SERIES A PREFERRED STOCK PURCHASE AGREEMENT
 
This Series A Preferred Stock Purchase Agreement (this “Agreement”) is made as
of February 3, 2011 by and among Neah Power Systems, Inc., a Nevada corporation
(“NPS”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and, collectively, the
“Purchasers”). NPS and the Purchasers are sometimes individually referred to
herein as a “Party” and collectively as the “Parties.”
 
RECITALS
 
WHEREAS, subject to the terms and conditions set forth in this Agreement, NPS
desires to issue and sell to each Purchaser, and each Purchaser desires to
purchase from NPS, shares of NPS’ Series A Preferred Stock having the rights,
preferences and privileges set forth in the certificate of designation attached
to this Agreement as Exhibit A (the “Preferred Stock”); and
 
WHEREAS, the issuance and sale of the Preferred Stock to each of the Purchasers
is intended to be exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, and the safe harbor set forth in Rule 506 of
Regulation D promulgated thereunder.
 
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained in this Agreement, and intending to be legally bound, the
Parties agree as follows:
 
ARTICLE I
PURCHASE AND SALE; CLOSING
 
1.1           The Sale. Subject to the terms and conditions of this Agreement,
on the Closing Date (as defined below), NPS will issue and sell to each
Purchaser, and each Purchaser will purchase and acquire from NPS, the number of
shares of Preferred Stock set forth on such Purchaser’s signature page to this
Agreement (the “Sale”).
 
1.2           Purchase Price. The purchase price for each share of Preferred
Stock is $0.055 (the “Per Share Purchase Price”). Each Purchaser agrees to pay
the purchase price determined by multiplying the number of shares of Preferred
Stock purchased by such Purchaser by the Per Share Purchase Price. The purchase
price for each Purchaser as determined by the foregoing formula is set forth on
such Purchasers signature page to this Agreement (the “Subscription Amount”).
 
1.3           Advancement. Certain of the Purchasers have advanced certain
portions of their Subscription Amount to NPS (the “Advancement”) prior to the
date of this Agreement. The amount of such Advancement, if applicable, is set
forth on such Purchaser’s signature page to this Agreement. NPS acknowledges
receipt of the Advancement as set forth on such Purchaser’s signature page to
this Agreement.
 
1.4           Closing. Upon the terms and subject to the conditions set forth in
this Agreement, the closing of the Sale shall take place on a day designated by
NPS that shall be no more than fifteen Business Days following the date of this
Agreement (the “Closing Date”). NPS shall provide to the Purchasers at least 24
hours notice prior to the Closing Date. On or prior to the Closing Date, NPS
shall file with the Nevada Secretary of State the certificate of designation in
the form attached as Exhibit A (the “Certificate of Designation”). On the
Closing Date, after the Nevada Secretary of State has returned a filing receipt
indicating the successful filing of the Certificate of Designation, (i) each
Purchaser shall deliver to NPS via wire transfer or a certified check of
immediately available funds such Purchaser’s Subscription Amount (minus any
Advancement) and (ii) NPS shall deliver to each Purchaser a stock certificate
representing such Purchaser’s respective shares of Preferred Stock. “Business
Day” means any day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking institutions in
the State of Washington are authorized or required by law or other governmental
action to close.
 
-1-

--------------------------------------------------------------------------------

 
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF NPS
 
NPS hereby represents and warrants as of the date hereof and as of the Closing
Date to each of the Purchasers, except as disclosed in the SEC Reports (as
defined below) filed on or prior to the date of this Agreement, as follows:
 
2.1           Organization and Qualification. NPS is an entity duly incorporated
or otherwise organized, validly existing and in good standing under the laws of
the jurisdiction of Nevada, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. NPS is duly qualified to conduct business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of this
Agreement, (ii) a material adverse effect on the results of operations, assets,
business or condition (financial or otherwise) of NPS, or (iii) a material
adverse effect on NPS’s ability to perform in any material respect on a timely
basis its obligations under this Agreement (any of (i), (ii) or (iii), a
“Material Adverse Effect”).
 
2.2           Power and Authority. NPS has the requisite power and authority to
enter into and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by NPS and is a
valid and binding agreement enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
similar laws of general applicability relating to or affecting creditors’ rights
generally and general principals of equity.
 
2.3           No Conflicts. No consent, approval, or authorization of or
designation, declaration or filing with any third party or any governmental
authority is required in connection with the valid execution and delivery of
this Agreement.
 
2.4           Issuance of the Securities. The Preferred Stock is duly authorized
and, when issued and paid for in accordance with this Agreement, will be duly
and validly issued, fully paid and nonassessable, and free and clear of all
liens imposed by NPS.
 
-2-

--------------------------------------------------------------------------------

 
2.5           SEC Reports; Financial Statements. NPS has filed all reports,
schedules, forms, statements and other documents required to be filed by NPS
under the Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof (or such
shorter period as NPS was required by law or regulation to file such material)
(the foregoing materials referred to herein as the “SEC Reports”). As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and none
of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of NPS included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of NPS and
its consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.
 
2.6           Litigation. There is no Proceeding pending or, to the knowledge of
NPS, threatened against or affecting NPS or any of its respective properties
before or by any Governmental Body which adversely affects or challenges the
legality, validity or enforceability of any of this Agreement or the Preferred
Stock. There has not been, and to the knowledge of NPS, there is not pending or
contemplated, any investigation by the Securities and Exchange Commission
involving NPS or any current or former director or officer of NPS. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by NPS under the Exchange Act
or the Securities Act. “Proceeding” means an action, claim, suit, investigation
or proceeding (including an investigation or partial proceeding, such as a
deposition). “Governmental Body” means any (i) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (ii) U.S. federal and state government; or (iii) governmental or
quasi-governmental authority of any nature (including any governmental division,
department, agency, commission, instrumentality, official, ministry, fund,
foundation, center, organization, unit, body or entity and any court or other
tribunal).
 
2.7           Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in ARTICLE III, no registration under
the Securities Act is required for the offer and sale of the Preferred Stock by
NPS to the Purchasers as contemplated by this Agreement.
 
2.8           Investment Company. NPS is not, and is not an affiliate of, and
immediately after receipt of payment for the Preferred Stock, will not be an
affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. NPS shall conduct its business in a manner so
that it will not become subject to the Investment Company Act of 1940, as
amended.
 
-3-

--------------------------------------------------------------------------------

 
2.9           No General Solicitation. Neither NPS nor any person acting on
behalf of NPS has offered or sold any of the Preferred Stock by any form of
general solicitation or general advertising. NPS has offered the Preferred Stock
for sale only to the Purchasers and certain other “accredited investors” within
the meaning of Rule 501 under the Securities Act.
 
2.10           Brokers, Finders and Investment Bankers
 
2.11           . NPS, nor any of its officers, directors, employees or
affiliates has employed any broker, finder or investment banker or incurred any
liability for any investment banking fees, financial advisory fees, brokerage
fees or finders’ fees in connection with the transactions contemplated by this
Agreement.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
 
Each Purchaser, for itself and for no other Purchaser, hereby represents and
warrants as of the date hereof and as of the Closing Date to NPS as follows:
 
3.1           Power and Authority. Purchaser has the requisite power and
authority to enter into and deliver this Agreement and to perform its
obligations hereunder. This Agreement has been duly authorized, executed and
delivered by Purchaser and is a valid and binding agreement enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium of similar loans of general applicability
relating to or affecting creditors’ rights generally and general principals of
equity.
 
3.2           No Conflict. No consent, approval, or authorization of or
designation, declaration or filing with any third party or any governmental
authority is required in connection with the valid execution and delivery of
this Agreement.
 
3.3           Accredited Investor. Purchaser is an “accredited investor” as that
term is defined in Regulation D promulgated under the Securities Act of 1933 as
amended.
 
3.4           Investment Intent. Purchaser is purchasing the Preferred Stock for
Purchaser’s own account and for investment purposes only and has no present
intention, agreement or arrangement for the distribution, sale, transfer,
assignment, pledge, hypothecation, encumbrance or other disposition, or
subdivision of the Preferred Stock. Purchaser does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person with respect to any of the
Preferred Stock.
 
3.5           Prior Relationship. Purchaser has a pre-existing business or
personal relationship with NPS, its directors, officers or agents. The sale of
the Preferred Stock has not been accompanied by the publication of any
advertisement or by any general solicitation.
 
3.6           Restricted Preferred Stock. Purchaser understands that the
Preferred Stock and the shares of Common Stock issuable upon conversion of the
Preferred Stock (the “Underlying Shares”) are and will be “restricted
securities” as that term is defined in Rule 144 under the Securities Act of
1933, as amended, and the Preferred Stock and the Underlying Shares must be held
indefinitely unless they are subsequently registered or qualified under the
Securities Act of 1933, as amended, and other applicable securities laws or that
exemptions from such registration or qualification are available. The
certificates representing the Preferred Stock and Underlying Shares may bear a
legend in substantially the form set forth below:
 
-4-

--------------------------------------------------------------------------------

 
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [CONVERSION] OF THIS
SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
3.7           Preferred Stock Terms; Conversion. Purchaser has read and
understands the terms of the Preferred Stock set forth in the Certificate of
Designation. Purchaser acknowledges that the Preferred Stock is convertible into
shares of Common Stock only at the option of the Company. Purchaser further
acknowledges that NPS may not have sufficient authorized Common Stock as of the
date of this Agreement or at the time of issuing the Preferred Stock to convert
the Preferred Stock to Common Stock.
 
3.8           Brokers, Finders and Investment Bankers. Purchaser, nor any of its
officers, directors, employees or affiliates has employed any broker, finder or
investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders’ fees in connection with the
transactions contemplated by this Agreement.
 
ARTICLE IV
MISCELLANEOUS
 
4.1           Termination. This Agreement may be terminated by any Purchaser, as
to such Purchaser’s obligations hereunder only and without any effect whatsoever
on the obligations between NPS and the other Purchasers, by written notice to
NPS, if the Closing has not been consummated on or before the fifteenth Business
Day following the date of this Agreement. This Agreement may be terminated by
the Company by written notice to each of the Purchasers if the Closing has not
been consummated on or before the fifteenth Business Day following the date of
this Agreement.
 
-5-

--------------------------------------------------------------------------------

 
4.2           Entire Agreement. This Agreement is the final, complete and
exclusive statement of the agreement of the parties with respect to the subject
matter of it and supersedes any prior or contemporaneous agreements,
understandings, or course of dealing.
 
4.3           Applicable Law; Consent to Jurisdiction. This Agreement and the
rights and remedies of each party arising out of or relating to this Agreement
(including, without limitation, equitable remedies) shall be solely governed by,
interpreted under, and construed and enforced in accordance with the laws
(without regard to the conflicts of law principles thereof) of the State of
Washington, as if this Agreement were made, and as if its obligations are to be
performed, wholly within the State of Washington. Any and all proceedings
resulting from or arising out of a controversy or claim relating to this
Agreement or the breach thereof, shall be held exclusively in King County in the
State of Washington, and the parties hereto expressly consent to hold themselves
subject to such jurisdiction for the purposes of any and all such proceedings.
 
4.4           Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under this Agreement. Nothing contained herein, and no
action taken by any Purchaser pursuant hereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of this Agreement.
 
4.5           Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (Pacific
Time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Business Day or between 5:30 p.m. and 11:59 p.m. (Pacific Time) on any
Business Day, (c) the Business Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto, or to such other address as a party may specify by notice to the other
parties delivered in accordance with this Section 4.5.
 
-6-

--------------------------------------------------------------------------------

 
4.6           Saturdays, Sundays and Holidays. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the following Business Day.
 
4.7           Successors and Assigns. This Agreement, and the rights and
obligations of each of the parties hereunder, may not be assigned by Purchaser
without the prior written consent of NPS. Subject to the foregoing sentence,
this Agreement shall inure to the benefit of, and shall be binding upon, the
Parties and their successors and assigns.
 
4.8           Counterparts. This Agreement may be executed in multiple
counterparts and transmitted by facsimile or by electronic mail in “portable
document format” (PDF) form, or by any electronic means intended to preserve the
original graphic and pictorial appearance of a party’s signature. Each such
counterpart and facsimile or PDF signature shall constitute an original, and all
of which, when taken together, shall constitute one instrument.
 
[SIGNATURE PAGES FOLLOW]
 
-7-

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the undersigned has caused this Series A Preferred Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
 

  NEAH POWER SYSTEMS, INC.         By: /s/ Stephen M. Wilson    
Name: Stephen M. Wilson
itle: Chief Financial Officer
     
Address for notice:
Neah Power Systems, Inc.
22118 20th Avenue SE, Suite 142
Bothell, Washington
Attn: Stephen M. Wilson
     
With a copy to (which shall not constitute notice):
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street
Forty-Third Floor Los Angeles, CA 90071
Attn: Jonathan Atzen, Esq.

 
[NEAH POWER SYSTEMS, INC. SIGNATURE PAGE TO SERIES A PREFERRED STOCK PURCHASE
AGREEMENT]
 

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the undersigned has caused this Series A Preferred Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
 
Name of Purchaser:  Investor Relations Services,
Inc.                                                                                                                               
 
 
Subscription Amount: $ 127,200.00              
 
Advancement Amount: $ 127,200.00          
 
No. of Shares of Preferred Stock: 2,312,727           
 

Signature of Authorized Signatory of Purchaser:
/s/ Richard J. Fixaris
   
Name of Authorized Signatory:
Richard J. Fixaris    
Title of Authorized Signatory:
President    
Fax Number of Purchaser:       
(386) 409-0043    

                                                                                             
 
Address for notice:
 
Investor Relations Services, Inc.
          120 Flagler Avenue          
New Smyrna Beach, Florida 32169
     
With a copy to (which shall not constitute notice):
               
Address for (i) delivery of the Preferred Stock and (ii) registration of the
 
Same
Preferred Stock on the books and records of the Company:          

 
EIN Number: [Provide this under separate cover.]
 
[PURCHASER SIGNATURE PAGE NO. 1 TO PREFERRED STOCK PURCHASE AGREEMENT]
 
[ADDITIONAL SIGNATURE PAGES FOLLOW]
 

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the undersigned has caused this Series A Preferred Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
 
Name of Purchaser:
                                                                                                                                
 
 
Subscription Amount: $                            
 
Advancement Amount: $                       
 
No. of Shares of Preferred Stock:                       
 

Signature of Authorized Signatory of Purchaser:    
 
   
Name of Authorized Signatory:
     
Title of Authorized Signatory:  
     
Fax Number of Purchaser:            
     

                                          
Address for notice:
                           
With a copy to (which shall not constitute notice):
                            Address for (i) delivery of the Preferred Stock and
(ii) registration of the    
Preferred Stock on the books and records of the Company:
         

 
EIN Number: [Provide this under separate cover.]
 
[PURCHASER SIGNATURE PAGE NO. 2 TO PREFERRED STOCK PURCHASE AGREEMENT]
 
[ADDITIONAL SIGNATURE PAGE FOLLOWS]
 

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the undersigned has caused this Series A Preferred Stock
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
 
Name of
Purchaser:                                                                                                                                 
 
 
Subscription Amount: $                            
 
Advancement Amount: $                       
 
No. of Shares of Preferred Stock:                      
 

Signature of Authorized Signatory of Purchaser:      
 
   
Name of Authorized Signatory:    
     
Title of Authorized Signatory:  
     
Fax Number of Purchaser:          
     

 
Address for notice:
                           
With a copy to (which shall not constitute notice):
                     
Address for (i) delivery of the Preferred Stock and (ii) registration of the
    Preferred Stock on the books and records of the Company:          

 
EIN Number: [Provide this under separate cover.]
 
[PURCHASER SIGNATURE PAGE NO. 3 TO PREFERRED STOCK PURCHASE AGREEMENT]
 
[FINAL SIGNATURES PAGE]
 

--------------------------------------------------------------------------------

 
Exhibit A
 
Certificate of Designation
 

--------------------------------------------------------------------------------