SERIES B PREFERRED STOCK PURCHASE AGREEMENT

This Series B Preferred Stock Purchase Agreement (this “Agreement”) is made as
of [DATE] 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 B 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 $1
(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 may 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 five 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. The certificate of designation is
attached as Exhibit A (the “Certificate of Designation”). On the Closing Date,
,(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.

 

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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.

2.5 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.

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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.

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. 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.

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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:

[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.

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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.

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 fifth 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 fifth Business Day following the date of this
Agreement.

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 Short Sales. Neither the Purchaser nor any affiliate of the Purchaser acting
on its behalf or pursuant to any understanding with it will execute any Short
Sales of the Common Stock of NPS.

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4.4 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.

4.5 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.

4.6 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 4.6.

4.7 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.

4.8 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.

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4.9 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]

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IN WITNESS WHEREOF, the undersigned has caused this Series B 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:

  Name: David Schmidt Title: Acting Principal Financial Officer Address for
notice: Neah Power Systems, Inc. 22118 20th Avenue SE, Suite 142

Bothell, Washington
Attn: Gerard C. D’Couto

With a copy to (which shall not constitute notice): Joseph J. Tomasek, Esq. 77
North Bridge Street Somerville, New Jersey 08876

 

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

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IN WITNESS WHEREOF, the undersigned has caused this Series B 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: ____________                    

02/21/2014 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. 1 TO PREFERRED STOCK PURCHASE AGREEMENT]

[ADDITIONAL SIGNATURE PAGES FOLLOW]

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 Exhibit A

Certificate of Designation