Exhibit 10.122

AMENDMENT NO. 1

TO THE

MAIN AGREEMENT

This Amendment No. 1 (this "Amendment") to the Main Agreement (as defined
below), dated as of May 4, 2004, is entered into by and between Mechanical
Technology Incorporated, a corporation organized under the laws of New York
(together with its permitted successors, the "Company"), and Fletcher
International, Ltd., a company organized under the laws of Bermuda (together
with its permitted successors, "Fletcher").

WHEREAS, the Company and Fletcher are parties to that certain Agreement dated as
of January 26, 2004 (the "Main Agreement") (with capitalized terms used and not
defined herein having the meanings ascribed to them in the Main Agreement); and

WHEREAS, pursuant to the Main Agreement, the Company issued to Fletcher on
January 29, 2004, Certificate of Additional Investment Rights No. 1; and

WHEREAS, the Company and Fletcher desire to amend the Main Agreement to, among
other things, revise the terms of the Additional Investment Rights contained in
the Certificate issued under the Main Agreement and certain registration
obligations of the Company;

NOW, THEREFORE, in consideration of and upon the basis of the foregoing, the
representations, warranties, covenants and agreements contained herein and in
the Main Agreement, and subject to the terms and conditions set forth herein and
in the Main Agreement, the parties hereto agree as follows:

 1. Amendment of the Main Agreement

    .

     a. Annex A of the Main Agreement is hereby deleted and replaced with the
        Certificate attached hereto as Annex A-1 (the "Replacement
        Certificate").
     b. Section 1(b) of the Main Agreement is hereby deleted and replaced with
        the following:
    
        "(b) In addition, the Company shall issue to Fletcher on the date of
        Amendment No. 1 to the Agreement a certificate in the form attached
        hereto as Annex A (the "Certificate") evidencing rights (the "Additional
        Investment Rights") to purchase from the Company (i) additional shares
        of Common Stock (the "First Additional Shares") at the price specified
        in the Certificate, at an aggregate purchase price of eight million
        dollars ($8,000,000) (the "First Additional Investment Amount"); (ii)
        from time to time, additional shares of Common Stock (the "Second
        Additional Shares," and, together with the First Additional Shares, the
        "Additional Shares") at the price specified in the Certificate, up to an
        aggregate purchase price of twenty million dollars ($20,000,000) (the
        "Second Additional Investment Amount," and, together with the First
        Additional Investment Amount, the "Additional Investment Amount") and
        (iii) up to two million, seven hundred thousand (2,700,000) shares of
        common stock, par value $0.01 per share (the "Plug Power Stock") of Plug
        Power, Inc., a Delaware corporation ("Plug Power"), owned by the Company
        and held in escrow pursuant to the terms of the Escrow Agreement (as
        defined in Section 13(a)(iii)) at a price specified in the Certificate,
        all subject to the terms and conditions of the Certificate. Fletcher
        shall have the right to exercise the Additional Investment Rights in the
        manner, and subject to the terms, specified in this Agreement and in the
        Certificate."
    
     c. Section 4 of the Main Agreement is hereby deleted and replaced with the
        revised Section 4 attached hereto as Annex B.
     d. Section 5(b) of the Main Agreement is hereby amended by deleting
        "11,107,214" in each place it appears and replacing it with "8,330,411"
        and deleting "forty percent (40%)" and replacing it with "thirty percent
        (30%)".
     e. Section 7 of the Main Agreement is hereby deleted and replaced with the
        revised Section 7 attached hereto as Annex C.
     f. Section 8(f) of the Main Agreement is hereby deleted and replaced with
        the following:
    
        "(f) If on any date the number of shares equal to (i) the quotient of
        (A) the difference obtained by subtracting the aggregate Designated
        Additional Investments set forth on the Additional Investment Notices
        with respect to all exercises of the MTI Investment Rights (measured as
        of such date) from the Additional Investment Amount divided by (B) the
        Amendment Date Price on such date, multiplied by eighty percent (80%),
        plus (ii) all other shares of Common Stock that are issuable upon
        exercise of the MTI Investment Rights or otherwise under this Agreement
        or the Certificate, or the date has passed on which such shares were
        required to be issued, under this Agreement or the Certificate in
        connection with a Restatement, a Later Issuance, a Change in Control or
        otherwise, exceeds the remaining number of Common Shares (after taking
        into account all issued shares of Common Stock) then reserved for
        issuance, then the Company shall reserve for issuance within three (3)
        Business Days after and including such date a number of Common Shares
        not less than such excess."
    
     g. Sections 9(b) and 9(c) of the Main Agreement are each hereby amended by
        deleting the amount "$26,000,000" and replacing it with "$28,000,000."
     h. The first sentence of the letter attached as Annex B to the Main
        Agreement is hereby deleted and replaced with the following:

    "Reference is made to the Agreement (the "Agreement") dated as of January
    26, 2004 by and between Mechanical Technology Incorporated (the "Company")
    and Fletcher International, Ltd. ("Fletcher"), as amended by Amendment No. 1
    to the Main Agreement, dated as of May 4, 2004."

    Delivery of New Certificate
    . Upon the execution of this Amendment, (a) Fletcher shall deliver to the
    Company the original Certificate issued pursuant to the Main Agreement for
    cancellation and the Company shall issue and deliver to Fletcher one (1)
    Replacement Certificate, duly executed by the Company in definitive form and
    duly registered on the books of the Company in the name of Fletcher
    International, Ltd., and (b) Fletcher shall deliver the certificate in the
    form attached hereto as
    Annex D
    .

    3. Amendment to Escrow Agreement; Release of Plug Power Shares. Upon the
    execution of this Amendment, Fletcher and the Company shall each execute and
    deliver to the Escrow Agent:

     a. Joint Instructions to the Escrow Agent to release three hundred thousand
        (300,000) shares of Plug Power Stock from the Escrow Fund (as defined in
        the Escrow Agreement) to the Company; and
     b. a duly executed amendment to the Escrow Agreement substantially in the
        form attached hereto as Annex E.
    
        4. Miscellaneous.
    
        (a) Except as expressly set forth herein, the Main Agreement shall
        remain in full force and effect, as amended hereby.
    
        (b) The parties may execute and deliver this Amendment as a single
        document or in any number of counterparts, manually, by facsimile or by
        other electronic means, including contemporaneous xerographic or
        electronic reproduction by each party's respective attorneys. Each
        counterpart shall be an original, but a single document or all
        counterparts together shall constitute one instrument that shall be the
        agreement.
    
        [SIGNATURE PAGE FOLLOWS]
    
        IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
        this Amendment, all as of the day and year first above written.
    
         
        
        MECHANICAL TECHNOLOGY INCORPORATED
        
                 
        
        By: /s/Cynthia A. Scheuer_______________
        
        Name: Cynthia A. Scheuer
        
        Title: VP & CFO
        
             
        
        FLETCHER INTERNATIONAL, LTD., by its duly authorized investment advisor,
        FLETCHER ASSET MANAGEMENT, INC.
        
                 
        
        By: /s/Peter Zayfert _____
        
        Name: Peter Zayfert
        
        Title: Authorized Signatory
        
         
        
         
        
         
        
        By: /s/Denis Kiely __
        
        Name: Denis Kiely
        
        Title: Authorized Signatory
    
         
    
         
    
        ANNEX A-1
    
        
    
        FORM OF CERTIFICATE OF ADDITIONAL INVESTMENT RIGHTS
    
        
    
         
    
         
    
        ANNEX B
        
        Revised Section 4 of the Main Agreement
    
        4. Registration Provisions.
    
     c. The Company shall, as soon as practicable and at its own expense, but in
        no event later than February 25, 2004, file a registration statement
        under the Securities Act covering the resale of all of the Common Shares
        (such registration statement, together with all amendments and
        supplements thereto and any replacement registration statement with
        respect thereto or with respect to the Common Shares covered thereby,
        the "Initial Registration Statement"). Pursuant to the preceding
        sentence, the Company shall register pursuant to the Initial
        Registration Statement a number of shares of Common Stock at least equal
        to the sum of (i) the quotient of the Initial Investment divided by the
        product of (A) the Agreement Date Price (measured as of the filing date
        of the Initial Registration Statement) multiplied by (B) eight tenths
        (0.80), plus (ii) the quotient of $26,000,000 divided by the product of
        (A) the Agreement Date Price multiplied by (B) eight tenths (0.80);
        provided, however, that if the Stockholder Consent has not been obtained
        prior to the effectiveness of the Initial Registration Statement, the
        Company shall register pursuant to such Initial Registration Statement
        not less than 5,550,830 shares of Common Stock, representing nineteen
        and ninety-nine one hundredths percent (19.99%) of the shares of Common
        Stock outstanding as of the date of this Agreement (the "Original
        Number"). The Company shall use its best efforts to cause such Initial
        Registration Statement to be declared effective as soon as practicable,
        but not later than April 25, 2004 (or, in the event that the SEC elects
        to review such Initial Registration Statement, May 25, 2004). The
        Company shall provide prompt written notice to Fletcher if the SEC
        elects to review such Initial Registration Statement. Notwithstanding
        anything in this Agreement to the contrary, (x) in the event of an SEC
        Rejection (as defined in Section 4(l)) relating to the Initial
        Registration Statement stating that the SEC will not permit the Company
        to register the resale of Common Shares issuable upon exercise of the
        MTI Additional Investment Rights, the Company shall only be obligated to
        register pursuant to the Initial Registration Statement the number of
        shares under Section 4(a)(i) above, and (y) in the event such SEC
        Rejection referred to in the preceding clause (x) does not expressly
        state that the SEC will permit the Company to register the resale of
        Common Shares issuable under this Agreement (disregarding for these
        purposes shares issuable under the Certificate or with respect to the
        MTI Additional Investment Rights), the Company shall only be obligated
        to register pursuant to the Initial Registration Statement 1,418,842
        Common Shares.
     d. If the Stockholder Consent is obtained after the effective date of the
        Initial Registration Statement, then the Company shall, at its own
        expense and no later than ten (10) days after and excluding the date on
        which the Stockholder Consent is obtained, file a registration statement
        under the Securities Act covering the resale of all of the Common Shares
        not previously registered pursuant to the Initial Registration Statement
        (such registration statement, together with all amendments and
        supplements thereto and any replacement registration statement with
        respect thereto or with respect to the Common Shares covered thereby,
        the "Consent Registration Statement"). Pursuant to the preceding
        sentence, the Company shall register pursuant to the Consent
        Registration Statement a number of shares of Common Stock at least equal
        to the difference between (i) the quotient of (A) thirty-eight million
        dollars ($38,000,000) divided by (B) the product of (x) the Amendment
        Date Price (as defined in the Certificate) (measured as of the filing
        date of the Consent Registration Statement) multiplied by (y)
        eight-tenths (0.80) and (ii) the number of shares registered pursuant to
        the Initial Registration Statement or any other effective Registration
        Statement (as defined in Section 4(d)); provided, however, that in no
        event shall the Company be required to register pursuant to the
        Registration Statements in the aggregate more than 8,330,411 Common
        Shares, representing thirty percent (30%) of the Original Number. The
        Company shall use its best efforts to cause the Consent Registration
        Statement to be declared effective as soon as practicable, but not later
        than seventy (70) days after and excluding the date on which the
        Stockholder Consent is obtained (or, in the event that the SEC elects to
        review such Initial Registration Statement, one hundred (100) days after
        and excluding the date on which the Stockholder Consent is obtained).
        The Company shall provide prompt written notice to Fletcher if the SEC
        elects to review such Consent Registration Statement. Notwithstanding
        anything in this Agreement to the contrary, in the event of (1) an SEC
        Rejection relating to the Initial Registration Statement, or (2) an SEC
        Rejection relating to any other Registration Statement, the Company
        shall have no further obligations under this Section 4(b) and shall
        instead be obligated to register such shares, if and when issued, in
        accordance with Section 4(n).
     e. At any time after the effectiveness of the Initial Registration
        Statement and the Consent Registration Statement, the Company shall file
        a new registration statement (each new registration statement, an
        "Additional Registration Statement") as promptly as practicable after
        (and in no event later than ten (10) days after and excluding) the date
        (a "Shortfall Date") on which the number of Common Shares issued or
        issuable under this Agreement and the Certificate exceeds eighty percent
        (80%) of the number of shares of Common Stock then registered, so that
        one hundred twenty-five percent (125%) of Common Shares so issued or
        issuable (as determined on such date) shall be registered pursuant to
        such registration statement; provided, however, that in no event shall
        the Company be required to register pursuant to the Registration
        Statements in the aggregate more than 8,330,411 Common Shares,
        representing thirty percent (30%) of the Original Number. The Company
        shall use its best efforts to cause each Additional Registration
        Statement to be declared effective as soon as practicable, but not later
        than seventy (70) days after and excluding the relevant Shortfall Date
        (or, in the event that the SEC elects to review such Additional
        Registration Statement, one hundred (100) days after and excluding the
        relevant Shortfall Date). The Company shall provide prompt written
        notice to Fletcher if the SEC elects to review any Additional
        Registration Statement. Notwithstanding anything in this Agreement to
        the contrary, in the event of (1) an SEC Rejection relating to the
        Initial Registration Statement, or (2) an SEC Rejection relating to any
        other Registration Statement, the Company shall have no further
        obligations under this Section 4(c) and shall instead be obligated to
        register such shares, if and when issued, in accordance with Section
        4(n).
     f. The Initial Registration Statement, Consent Registration Statement and
        each Additional Registration Statement and Subsequent Issuance
        Registration Statement (as defined in Section 4(n)) are referred to
        herein, collectively, as the "Registration Statements." The obligations
        to timely file the Registration Statements and to have the Registration
        Statements declared effective and to maintain such effectiveness as
        provided in this Section 4 (subject to any Blackout Period that does not
        constitute a Blackout Violation, in each case, as defined below) are
        referred to herein as the "Registration Requirement."
     g. Each Common Share is a "Covered Security." The Company shall provide
        prompt written notice to Fletcher when each of the Registration
        Statements has been declared effective by the SEC.
     h. The Company will use its best efforts to: (i) keep each Registration
        Statement effective until the earlier of (A) the later of (1) the second
        anniversary of the issuance of the last Covered Security that may be
        issued and to which such Registration Statement relates, or (2) such
        time as all of the Covered Securities issued or issuable to Fletcher and
        to which such Registration Statement relates can be sold by Fletcher or
        any of its affiliates within a three-month period without compliance
        with the registration requirements of the Securities Act pursuant to
        Rule 144 or (B) the date all of the Covered Securities covered by such
        Registration Statement shall have been sold by Fletcher and its
        affiliates (such later period, the "Registration Period"); (ii) prepare
        and file with the SEC such amendments and supplements to the
        Registration Statements and the prospectuses used in connection with the
        Registration Statements (as such prospectuses are so amended and
        supplemented from time to time, the "Prospectuses") as may be necessary
        to comply with the provisions of the Securities Act with respect to the
        disposition of all Covered Securities by Fletcher or any of its
        affiliates; (iii) furnish such number of Prospectuses and other
        documents incident thereto, including any amendment of or supplement to
        the Prospectuses, as Fletcher from time to time may reasonably request;
        (iv) cause all Covered Securities to be listed on each securities
        exchange and quoted on each quotation service on which similar
        securities issued by the Company are then listed or quoted; (v) provide
        a transfer agent and registrar for all Covered Securities and a CUSIP
        number for all Covered Securities; (vi) otherwise comply with all
        applicable rules and regulations of the SEC, the Nasdaq and any other
        exchange or quotation service on which the Covered Securities are
        obligated to be listed or quoted under this Agreement; and (vii) file
        the documents required of the Company and otherwise obtain and maintain
        requisite blue sky clearance in (x) New York and all other jurisdictions
        in which any of the Covered Securities were originally sold and (y) all
        other states specified in writing by Fletcher, provided, however, that,
        as to this clause (y), the Company shall not be required to qualify to
        do business or consent to service of process in any state in which it is
        not now so qualified or has not so consented. Fletcher shall (i) provide
        such information as reasonably requested by the Company in connection
        with the preparation of the Registration Statements and (ii) have the
        right to approve the description of the selling stockholder, plan of
        distribution and all other references to Fletcher and its affiliates
        contained in any Registration Statement and any Prospectus; provided,
        however, that, in the event of Fletcher's failure to comply with its
        obligations set forth in clause (i) of this sentence, the Company's
        obligation to file a Registration Statement will be suspended until such
        time as Fletcher complies therewith and, provided, further, that, with
        respect to clause (ii) of this sentence, Fletcher shall approve or
        reject such descriptions or references within two (2) full Business Days
        after and excluding the date on which the Company provides the final
        forms of such descriptions and references, and, in the event that
        Fletcher has not approved or rejected such descriptions within five (5)
        full Business Days after and excluding the date on which the Company
        provides the final forms of such descriptions and references, the
        Company's obligation to file a Registration Statement will be suspended
        until such time as Fletcher complies therewith.
     i. The Company shall furnish to Fletcher upon request a reasonable number
        of copies of a supplement to or an amendment of any Prospectus as may be
        necessary in order to facilitate the public sale or other disposition of
        all or any of the Covered Securities by Fletcher or any of its
        affiliates pursuant to the Registration Statements.
     j. With a view to making available to Fletcher and its affiliates the
        benefits of Rule 144 and Form S-3 under the Securities Act, the Company
        covenants and agrees to: (i) make and keep available adequate current
        public information (within the meaning of Rule 144(c)) concerning the
        Company during the Registration Period; and (ii) furnish to Fletcher
        upon request, as long as Fletcher owns any Covered Securities, (A) a
        written statement by the Company that it has complied with the reporting
        requirements of the Securities Act and the Exchange Act and, (B) such
        other information as may be reasonably requested in order to avail
        Fletcher and its affiliates of Rule 144 or Form S-3 with respect to such
        Covered Securities.
     k. Notwithstanding anything else in this Section 4, if, at any time during
        which a Prospectus is required to be delivered in connection with the
        sale of any Covered Security, the Company determines in good faith and
        upon advice of counsel that a development has occurred or a condition
        exists as a result of which the Registration Statements or the
        Prospectuses contain a material misstatement or omission, the Company
        will promptly notify Fletcher thereof by telephone and in writing. Upon
        receipt of such notification, Fletcher and its affiliates will
        immediately suspend all offers and sales of any Covered Security
        pursuant to the Registration Statements, and, if so directed by the
        Company, Fletcher will deliver to the Company, at the Company's expense,
        all copies of the Prospectuses printed in bulk in connection with a
        pending underwritten offering, in its possession, if any, relating to
        the Covered Securities. In such event, the Company will amend or
        supplement the Registration Statements and the Prospectuses or make such
        filings or public disclosures as promptly as practicable and will use
        its best efforts to take such other steps as may be required to permit
        sales of the Covered Securities thereunder by Fletcher and its
        affiliates in accordance with applicable federal and state securities
        laws. The Company will promptly notify Fletcher after it has determined
        in good faith that such sales have become permissible in such manner and
        will promptly deliver copies of the Registration Statements and the
        Prospectuses (as so amended or supplemented, if applicable) to Fletcher
        in accordance with paragraphs (f) and (g) of this Section 4.
     l. Notwithstanding anything else in this Agreement, but subject to the last
        sentence of this Section 4(j), if a material transaction in which the
        Company is engaged or proposes to engage would require an immediate
        amendment to the Registration Statements, a supplement to the
        Prospectuses or a filing under the Exchange Act or other public
        disclosure of material information and the disclosure of such
        transaction would be premature or injurious to the consummation of the
        transaction (each, a "Blackout Event"), the Company may give notice (a
        "Blackout Notice") to Fletcher by telephone and in writing to suspend
        sales of Covered Securities. Fletcher agrees that, after the receipt of
        a Blackout Notice, it will not effect any sales of Covered Securities
        pursuant to the Registration Statements until the Company notifies
        Fletcher that such sales are permissible and, if so directed by the
        Company, Fletcher will deliver to the Company all copies of the
        Prospectus prepared in bulk in connection with an underwritten offering
        in its possession, if any, relating to the Covered Securities. At the
        end of any Blackout Event, the Company will (i) amend or supplement the
        Registration Statements and the Prospectuses or make such filings or
        public disclosures as promptly as practicable, (ii) use its best efforts
        to take such other steps as may be required to permit sales of the
        Covered Securities thereunder by Fletcher and its affiliates in
        accordance with applicable federal and state securities laws, (iii)
        promptly notify Fletcher after it has determined in good faith that such
        sales are permissible and (iv) promptly deliver copies of the
        Registration Statements and the Prospectuses (as so amended or
        supplemented, if applicable) to Fletcher in accordance with paragraphs
        (f) and (g) of this Section 4. Notwithstanding the foregoing, (x) under
        no circumstances shall the Company be entitled to exercise its right
        under this Section 4(j) to suspend sales of any Covered Securities
        pursuant to the Registration Statements if (A) it has exercised its
        right to suspend sales under this Section 4(j) on more than one (1)
        other occasion in the preceding twelve (12)-month period, (B) it has
        exercised its right to suspend sales under this Section 4(j) on one (1)
        occasion, and has suspended sales pursuant to Section 4(i) for an
        aggregate of thirty (30) days or more, in the preceding twelve
        (12)-month period, or (C) it has suspended sales pursuant to Section
        4(i) for an aggregate of sixty (60) days or more in the preceding twelve
        (12)-month period, (y) any suspension under this Section 4(j) shall not
        exceed thirty (30) days and (z) no suspension under this Section 4(j)
        may commence less than thirty (30) days after the end of the preceding
        suspension under Section 4(i) or this Section 4(j).
     m. Promptly after the commencement of any suspension of sales of the
        Covered Security pursuant to this Section 4 (each period during which
        such sales are suspended being referred to herein as a "Blackout
        Period"), Fletcher will notify the Company of any contract to sell,
        assign, deliver or otherwise transfer any Covered Security that requires
        delivery of such Covered Security no later than three (3) Business Days
        after execution (each a "Sales Contract") that Fletcher or any of its
        affiliates has entered into prior to the commencement of such Blackout
        Period and that would require delivery of such Covered Securities during
        such Blackout Period, which notice will contain the aggregate sale price
        and quantity of Covered Securities pursuant to such Sales Contract.
        Within two (2) Business Days of receipt of such notice, the Company will
        notify Fletcher of its election either to (i) terminate the Blackout
        Period and, as promptly as practicable, amend or supplement the
        Registration Statements or the Prospectuses in order to correct the
        material misstatement or omission and deliver to Fletcher copies of such
        amended or supplemented Registration Statement and Prospectus in
        accordance with paragraphs (f) and (g) of this Section 4, or
        (ii) continue the Blackout Period in accordance with this paragraph. If
        the Company elects to continue the Blackout Period (or the Company
        elects to terminate the Blackout Period, but the Blackout Period is not
        terminated before the latest date that Fletcher may consummate the
        transaction contemplated by the Sales Contract), and if Fletcher or any
        of its affiliates are therefore unable to consummate the sale of Covered
        Securities pursuant to the Sales Contract (such unsold Covered
        Securities being the "Unsold Securities"), the Company will promptly
        indemnify each Fletcher Indemnified Party (as such term is defined in
        Section 17(a) below) against any Proceeding (as such term is defined in
        Section 17(a) below) that each Fletcher Indemnified Party may incur
        arising out of or in connection with Fletcher's breach or alleged breach
        of any such Sales Contract, and the Company shall reimburse each
        Fletcher Indemnified Party for any reasonable costs or expenses
        (including reasonable legal fees) incurred by such party in
        investigating or defending any such Proceeding. The purpose of the
        indemnities set forth in this Section 4(k) shall be to make the Fletcher
        Indemnified Parties whole for all losses, costs and expenses related to
        such Blackout Period, and the calculation of any indemnification payment
        under this Section 4(k) shall take into account all relevant factors,
        including (i) any cash payment made to any Person to terminate or modify
        such Sales Contract, (ii) the cost of covering by purchasing or
        borrowing Common Stock or other securities to deliver pursuant to such
        Sales Contract, (iii) the expected net benefit to Fletcher of delivering
        the Unsold Securities pursuant to the Sales Contract and (iv) Fletcher's
        mitigation of losses resulting from sales of the Unsold Securities after
        the Blackout Period; provided, however, that nothing in this Section
        4(k)(iv) shall require Fletcher to take any actions that would have or
        could reasonably be expected to have an adverse economic effect on
        Fletcher or its affiliates. Upon receipt of Fletcher's notice of
        existing Sales Contracts required by this Section 4(k), the Company and
        Fletcher shall discuss in good faith any steps that could reasonably be
        taken to mitigate any losses relating to any Unsold Securities. In the
        event of a Blackout Period, Fletcher shall take reasonable actions to
        mitigate losses relating to Unsold Securities and resulting from the
        Blackout Period; provided, however, that Fletcher shall not be required
        to take any actions that would have or could reasonably be expected to
        have an adverse economic effect (after taking into account any
        specifically-stated, written commitment by the Company to provide
        indemnification under this Section 4(k) with respect to such action) on
        Fletcher or its affiliates. The amounts owed to Fletcher by the Company
        hereunder shall be reduced by losses resulting from Fletcher's failure
        to comply with its obligation set forth in the preceding sentence. If
        the Company elects to terminate the Blackout Period, Fletcher shall use
        reasonable efforts to extend the consummation date of such Sales
        Contract until after such Blackout Period ends; provided, however, that
        Fletcher shall not be required to take any action with respect to such
        Sales Contract that would have an adverse economic effect on Fletcher.
     n. If (i) the Registration Requirement is not satisfied at any time, (ii)
        the Company suspends sales under Section 4(j) on more than one (1) other
        occasion in the preceding twelve (12)-month period, (iii) the Company
        suspends sales under Section 4(j) on one (1) occasion, and has suspended
        sales pursuant to Section 4(i) for an aggregate of thirty (30) days or
        more, in the preceding twelve (12)-month period, (iv) the Company
        suspends sales pursuant to Section 4(i) for an aggregate of sixty (60)
        days or more in the preceding twelve (12)-month period, or (v) any
        suspension under Section 4(j) shall exceed thirty (30) days or shall
        occur within thirty (30) days of any suspension under Section 4(i) or
        Section 4(j) (each of (ii), (iii), (iv) and (v), a "Blackout
        Violation"), then for each month or portion thereof in which the
        Registration Requirement is not satisfied or a Blackout Violation occurs
        or continues, the Agreement Date Price shall be reduced by $0.3524 and
        the Amendment Date Price shall be reduced by $0.3170, including through
        the issuance of additional shares of Common Stock as if such adjusted
        Agreement Date Price or Amendment Date Price, as the case may be, had
        been in effect as of the date hereof and as of each of the dates on
        which an Additional Investment Notice was delivered to the Company, as
        applicable; provided, however, that no reduction of the Agreement Date
        Price or Amendment Date Price (and issuance of additional shares of
        Common Stock) shall be made (1) with respect to any Common Shares that
        (x) are not owned by Fletcher or its affiliates on the date of the event
        giving rise to such reduction or (y) may be sold pursuant to an
        effective Registration Statement and are not affected by the Company's
        failure to satisfy the Registration Requirement, or (2) with respect to
        Common Shares issuable upon exercise of the MTI Investment Rights, after
        the date of an SEC Rejection and before the exercise of such MTI
        Investment Rights. For purposes of this Agreement, "SEC Rejection" shall
        mean the SEC's (or its Staff's) delivery of a comment or instruction
        (either orally or in writing) to the Company or its counsel stating that
        the SEC will not permit the Company to register the resale of Common
        Shares issuable upon exercise of the MTI Additional Investment Rights
        (as defined in the Certificate) or otherwise issuable hereunder or under
        the Certificate until such shares have been issued, but, if applicable,
        does not object to the registration of the remaining shares of Common
        Stock issued hereunder if the shares issuable upon exercise of the MTI
        Additional Investment Rights and otherwise issuable hereunder or under
        the Certificate are excluded from the relevant Registration Statement;
        provided, however, that an SEC comment shall only constitute an SEC
        Rejection (A) with respect to the Initial Registration Statement, in the
        event that it occurs subsequent to the Company (x) filing a first
        amendment to the Initial Registration Statement, (y) either (i) filing a
        second amendment to the Initial Registration Statement or (ii) engaging
        in an oral teleconference with a member of the SEC staff responsible for
        reviewing the Initial Registration Statement and counsel for Fletcher
        (if counsel for Fletcher is permitted by the member of the SEC staff to
        join such teleconference and only if Fletcher is a Holder (as defined in
        the Certificate)) and during such teleconference asserting its position
        that the Company should be permitted to register for resale pursuant to
        the Initial Registration Statement the number of Common Shares
        contemplated by the second sentence of Section 4(a) hereof and (z)
        taking such other actions as are determined by the Company to be
        productive toward obtaining registration of the shares issuable upon
        exercise of the MTI Additional Investment Rights in light of the SEC's
        oral and written comments; and (B) with respect to any other
        Registration Statements, in the event that it occurs subsequent to the
        Company (x) filing a first amendment to such Registration Statement, (y)
        either (i) filing a second amendment to such Registration Statement or
        (ii) engaging in an oral teleconference with a member of the SEC staff
        responsible for reviewing such Registration Statement and counsel for
        Fletcher (if counsel for Fletcher is permitted by the member of the SEC
        staff to join such teleconference and only if Fletcher is a Holder) and
        during such teleconference asserting its position that the Company
        should be permitted to register for resale pursuant to such Registration
        Statement the number of Common Shares contemplated by the applicable
        provision of this Agreement and (z) taking such other actions as are
        determined by the Company to be productive toward obtaining registration
        of the shares issuable upon exercise of the MTI Additional Investment
        Rights in light of the SEC's oral and written comments. If an SEC
        Rejection is delivered to the Company in writing, then the Company shall
        deliver a copy of such SEC Rejection to Fletcher on the next Business
        Day, and if an SEC Rejection is delivered to the Company orally, then
        the Company shall summarize the substance of such SEC Rejection in a
        letter to Fletcher, signed by an appropriate officer of the Company, on
        the next Business Day. If the Registration Requirement is not satisfied
        at any point in time during the Registration Period, or if a Blackout
        Violation occurs, then the end of the Additional Investment Term (as
        defined in the Certificate) relating to the Second MTI Right shall be
        extended by one day for each day (or portion thereof) that the
        Registration Requirement shall not have been satisfied or the Blackout
        Violation shall exist, as the case may be; provided, that such
        Additional Investment Term shall not be extended for any day (or portion
        thereof) that the Registration Requirement is not satisfied with respect
        to Common Shares issuable upon exercise of the MTI Investment Rights
        after the date of an SEC Rejection, which prevents the Company from
        satisfying the Registration Requirement with respect to the Registration
        Statement covering such Common Shares, except that such Additional
        Investment Term shall be extended for any day (or portion thereof) that
        the Registration Requirement with respect to Common Shares issuable upon
        exercise of the MTI Investment Rights shall not have been satisfied.
        Notwithstanding the foregoing, in no event shall such Additional
        Investment Term be extended beyond December 31, 2006, except, that, if
        the Registration Requirement is not satisfied, or if a Blackout Period
        or a Blackout Violation exists, at any time during the sixty
        (60)-Business Day period ending on and including December 31, 2006,
        Fletcher shall have no less than sixty (60) Business Days on which the
        Registration Requirement is satisfied and no Blackout Period or Blackout
        Violation exists after and excluding the last date on which the
        Registration Requirement was not satisfied, or a Blackout Period or
        Blackout Violation existed, to exercise the MTI Investment Rights.
     o. "Market Stand-off" Agreement. If requested by the Company and an
        underwriter in a bona fide underwritten public offering of Common Stock
        with net proceeds of at least twenty-five million dollars ($25,000,000)
        to the Company, after underwriter's discounts or commissions and other
        fees or expenses, Fletcher shall not sell any Common Stock on Nasdaq
        during the ninety (90) day period (or such shorter period, if (A) so
        notified by the Company in writing or (B) the Company withdraws the
        registration statement with respect to, or otherwise abandons, such
        underwritten public offering) (in each case, a "Stand-off Period")
        following the effective date of a registration statement of the Company
        filed under the Securities Act, provided that:
         i.   such Stand-off Period shall not occur before the first anniversary
              of the termination of the most recent Stand-off Period;
         ii.  all officers and directors of the Company and all stockholders of
              the Company beneficially owning more than ten percent (10%) of the
              shares of Common Stock on the effective date of such registration
              statement shall have entered into agreements no less favorable to
              the Company and the underwriters;
         iii. Fletcher shall beneficially own more than ten percent (10%) of the
              shares of Common Stock outstanding on the effective date of such
              registration statement;
         iv.  the MTI Investment Rights, in whole or in part, are outstanding,
              are unexercised and have not expired; and
    
        the end of the Additional Investment Term relating to the Second MTI
        Right shall be extended by one day for each day (or portion thereof) of
        the Stand-off Period, provided, however, that in no event shall such
        Additional Investment Term be extended beyond December 31, 2006, except,
        that, if a Stand-off Period exists at any time during the sixty
        (60)-Business Day period ending on and including December 31, 2006, the
        Holder (as defined in the Certificate) shall have no less than sixty
        (60) Business Days (on which no Stand-off Period exists) after the end
        of such Stand-off Period in which to exercise the MTI Investment Rights.
    
        Subsequent Issuance Registration Statements
        . At any time after an SEC Rejection, upon the exercise of the MTI
        Investment Rights pursuant to the Certificate or upon the issuance of
        any other shares of Common Stock under this Agreement or the Certificate
        (excluding the 1,418,842 Initial Shares), the Company shall, at its own
        expense and as promptly as practicable after (and in no event later than
        ten (10) Business Days after and excluding) each Additional Investment
        Closing Date, file a registration statement (each such registration
        statement, together with all amendments and supplements thereto and any
        replacement registration statement with respect thereto or with respect
        to the Common Shares covered thereby, an "
        Subsequent Issuance Registration Statement
        ")) covering the resale of all of the shares of Common Stock issued
        pursuant to such exercise of the MTI Investment Rights. The Company
        shall use its best efforts to cause each Subsequent Issuance
        Registration Statement to be declared effective as soon as practicable,
        but not later than sixty (60) days after and excluding the relevant
        Additional Investment Closing Date (or, if the SEC elects to review such
        Subsequent Issuance Registration Statement, ninety (90) days after and
        excluding the relevant Additional Investment Closing Date). The Company
        shall provide prompt written notice to Fletcher if the SEC elects to
        review any Subsequent Issuance Registration Statement. Notwithstanding
        anything contained herein to the contrary, the Company shall not be
        obligated to file more than two Subsequent Issuance Registration
        Statements during any ninety (90) day period or more than six Subsequent
        Issuance Registration Statements during any one year period.
    
        ANNEX C
        
        Revised Section 7 of the Main Agreement
    
        7. Future Equity Issuances.
    
     p. If, on or after the date hereof and prior to the end of the Additional
        Investment Term, the Company engages or participates in any discussions
        with any Person regarding any potential Later Issuance (as defined, and
        subject to the limitations, below), the Company shall (i) within two (2)
        Business Days after and excluding the date of such discussions, notify
        Fletcher of the existence of the Company's discussions with respect to
        the potential Later Issuance and (ii) in connection with such notice,
        inquire whether Fletcher desires to be informed as to the substance of
        such discussions. If Fletcher notifies the Company in writing that
        Fletcher elects to become informed with respect to such potential Later
        Issuance by 11:59 p.m., New York City time, on the second (2nd) Business
        Day after and excluding the date on which the Company so notifies
        Fletcher (the "Fletcher Election Period"), the Company shall use its
        best efforts to engage in good faith discussions with Fletcher regarding
        the potential Later Issuance and shall not consummate such Later
        Issuance until the later to occur of (i) two (2) full Business Days
        after and excluding the date of Fletcher's election and (ii) the
        expiration of the Fletcher Election Period. For purposes of
        clarification, nothing in this subsection shall obligate the Company to
        invite or allow Fletcher to participate in a Later Issuance.
        Notwithstanding anything in this Agreement to the contrary, the Company
        shall have no obligations under this Agreement to disclose any material,
        non-public information to Fletcher unless Fletcher, upon request by the
        Company, executes and delivers a confidentiality agreement relating
        thereto in form and substance reasonably acceptable to the Company.
     q. If, on or prior to December 31, 2004 (which date will be extended by one
        day for each day (or portion thereof) prior to December 31, 2004 that
        the Registration Requirement shall not have been satisfied or a Blackout
        Violation shall exist, as the case may be (such later date, the
        "Extended Date")), there is a Later Issuance:
         i.  at a Later Issuance Price (as defined below) per share that is less
             than $7.048, but greater than or equal to $6.34, then:
              A. the Company shall promptly issue, and deliver certificates to
                 Fletcher representing, an additional number of shares of Common
                 Stock, if any, equal to the positive difference between (1) the
                 number of shares equal to the number calculated by dividing
                 $10,000,000 by the Later Issuance Price and (2) the sum of the
                 Initial Shares plus all shares of Common Stock previously
                 issued under this Section 7(b)(i)(A), if any; and
              B. the Agreement Date Price shall automatically be reduced to
                 equal the lesser of the Later Issuance Price and the Agreement
                 Date Price then in effect; or
        
         ii. at a Later Issuance Price per share that is less than $6.34, then:
              A. the Company shall promptly issue, and deliver certificates to
                 Fletcher representing, an additional number of shares of Common
                 Stock, if any, equal to the sum of:
             
                 (1) the positive difference between (x) the number of shares
                 equal to the number calculated by dividing $10,000,000 by the
                 Later Issuance Price and (y) the sum of the Initial Shares plus
                 all shares of Common Stock previously issued under this Section
                 7(b)(ii)(A)(1), if any; plus
             
                 (2) with respect to each Additional Investment Notice delivered
                 by the Holder prior to a Later Issuance where the MTI
                 Additional Investment Price (as defined in the Certificate) was
                 greater than the Later Issuance Price, the positive difference,
                 if any, between (1) the number of shares calculated by dividing
                 (x) the Designated Additional Investment set forth in such
                 Additional Investment Notice by (y) the Later Issuance Price
                 (provided that if such Additional Investment Notice was settled
                 by Net Basis Settlement, such additional number of shares shall
                 equal the positive difference, if any, between the number of
                 shares of Common Stock that would have been issuable pursuant
                 to Section 1.4(b) of the Certificate if the MTI Additional
                 Investment Price had equaled the Later Issuance Price, minus
                 the number of shares of Common Stock actually issued pursuant
                 to such Additional Investment Notice) and (2) the sum of the
                 aggregate number of shares of Common Stock delivered upon such
                 closings of such exercises of the MTI Investment Rights plus
                 all shares of Common Stock previously issued under this Section
                 7(b)(ii)(A)(2), if any; and
             
              B. the Agreement Date Price shall automatically be reduced to
                 equal the lesser of the Later Issuance Price and the Agreement
                 Date Price then in effect; and
              C. the Amendment Date Price shall automatically be reduced to
                 equal the lesser of the Later Issuance Price and the Amendment
                 Date Price then in effect.
    
     r. If, at any time after the later of December 31, 2004 or the Extended
        Date, and on or prior to the end of the Additional Investment Term,
        there is a Later Issuance at a Later Issuance Price per share that is
        less than $7.048, but greater than or equal to $6.34, then:
         i.  the Company shall promptly issue, and deliver certificates to
             Fletcher representing, an additional number of shares of Common
             Stock equal to the positive difference obtained by subtracting (1)
             the sum of the Initial Shares plus all shares of Common Stock
             previously issued under this Section 7(c)(i) from (2) the quotient
             obtained by dividing (y) ten million dollars ($10,000,000) by (z)
             the Adjusted ADP; and
         ii. the Agreement Date Price shall be adjusted to equal the Adjusted
             ADP, if the Adjusted ADP is less than the Agreement Date Price then
             in effect.
    
     s. If, at any time after the later of December 31, 2004 or the Extended
        Date, and on or prior to the end of the Additional Investment Term,
        there is a Later Issuance at a Later Issuance Price per share that is
        less than $6.34, then:
         i.   the Company shall promptly issue, and deliver certificates to
              Fletcher representing, an additional number of shares of Common
              Stock equal to the sum of:
               A. the positive difference obtained by subtracting (1) the sum of
                  the Initial Shares plus all shares of Common Stock previously
                  issued under this Section 7(d)(i)(A) from (2) the quotient
                  obtained by dividing (y) ten million dollars ($10,000,000) by
                  (z) the Adjusted ADP; plus
               B. the sum of any positive differences obtained for each exercise
                  of the MTI Investment Rights by subtracting (1) the sum of the
                  number of shares of Common Stock delivered upon the closing of
                  the exercise of the MTI Investment Rights plus all shares of
                  Common Stock previously issued under this Section 7(d)(i)(B)
                  from (2) the quotient obtained by dividing (y) the Designated
                  Additional Investment set forth in the Additional Investment
                  Notice delivered in connection with the closing of the
                  exercise of the MTI Investment Rights by (z) the Adjusted MTI
                  Price;
        
         ii.  the Agreement Date Price shall be adjusted to equal the Adjusted
              ADP, if the Adjusted ADP is less than the Agreement Date Price
              then in effect; and
         iii. the Amendment Date Price shall be adjusted to equal the Adjusted
              MTI Price, if the Adjusted MTI Price is less than the Amendment
              Date Price then in effect.
    
     t. "Later Issuance" shall mean the consummation of, any sale or issuance by
        the Company, directly or indirectly, to any Person or Persons (other
        than Fletcher or its affiliates) of any shares of, or securities
        convertible into, exercisable or exchangeable for, or whose value is
        derived in whole or in part from, any shares of any class of the
        Company's capital stock; provided that "Later Issuance" shall not
        include (A) a sale or issuance to the sellers of any business or assets
        of a business being purchased by the Company in a bona fide acquisition
        whether through purchase, merger, consolidation, exchange offer or
        otherwise, (B) a bona fide sale or issuance to a strategic or joint
        venture partner, (C) a bona fide sale or issuance in connection with the
        acquisition of intellectual property assets, (D) issuances pursuant to
        any stock split, dividend or distribution payable in additional shares
        of capital stock pro rata to all holders of Common Stock, (E) sales or
        issuances to employees, consultants or directors of the Company or any
        of its subsidiaries directly or pursuant to a stock option plan,
        employee stock purchase plan or restricted stock plan, or other similar
        arrangements related to compensation for services in effect on the date
        of this Agreement, or similar plans or arrangements approved by the
        Company's Board of Directors (and, if required, approved by the
        Company's stockholders) after the date hereof, in each case in the
        ordinary course of business for bona fide compensatory purposes,
        (F) issuances issued upon the exercise of any options or warrants to
        purchase capital stock outstanding on the date hereof or upon conversion
        of any securities convertible into capital stock outstanding on the date
        hereof, in each case in accordance with the terms of such options,
        warrants or securities in effect on the date hereof, (G) issuances in
        connection with the exercise or triggering of a stockholder rights plan
        or similar anti-takeover mechanism (a "Poison Pill"), (H) Common Shares
        issued or issuable pursuant to this Agreement or upon exercise of the
        MTI Investment Rights or (I) sales or issuances occurring on or after
        January 1, 2005 (which date will be extended by one day for each day (or
        portion thereof) that the Registration Requirement shall not have been
        satisfied or a Blackout Violation shall exist, as the case may be)
        pursuant to a bona fide underwritten public offering of the Company's
        securities with net proceeds to the Company of at least twenty-five
        million dollars ($25,000,000). "Later Issuance Price" shall mean the
        fair market value of the minimum amount of consideration deliverable by
        the purchaser in return for each share of Common Stock (or economic
        equivalent thereof). "Adjusted ADP" shall equal the product of (A)
        $7.048 (the "Initial ADP") and (B) a fraction, the numerator of which
        shall be the sum of the number of shares of Common Stock outstanding
        immediately prior to the Later Issuance plus the quotient obtained by
        dividing the aggregate Proceeds received by the Company in the Later
        Issuance by the Initial ADP, and the denominator of which shall be the
        sum of the number of shares of Common Stock outstanding immediately
        prior to the Later Issuance and the number of shares of Common Stock
        issued in the Later Issuance; provided that for each Later Issuance
        after and excluding the first Later Issuance occurring under this
        Agreement, the "Initial ADP" shall equal the Adjusted ADP calculated in
        connection with the immediately preceding Later Issuance. "Adjusted MTI
        Price" shall, with respect to each exercise of the MTI Investment
        Rights, equal the product of (A) the Amendment Date Price measured as of
        the date of such exercise (the "Initial Strike Price") and (B) a
        fraction, the numerator of which shall be the sum of the number of
        shares of Common Stock outstanding immediately prior to the Later
        Issuance plus the quotient obtained by dividing the Proceeds by the
        Initial Strike Price, and the denominator of which shall be the sum of
        the number of shares of Common Stock outstanding immediately prior to
        the Later Issuance and the number of shares of Common Stock issued in
        the Later Issuance; provided that for each Later Issuance after and
        excluding the first Later Issuance occurring under this Agreement with
        respect to such exercise of the MTI Investment Rights, the "Initial
        Strike Price" shall equal the Adjusted MTI Price calculated in
        connection with the immediately preceding Later Issuance. "Proceeds"
        shall equal the product of the Later Issuance Price and the number of
        shares of Common Stock issued in the Later Issuance.

ANNEX D

Fletcher International, Ltd.

[insert address]

May [ ], 2004

Mechanical Technology Incorporated

431 New Karner Road

Albany, NY 12205

Re: Amendment No. 1 to Main Agreement

Ladies and Gentlemen:

Reference is made to (i) that certain Agreement dated as of January 26, 2004 by
and between Mechanical Technology Incorporated, a corporation organized under
the laws of New York (together with its permitted successors, the "Company"),
and Fletcher International, Ltd., a company organized under the laws of Bermuda
(together with its permitted successors, "Fletcher") (the "Main Agreement");
(ii) that certain Amendment No. 1 to Main Agreement dated as of May [ ], 2004 by
and between the Company and Fletcher (the "Main Agreement Amendment"); (iii) the
certain Escrow Agreement dated as of January 29, 2004 by and between the
Company, Fletcher and Smith Barney, a division of Citigroup Global Markets, Inc.
( "Escrow Agent") (the "Escrow Agreement"); and (iv) the certain Amendment No. 1
to Escrow Agreement dated as of May [ ], 2004 by and between the Company,
Fletcher and Escrow Agent (the "Escrow Agreement Amendment", and together with
the Main Agreement Amendment, the "Amendments"). This letter agreement is being
delivered pursuant to Section 2 of the Main Agreement Amendment. Capitalized
terms used herein but not defined herein shall have the meanings assigned to
such terms in the Main Agreement Amendment.

Fletcher hereby represents and warrants to the Company, as of the date hereof,
as follows:

(1) Fletcher understands that no United States federal or state agency has
passed on, reviewed or made any recommendation or endorsement of the Replacement
Certificate.

(2) Fletcher is an "accredited investor" as such term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act").

(3) Fletcher is purchasing the Replacement Certificate for its own account for
investment only and not with a view to, or for resale in connection with, the
public sale or distribution thereof in the United States, except pursuant to
sales registered under the Securities Act or an exemption therefrom.

(4) Fletcher understands that the Replacement Certificate is being offered and
sold to it in reliance on specific exemptions from the registration requirements
of the United States federal securities laws and that the Company is relying on
the truth and accuracy of, and Fletcher's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Fletcher set forth
herein in order to determine the availability of such exemptions and the
eligibility of Fletcher to acquire the Replacement Certificate. Fletcher further
understands that the Replacement Certificate may not be re-offered or resold
other than pursuant to registration under the Securities Act or an available
exemption therefrom.

(5) To Fletcher's knowledge, the Replacement Certificate was not offered or sold
to Fletcher by any form of general solicitation or general advertising.

Sincerely,

FLETCHER INTERNATIONAL, LTD., by its duly authorized investment advisor,
FLETCHER ASSET MANAGEMENT, INC.

 

By:______________________________

Name:

Title:

By:______________________________

Name:

Title:

ACCEPTED AND ACKNOWLEDGED AS OF

THE DATE FIRST WRITTEN ABOVE:

MECHANICAL TECHNOLOGY INCORPORATED

By:__________________________________

Name:

Title:

 

ANNEX E

FORM OF AMENDMENT NO. 1 TO ESCROW AGREEMENT