Exhibit
10.2

AWARD AGREEMENT (NON-QUALIFIED
STOCK OPTION)

under theMECHANICAL TECHNOLOGY, INCORPORATEDAMENDED AND RESTATED 2006 EQUITY
INCENTIVE PLAN

THIS AGREEMENT is made as of the ___ day
of _____, 20__, by and between Mechanical Technology, Incorporated, a New York
corporation (the "Company"), and [NAME OF DIRECTOR] (the "Optionee").

WITNESSETH:

WHEREAS, the Optionee is now a Director of
the Company, and the Company desires to provide additional incentives to the
Optionee, to encourage stock ownership by the Optionee, and to encourage the
Optionee to remain as a Director of the Company, and as an inducement thereto
the Company has determined to grant to the Optionee a non-qualified stock option
pursuant to the Company's Amended and Restated 2006 Equity Incentive Plan
("Plan");

NOW, THEREFORE, it is agreed between the
parties as follows:

|1. |  | Grant of Option. Subject to the terms and conditions hereof,
      the Company hereby grants to the Optionee the right and option (the
      "Option") to purchase from the Company up to, but not exceeding in the
      aggregate, __________ shares of the Company's Common Stock, par value $0.01 ("Common
      Stock"), at a price of $ __________ per share (the "fair market value" of
      the Common Stock, determined as provided in the Plan, on the date of grant
      of this Option). ****This option is not intended to
      meet the requirements for "incentive stock options" under Section 422A of
      the Internal Revenue Code (the "Code").****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|2. |  | Right to Exercise Option. The Option hereby granted may be
      exercised immediately upon the grant hereof, and shall remain exercisable
      until exercised or until the expiration of the Option (as hereinafter
      provided), whichever occurs first. Any provision of this Agreement
      notwithstanding, this Option shall not be exercisable on or after [10
      years after the date of grant], on which date all Options hereunder shall
      expire.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|3. |  | Death. If the Optionee should die the executor or
      administrator of the estate of the Optionee, or the person or persons to
      whom the Option shall have been transferred by will or by the laws of
      descent and distribution, shall have the right, within one year from the
      date of the Optionee's death, to exercise this Option to the extent that
      it shall have been exercisable and unexercised on the date of the
      Optionee's death, subject to any other limitation on the exercise of such
      Option in effect at the date of exercise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|4. |  | Exercise of Option. The Optionee, from time to time during
      the period when the Option hereby granted may by its terms be exercised,
      may exercise the Option in whole or in part as at the time permitted, by
      delivery to the Company of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | After receipt of the foregoing and
      subject to Section 5 below and to any restrictions imposed pursuant to the
      next paragraph, in the case of the Optionee's surrender of any
      previously-acquired shares that are subject to a risk of forfeiture, the
      Company shall issue the shares in the name of the Optionee and deliver the
      certificates therefor to the Optionee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |  | Any previously-acquired shares surrendered in payment of a portion
      of the exercise price may include shares subject to a risk of forfeiture
      that were issued under this Plan or another plan of the Company, but in
      such case any shares issued upon exercise of this Option, the purchase or
      exercise price of which was paid for by surrendering shares subject to a
      risk of forfeiture, shall themselves be subject to the same risk of
      forfeiture for the same period and on the same terms as the shares so
      surrendered as payment. Shares of the Company's Common Stock (including
      shares to be acquired pursuant to the exercise of this Option) that are
      surrendered as payment for shares purchased pursuant to the exercise of
      this Option shall be valued, for such purpose, at the "fair market value"
      of the Company's Common Stock, determined in accordance with the Plan, on
      the business day preceding the date of surrender of the certificates for
      such shares to the Company, duly endorsed for transfer (or with duly
      executed stock powers attached) and accompanied by a notice of election to
      exercise the Option (in the case of the surrender of already-owned shares)
      or on the business day preceding the date of the Optionee's delivery to
      the Company of a notice of election to exercise the Option and written
      election to have shares withheld from the shares to be received by the
      Optionee upon exercise of the Option (in the case of shares to be acquired
      pursuant to the exercise of this Option), as the case may
  be.

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|5.  |  | Compliance With Securities
      Laws. Anything to the contrary herein
      notwithstanding, the Company's obligation to sell and deliver stock under
      this Option is subject to such compliance with federal and state laws,
      rules and regulations applying to the authorization, issuance or sale of
      securities as the Company deems necessary or advisable. The Company shall
      not be required to sell and deliver stock pursuant hereto unless and until
      it receives satisfactory proof that the issuance or transfer of such
      shares will not violate any of the provisions of the Securities Act of
      1933 or the Securities Exchange Act of 1934 or the rules and regulations
      of the Securities and Exchange Commission promulgated thereunder or the
      provisions of any state law governing the sale of securities, or that
      there has been compliance with the provisions of such acts, rules,
      regulations and state laws.                                                                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|6.  |  | Non-Assignability.  The Option
      hereby granted shall not be transferable by the Optionee other than by
      will or the laws of descent and distribution, and except as specifically
      set forth herein, the Option may be exercised during the Optionee's
      lifetime only by the Optionee. Any transferee of the Option shall take the
      same subject to the terms and conditions of this Agreement. No such
      transfer of the Option shall be effective to bind the Company unless the
      Company shall have been furnished with written notice thereof and a copy
      of the will and/or such other evidence as the Company may deem necessary
      to establish the validity of the transfer and the acceptance by the
      transferee or transferees of the terms and conditions of this Agreement.
      No assignment or transfer of this Option, or of the rights represented
      thereby, whether voluntary or involuntary, by operation of law or
      otherwise, except a transfer by the Optionee by will or by the laws of
      descent and distribution, shall vest in the purported assignee or
      transferee any interest or right herein whatsoever.
|   
|7.  |  | Withholding. The Optionee hereby
      authorizes the Company to withhold from his compensation or other payments
      due to him, or agrees to tender the applicable amount to the Company, in
      cash or shares of the Company's Common Stock then owned by the Optionee,
      to satisfy any requirements for withholding of income and employment taxes
      in connection with the exercise of the Option granted hereby; shares of
      the Company's Common Stock that are surrendered in payment of the
      Optionee's withholding and other tax obligations shall be valued, for such
      purpose, at the "fair market value" of the Company's Common Stock,
      determined in accordance with the Plan, on the business day preceding the
      date of surrender of the certificates for such shares to the Company for
      such purpose, duly endorsed for transfer (or with duly executed stock
      powers attached).                                                                                                                                                                                                                                                      
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|8.  |  | Disputes. As a condition to the
      granting of the Option granted hereby, the Optionee and the Optionee's
      successors and assigns agree that any dispute or disagreement which shall
      arise under or as a result of this Agreement shall be determined by the
      Board of Directors of the Company in its sole discretion and judgment (or
      by such Committee of the Board, or such other person or groups of persons,
      to whom the Board may have delegated such authority and responsibility),
      and that any such determination and any interpretation by the Board (or
      any such committee, person or group of persons) of the terms of this
      Agreement shall be final and shall be binding and conclusive for all
      purposes.                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|9.  |  | Adjustments. In the event of any stock
      dividend, stock split, reclassification, merger, consolidation, or similar
      transaction affecting the shares covered by this Option, the rights of the
      Optionee shall be as provided in the Plan and any adjustment therein
      provided, if any, shall be made in accordance with the
    Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10. |  | Rights as
      Shareholder. The Optionee shall have no rights as a
      shareholder of the Company with respect to any of the shares covered by
      this Option until the issuance of a stock certificate or certificates upon
      the exercise of the Option in full or in part and payment by the Optionee
      of the purchase price for such shares, and then only with respect to the
      shares represented by such certificate or
  certificates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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|11.                                                                        |  | Notices. Every notice relating to this
      Agreement shall be in writing and if given by mail shall be given by
      registered or certified mail with return receipt requested. All notices to
      the Company shall be delivered to the Secretary at the Company's
      headquarters in Albany, New York, or addressed to the Secretary of the
      Company and mailed to him at:                                                                                                                                                                                                              
|-------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Mechanical Technology, Inc.431
      New Karner RoadAlbany, New York 12205
|                                                                           |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                           |  | All notices
      by the Company to the Optionee shall be delivered to the Optionee
      personally or addressed to the Optionee at the Optionee's last residence
      address as then contained in the records of the Company or such other
      address as the Optionee may designate. Either party by notice to the other
      may designate a different address to which notices shall be addressed. Any
      notice given by the Company to the Optionee at the Optionee's last
      designated address shall be effective to bind any other person who shall
      acquire rights hereunder.
|                                                                          
|12.                                                                        |  | "Optionee" to Include Certain Transferees. Whenever the word
      "Optionee" is used in any provision of this Agreement under circumstances
      where the provision should logically apply to any other person or persons
      to whom the Option, in accordance with the provisions of Section 6 hereof,
      may be transferred, the word "Optionee" shall be deemed to include such
      person or persons.                                                                                                                                                                                    
|                                                                          
|13.                                                                        |  | Governing
      Law. This Agreement has been made in and shall be construed in
      accordance with the laws of the State of New York.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                          
|14.                                                                        |  | Provisions of Plan Controlling. The provisions hereof are
      subject to the terms and provisions of the Plan, a copy of which will be
      provided to the Optionee upon request. In the event of any conflict
      between the provisions of this Option and the provisions of the Plan, the
      provisions of the Plan shall control. Capitalized terms used and not
      defined herein shall have the meaning, if any, set forth in the
      Plan.                                                                                                                                         

IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the day and year first above written.

| | MECHANICAL TECHNOLOGY, INCORPORATED
| | -----------------------------------
| |                                    
| | By:                                
| | Name:                              
| | Title:                             
| |                                    
| |                                    
| | Optionee                           

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NOTICE OF EXERCISE OF NONQUALIFIED
STOCK OPTIONGRANTED UNDER THE
MECHANICAL TECHNOLOGY, INCORPORATEDAMENDED AND RESTATED 2006 EQUITY
INCENTIVE PLAN

SecretaryMechanical Technology, Incorporated431 New Karner RoadAlbany, New
York 12205

Dear Sir/Madam:

A non-qualified stock option ("Option")
was granted to me on _____________, 20__ to purchase _____________shares of
Mechanical Technology, Incorporated Common Stock, par value $0.01 per share, at
a price of $_____per share.

I hereby elect to exercise my Option with
respect to _______shares.

Payment of the purchase price for the
shares being purchased upon my exercise of the Option is enclosed herewith as
follows (must equal total purchase price for the shares):



|$_______ |  | By personal check, cash, bank
      draft or money order, in such amount;                                                                                                                                                                                                                              
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |  |                                                                                                                                                                                                                                                                                                        
|$_______ |  | By the surrender of certificates,
      enclosed herewith, for _______ shares of Mechanical Technology,
      Incorporated Common Stock registered in my name, which shares had a "fair
      market value, as of the close of business yesterday, equal to such amount;
      and/or                  
|         |  |                                                                                                                                                                                                                                                                                                        
|$_______ |  | By my election hereby to
      have _______ shares of Mechanical Technology, Incorporated Common
      Stock withheld from the shares to be received by me upon exercise of the
      Option, which shares had a "fair market value, as of the close of business
      yesterday, equal to such amount.

I authorize the Company to withhold from
my compensation or other payments due to me, or agree to tender the applicable
amount to the Company, to satisfy any requirements for withholding of income and
employment taxes due as a result of my exercise of this option.

I represent that the shares of stock that
I am purchasing upon this exercise of my Option are being purchased for
investment purposes and not with a view to resale. This representation shall not
be binding upon me if the shares of Common Stock that I am purchasing are
subject to an effective Registration Statement under the Securities Act of 1933.

__________________________________ Optionee

Dated: ________________, 20__

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