MTI MICROFUEL CELLS INC. AMENDMENT NO. 1 TO CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT, SECURITY AGREEMENT AND SECURED CONVERTIBLE PROMISSORY NOTES AND CONSENT

MTI MICROFUEL CELLS INC.

AMENDMENT NO. 1 TO
CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT, SECURITY
AGREEMENT AND SECURED CONVERTIBLE PROMISSORY NOTES AND CONSENT

      This Amendment No. 1 to Convertible Note and Warrant Purchase Agreement, Security Agreement and Secured Convertible Promissory Notes and Consent (this “ Amendment and Consent ”) is made as of  FEB 20th , 2009 (the “ Effective Date ”) by and among MTI MicroFuel Cells Inc., a Delaware corporation (the “ Company ”) and each of the investors listed on Exhibit A attached to this Amendment (each a “ Purchaser ” and together the “ Purchasers ”), and amends (i) that certain Convertible Note and Warrant Purchase Agreement, dated as of September 18, 2008 (the “ Purchase Agreement ”) between the Company and the Purchasers, (ii) that certain Security Agreement, dated as of September 18, 2008 (the “ Security Agreement ”) between the Company and the Purchasers, and (iii) those certain Secured Convertible Promissory Notes, each dated as of September 18, 2008 (the “ Notes ”) between the Company and each of the Purchasers.

      WHEREAS, the Company issued Notes in the aggregate principal amount of $2,200,000, and warrants exercisable for equity securities of the Company (the “ Warrants ”), to the Purchasers pursuant to the Purchase Agreement, which Notes are secured by all of the assets of the Company in accordance with the provisions of the Security Agreement;

      WHEREAS, the Company and the Purchasers desire to amend the Purchase Agreement to permit the Company to sell additional Notes and Warrants with an aggregate principal amount of up to $500,000 to such Purchasers who desire to acquire additional Notes and Warrants as scheduled on Exhibit A attached hereto;

      WHEREAS, the Company and the Purchasers desire to amend the Notes to extend the Maturity Date (as defined thereunder) from March 31, 2009 to May 31, 2009; and

      WHEREAS, the Purchase Agreement and the Notes may be amended by the Company and holders of at least a majority in interest of the Notes, and the Security Agreement may be amended by Company and each of the Purchasers;

      NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, receipt of which is hereby acknowledged, the parties to this Amendment and Consent agree as follows:

      1. Amendment of Section 1(b)(iii) of the Purchase Agreement . Section 1(b)(iii) of Purchase Agreement is hereby amended to permit the Company to sell additional Notes and Warrants with an aggregate principal amount of up to $500,000 under the Purchase Agreement for a period of thirty (30) days following the Effective Date hereto to such Purchasers who desire to acquire additional Notes and Warrants as scheduled on Exhibit A attached hereto.

      2. Amendment of “Maturity Date” of the Notes . The “Maturity Date” set forth in Section 1 of each of the Notes, and such additional Notes to be issued to the Purchasers as scheduled on Exhibit A attached hereto, shall be amended to provide for an amended “Maturity Date” of May 31, 2009.

      3. Amendment of Security Interest . The Security Agreement is hereby amended to provide that the indebtedness represented by the additional Notes to be issued to the Purchasers scheduled on Exhibit A attached hereto shall be secured by all of the assets of the Company in accordance with the provisions of the Security Agreement, and Exhibit A to the Security Agreement shall be amended to include such Purchasers’ additional indebtedness thereunder.

      4. Consent to Amendments and Related Matters . The Company and each of the Purchasers hereby consent to (i) the amendment of the Purchase Agreement and the Notes, (ii) the purchase by the Purchaser(s) set forth on Exhibit A attached hereto of an additional Note(s) and Warrant(s) and the Company’s issuance of a Note(s) and Warrant(s) to such Purchaser(s), and (iii) the inclusion of the indebtedness represented by such additional Note(s) under the Security Agreement and amendment thereof to include such indebtedness as secured thereunder.

      5. Miscellaneous .

           (a) Governing Law . This Amendment and Consent and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto 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.

           (b) Counterparts . This Amendment and Consent may be executed in two or more counterparts and by facsimile, each of which shall be deemed an original and all of which together shall constitute one instrument.

           (c) Entire Agreement . Each of the Purchase Agreement, the Security Agreement, and the Notes, as amended by this Amendment and Consent, and the documents referred to herein and therein, constitute the entire agreement between the parties hereto pertaining to the subject matters hereof and thereof, respectively, and any and all other written or oral agreements existing between the parties hereto are expressly canceled.

[Signature Pages Follow]

      The parties have executed this Amendment No. 1 to Convertible Note and Warrant Purchase Agreement, Security Agreement and Secured Convertible Promissory Notes and Consent as of the Effective Date.

COMPANY:

MTI MICROFUEL CELLS INC.

PURCHASERS:

MECHANICAL TECHNOLOGY INCORPORATED

WALTER L. ROBB

COUNTER POINT VENTURES FUND II, LP

EXHIBIT A

Additional Closing Date : _______________, 2009

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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 DISPOSITION THEREOF. NO SUCH SALE OR DISPOSITION 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.

MTI MICROFUEL CELLS INC.

SECURED CONVERTIBLE PROMISSORY NOTE

      For value received, MTI MicroFuel Cells Inc., a Delaware corporation (the “ Company ”), promises to pay to Counter Point Ventures Fund II, LP (the “ Holder ”), the principal sum of $500,000. Interest shall accrue from the date of this Note on the unpaid principal amount at a rate equal to 10.0% per annum, compounded annually. This Note is one of a series of Secured Convertible Promissory Notes containing substantially identical terms and conditions issued pursuant to that certain Convertible Note and Warrant Purchase Agreement dated September 18, 2008, as amended (the “ Purchase Agreement ”). Such Notes are referred to herein as the “ Notes ,” and the holders thereof are referred to herein as the “ Holders .” This Note is subject to the following terms and conditions.

      1. Maturity . Unless converted as provided in Section 2 below, all unpaid principal and accrued interest under this Note shall be due and payable upon demand by the Holder at any time on or after May 31, 2009 (the “ Maturity Date ”), except as otherwise provided hereunder. Notwithstanding the foregoing, the entire unpaid principal sum of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon the insolvency of the Company, the commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of 90 days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company.

      2. Conversion .

           (a) Investment by the Holder .

                (i) The entire principal amount of and (at the Company’s option) accrued but unpaid interest on this Note will automatically convert into shares of the Company’s preferred stock (the “ Next Equity Preferred ”) issued and sold in the Company’s next equity financing in a single or a series of related transactions yielding gross proceeds to the Company of at least $3,500,000 (including conversion, in whole or in part, of any Notes) (the “ Next Equity Financing ”). The number of shares of Next Equity Preferred to be issued upon such conversion shall be equal to the quotient obtained by dividing (a) the entire principal amount of this Note plus (if applicable) accrued but unpaid interest, by (b) the price per share of the Next Equity Preferred, rounded down to the nearest whole share, and the issuance of such shares upon such conversion shall be upon the terms and subject to the conditions applicable to the Next Equity Financing.

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                (ii) If the Next Equity Financing does not occur on or before the Maturity Date, all principal and (at the Company’s option) accrued interest outstanding under all of the Notes shall be converted into equity securities of the Company (“ Equity Securities ”) based upon a Company valuation and on such terms to be agreed upon by the Company and the holders of a majority in interest of the Notes within thirty (30) days following the Maturity Date, which valuation and terms shall be negotiated in good faith by the Company and a majority in interest of the Notes (a “ Negotiated Conversion ”). If the Company and holders of a majority in interest of the Notes cannot agree upon the valuation and terms of a Negotiated Conversion, and fail to consummate such Negotiated Conversion within thirty (30) days following the Maturity Date, then all principal and accrued interest outstanding under the Notes shall be due and payable upon demand by the Holders at any time thereafter.

                (iii) Notwithstanding the above, in the event a Change of Control (as defined below) is consummated prior to the Next Equity Financing, a Negotiated Conversion, or the repayment in full of all principal and accrued interest under the Notes, then the Notes shall become immediately due and payable in an amount equal to 125% of the principal amount of the Note(s) and 100% of the accrued interest outstanding thereon, payment of which shall be in full satisfaction of the Note(s) and shall be made within thirty (30) days following the consummation of such Change of Control.

                (iv) 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.

           (b) Mechanics and Effect of Conversion . Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company. At its expense, the Company will, as soon as practicable thereafter, issue and deliver to such Holder, at such principal office, a certificate or certificates for the number of shares to which such Holder is entitled upon such conversion, together with any other securities and property to which the Holder is entitled upon such conversion under the terms of this Note, including a check payable to the Holder for any cash amounts payable as described herein. Upon conversion of this Note, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted including without limitation the obligation to pay such portion of the principal amount and accrued interest.

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           (c) Payment of Interest . Upon conversion of the principal amount of this Note into the Company’s Next Equity Preferred or Equity Securities, as applicable, any interest accrued on this Note that is not by reason of Section 2(a) hereof simultaneously converted into Next Equity Preferred or Equity Securities, as applicable, shall be immediately paid to the Holder.

      3. Payment; Prepayment . All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal. Prepayment of this Note may be made at any time without penalty.

      4. Transfer; Successors and Assigns . The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge, or otherwise transfer this Note without the prior written consent of the Company. Subject to the preceding sentence, this Note may be transferred only upon surrender of the original Note 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 note for the appropriate principal amount and interest will be issued to, and registered in the name of, the transferee. Interest and principal are payable only to the registered holder of this Note.

      5. Governing Law . This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto 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.

      6. Amendments and Waivers . Any term of this Note may be amended only with the written consent of the Company and at least a majority in interest of the Holders. Any amendment or waiver effected in accordance with this Section 6 shall be binding upon the Company, each Holder and each transferee of any Note.

      7. Security Interest . This Note is secured by all of the assets of the Company in accordance with a separate security agreement (the “ Security Agreement ”) of even date herewith between the Company and the Holder. In case of an Event of Default (as defined in the Security Agreement), the Holder shall have the rights set forth in the Security Agreement.

      8. Company Covenant . For so long as this Note is outstanding, the Company shall not, without written consent of at least a majority in interest of the Holders, sell or transfer any accounts, inventory, equipment, general intangibles (to inc