SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into as of June
10, 2014, by and between [                       ], an individual accredited
investor having his principal residence at [                             ]
(“Investor”), and NEAH POWER SYSTEMS, INC., a Nevada corporation having its
principal offices located at 22118 20th Avenue SE, Suite 142, Bothell,
Washington, 98021 (the “Company”).  The Investor and the Company are sometimes
referred to herein, individually, as a “Party” and, collectively, as the
“Parties”.

WHEREAS, the Parties desire that the Company shall issue and the Investor shall
purchase certain securities of the Company upon the terms and subject to the
conditions described herein.

NOW, THEREFORE, the Parties agree to the following:

1.

Purchase and Sale of Securities.  Subject to the terms and conditions of this
Agreement, the Investor shall purchase from the Company and the Company shall
issue and sell to the Investor thirty three million three hundred and thirty
three thousand and three hundred and thirty three (33,333,333) shares (the
“Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”),
eight million three hundred and thirty three thousand and three hundred and
thirty three (8,333,333) three (3) year warrant to purchase common shares at a
strike price of $0.0300 (Warrant no XXX-01), and three million three hundred and
thirty three thousand and three hundred and thirty three (3.333,333) three (3)
year warrant to purchase common shares at a strike price of $0.0375 (Warrant No
XXX-02) for the total of $500,000.00 (the “Purchase Price”).  

 

2.

Closing.  The closing of the purchase and sale of the Shares (the “Closing”)
shall take place remotely by the electronic exchange of all required closing
deliveries.  The date on which the Closing actually occurs is referred to herein
as the “Closing Date”.

 

3.

Closing Deliverables.  At the Closing, (i) the Investor shall wire the Purchase
Price to the Company, and (ii) the Company shall deliver to the Investor a
certificate representing the Shares and the associated warrant certificates.

 

4.

Investor Representations.  The Investor represents, warrants and acknowledges to
the Company: (i) the Investor is an accredited investor as defined in Rule
501(a) of Regulation D under the Securities Act; (ii) the Investor has such
experience in financial and business matters that it is capable of evaluating
the merits and risks of its investment in the Shares; (iii) the Investor
acknowledges that this investment is speculative and involves a high degree of
risk, and the Investor is capable of bearing all of the economic risks of this
investment, including the possible loss of its investment; (iv) the Investor
understands that the Shares are being sold by the Company pursuant to an
exemption from registration under the Securities Act and pursuant to similar
exemptions under certain state securities laws; (v) the Investor acknowledges
that the Shares will be deemed “restricted securities” under applicable rules
promulgated under the Securities Act; (vi) the Investor is acquiring the Shares
for its own account, for investment and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the same; (vii) the Investor understands that it will
not be able to transfer or make any other disposition of the Shares unless such
transfer or disposition is registered or qualified under all applicable federal
or state securities laws or an exemption from such registration or qualification
is available; (viii) the Investor understands that the certificates representing
the Shares will bear a legend evidencing the restrictions on transfer described
herein; (ix) the Investor has had an opportunity to review the public
information available about the Company, including the documents filed by the
Company with the Securities and Exchange Commission (the “SEC”), and the
Investor has had an opportunity to ask questions and receive answers from the
Company in connection with the purchase of the Shares; and (x) the Investor has
full power and authority to execute, deliver and perform this Agreement.

 

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5.

Representations and Warranties by Investor under USA PATRIOT Act.

(a)

The Investor represents that the amounts to be paid by the Investor to the
Company for the Shares were not and are not directly or indirectly derived from
activities that may contravene federal, state or international laws and
regulations, including anti-money laundering laws and regulations. Federal
regulations and Executive Orders administered by the U.S. Treasury Department’s
Office of Foreign Assets Control (“OFAC”) prohibit, among other things, the
engagement in transactions with, and the provision of services to, certain
foreign countries, territories, entities and individuals.1 The lists of OFAC
prohibited countries, territories, persons and entities can be found on the OFAC
website at <http://www.treas.gov/ofac>. In addition, the programs administered
by OFAC (“OFAC Programs”) prohibit dealing with individuals or entities in
certain countries regardless of whether such individuals or entities appear on
the OFAC lists.

(b)

The Investor hereby represents and warrants that, to the best of the Investor’s
knowledge: (i) the Investor; (ii) any person controlling or controlled by the
Investor; (iii) if the Investor is a privately held entity, any person having a
beneficial interest in the Investor; or (iv) any person for whom the Investor is
acting as agent or nominee in connection with this investment is not a country,
territory, individual or entity named on an OFAC list or a person or entity
prohibited under the OFAC Programs.

(c)

The Investor represents and warrants that, to the best of the Investor’s
knowledge, (i) the Investor; (ii) any person controlling or controlled by the
Investor; (iii) if the Investor is a privately held entity, any person having a
beneficial interest in the Investor; or (iv) any person for whom the Investor is
acting as agent or nominee in connection with this investment is not a senior
foreign political figure,2 any immediate family member3 or close associate4 of a
senior foreign political figure as such terms are defined in the footnotes
below.

__________________________________________________________________

1

These individuals include specially designated nationals, specially designated
narcotics traffickers and other parties subject to OFAC sanctions and embargo
programs.

2

A “senior foreign political figure” is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
non-U.S. government (whether elected or not), a senior official of a major
non-U.S. political party, or a senior executive of a non-U.S. government-owned
corporation. In addition, a “senior foreign political figure” includes any
corporation, business or other entity that has been formed by, or for the
benefit of, a senior foreign political figure.

3

“Immediate family” of a senior foreign political figure typically includes the
figure's parents, siblings, spouse, children and in-laws.

4

A “close associate” of a senior foreign political figure is a person who is
widely and publicly known to maintain an unusually close relationship with the
senior foreign political figure, and includes a person who is in a position to
conduct substantial U.S. and non-U.S. financial transactions on behalf of the
senior foreign political figure.

 

6.

Company Representations. The Company represents and warrants to the Investor as
follows:

 

(a)

Due Organization. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite power and authority to own, lease, use, and operate its properties and
to carry on its business as and where now owned, leased, used, operated and
conducted. The Company has no subsidiaries. The Company is qualified to conduct
business and is in good standing in the States of Nevada and Washington, and
neither the conduct of its business nor the ownership or leasing of its property
require it to qualify to do business as a foreign corporation in any other
jurisdiction. All actions taken by the current directors and stockholders of the
Company have been valid and in accordance with the laws of the State of Nevada
and all actions taken by the Company have been duly authorized by the current
directors and stockholders of the Company as appropriate.

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(b)

Authorized Capital, No Preemptive Rights, No Liens; Anti-Dilution. As of the
date hereof, the authorized capital of the Company is 1,800,000,000 shares of
Common Stock, par value $0.001 per share, of which 929,889,445 are issued and
outstanding, and 5,000,000 shares of Preferred Stock, par value $0.001 per
share, of which  2,000,000 shares have been designated as Series B Preferred
Stock, 1,228,994 shares of which are issued and outstanding.  All of the
outstanding shares of capital stock are duly authorized, validly issued, fully
paid and non-assessable. No shares of capital stock of the Company are subject
to preemptive rights or similar rights of the stockholders of the Company or any
liens or encumbrances imposed through the actions or failure to act of the
Company, or otherwise.  As of the date hereof

(i) there are no outstanding options, warrants, convertible securities, scrip,
rights to subscribe for, puts, calls, rights of first refusal, tag-along
agreements, nor any other agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for any shares of capital stock of the
Company, or arrangements by which the Company is or may become bound to issue
additional shares of capital stock of the Company, and

(ii) there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the Securities Act
of 1933, and

(iii) there are no anti-dilution or price adjustment provisions contained in any
security issued by the Company (or in the Company’s articles of incorporation or
bylaws or in any agreement providing rights to security holders)

that will be triggered by the transactions contemplated by this Agreement.

(c)

Authorization. The Company has full corporate power and authority and has taken
all requisite corporate action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization, execution and
delivery of this Agreement and all other necessary documents required to be
executed and delivered in connection herewith (collectively, the “Transaction
Documents”), (ii) the performance of all obligations of the Company under the
Transaction Documents, and (iii) the authorization, issuance, and delivery of
the Shares in accordance with the terms hereof.  The Transaction Agreements
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except as such enforcement
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
voidable preference, fraudulent conveyance and other similar laws affecting the
rights or remedies of creditors generally and (b) the exercise of judicial
discretion in accordance with general principles of equity (whether applied by a
court of law or of equity).

(d)

Valid Issuance of the Shares.  The Shares, when issued and delivered in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable and free of restrictions on transfer other than restrictions
imposed by applicable state and federal securities laws, or created by or
imposed by the Seller.  Assuming the accuracy of the representations of the
Seller in Section 4, the Shares, when issued, will be issued in compliance with
all applicable federal and state securities laws.  

(e)

 Common Stock. All of the outstanding shares of Common Stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable. The Company has registered the Common Stock pursuant to Section
12(b) or 12(g) of the Exchange Act and is in full compliance with all reporting
requirements of the Exchange Act, and the Company has maintained all
requirements for the continued listing or quotation of the Common Stock, and
such Common Stock is currently listed or quoted on the Principal Market. The
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration.

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(f)

No Registration or Integration. Assuming that the Investor’s representations in
Section 4 and the signature page to this Agreement are true and correct, no
registration of the shares of common stock is required under the Securities Act
or any state securities law for the offer and sale of such securities to the
Investor pursuant to this Agreement.  None of the Company, its affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act) or any person
acting on its or their behalf has, directly or indirectly, made offers or sales
of any security or solicited offers to buy any security which is or would be
integrated with the sale of the Shares in a manner that would require the Shares
to be registered under the Securities Act.

 

(g)

No General Solicitation. Neither the Company, its affiliates (as defined in Rule
501(b) of Regulation D under the Securities Act) or any person acting on its or
their behalf has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with any offer or sale of the Shares in the United States.

(h)

Exchange Act Compliance.  The Company is subject to and in compliance with the
reporting requirements of Exchange Act.  As of its filing date, each report
filed by the Company with the SEC pursuant to the Exchange Act, complied as to
form in all material respects with the requirements of the Exchange Act and did
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.  Each
registration statement and any amendment thereto filed by the Company pursuant
to the Securities Act, as of the date such statement or amendment became
effective, complied as to form in all material respects with the Securities Act
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and each prospectus filed pursuant to Rule 424(b) under
the Securities Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.  The Company’s internal controls over financial reporting
are effective and the Company is not aware of any material weakness in them.
There has been no change in the Company’s internal controls over financial
reporting that has materially affected, or is reasonably likely to materially
affect, the Company’s internal controls over financial reporting.

(i)

No Conflicts. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby do not and will not (a) result in a violation of the Certificate or
By-Laws or (b) conflict with, or constitute a material default (or an event that
with notice or lapse of time or both would become a material default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture, instrument or any "lock-up"
or similar provision of any underwriting or similar agreement to which the
Company is a party, or (c) result in a violation of any federal, state or local
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or by which any
property or asset of the Company is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a material
adverse effect) nor is the Company otherwise in violation of, conflict with or
in default under any of the foregoing. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations that either singly or in the aggregate do
not and will not have a material adverse effect. The Company is not required
under federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under the Transaction Agreement or issue and sell the Equity Unit in
accordance with the terms hereof or the Common Stock issuable upon exercise or
conversion thereof (other than filing of a Form D with the SEC and any notice
filings under state securities or blue sky laws subsequent to the closing of the
transactions); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of Investor herein.

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(j)

No Undisclosed Liabilities. The Company has no liabilities or obligations that
are material, individually or in the aggregate, and that are not disclosed in
the SEC Documents or otherwise publicly announced, other than those incurred in
the ordinary course of the Company's businesses since May 14, 2014 and which,
individually or in the aggregate, do not or would not have a material adverse
effect on the Company.

(k)

No Undisclosed Events or Circumstances. There has been no event or circumstance
that has occurred or exists with respect to the Company, that, under applicable
law, rule or regulation, requires public disclosure or announcement prior to the
date hereof by the Company but which has not been so publicly announced or
disclosed in the Company’s filings with the SEC or any disclosure schedule
attending this Agreement.

(l)

Financial Statements.  The financial statements included in each SEC Filing
present fairly and accurately the consolidated financial position of the Company
and its subsidiaries as of the dates shown and their consolidated results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis.

(m)

Disclosures.  No representation or warranty made by the Company under this
Agreement or the other Transaction Agreements contains any untrue statement of a
material fact or omits to state a material fact necessary to make the respective
statements contained herein or therein, in light of the circumstances under
which the statements were made, not misleading.

5.

Miscellaneous.

(a) Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Washington, without regard to the principles of conflict of laws thereof.  Each
Party agrees that all legal proceedings concerning the interpretation,
enforcement and defense of the transactions hereunder (whether brought against a
party hereto or its respective Affiliates, directors, officers, shareholders,
employees or agents) may be commenced in the state and federal courts sitting in
the City of Seattle, King County (the “Washington Courts”).  Each Party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of the Washington
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such
Washington Courts, or such Washington Courts are improper or inconvenient venue
for such proceeding.  Each Party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such Party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by applicable law. Each Party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either Party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys’ fees and other costs and expenses incurred in
the investigation, preparation and prosecution of such action or proceeding.

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(b) Waiver.  Any waiver by the Company or the Investor of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement.  The failure of the Company or the Investor to insist upon
strict adherence to any term of this Agreement on one or more occasions shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
 Any waiver by the Company or the Investor must be in writing.

(c) Headings.  The headings contained herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

(d)     

Successors and Assigns. This Agreement shall be binding upon the parties hereto,
their respective successors and may not be assigned by any party without the
written agreement of both parties.

(e)     

Amendment. This Agreement may not be amended without the written agreement of
both parties.

(f)

Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

(g)     

Titles and Subtitles. The titles of the sections and subsections of this
Agreement are not to be considered in construing this Agreement.

(h)   

Agreement is Entire Contract. This Agreement, together with the other
Transaction Agreements, constitutes the final, complete and exclusive contract
between the parties hereto with respect to the subject matter hereof and no
party shall be liable or bound to the other in any manner by any warranties,
representations, guarantees or covenants except as specifically set forth herein
and in such other documents referred to above. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto, and their respective successors and assigns, any right, remedies,
obligations or liabilities under or by reason of this  Agreement, except as
expressly provided herein.

1.

Notices. All notices pertaining to the Agreement shall be in writing and shall
be delivered by a) facsimile, by b) the United States Postal Service or
reputable courier service, or by c) E-mail with receipt confirmation by
recipient. The contact information for such communications shall be:

If to the Company:

Neah Power Systems, Inc.

22118 20th Ave SE, Suite 142

Bothell, Washington 98021

Tel: 425-424-3324 ext. 112

Fax: 425-483-8454

Attn: David Schmidt

dschmidt@neahpower.com

 

 

 

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With a copy to:

Joseph J. Tomasek, Esq.

Jtoma38@aol.com

77 North Bridge Street

Somerville, New Jersey 08876

(Tel): 908-429-0030

Mintz&Fraade, P.C.

480 Madison Avenue

New York, New York 10022

212-486-2500

If to Investor:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on the day and year first above written.

By:__________________________________

Principal

NEAH POWER SYSTEMS, INC.

By:

 ________________________________

Gerard Christopher D’Couto

President and Chief Executive Officer

 

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