THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
 

Warrant No. _______ Date of Issuance: ________________, 2010

MTI MICROFUEL CELLS INC.
 
Common Stock Warrant
 
     MTI MicroFuel Cells Inc. (the “Company”), for value received, hereby
certifies that Counter Point Ventures Fund II, LP, or its registered assigns
(the “Holder”), is entitled, subject to the terms set forth below, to purchase
from the Company, at any time after the date hereof and on or before the
Expiration Date (as defined in Section 6 below) shares of capital stock of the
Company at an exercise price per share of $0.070 as set forth herein. This
Common Stock Warrant (“Warrant”) is one of a series of Warrants containing
substantially identical terms and conditions issued pursuant to that certain
Common Stock and Warrant Purchase Agreement dated December __, 2009 (the
“Purchase Agreement”). This Warrant is issued pursuant to, and is subject to the
terms and conditions of, the Purchase Agreement.
 
     The shares purchasable upon exercise of this Warrant are hereinafter
referred to as the “Warrant Stock”.
 
     1. Number and Type of Shares; Purchase Price. Subject to the terms and
conditions hereinafter set forth, the Holder is entitled, upon surrender of this
Warrant, to purchase from the Company a number of shares of Company Common
Stock, par value $0.01 per share (“Common Stock”), equal to 20% of the number of
shares of Common Stock issued by the Company to the Holder pursuant to the
Purchase Agreement on the Date of Issuance set forth above, rounded down to the
nearest whole share, at a per share purchase price equal to the purchase price
per share of such Common Stock issued to the Holder under the Purchase Agreement
(the “Purchase Price”).
 
     2. Exercise.
 
          (a) Manner of Exercise. This Warrant may be exercised by the Holder,
in whole or in part, by surrendering this Warrant, with the purchase/exercise
form appended hereto as Exhibit A duly executed by such Holder or by such
Holder’s duly authorized attorney, at the principal office of the Company, or at
such other office or agency as the Company may designate, accompanied by payment
in full of the Purchase Price payable in respect of the number of shares of
Warrant Stock purchased upon such exercise. The Purchase Price may be paid by
cash, check, wire transfer, or by the surrender of promissory notes or other
instruments representing indebtedness of the Company to the Holder.
 

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          (b) Effective Time of Exercise. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
day on which this Warrant shall have been surrendered to the Company as provided
in Section 2(a) above. At such time, the person or persons in whose name or
names any certificates for Warrant Stock shall be issuable upon such exercise as
provided in Section 2(d) below shall be deemed to have become the holder or
holders of record of the Warrant Stock represented by such certificates.
 
          (c) Net Issue Exercise.
 
               (i) In lieu of exercising this Warrant in the manner provided
above in Section 2(a), the Holder may elect to receive shares equal to the value
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election on the purchase/exercise form appended hereto as Exhibit A duly
executed by such Holder or such Holder’s duly authorized attorney, in which
event the Company shall issue to such Holder a number of shares of Warrant Stock
computed using the following formula:
 

X =       Y (A - B)   A

Where:         X    =    The number of shares of Warrant Stock to be issued to
the Holder.       Y = The number of shares of Warrant Stock purchasable under
this Warrant (at the date of such calculation).           A = The fair market
value of one share of Warrant Stock (at the date of such calculation).          
B  = The Purchase Price (as adjusted to the date of such calculation).

               (ii) For purposes of this Section 2(c), the fair market value of
Warrant Stock on the date of calculation shall mean with respect to each share
of Warrant Stock:
 
                         (A) if the exercise is in connection with an initial
public offering of the Company’s Common Stock, and if the Company’s Registration
Statement relating to such public offering has been declared effective by the
Securities and Exchange Commission, then the fair market value shall be the
product of (x) the initial “Price to Public” per share specified in the final
prospectus with respect to the offering and (y) the number of shares of Common
Stock into which each share of Warrant Stock is convertible at the date of
calculation;
 
                         (B) if (A) is not applicable, the fair market value of
Warrant Stock shall be at the highest price per share which the Company could
obtain on the date of calculation from a willing buyer (not a current employee
or director) for shares of Warrant Stock sold by the Company, from authorized
but unissued shares, as determined in good faith by the Board of Directors,
unless the Company is at such time subject to an acquisition as described in
Section 6 below, in which case the fair market value of Warrant Stock shall be
deemed to be the value received by the holders of such stock pursuant to such
acquisition.
 
-2-
 

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          (d) Delivery to Holder. As soon as practicable after the exercise of
this Warrant in whole or in part, and in any event within ten (10) days
thereafter, the Company at its expense will cause to be issued in the name of,
and delivered to, the Holder, or as such Holder (upon payment by such Holder of
any applicable transfer taxes) may direct:
 
               (i) a certificate or certificates for the number of shares of
Warrant Stock to which such Holder shall be entitled; and
 
               (ii) in case such exercise is in part only, a new warrant or
warrants (dated the date hereof) of like tenor, calling in the aggregate on the
face or faces thereof for the number of shares of Warrant Stock equal (without
giving effect to any adjustment therein) to the number of such shares called for
on the face of this Warrant minus the number of such shares purchased by the
Holder upon such exercise as provided in Section 2(a) or 2(c) above.
 
     3. Adjustments.
 
          (a) Stock Splits and Dividends. If outstanding shares of the Company’s
Common Stock shall be subdivided into a greater number of shares or a dividend
in Common Stock shall be paid in respect of Common Stock, the Purchase Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of shares of Warrant Stock purchasable upon the
exercise of this Warrant shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of this
Warrant immediately prior to such adjustment, multiplied by the Purchase Price
in effect immediately prior to such adjustment; by (ii) the Purchase Price in
effect immediately after such adjustment.
 
          (b) Reclassification, Etc. In case there occurs any reclassification
or change of the outstanding securities of the Company or of any reorganization
of the Company (or any other corporation the stock or securities of which are at
the time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
Holder, upon the exercise hereof at any time after the consummation of such
reclassification, change, or reorganization shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the exercise
hereof prior to such consummation, the stock or other securities or property to
which such Holder would have been entitled upon such consummation if such Holder
had exercised this Warrant immediately prior thereto, all subject to further
adjustment pursuant to the provisions of this Section 3; provided, however, that
the operation of this Section 3(b) shall not effect the termination of this
Warrant upon a Change of Control (as defined in Section 6 below) pursuant to
Section 6 below.
 
-3-
 

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          (c) Adjustment Certificate. When any adjustment is required to be made
in the Warrant Stock or the Purchase Price pursuant to this Section 3, the
Company shall promptly mail to the Holder a certificate setting forth (i) a
brief statement of the facts requiring such adjustment; (ii) the Purchase Price
after such adjustment; and (iii) the kind and amount of stock or other
securities or property into which this Warrant shall be exercisable after such
adjustment.
 
     4. Transfers.
 
          (a) Unregistered Security. Each holder of this Warrant acknowledges
that this Warrant and the Warrant Stock of the Company have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), and agrees
not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose
of this Warrant or any Warrant Stock issued upon its exercise in the absence of
(i) an effective registration statement under the Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect;
or (ii) an opinion of counsel, satisfactory to the Company, that such
registration and qualification are not required. Each certificate or other
instrument for Warrant Stock issued upon the exercise of this Warrant shall bear
a legend substantially to the foregoing effect.
 
          (b) Transferability. The Holder may not assign, pledge, or otherwise
transfer this Warrant without the prior written consent of the Company. Subject
to the preceding sentence, this Warrant may be transferred only upon surrender
of the original Warrant for registration of transfer, duly endorsed, or
accompanied by a duly executed written instrument of transfer in form
satisfactory to the Company. Thereupon, a new warrant in substantially the form
hereof will be issued to, and registered in the name of, the transferee.
 
          (c) Warrant Register. The Company will maintain a register containing
the names and addresses of the Holders of this Warrant. Until any transfer of
this Warrant is made in the warrant register, the Company may treat the Holder
of this Warrant as the absolute owner hereof for all purposes; provided,
however, that if this Warrant is properly assigned in blank, the Company may
(but shall not be required to) treat the bearer hereof as the absolute owner
hereof for all purposes, notwithstanding any notice to the contrary. Any Holder
may change such Holder’s address as shown on the warrant register by written
notice to the Company requesting such change.
 
     5. No Impairment. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will (subject to Section 14 below) at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.
 
     6. Termination. This Warrant (and the right to purchase securities upon
exercise hereof) shall automatically terminate upon the earliest to occur of the
following (the “Expiration Date”): (a) the five (5) year anniversary of the Date
of Issuance of this Warrant; (b) immediately prior to a Change of Control; or
(c) the closing of a firm commitment underwritten public offering pursuant to a
registration statement under the Securities Act.
 
-4-
 

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     The term “Change of Control” shall mean the sale, conveyance or other
disposition of all or substantially all of the Company’s property or business or
the Company’s merger with or into or consolidation with any other corporation,
limited liability company or other entity (other than a wholly owned subsidiary
of the Company), provided that the term “Change of Control” shall not include a
merger of the Company effected exclusively for the purpose of changing the
domicile of the Company, to an equity financing in which the Company is the
surviving corporation, or to a transaction in which the stockholders of the
Company immediately prior to the transaction own 50% or more of the voting power
of the surviving corporation following the transaction.
 
     7. Notices of Certain Transactions. In case:
 
          (a) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, to subscribe for or purchase any shares of stock of any class or any
other securities, or to receive any other right;
 
          (b) of any capital reorganization of the Company, any reclassification
of the capital stock of the Company, any consolidation or merger of the Company,
any consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the surviving
entity), or any transfer of all or substantially all of the assets of the
Company;
 
          (c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
 
          (d) of any redemption of the Common Stock;
 
then, and in each such case, the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right; or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such other
stock or securities at the time deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation,
winding-up, redemption or conversion) are to be determined. Such notice shall be
mailed at least ten (10) days prior to the record date or effective date for the
event specified in such notice.
 
     8. Reservation of Stock. The Company will at all times reserve and keep
available, solely for the issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the exercise of this Warrant.  
 
-5-
 

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     9. Exchange of Warrants. Upon the surrender by the Holder of any Warrant or
Warrants, properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 4 hereof, issue
and deliver to or upon the order of such Holder, at the Company’s expense, a new
Warrant or Warrants of like tenor, in the name of such Holder or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares
of Warrant Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
 
     10. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
 
     11. Mailing of Notices. Any notice required or permitted pursuant to this
Warrant shall be in writing and shall be deemed sufficient upon receipt, when
delivered personally or sent by courier, three days after deposit with an
overnight delivery service, or confirmed facsimile, addressed (a) if to the
Holder, to the address of the Holder most recently furnished in writing to the
Company; and (b) if to the Company, to the address set forth below or
subsequently modified by written notice to the Holder.
 
     12. No Rights as Stockholder. Until the exercise of this Warrant, the
Holder of this Warrant shall not have or exercise any rights by virtue hereof as
a stockholder of the Company.
 
     13. No Fractional Shares. No fractional shares of Warrant Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Warrant Stock on the date of exercise, as determined in good faith by the
Company’s Board of Directors.
 
     14. Amendment or Waiver. Any term of this Warrant may be amended or waived
upon written consent of the Company and the holders of at least a majority of
the Warrant Stock issuable upon exercise of outstanding warrants purchased
pursuant to the Purchase Agreement. By acceptance hereof, the Holder
acknowledges that in the event the required consent is obtained, any term of
this Warrant may be amended or waived with or without the consent of the Holder;
provided, however, that any amendment hereof that would materially adversely
affect the Holder in a manner different from the holders of the remaining
warrants issued pursuant to the Purchase Agreement shall also require the
consent of Holder.
 
     15. Headings. The headings in this Warrant are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Warrant.
 
     16. Governing Law. This Warrant shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.
 
     17. Counterparts. This Warrant may be executed in counterparts and by
facsimile, each of which will be deemed to be an original and all of which
together will constitute a single agreement.
 
[Signature Page Follows]
 
-6-
 

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     This Common Stock Warrant was executed as of the date first above written.
 

COMPANY:     MTI MICROFUEL CELLS INC.         Peng K. Lim Chief Executive
Officer   Address:

AGREED TO AND ACCEPTED:   HOLDER:   COUNTER POINT VENTURES FUND II, LP     
Walter L. Robb, General Partner   Address:     c/o Vantage Management, Inc.  
3000 Troy Schenectady Road   Schenectady, NY 12309

 
 
 
 
 
 
 
 
 
 
 
 
 
 
SIGNATURE PAGE TO COMMON STOCK WARRANT
 

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EXHIBIT A
 
PURCHASE/EXERCISE FORM
 

 

To: MTI MICROFUEL CELLS INC. Dated: ________________

     
     The undersigned, pursuant to the provisions set forth in the attached
Warrant No. _______, hereby irrevocably elects to (i) purchase __________ shares
of the _________ Stock covered by such Warrant and herewith makes payment of $
__________, representing the full purchase price for such shares at the price
per share provided for in such Warrant; or (ii) exercise such Warrant for
__________ shares purchasable under the Warrant pursuant to the Net Issue
Exercise provisions of Section 2(c) of such Warrant.
 
     The undersigned acknowledges that it has reviewed the representations and
warranties contained in Section 4 of the Purchase Agreement (as defined in the
Warrant) and by its signature below hereby makes such representations and
warranties to the Company. Defined terms contained in such representations and
warranties shall have the meanings assigned to them in the Purchase Agreement,
provided that the term “Purchaser” shall refer to the undersigned and the term
“Securities” shall refer to the Warrant Stock and the Common Stock of the
Company issuable upon conversion of the Warrant Stock, if applicable.
 
      The undersigned further acknowledges that it has reviewed the lock-up
agreement set forth in Section 7 of the Purchase Agreement, and agrees to be
bound by such provisions.
 

  Print Name of Holder           Signature         Print Name and Title of
Signatory (if entity)

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