On June 9, 2006, in connection with the operation of the employment agreement dated March 6, 2006 (the "Agreement") between Mr. Russel Marvin, Chief Operating Officer of MTI MicroFuel Cells Inc. and MTI MicroFuel Cells Inc. ("MTI Micro"), a majority-owned subsidiary of Mechanical Technology Incorporated ("MTI"), and Mr. Marvin's election under the Agreement related to compensation and equity parity with the Chief Executive Officer ("CEO") of MTI Micro, (1)MTI granted Mr. Marvin additional options to purchase 5,000 shares of MTI common stock which vest in equal quarterly amounts over a four-year period at the rate of 6.25% per quarter, with the first vesting to occur three months from the date of the Agreement or June 6, 2006; (2) in order to conform their terms to the terms of the CEO's performance-based options, MTI modified the terms of Mr. Marvin's existing 150,000 performance-based MTI stock options, from vesting upon the public announcement that MTI Micro has completed its milestone to have available operationally robust units for field testing by the end of 2006, to vesting upon the earlier of the public announcement that MTI Micro has completed its milestone to have available operationally robust units for field testing by the end of 2006 or December 31, 2008; and (3) in order to be consistent with the terms of the CEO's employment contract, MTI Micro agreed to reimburse Mr. Marvin up to $7,000 for the cost of any attorney's fees incurred in connection with his legal representation concerning the Agreement.

The forgoing stock options issued to Mr. Marvin were granted on June 9, 2006 and were priced based on the closing price of the Company's stock on the NASDAQ National Market System of $3.19.