grant date, the optionee will generally
recognize ordinary income equal to the lesser of (a) the excess of the fair
market value of the shares on the date of exercise over the purchase price
paid for the shares upon exercise and (b) the amount of gain realized on
the sale. Any gain realized in excess of the ordinary income recognized,
and any loss realized, will be long-term or short-term capital gain or
loss, depending upon the length of the period the optionee held the shares.
If an optionee is required to recognize ordinary income as a result of the
disposition of shares acquired on the exercise of an incentive stock
option, the Company, subject to general rules under Section 162(m) of the
Internal Revenue Code, will be entitled to a deduction for an equivalent
amount.
Non-Qualified Stock Options
The Company has been advised that the federal income tax consequences to
the Company and the optionee of the grant and exercise of non-qualified
options under the 1999 Plan, under the current provisions of the Internal
Revenue Code, are substantially as follows: An optionee is not deemed to
receive any income at the time the option is granted. If the option is
exercised, the optionee is deemed to have received ordinary income, on the
exercise date, in an amount equal to the difference, on the exercise date,
between the exercise price and the fair market value of the acquired
shares. The Company is generally entitled, in the year in which the option
is exercised, to a corresponding deduction, subject to general rules
relating to the reasonableness of the optionee's compensation and the
limitation under Rule 162(m) of the Code.
Section 162(m) of the Code generally limits to $1 million the amount of
compensation paid to certain "covered employees" of a publicly held
corporation (generally, the corporation's chief executive officer and four
most highly compensated executive officers other than the chief executive
officer) that may be deducted by the corporation as an expense. Certain
performance-based compensation, the material terms of which are disclosed
to the corporation's stockholders and approved by a majority stockholder
vote, is exempt from the $1 million limitation. Based on regulations of
the Internal Revenue Service promulgated under Section 162(m), grants of
stock options under the 1999 Plan approved by a Committee consisting solely
of "outside directors" (as defined in such regulations) would appear to
constitute performance-based compensation that would be exempt under
Section 162(m).
Under current accounting rules, there is no earnings charge to the Company
for financial accounting purposes in connection with the grant, existence
or exercise of any stock option granted to employees under the 1999 Plan,
however, there will be an earnings charge for options granted to members of
the Board of Directors. The Company is required to disclose, and does
disclose, in a footnote to its annual consolidated financial statements,
the impact of such employee grants on consolidated net income and earnings
per share.
The board expects to approve the 1999 plan and recommends candidates for election and to fill interim vacancies.
Atthat stockholders
vote "for" 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 1997.1999 plan.
APPROVAL OF AUDITORS
The Board of Directors has recommended that the appointment of
Coopers &
Lybrand L.L.P.PricewaterhouseCoopers LLP as independent auditors for the year ending
September 30, 19981999 be ratified by the stockholders. PricewaterhouseCoopers
LLP (and its predecessor, Coopers & Lybrand, L.L.P.LLP) have been the Company's
auditors since 1978. Representatives of Coopers & Lybrand L.L.P.PricewaterhouseCoopers LLP 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 ratificationratifica-
tion of the appointment of auditors.
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.
ADDITIONAL INFORMATION
EXECUTIVE COMPENSATION
The following table setstables set forth information with respect to the compensation
and stock option grants for services to the Company and its subsidiaries during the Company's fiscal year ended September 30, 19971998 (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 and its subsidiaries during such
year whose total annual compensation exceeded $100,000.
========================================================================================================
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- --------------------------------------------------------------------------------------------------------
NAME AND POSITION OF
PRINCIPAL FISCAL SALARY BONUS OTHER RESTRICT- SECURITIES ALL
PRINCIPAL YEAR ANNUAL ED UNDER- OTHER
COMP STOCK LYING COMP
AWARDS OPTIONS
(#)
George C. McNamee,
Chief Executive
Officer (1) (#)
- --------------------------------------------------------------------------------------------------------
R. Wayne Diesel 1997 $200,000 $15,000 -1998 $- $- 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, 1998 $101,168 $50,000 None $170,322
President & COO(2) (3),(4)
1997 $121,154 None - None 150,100 $-
James Clemens, President 1998 $122,961 $20,340 50,000 $4,896
& COO (3)
- --------------------------------------------------------------------------------------------------------
Stephen Sullivan, President, 1997 $62,828 None - None None $16,615CEO, Ling Electronics, (3)
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. (3),(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,1998 $133,481 $33,500 45,100 $5,793
(3)
1997 $120,673 $37,000 - None 25,100 $4,233
LAB and Advanced Products (2)
- --------------------------------------------------------------------------------------------------------(3)
1996 $99,167 $37,000 - None None $3,966
(2)
- --------------------------------------------------------------------------------------------------------
1995 $95,000 $10,000 - 625 None $3,800
(2)
- --------------------------------------------------------------------------------------------------------(3)
(1) This column shows the market valueMr. McNamee was appointed Chief Executive Officer on the date of grant of shares of the
Company's Common Stock awarded under the Company's Restricted Stock Incentive
Plan. The Plan expiredApril 15, 1998.
(2) Dr. Mastroianni resigned his position as President and Chief Operating
Officer 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)April 7, 1998.
(3) 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.off and total salary
payments of $150,000 payable monthly at a rate of $10,000 per month for
a period of 15 months pursuant to an agreement dated April 7, 1998.
See "Employment Agreements."
(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 March 24, 1998 installment was bonused
to Mr. Clemens. 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 $100,000.
OPTION GRANTS IN FISCAL 19971998
Potential Realizable
Value at Assumed
Number of Percentage Annual Rates of
Shares of Total Stock Price
Underlying Options Exercise Appreciation for
Options Granted to Price Expiration Option Term
Name Granted Employees (per share) Date 5%($) 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 $38920,000(1) 14.44% $6.00 06/16/08 $75,467 $191,249
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 $38920,000(1) 14.44% $6.00 06/16/08 $75,467 $191,249
- -----------------------
(1) Options may be exercised until June 30, 2000.
(2) Options may be exercised after December 20, 1997 and prior to December 20,
1999.
(3) Dr. Mastroianni was originally granted qualified options for 150,000 shares;
30,000 of which vested 6,000 per year for each of five years and 120,000 of
which vested upon attainment of certain defined profit targets. As of July 15,
1997, Dr. Mastroianni's option agreement was amended to provide that Dr.
Mastroianni will receive a total of 150,000 qualified stock options that will
vest as follows: a) 30,000 will vest 20% per year commencing as of December
20, 1996; (b) 30,000 will vest at the rate of 33-1/3% per year beginning as of
July 15, 1997; c) 90,000 will vest, if certain profit targets are attained, at
the rate of 20,000 per year, for each of three years, commencing as of July 15,
1997, and 30,000 as of September 30, 2000.
(4) 25% or 3,7505,000 shares are exercisable each year beginning on August 27, 1998.
(5) Options will vest and may be exercised based upon the attainment of certain
defined annual profit targets.
(6) Options may be exercised after December 20, 1997 and prior to December
20, 1999.
(7) 25% or 6,250 shares are exercisable each year beginning on August 27, 1998.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised Number of Securities In-the-Money
Underlying Unexercised Options at
Options at Fiscal Year End(#) Options at Fiscal Year End (#) End ($End($)
------------- -----------
Shares Value
Acquired Value on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----- ----------- ------------- ----------- -------------
R. Wayne Diesel 0 0 35,000 100 $1,050 $103
Martin J. Mastroianni 42,100 206 0 0 36,000 114,100 $25,580 $121,8230 0
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 $4033,750 46,250 $13,819 $134,231
Denis P. Chaves 0 0 0 25,100 0 $8536,350 38,750 $23,500 $91,594
COMPENSATION COMMITTEE REPORT
COMPENSATION POLICIES FOR OFFICERS.OFFICERS
The Company's compensation program for executive officers, and employee Directors currentlyother than
the Chief Executive Officer, consists of an annual salary and bonus
payments that are primarily designed to reward performance.
For the fiscal year 1997,1998, 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 asGeorge C. McNamee became Chief Executive Officer and became special assistant
to the chairman of the Board of Directors. Effective June 30,Company on April 15,
1998 Mr. Diesel will resign from his positionafter Dr. Mastroianni resigned as special assistant. The office ofPresident and Chief ExecutiveOperating Officer
was eliminated as of February 23,on April 7, 1998. Mr. DieselMcNamee receives no salary, bonus or other
compensation from the Company.
Effective April 7, 1998, Dr. Mastroianni resigned as President and Chief
Operating Officer. Dr. Mastroianni was President and Chief ExecutiveOperating Officer
from February 1994December 20, 1996 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.April 7, 1998. For the period
October 1, 1994 through September 30, 1997, Mr. Diesel'sDecember 20, 1996
to April 7, 1998, Dr. Mastroianni's base salary of $200,000$150,000 did not change.
In fiscal 1997, Mr. DieselDr. Mastroianni 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$50,000 which 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, 1997.1997 and paid in fiscal 1998. 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. Upon his resignation, Dr. Mastroianni
was vested in 42,000 qualified options.
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
thereafter1998, 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.
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
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
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. James Clemens,
President of Ling Electronics, Inc. ("Ling"). The agreement provides for
an annual base salary of $115,000, subject to adjustment by the Compensation
Committee. Effective July 1, 1998, Mr. Clemens' salary was increased to
$150,000. In addition, Mr. Clemens is entitled to receive incentive
compensation equal to 3% of annual pre-tax income of Ling up to $1,000,000,
and 2% of annual pre-tax income of Ling in excess of $1,000,000. Mr. Clemens
also received non-qualified stock options for 15,000 shares of the Company's
common stock and an advance of $30,000. The advance must be repaid at the
rate of $10,000 per year plus 6.5% interest. The Company agreed to pay Mr.
Clemens an annual bonus equivalent to the payments due on the advance if Mr.
Clemens is still employed by the Company prior to March 24, 1998, 1999 and
2000, respectively. If Mr. Clemens dies or is disabled prior to March 24,
2000, the amount then due on the advance will be forgiven.
The Company had an employment agreement with Dr. Mastroianni which provided
that Dr. Mastroianni would receive an annual base salary of $150,000 and be
eligible for incentive compensation and incentive stock options. The
agreement also stated that if Dr. Mastroianni was removed from the position
of President for reasons other than cause during his first three years of
employment, the Company would pay him severance payments equivalent to a
maximum of one year's base salary.
Effective April 7, 1998, Dr. Mastroianni resigned as President and Chief
Operating Officer of the Company. On April 7, 1998, the Company entered
into an agreement with Dr. Mastroianni regarding his employment. The
agreement provides that Dr. Mastroianni will receive: a) total salary payments
from the Company of $150,000 payable monthly over 15 months; b) 401(k)
matching payments; c) insurance benefits through June 1, 2000; and d) vesting
of 42,000 qualified stock options previously awarded to Dr. Mastroianni.
CERTAIN RELATIONSHIPS 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 onRELATED TRANSACTIONS
At September 30, 19921998, First Albany Companies, Inc. ("FAC") owned
approximately 34% of the Company's Common Stock. George McNamee, a Director
and Chief Executive Officer of the Company, is Chairman of the Board of
Directors, Co-Chief Executive Officer and a shareholder of FAC. Alan Goldberg,
a Director of the Company, is a Director, President and Co-Chief Executive
Officer and a shareholder of FAC.
During fiscal 1998, First Albany Corporation, a wholly owned subsidiary of
FAC, provided financial advisory services in Mechanicalconnection with the sale of the
Technology Incorporated Common Stock,Division for which FAC was paid fees of $10,000.
On December 17, 1998, the S&P 500,Industrial Development Agency for the Town of
Colonie issued $6 million in Industrial Development Revenue ("IDR") Bonds on
behalf of the Company to assist in the construction of a new building for
Advanced Products and the S&P
Technology Sector Index,Company's corporate headquarters and that all dividends were reinvested.renovation of
existing buildings leased to Plug Power. The construction project is due to
be completed in April 1999. FAC underwrote the sale of the IDR Bonds. FAC
received no fees for underwriting the IDR Bonds but was reimbursed for its
out-of-pocket expenses.
ADDITIONAL INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
First Albany Companies, Inc. ("FAC"), 30 South Pearl Street,street, Albany, New
York, 12207, are the beneficial owners of 2,035,6982,444,038 shares, or 34.5%34%, 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", and (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.
group.
Name of Amount and Nature of Percent of
Beneneficial Owner Beneficial Ownership(1)(2) Class
------------------ -------------------------- ----------Ownership Class(1)
Denis P. Chaves 27,700(3)47,700(2) *
Dale W. Church 50,000(4)68,000(3) *
James R. Clemens 30,000(5)50,000(4) *
R. Wayne Diesel 70,200(6) 1.2%
Edward A. Dohring 15,000(4)26,000(5) *
Alan P. Goldberg 2,165,773(7) 36.7%
Douglas McCauley 15,100(8) *2,644,229(6) 36.8%
George C. McNamee 2,245,698(7)(9) 38.0%2,741,341(6)(7) 38.2%
Martin J. Mastroianni 170,100(10) 2.9%24,000(8) *
E. Dennis O'Connor 40,00058,000(9) *
Dr. Walter L. Robb 24,500(4)37,400(5) *
Dr. Beno Sternlicht 273,050(4)(11) 4.6%
Stephen Sullivan 1,000(2) *
Stephen T. Wilson 10,100(12) *273,902(5)(10) 3.8%
All present Directors and
Officers as a group (12(10 persons) 3,091,423 52.3%
- ----------------------------
* Percentage3,517,534 48.99%
*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%48.99% of the Company's outstanding Common
Stock.
(2) Includes options for 20,000 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 foron June 16, 1998, 25,000 shares
granted on August 27, 1997 and an
option for 100 shares granted on December 20, 1996.
(4)(3) Includes an optionoptions for 10,000 shares granted on August 31, 1998, 10,000
shares granted on April 16, 1997.
(5)1997 and 8,000 shares owned by Mr. Church's wife.
Mr. Church disclaims beneficial ownership of such shares.
(4) Includes an optionoptions for 20,000 shares granted on June 16, 1998, 15,000
shares granted on August 27, 1997 and an
option for 15,000 shares granted on March 24, 1997.
(6)(5) Includes 100 shares held by Mr. Diesel's wife as custodianoptions for their minor
child; Mr. Diesel disclaims beneficial ownership of such shares. Includes an
option for 35,00010,000 shares granted on August 27, 199731, 1998 and an option for 10010,000
shares granted on December 20, 1996.
(7)April 16, 1997.
(6) Includes 2,035,6982,444,038 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.
(8)(7) 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 10,00012,000 shares owned by Mr. McNamee's wife. Mr. McNamee disclaims
beneficial ownership of such shares.
(10)(8) Dr. Mastroianni resigned as President and Chief Operating Officer of the
Company in April 1998, accordingly his shares are not included within the
total shares of all present Directors and Officers as a group.
(9) Includes an optionoptions for up to 150,00010,000 shares granted on December 20, 1996
as amended on July 15, 1997, and an option for 100 shares granted on December
20, 1996.
(11)August 31, 1998.
(10) Includes 26,65031,980 shares owned by Dr. Sternlicht's wife and 10,15012,180 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,
1997,1998, 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 to be held in 19992000 must be received by the
Company before October 6, 19984, 1999 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, 1998February 12, 1999
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 AND 3, or 4, THE PROXY WILL BE VOTED FOR THOSE
PROPOSALS.THAT
PROPOSAL.
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,Mechanical Technology Incorporated, 968 Albany-Shaker Road, Latham,
New York, at 10:00 a.m. on April 15, 1998,March 18, 1999, or any adjournment thereof, as
follows:
1.ELECTION OF DIRECTORS:
FOR ALLBOTH NOMINEES LISTED BELOW _______ WITHHOLD AUTHORITY _______
(except as marked to the contrary below) to vote for allboth 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.PRICEWATERHOUSECOOPERS L.L.P AS
AUDITORS.
FOR _____ AGAINST _____ ABSTAIN _____
3.PROPOSAL TO APPROVE AND ADOPT THE AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF
INCORPORATION.COMPANY'S 1999 EMPLOYEE STOCK INCENTIVE PLAN
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 _______________________________________________________________1999 ___________________________________________
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 _____
EXHIBIT A
Mechanical Technology Incorporated 1999 Employee Stock Incentive Plan
SECTION 1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MECHANICAL TECHNOLOGY INCORPORATED
UNDERPURPOSE
The purpose of the Mechanical Technology Incorporated 1999 Employee Stock
Incentive Plan is to provide a means whereby Mechanical Technology
Incorporated, a New York corporation (the "Corporation"), may attract able
persons to remain in or to enter the employ of the Corporation, a Parent
Corporation or a Subsidiary and to provide a means whereby those employees,
directors, officers, and other individuals or entities upon whom the
responsibilities of the successful administration, management, planning,
and/or organization of the Corporation may rest, and whose present and
potential contributions to the welfare of the Corporation, a Parent
Corporation or a Subsidiary are of importance, can acquire and maintain
stock ownership, thereby strengthening their concern for the long-term
welfare of the Corporation. A further purpose of the Plan is to provide
such employees and individuals or entities with additional incentive and
reward opportunities designed to enhance the profitable growth of the
Corporation over the long term. Accordingly, the Plan provides for granting
Common Stock, Incentive Stock Options, options which do not constitute
Incentive Stock Options, or any combination of the foregoing, as is best
suited to the circumstances of the particular employees and individuals or
entities as provided herein.
SECTION 807 OF THE BUSINESS CORPORATION LAW2
DEFINITIONS
The undersigned, beingfollowing definitions shall be applicable during the President andterm of the Secretary of MECHANICAL
TECHNOLOGY INCORPORATED,Plan
unless specifically modified by any paragraph:
(a) Award means, individually or collectively, any Option granted pursuant
to Section 807the Plan.
(b) Board means the board of directors of the Business Corporation
lawCorporation.
(c) Change of Control Value means the amount determined in Clause (i),
(ii) or (iii), whichever is applicable, as follows: (i) the per share price
offered to stockholders of the State of New York, do hereby restate, certify and set forth:
1. The nameCorporation in any merger, consolidation,
sale or assets or dissolution transaction, (ii) the price per share offered
to stockholders 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 acttender offer or activity for which corporations may be organized
underexchange offer
whereby a Corporate Change takes place or (iii) if a Corporate Change
occurs other than as described in Clause (i) or Clause (ii), 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,
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
filledfair
market value per share determined by the Board of Directors, acting by a majorityas of the directors thendate determined by
the Board to be the date of cancellation and surrender of an Option. If the
consideration offered to stockholders of the Corporation in office, although lessany transaction
described in this Paragraph or Paragraphs (d) and (e) of Section 8 consists
of anything other than a quorum,cash, the Board shall determine the fair cash
equivalent of the portion of the consideration offered which is other than
cash.
(d) Code means the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any Section of the Code shall be deemed to include any
amendments or successor provisions to such Section and any directors so chosen shall hold office untilregulations
under such Section.
(e) Common Stock means the next electioncommon stock 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 forCorporation.
(f) Compensation Committee means 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
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 majoritycommittee 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 corporationCorporation, who 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
havegiven 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
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
majorityto grant options or
make stock grants under the Plan.
(g) Corporation means Mechanical Technology Incorporated.
(h) Corporate Change means one of the directors then in office, although less than a quorum, and any
directors so chosen shall hold office untilfollowing events: (i) the next electionmerger,
consolidation or other reorganization of the classCorporation in which the
outstanding Common Stock is converted into or exchanged 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 thea different
class of directors whose term shall then
expire shall be elected to hold office forsecurities of the Corporation, a term expiring at the third
succeeding annual meeting.
Notwithstandingclass of securities of any other
provision of this Certificate of Incorporationissuer (except a Subsidiary or the By-LawsParent Corporation), cash or other property
other than (a) a merger, consolidation or reorganization of the corporation (and notwithstandingCorporation
which would result in the fact that some lesser
percentage may be specified by law, this Certificate of Incorporation or the
By-Lawsvoting stock of the corporation), any directorCorporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or the entire Board of Directorsby being converted into voting securities of the corporation may be removed at any time, but only for cause or aftersurviving
entity), in combination with 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 copyownership 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 wastrustee 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,fiduciary holding securities under an 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 interestsCorporation, at least sixty percent (60%) 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: Directorscombined voting power 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.
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
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.
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 thevoting stock of the corporation
entitled to vote shall constitute a quorum at all meetingsCorporation or such surviving entity outstanding
immediately after such merger, consolidation or reorganization of the
stockholders. In case a quorum shall not be present at any meeting, a
majority in interestCorporation, or (b) merger, consolidation or reorganization of the
stockholders entitledCorporation effected 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 meetingsimplement a recapitalization of the stockholders
for any purpose or purposes may be called by the President or Secretary, or by
resolutionCorporation (or
similar transaction) in which no person acquires more than forty-nine
percent (49%) of the directors.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place,
date and timecombined voting power 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 ofCorporation's then
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.
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.
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 stockholdersstock; (ii) the sale, lease or exchange of all or substantially
all of the corporation's propertyassets of the Corporation to any other corporation or entity
(except a Subsidiary or Parent Corporation); (iii) the adoption by the
stockholders of the Corporation of a plan of liquidation and assets,
recommendingdissolution;
(iv) the acquisition (other than acquisition pursuant to any other clause
of this definition) by any person or entity, including without limitation a
"group" as contemplated by Section 13(d)(3) of the Exchange Act, of
beneficial ownership, as contemplated by such Section, of more than twenty-
five percent (25%) (based on voting power) of the Corporation's outstanding
capital stock or acquisition by a person or entity who currently has
beneficial ownership which increases such person's or entity's beneficial
ownership to fifty percent (50%) or more (based on voting power) of the
Corporation's outstanding capital stock; or (v) as a result of or in
connection with a contested election of directors, the persons who were
directors of the Corporation before such election shall cease to constitute
a majority of the Board. Notwithstanding the provisions of clause (iv)
above, a Corporate Change shall not be considered to have occurred upon the
acquisition (other than acquisition pursuant to any other clause of the
preceding sentence) by any person or entity, including without limitation a
"group" as contemplated by Section 13(d)(3) of the Exchange Act, of
beneficial ownership, as contemplated by such Section, of more than twenty-
five percent (25%) (based on voting power) of the Corporation's outstanding
capital stock or the requisite percentage to increase their ownership to
fifty percent (50%) resulting from a public offering of securities of the
Corporation under the Securities Act of 1933, as amended.
(i) Exchange Act means the Securities Exchange Act of 1934, as amended.
(j) Fair Market Value means, as of any specified date, the closing price
of the Common Stock on the NASDAQ (or, if the Common Stock is not listed on
such exchange, such other national securities exchange on which the Common
Stock is then listed) on that date, or if no prices are reported on that
date, on the last preceding date on which such prices of the Common Stock
are so reported. If the Common Stock is not then listed on any national
securities exchange but is traded over the counter at the time
determination of its Fair Market Value is required to be made hereunder,
its Fair Market Value shall be deemed to be equal to the stockholdersaverage between
the reported high and low sales prices of Common Stock on the most recent
date on which Common Stock was publicly traded. If the Common Stock is not
publicly traded at the time a dissolutiondetermination of its value is required to be
made hereunder, the determination of its Fair Market Value shall be made by
the Board in such manner as it deems appropriate (such determination will
be made in good-faith as required by Section 422(c)(1) of the corporationCode and may
be based on the advice of an independent investment banker or a
revocation of a dissolution, or amendingappraiser
recognized to be expert in making such valuations). Fair Market Value also
shall satisfy the By-Lawsrequirements under Section 260.140 of the corporation;California Code
of Regulations, as necessary to qualify for an exemption from the
provisions of Section 25110 of the California Corporations Code.
(k) Grant means individually or collectively, any Common Stock granted
pursuant to the Plan.
(l) Grantee means an employee, director, officer, other individual or
entity who has been granted Common Stock pursuant to the Plan.
(m) Holder means an individual or entity who has been granted an Award.
(n) Incentive Stock Option means an Option within the meaning of Section
422 of the Code.
(o) Option means an Award granted under Section 7 of the Plan and unlessincludes
both Incentive Stock Options to purchase Common Stock and Options which do
not constitute Incentive Stock Options to purchase Common Stock.
(p) Option Agreement means a written agreement between the resolution, these By-Laws,Corporation and
an employee with respect to an Option.
(q) Optionee means an employee, director, officer, entity or the Certificate of
Incorporation expressly so provide, no such committeeindividual
who has been granted an Option.
(r) Parent Corporation shall have the powermeaning set forth in Section 424(e)
of the Code.
(s) Plan means the Mechanical Technology Incorporated 1999 Employee Stock
Incentive Plan.
(t) Rule 16b-3 means Rule 16b-3 of the General Rules and Regulations of
the Securities and Exchange Commission under the Exchange Act, as such rule
is currently in effect or authorityas hereafter modified or amended.
(u) Subsidiary means a company (whether a corporation, partnership, joint
venture or other form of entity) in which the Corporation, or a corporation
in which the Corporation owns a majority of the shares of capital stock,
directly or indirectly, owns an equity interest of fifty percent (50%) or
more, except solely with respect to declare a dividend or to authorize the issuance of stock.
SECTION 8. MEETINGS. Regular meetingsIncentive Stock Options
the term "Subsidiary" shall have the same meaning as the term "subsidiary
corporation" as defined in Section 424(f) of the directorsCode.
SECTION 3
EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective as of March 29, 1999, the date of its adoption
by the Board, provided that the Plan is approved by the stockholders of the
Corporation within twelve (12) months before or thereafter and on or prior
to the date of the first annual meeting of stockholders of the Corporation
held subsequent to the acquisition of an equity security by a Holder
hereunder for which exemption is claimed under Rule 16b-3. Notwithstanding
any provision of the Plan or of any Option Agreement, no Option shall be
exercisable and no Common Stock may be held
without notice atgranted prior to such placesstockholder
approval. The Plan shall be terminated and no further Awards or Common
Stock may be granted under the Plan after ten (10) years from the date the
Plan is adopted by the Board or the date the Plan is approved by the
Corporation's shareholders, whichever is earlier. Subject to the provisions
of Section 9, the Plan shall remain in effect until all Options granted
under the Plan have been exercised or have expired by reason of lapse of
time and all restrictions imposed upon restricted stock awards have lapsed.
Any option exercised before shareholder approval is obtained must be
rescinded if shareholder approval is not obtained within twelve (12) months
before or after the Plan is adopted. Such shares shall not be counted in
determining whether such approval is granted.
SECTION 4
ADMINISTRATION
(a) Administration of Plan by Board. The Plan shall be administered by the
Board in compliance with Rule 16b-3. Members of the Board shall abstain
from participating in and deciding matters which directly affect their
individual ownership interests under the Plan.
(b) Powers. Subject to the terms of the Plan, the Board shall elect one or
several members to the Compensation Committee who shall have sole
authority, in their discretion, to determine which employees, officers,
directors, individuals or entities shall receive an Award or Grant, the
time or times when such Award or Grant shall be made, whether Common Stock,
an Incentive Stock Option or non-qualified Option shall be granted and the
number of shares of Common Stock which may be issued under each Option. In
making such determinations, the Designated Officer may take into account
the nature of the services rendered by these individuals, their present and
potential contribution to the success of the Corporation, a Parent
Corporation or a Subsidiary, and such other factors as the Board in its
discretion shall deem relevant.
(c) Additional Powers. The Board shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Board is authorized in its sole discretion,
exercised in a nondiscriminatory manner, to construe and interpret the Plan
and the respective agreements executed thereunder, to prescribe such rules
and regulations relating to the Plan as it may deem advisable to carry out
the Plan, and to determine the terms, restrictions and provisions of each
Award or Grant, including such terms, restrictions and provisions as shall
be determinedrequisite in the judgment of the Board to cause designated Options to
qualify as Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Board may correct
any defect or supply any omission or reconcile any inconsistency in any
agreement relating to an Award or Grant in the manner and to the extent it
shall deem expedient to carry it into effect. The determination of the
Board on the matters referred to in this Section 4 shall be conclusive.
(d) Compliance With Code 162(m). In the event the Corporation, a Parent
Corporation or a Subsidiary becomes a "publicly-held corporation" as
defined in Section 162(m)(2) of the Code, the Corporation may establish a
committee of outside directors meeting the requirements of Code 162(m) to
(i) approve the grant of Options which might reasonably be anticipated to
result in the payment of employee remuneration that would otherwise exceed
the limit on employee remuneration deductible for income tax purposes by
the Corporation pursuant to Code 162(m) and (ii) administer the Plan. In
such event, the powers reserved to the Board in the Plan shall be exercised
by such compensation committee. In addition, Options under the Plan shall
be granted upon satisfaction of the conditions to such grants provided
pursuant to Code 162(m) and any Treasury Regulations promulgated
thereunder.
SECTION 5
GRANT OF OPTIONS AND STOCK SUBJECT TO THE PLAN
(a) Award Limits. The Compensation Committee may from time to time grant
Awards and/or make Grants to one or more employees, directors, officers,
individuals or entities determined by resolutionhim or her to be eligible for
participation in the Plan in accordance with the provisions of Section 6 of
the directors.
Special meetingsPlan. The aggregate number of shares of Common Stock that may be issued
under the Plan shall not exceed 1,000,000 shares. The aggregate number of
shares of Common Stock that may be issued to any Holder and/or granted to
any Grantee under the Plan shall not exceed thirty percent (30%)] of the
boardaggregate number of shares referred to in the preceding sentence. The total
number of shares issuable upon exercise of all outstanding Options shall
not exceed a number of shares which is equal to thirty percent (30%) of the
then outstanding shares of the Corporation. Any of such shares which remain
unissued and which are not subject to outstanding Options and/or Grants at
the termination of the Plan shall cease to be subject to the Plan but,
until termination of the Plan, the Corporation shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Shares
shall be deemed to have been issued under the Plan only to the extent
actually issued and delivered pursuant to an Award or Grant. To the extent
that an Award or Grant lapses or the rights of its Holder or Grantee
terminate, any shares of Common Stock subject to such Award or Grant shall
again be available for the grant of an Award or making of a Grant. The
aggregate number of shares which may be calledissued under the Plan shall be
subject to adjustment in the same manner as provided in Section 8 of the
Plan with respect to shares of Common Stock subject to Options then
outstanding. Separate stock certificates shall be issued by the ChairmanCorporation
for those shares acquired pursuant to a Grant, the exercise of an Incentive
Stock Option and for those shares acquired pursuant to the exercise of any
Option which does not constitute an Incentive Stock Option.
(b) Stock Offered. The stock to be offered pursuant to an Award or Grant
may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Corporation.
SECTION 6
ELIGIBILITY
An Incentive Stock Option Award made pursuant to the Plan may be granted
only to an individual who, at the time of grant, is an employee of the
Board, if elected, PresidentCorporation, a Parent Corporation or a Subsidiary. An Award of an Option
which is not an Incentive Stock Option or a Grant of Common Stock may be
made to an individual who, at the time of Award or Grant, is an employee of
the Corporation, a Parent Corporation or a Subsidiary, or to an individual
who has been identified by the Secretary onBoard or Designated Officer to receive an
Award or Grant due to their contribution or service to 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,Corporation,
including members of the Board of Directors of the Corporation, a Parent
Corporation or a Subsidiary. An Award or Grant made pursuant to the Plan
may be made on more than one occasion to the same person, and such Award or
Grant may include a Common Stock Grant, an Incentive Stock Option, an
Option which is not an Incentive Stock Option, or any committee
designatedcombination thereof.
Each Award or Grant shall be evidenced by a written instrument duly
executed by or on behalf of the Corporation.
SECTION 7
STOCK OPTIONS/GRANTS
(a) Stock Option Agreement. Each Option shall be evidenced by an Option
Agreement between the Corporation and the Optionee which shall contain such
terms and conditions as may be approved by the Board of Directors, may participate in a meetingand agreed upon by the
Holder. The terms and conditions of the Boardrespective Option Agreements need
not be identical. Each Option Agreement shall specify the effect of
Directors,termination of employment, total and permanent disability, retirement or
death on the exercisability of the Option. Under each Option Agreement, a
Holder shall have the right to appoint any committee, by means of conference telephoneindividual or similar communications equipment by means of which all persons participatinglegal entity in
writing as his or her beneficiary under the Plan in the meeting can hearevent of his death.
Such designation may be revoked in writing by the Holder at any time and a
new beneficiary may be appointed in writing on the form provided by the
Board for such purpose. In the absence of such appointment, the beneficiary
shall be the legal representative of the Holder's estate.
(b) Option Period. The term of each other, and such participation in a meetingOption shall constitute presence in personbe as specified by the
Board at the meeting.
SECTION 9. QUORUM. A majoritydate of grant and shall be stated in the Option Agreement;
provided, however, that an option may not be exercised more than one
hundred twenty (120) months from the date it is granted.
(c) Limitations on Exercise of Option. Any Option granted hereunder shall
be exercisable at such times and under such conditions as determined by the
Board and as shall be permissible under the terms of the directorsPlan, which shall
constitute a
quorumbe specified in the Option Agreement evidencing the Option; provided,
however, that an option shall be exercised at the rate of at least twenty
percent (20%) per year over five (5) years from the date it is granted. An
Option may not be exercised for fractional shares.
(d) Special Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined at the time the respective
Incentive Stock Option is granted) of Common Stock with respect to which
Incentive Stock Options are exercisable for the transaction of business. If atfirst time by an individual
during any meetingcalendar year under all incentive stock option plans of the
board
thereCorporation (and any Parent Corporation or Subsidiary) exceeds One Hundred
Thousand Dollars ($100,000) (within the meaning of Section 422 of the
Code), such excess Incentive Stock Options shall be treated as Options
which do not constitute Incentive Stock Options. The Board shall determine,
in accordance with applicable provisions of the Code, Treasury Regulations
and other administrative pronouncements, which of an Optionee's Incentive
Stock Options will not constitute Incentive Stock Options because of such
limitation and shall notify the Optionee of such determination as soon as
practicable after such determination. No Incentive Stock Option shall be
granted to an individual if, at the time the Option is granted, such
individual owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or of its
Parent Corporation or a Subsidiary, within the meaning of Section 422(b)(6)
of the Code, unless (i) at the time such Option is granted the Option price
is at least one hundred ten percent (110%) of the Fair Market Value of the
Common Stock subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of grant.
(e) Option Price. The purchase price of Common Stock issued under each
Option shall be determined by the Board and shall be stated in the Option
Agreement, but such purchase price shall, in the case of Incentive Stock
Options, not be less than a quorum present, a majoritythe Fair Market Value of those presentCommon Stock subject to
the Option on the date the Option is granted, and, in the case of Options
which do not constitute Incentive Stock Options, not be less than
eighty-five percent (85%) of the fair value of the stock at the time the
option is granted, except that the price shall be one hundred ten percent
(110%) of the fair value in the case of any person or entity who owns stock
comprising more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation or its Parent Corporation or
Subsidiary. Fair value in the case of options that do not constitute
Incentive Stock Options shall have the same meaning as set forth in
Section 260.140.50 of the California Code of Regulations.
(f) Options and Rights in Substitution for Stock Options Made by Other
Corporations. Options may adjournbe granted under the meetingPlan from time to time untilin
substitution for stock options held by employees of corporations who
become, or who became prior to the effective date of the Plan, employees of
the Corporation, of any Parent Corporation or of any Subsidiary as a quorum is obtained, and no
further notice thereof need be given other thanresult
of a merger or consolidation of the employing corporation with the
Corporation, such Parent Corporation or such Subsidiary, or the acquisition
by announcementthe Corporation, a Parent Corporation or a Subsidiary of all or a
portion of the assets of the employing corporation, or the acquisition by
the Corporation, a Parent Corporation or a Subsidiary of stock of the
employing corporation with the result that such employing corporation
becomes a Subsidiary.
(g) Restricted Stock Option Purchase Agreement. Notwithstanding the
foregoing, at the meetingelection of the Holder, the Option can be exercised
provided that the Holder shall, as a condition of such exercise, execute
and deliver the Restricted Stock Option Purchase Agreement (the "Purchase
Agreement"), pursuant to which the Corporation shall be adjourned.granted a
"Repurchase Option" and "Right of First Refusal" as to all "Shares" (as
such terms are defined in the Purchase Agreement).
(h) Restricted Stock Grant Agreement. Each Grant shall be evidenced by the
execution and delivery of a Restricted Stock Grant Agreement (the "Grant
Agreement"), pursuant to which the Corporation shall be granted a
"Repurchase Option" and "Right of First Refusal" as to all "Shares" (as
such terms are defined in the Grant Agreement).
SECTION 10. COMPENSATION. Directors8
RECAPITALIZATION OR REORGANIZATION
(a) Except as hereinafter otherwise provided, Awards or Grants shall be
subject to adjustment by the Board at its discretion as to the number and
price of shares of Common Stock in the event of changes in the outstanding
Common Stock by reason of stock dividends, stock splits, reverse stock
splits, reclassifications, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any such Options or
Common Stock.
(b) The existence of the Plan and the Awards and/or Grants made hereunder
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 corporationaffect in any other
capacity as an officer, agentway the right or otherwise, and receiving compensation
therefor.
SECTION 11. ACTION WITHOUT MEETING. Any action required or permitted
to be taken at any meetingpower of the Board or the
stockholders of Directors,the Corporation to make or authorize any adjustment,
recapitalization, reorganization or other change in the capital structure
of the Corporation, a Parent Corporation or a Subsidiary or their business,
any committeemerger or consolidation of the Corporation, a Parent Corporation or a
Subsidiary, any issue of debt or equity securities having any priority or
preference with respect to or affecting Common Stock or the rights thereof,
the dissolution or liquidation of the Corporation, a Parent Corporation or
a Subsidiary, or any sale, lease, exchange or other disposition of all or
any part of their assets or business or any other corporate act or
proceeding.
(c) The shares with respect to which Options may be taken without a meeting,granted are shares of
Common Stock as presently constituted but if and whenever, prior to such actionthe
expiration of an Option theretofore granted, the Corporation shall effect a
written
consent thereto is signed by all memberssubdivision or consolidation of shares of Common Stock or the board, orpayment of such committee
as the case may be, and such written consent is filed with the minutesa
stock dividend on Common Stock without receipt 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
electedconsideration 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.
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
certifyingCorporation, the number of shares owned by himof Common Stock with respect to which
such Option may thereafter be exercised (i) in the corporation. Anyevent of or all
the signatures may be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate of stock may be
issuedan increase in
the placenumber of any certificate theretofore issued by the corporation,
alleged to have been lost or destroyed,outstanding shares shall be proportionately increased, and
the directors may,purchase price per share shall be proportionately reduced, and (ii) in
their
discretion, require the ownerevent of a reduction in the number of outstanding shares shall be
proportionately reduced, and the purchase price per share shall be
proportionately increased.
(d) If the Corporation recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option theretofore granted,
the Optionee shall be entitled to purchase under such Option, in lieu of
the lost or destroyed certificate, or his
legal representatives,number of shares of Common Stock as to givewhich such Option shall then be
exercisable, the corporation a bond, in such sum as they may
direct, not exceeding double the valuenumber and class 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 and securities, and
the cash and other property to which the Optionee would have been entitled
pursuant to the terms of the corporation
shallrecapitalization if, immediately prior to such
recapitalization, the Optionee had been the holder of such record of the
number of shares of Common Stock then covered by such Option.
(e) In the event of a Corporate Change, unless otherwise deemed to be
transferable only upon its booksimpractical 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
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 morethen no later than sixty nor less than ten days before the date of such meeting, nor more
than sixty(i) two business days prior to
any other action. A determination of stockholders
of record entitled to notice ofCorporate Change referenced in Clause (i), (ii), (iii), (v) or to vote at a meeting of stockholders
shall apply to any adjournment(vi) of
the meeting; provided, however, thatdefinition thereof or (ii) ten business days after any Corporate Change
referenced in Clause (iv) of the definition thereof, the Board, acting in
its sole discretion without the consent or approval of Directorsany Optionee or
Grantee, shall act to effect the following alternatives with respect to
outstanding Options which acts may fix a new record date for the adjourned meeting.
SECTION 5. SEAL. The corporate seal shallvary among individual Optionees and,
with respect to acts taken pursuant to Clause (i) above, may be circular in form and
shall contain the namecontingent
upon effectuation of the corporation,Corporate Change: (A) in the yearevent of its creationa Corporate
Change referenced in Clauses (i), (ii) and the
words "CORPORATE SEAL NEW YORK." Said seal(vi) acceleration of exercise
for all Options then outstanding so that such Options may be usedexercised in
full for a limited period of time on or before a specified date (before or
after such Corporate Change) fixed by causing itthe Board, after which specified date
all unexercised Options and all rights of Optionees thereunder shall
terminate; (B) in the event of a Corporate Change referenced in Clauses
(iii), (iv) and (v) require the mandatory surrender to the Corporation by
selected Optionees of some or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 6. FISCAL YEAR. The fiscal yearall 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 signedoutstanding Options held by such
officer or officers, agent or agentsOptionees (irrespective of the corporation, and inwhether 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 givenOptions are then exercisable under
the provisions of the law,Plan) as of a date (before or after such Corporate
Change) specified by the Board, in which event the Board shall thereupon
cancel such Options and pay to each Optionee an amount of cash per share
equal to the excess, if any, of the Change of Control Value of the shares
subject to such Option over the exercise price(s) under such Options for
such shares; (C) in the event of a Corporate Change referenced in Clauses
(iii), (iv) and (v), make such adjustments to Options then outstanding as
the Board deems appropriate to reflect such Corporate Change (provided,
however, that the Board may determine in its sole discretion that no
adjustment is necessary to Options then outstanding); (D) in the event of a
Corporate Change referenced in Clauses (iii), (iv) and (v), provide that
thereafter upon any exercise of an Option theretofore granted the Optionee
shall be entitled to purchase under such Option, in lieu of the number of
shares of Common Stock as to which such Option shall then be exercisable,
the number and class of shares of stock or other securities or property
(including, without limitation, cash) to which the Optionee would have been
entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets or plan of liquidation and dissolution if, immediately prior
to such merger, consolidation or sale of assets or any distribution in
liquidation and dissolution of the Corporation, the Optionee had been the
holder of record of the number of shares of Common Stock then covered by
such Option; or (E) in the event of a Corporate Change referenced in
Clauses (iii), (iv) and (v), cancel the Options granted if the Fair Market
Value of the Common Stock underlying the Options is below the Option
exercise price.
(f) Except as hereinbefore expressly provided, issuance by the Corporation
of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct
sale, upon the exercise of rights or warranty to subscribe therefore, or
upon conversion of shares or obligations of the Corporation convertible
into such shares or other securities, and in any case whether or not for
fair value, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Common Stock subject to
Options theretofore granted, or the purchase price per share of Common
Stock subject to Options.
SECTION 9
AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan or any Option or Grant
or alter or amend the Plan or any part thereof or any Option from time to
time; provided that no change in any Award or Grant previously made may be
made which would impair the rights of the Holder or Grantee without the
consent of the Holder or Grantee, and provided further, that the Board may
not, without approval of the stockholders, amend the Plan:
(a) to increase the aggregate number of shares which may be issued
pursuant to the provisions of the CertificatePlan on exercise or surrender of IncorporationOptions
or upon Grants;
(b) to change the minimum Option exercise price;
(c) to change the class of employees eligible to receive Awards and/or
Grants or increase materially the benefits accruing to employees under the
Plan;
(d) to extend the maximum period during which Awards may be granted or
Grants may be made under the Plan;
(e) to modify materially the requirements as to eligibility for
participation in the Plan; or
(f) to decrease any authority granted to the Board hereunder in
contravention of Rule 16b-3.
SECTION 10
OTHER
(a) No Right to an Award or Grant. Neither the adoption of the corporationPlan nor
any action of the Board 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,Designated Officer shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Lawsto give an
employee any right to be granted an Option to purchase Common Stock, to
receive a Grant or to any other rights hereunder except as may be altered or repealed and By-Laws may be made
at any annual meetingevidenced
by an Option Agreement duly executed on behalf of the stockholders or atCorporation, and then
only to the extent of and on the terms and conditions expressly set forth
therein. The Plan shall be unfunded. The Corporation shall not be required
to establish any special meeting
thereof if noticeor separate fund or to make any other segregation
of funds or assets to assure the proposed alterationpayment of any Award or repeal or By-Law or By-
Laws to be made beGrant. Shares
issued under this Plan shall have the same voting rights as all other
shares of common stock issued by the Corporation.
(b) No Employment Rights Conferred. Nothing contained in the noticePlan or in
any Award or Grant made hereunder shall (i) confer upon any employee any
right with respect to continuation of employment with the Corporation or
any Parent Corporation or Subsidiary, or (ii) interfere in any way with the
right of the Corporation or any Parent Corporation or Subsidiary to
terminate his or her employment at any time.
(c) Other Laws; Withholding. The Corporation shall not be obligated to
issue any Common Stock pursuant to any Award granted or any Grant made
under the Plan at any time when the offering of the shares covered by such
Award has not been registered (or exempted) under the Securities Act of
1933 and such other state and federal laws, rules or regulations as the
Corporation or the Board deems applicable and, in the opinion of legal
counsel for the Corporation, there is no exemption from the registration
requirements of such special meeting,laws, rules or regulations available for the issuance
and sale of such shares. No fractional shares of Common Stock shall be
delivered, nor shall any cash in lieu of fractional shares be paid. The
Corporation shall have the right to deduct in connection with all Awards or
Grants any taxes required by law to be withheld and to require any payments
necessary to enable it to satisfy its withholding obligations. The Board
may permit the affirmative voteHolder of a majorityan Award or Grant to elect to surrender, or
authorize the Corporation to withhold shares of Common Stock (valued at
their Fair Market Value on the date of surrender or withholding of such
shares) in satisfaction of the stock issued and outstanding
and entitledCorporation's withholding obligation,
subject to vote thereat, or by the affirmative vote of a majority
ofsuch restrictions as the Board deems necessary to satisfy the
requirements of Directors, at any regular meetingRule 16b-3.
(d) No Restriction 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, beCorporate Action. Nothing contained in the noticePlan
shall be construed to prevent the Corporation or any Parent Corporation or
Subsidiary from taking any corporate action which is deemed by the
Corporation or such Parent Corporation or Subsidiary to be appropriate or
in its best interest, whether or not such action would have an adverse
effect on the Plan or any Award made under the Plan. No employee,
beneficiary or other person shall have any claim against the Corporation or
any Parent Corporation or Subsidiary as a result of such special meeting.action.
(e) Restrictions on Transfer. An Award shall not be transferable otherwise
than by will or the laws of descent and distribution and shall be
exercisable during the lifetime of the Holder only by such Holder or the
Holder's guardian or legal representative.
(f) Effect of Death, Disability or Termination of Employment. The Option
Agreement or other written instrument evidencing an Award shall specify the
effect of the death, disability or termination of employment of the Holder
on the Award; provided, however that an Optionee shall be entitled to
exercise (i) at least six (6) months from the date of termination of
employment with the Corporation if such termination is caused by death or
disability or (ii) at least thirty (30) days from the date of termination
of employment with the Corporation if such termination is caused by reasons
other than death or disability. The Corporation has no right to repurchase
securities issued under the Plan upon termination of employment of the
Holder.
All outstanding Incentive Stock Options will automatically be converted to
a non-qualified stock option if the Optionee does not exercise the
Incentive Stock Option (i) within three (3) months of the date of
termination caused by reasons other than death or disability; or
(ii) within twelve (12) months of the date of termination caused by
disability.
(g) Information to Employees. Optionees and Grantees under the Plan shall
receive financial statements annually regarding the Corporation during the
period the options are outstanding. The financial statements provided need
not comply with Section 260.613 of the California Code of Regulations.
(h) Rule 16b-3. It is intended that the Plan and any grant of an Award
made to a person subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3. If any provisions of the Plan or any such Award
would disqualify the Plan or such Award hereunder, or would otherwise not
comply with Rule 16b-3, such provision or Award shall be construed or
deemed amended to conform to Rule 16b-3.
(i) Governing Law. The Plan shall by construed in accordance with the laws
of the State of New York and all applicable federal law. The securities
issued hereunder shall be governed by and in accordance with the Corporate
Securities Laws of the State of New York.
ADOPTED BY MECHANICAL TECHNOLOGY INCORPORATED's BOARD OF DIRECTORS AS OF
_________ __, 199_.
APPROVED BY THE SHAREHOLDERS AS OF ___________ __, 199__.