Form of Warrant

THIS WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED
PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES") WILL BE, ACQUIRED SOLELY
FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES (TOGETHER, THE
"SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
DISPOSITION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND OF ANY
APPLICABLE STATE SECURITIES LAWS.

Neah Power Systems, Inc.

WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK

 

No. W-2014-XXX-XX ______ Common Shares

THIS CERTIFIES THAT, for value received, [    ] (“Investor”), or its registered
assigns (the “Holder”), is entitled to subscribe for and purchase from Neah
Power Systems, Inc. (the “Company”), a Nevada corporation with an address at
22118 20th Avenue SE, Suite 142, Bothell, Washington, 98021, ”), ____ ________
shares of the fully paid and non-assessable Common Stock, $0.001 par value
("Shares"), of the Company at the price of ___________ per share (the “Exercise
Price”), subject to the provisions and upon the terms and conditions hereinafter
set forth.

This Warrant is subject to the following terms and conditions:

1.

TERM.

The term of this Warrant shall terminate, to the extent not exercised, on the
third anniversary of its issue date (the “Term”).  This Warrant is exercisable
by the Holder, in whole or in part, any time during the Term.

2.

METHOD OF EXERCISE; PAYMENT.

(A)

CASH EXERCISE. The purchase rights represented by this Warrant may be exercised
by the Holder, in whole or in part, from time to time at the principal office of
the Company, by delivering a completed and duly executed Notice of Exercise
(attached hereto as Exhibit “A”) and by the payment to, and receipt thereof by,
the Company of an amount equal to the Exercise Price multiplied by the number of
the Shares being purchased, which amount may be paid, at the election of the
Holder, by wire transfer or certified check payable to the order of the Company,
in immediately available funds.  Payment of the Exercise Price shall be in
lawful money of the United States of America.  The person or persons in whose
name(s) any certificate(s) representing Shares shall be issuable upon exercise
of this Warrant shall be deemed to have become the holder(s) of record of, and
shall be treated for all purposes as the record holder(s) of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised, with the Holder having all rights as a record holder
including, but not limited to, all voting rights.

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(B)

STOCK CERTIFICATES. In the event of any exercise of the rights represented by
this Warrant, certificates for the Shares so purchased shall be issued to the
beneficiary(ies) named by Holder and shall be delivered to the Holder within
twenty (20) business days after said exercise and, unless this Warrant has been
fully exercised or has expired, a new Warrant representing the rights to acquire
Shares with respect to which this Warrant shall not have been exercised shall
also be issued to the Holder within such time.

3.

STOCK FULLY PAID; RESERVATION OF SHARES. All of the Shares issuable upon the
exercise of the rights represented by this Warrant will, upon issuance and
receipt of the Exercise Price therefore, be fully paid and non-assessable, and
free from all preemptive rights, rights of first refusal or first offer, taxes,
liens and charges with respect to the issuance thereof. The Company hereby
represents and warrants that there have been reserved, and the Company shall at
all applicable times keep reserved until issued as contemplated by this Section
3, out of the authorized and unissued Common Stock, 3,896,104 shares to provide
for the exercise of the rights of purchase represented by this Warrant.  

4.

ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. Subject to the provisions of
Article “2” hereof, the number and kind of Shares purchasable upon the exercise
of this Warrant and the Exercise Price therefore shall be subject to adjustment
from time to time upon the occurrence of certain events, as follows:

(A)

RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of any reclassification of
the Common Stock (other than a change in par value, or as a result of a
subdivision or combination), or in case of any consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
with another corporation in which the Company is a continuing corporation and in
which the Company's stockholders immediately preceding such consolidation or
merger own at least 50% of the voting securities of the Company following such
consolidation or merger and which does not result in any reclassification of the
Shares issuable upon exercise of this Warrant), or in case of any sale of all or
substantially all of the assets of the Company, the Company, or such successor
or purchasing corporation as the case may be, shall execute a new Warrant,
providing that the holder of this Warrant shall have the right to exercise such
new Warrant, and procure upon such exercise and payment of the same aggregate
Exercise Price, in lieu of the Shares theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, change, consolidation, sale of
all or substantially all of the Company's assets or merger by a holder of an
equivalent number of Shares. Such new Warrant shall provide for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Paragraph “(A)” of this Article “4” of this Warrant. The provisions
of this Paragraph “(A)” of this Article “4” of this Warrant shall similarly
apply to successive reclassifications, consolidations, mergers, sales, leases or
conveyances.

(B)

STOCK SPLITS, DIVIDENDS AND COMBINATIONS. In the event that the Company shall at
any time subdivide the outstanding Shares or issue a stock dividend on its
outstanding Shares, the number of Shares issuable upon exercise of this Warrant
immediately prior to such subdivision or to the issuance of such stock dividend
shall be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any time
combine the outstanding Shares, the number of Shares issuable upon exercise of
this Warrant immediately prior to such combination shall be proportionately
decreased, and the Exercise Price shall be proportionately increased, effective
at the close of business on the date of such subdivision, issuance of warrants
or options, stock dividend or combination, as the case may be.

(C)

All calculations under this Article “4” of this Warrant shall be made to the
nearest cent or to the nearest share, as the case may be.

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(D)

In any case in which this Article “4” of this Warrant shall require that an
adjustment in the number of Shares be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the Shares, if any, issuable upon such exercise over and above the
number of Shares issuable upon such exercise on the basis of the number of
Shares in effect prior to such adjustment; provided, however, that the Company
shall deliver to the Holder a due bill or other appropriate instrument
evidencing the Holder’s right to receive such additional Shares upon the
occurrence of the event requiring such adjustment.

(E)

Whenever there shall be an adjustment as provided in this Article “4” of this
Warrant, the Company shall within thirty (30) days thereafter cause written
notice thereof to be sent to the Holder pursuant to Paragraph “(C)” of Article
“12” of this Warrant, which notice shall be accompanied by an officer’s
certificate setting forth the number of Shares issuable and the Exercise Price
thereof after such adjustment and setting forth a brief statement of the facts
requiring such adjustment and the computation thereof, which officer’s
certificate shall be conclusive evidence of the correctness of any such
adjustment absent manifest error.

(F)

The Company shall not be required to issue fractions of shares of Common Stock
or other capital stock of the Company upon the exercise of this Warrant. If any
fraction of a share of Common Stock would be issuable on the exercise of this
Warrant (or specified portions thereof), it shall be eliminated by rounding such
fraction to the nearest whole integer.

(G)

No adjustment in the Exercise Price per Warrant shall be required if such
adjustment is less than $.001.

5.

 SHORT SALES. Neither Holder nor any affiliate of the Holder acting on its
behalf or pursuant to any understanding with it will execute any short sales of
the Company’s stock or warrants.

6.

 CONDITIONS OF EXERCISE OR TRANSFER OF WARRANT.

(A)

Unless exercised pursuant to an effective registration statement under the Act
which includes the Shares so exercised, it shall be a condition to any exercise
of this Warrant that the Company shall have received, at the time of such
exercise, a representation in writing from the recipient that the Shares being
issued upon exercise, are being acquired for investment and not with a view to
any sale or distribution thereof.

(B)

This Warrant and each certificate evidencing the Shares issued upon exercise of
this Warrant shall be stamped or imprinted with a legend substantially in the
following form:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF,
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT.

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Subject to this Article “6” of this Warrant, the Company may instruct its
transfer agent not to register the transfer of all or a part of this Warrant, or
any of the Shares, unless the conditions specified in the above legend are
satisfied.

7.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Holder as follows:

(A)

This Warrant has been duly authorized and executed by the Company and is a valid
and binding obligation of the Company enforceable in accordance with its terms.

(B)

When exercisable in accordance with the terms hereof, the Shares will have been
duly authorized and reserved for issuance by the Company, validly issued, fully
paid and non-assessable.

8.

REPRESENTATIONS AND WARRANTIES BY THE HOLDER. The Holder represents and warrants
to the Company as follows:

(A)

This Warrant is being acquired for its own account, for investment and not with
a view to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Act. Upon exercise of this Warrant, the Holder
shall, if so requested by the Company, confirm in writing, in a form reasonably
satisfactory to the Company, that the Shares issuable upon exercise of this
Warrant are being acquired for investment and not with a view toward
distribution or resale.

(B)

Unless advised to the contrary in writing by the Company, the Holder is hereby
informed and understands that this Warrant and the Shares have not been
registered under the Act by reason of their issuance in a transaction exempt
from the registration and prospectus delivery requirements of the Act pursuant
to Section 4(a)(2) thereof, and that they must be held by the Holder
indefinitely, and that the Holder must therefore bear the economic risk of such
investment indefinitely, unless a subsequent disposition thereof is registered
under the Act or is exempted from such registration.

(C)

The Holder has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the purchase of this
Warrant and the Shares purchasable pursuant to the terms of this Warrant and of
protecting its interests in connection therewith.

(D)

The Holder is able to bear the economic risk of the purchase of the Shares
pursuant to the terms of this Warrant.

9.

RIGHTS OF STOCKHOLDERS. No holder of this Warrant shall be entitled, as a
warrant holder, to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.

10.

TRANSFER. Subject to the terms and conditions of this Warrant, including, but
not limited to Paragraph “(B)” of Article “6” of this Warrant, this Warrant may
be transferred, in whole or in part, by delivering a completed and duly executed
Notice of Assignment (attached hereto as Exhibit “B”) to the Company, with such
Notice of Assignment stating the individual or entity to whom it shall be
transferred (the “Transferee”), and whether such transfer shall be for all
rights remaining on the Warrant or only a portion thereof. The Warrants are
transferable by Holder on the registry books of the Company or its transfer
agent, upon surrender of the original Warrants, duly endorsed or accompanied by
proper instrument of transfer satisfactory to the Company or its transfer agent,
together with payment of any applicable transfer taxes.  The Company and its
transfer agent may deem and treat the person in whose name the Warrants are
registered as the holder and as the absolute, true and lawful owner of the
Warrants for all purposes, and neither the Company nor its transfer agent shall
be affected by any notice or knowledge to the contrary.  In the event of any
transfer of rights represented by this Warrant, the Transferee shall receive a
Warrant in this form as soon as practicable after the Company receives the
Notice of Assignment, and, unless this Warrant has been transferred in full, a
new Warrant representing the rights to acquire Shares with respect to which this
Warrant shall not have been exercised and which have not been transferred shall
also be issued to the Holder

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11.

MISCELLANEOUS.

(A)

Headings contained in this Warrant are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Warrant.

(B)

If any provision which is contained in this Warrant should, for any reason, be
held to be invalid or unenforceable in any respect under the laws of any
jurisdiction, such invalidity or unenforceability shall not affect any other
provision of this Warrant, and this Warrant shall be construed as if such
invalid or unenforceable provision had not been contained herein.

(C)

Any notice or other communication required or permitted hereunder must be in
writing and sent by either (i) registered or certified mail, postage prepaid,
return receipt requested, (ii) overnight delivery with confirmation of delivery
or (iii) facsimile transmission with an original mailed by first class mail,
postage prepaid, in each case addressed as follows:

To the Holder:

 To the address of record for the Holder as shown on the registry books
maintained by the Company or its transfer agent for the Warrants.

To the Company:                            

Neah Power Systems, Inc.

22118 20th Avenue SE, Suite 142

Bothell, Washington, 98021

Attn: David Schmidt

dschmidt@neahpower.com

Facsimile: (425) 483-8454

or in each case to such other address and facsimile number as shall have last
been furnished by like notice. If mailing by registered or certified mail is
impossible due to an absence of postal service, and if the other methods of
sending notice set forth in this Paragraph "(C)" of this Article "11" of this
Warrant are not otherwise available, notice shall be in writing and personally
delivered to the aforesaid address. Each notice or communication shall be deemed
to have been given as of the date so mailed or delivered, as the case may be;
provided, however that any notice sent by facsimile shall be deemed to have been
given as of the date sent by facsimile if a copy of such notice is also mailed
by first class mail on the date sent by facsimile; if the date of mailing
differs from the date of sending by facsimile, then the date of mailing by first
class mail shall be deemed to be the date upon which notice was given.

(D)

This Warrant shall in all respects be construed, governed, applied and enforced
under with the internal laws of the State of Nevada without giving effect to the
principles of conflicts of laws and be deemed to be an agreement entered into in
the State of Nevada and made pursuant to the laws of the State of Nevada.

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 (E)

Each of the parties further acknowledges and agrees that (i) each has been
advised by counsel during the course of negotiations; (ii) each counsel has had
significant input in the development of this Warrant and (iii) this Warrant
shall not, therefore, be construed more strictly against any party responsible
for its drafting regardless of any presumption or rule requiring construction
against the party whose attorney drafted this agreement.

(F)

The parties have not made any representations, warranties, or covenants with
respect to the subject matter hereof which are not set forth herein, and this
Warrant, together with any instruments or other agreements executed
simultaneously herewith, constitutes the entire agreement between them with
respect to the subject matter hereof. All understandings and agreements
heretofore had between the parties with respect to the subject matter hereof are
merged in this Warrant and such other instruments and agreements, which alone
fully and completely express their agreement. This Warrant may not be changed,
modified, extended, terminated or discharged orally, but only by means of a
written agreement which is signed by both parties to this Warrant and which
explicitly states that it modifies this Warrant.

(G)

The parties agree to execute any and all such other further instruments and
documents, and to take any and all such further actions which are reasonably
required to effectuate this Warrant and the intents and purposes hereof.

(H)

This Warrant shall be binding upon and inure to the benefit of the parties
hereto and their heirs, executors, administrators, personal representatives,
successors and assigns.

(I)

Except as otherwise expressly provided herein, no waiver of any covenant,
condition, or provision of this Warrant shall be deemed to have been made unless
expressly in writing and signed by the party against whom such waiver is
charged; and (i) the failure of any party to insist in any one or more cases
upon the performance of any of the provisions, covenants or conditions of this
Warrant or to exercise any option herein contained shall not be construed as a
waiver or relinquishment for the future of any such provisions, covenants or
conditions, (ii) the acceptance of performance of anything required by this
Warrant to be performed with knowledge of the breach or failure of a covenant,
condition or provision hereof shall not be deemed a waiver of such breach or
failure, and (iii) no waiver by any party of one breach by another party shall
be construed as a waiver of any other or subsequent breach.

(J)

All Exhibits annexed or attached to this Warrant are incorporated into this
Warrant by reference thereto and constitute an integral part of this Warrant.

(K)

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

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer.

Issued this 10th day of June, 2014.

Neah Power Systems, Inc.

By:_________________________________________

Name:

Gerard Christopher D’Couto_____

Title:

President and Chief Executive Officer

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EXHIBIT A

 

NOTICE OF EXERCISE

 

Warrant no:                                

 To: Neah Power Systems, Inc.

Attention: Chief Financial Officer

1. The undersigned hereby elects to purchase ________ shares of Common Stock of
Neah Power Systems, Inc. pursuant to the terms of this Warrant, and tenders
herewith payment of the purchase price of such shares in full.

2. Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:

_________________________________ (Name)

_________________________________

_________________________________ (Address)

3. The undersigned hereby represents and warrants that the aforesaid shares of
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares and all representations and warranties of
the undersigned set forth in the attached Warrant are true and correct as of the
date hereof.

______________________________

By: __________________________

Title: _________________________

Date:________________,_________

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EXHIBIT B

 

NOTICE OF ASSIGNMENT

 

Warrant no:__________________

 

(To be executed by the registered Holder to effect

 

a transfer of Warrants)

 

 

FOR VALUE RECEIVED, _______________________ hereby sells, assigns and transfers
unto ____________________ the right to purchase ______________ shares of the
common stock, par value $.001 per share, of Neah Power Systems, Inc., evidenced
by the attached Warrant, together with all right, title and interest therein,
and does irrevocably constitute to transfer and appoint ___________________ to
transfer the said right on the books of said company with full power of
substitution in the premises.

The undersigned hereby certifies that the Warrants are being sold, assigned or
transferred in accordance with all applicable securities laws.

Dated:

________________

________________________

Signature

NOTE:  The signature to this transfer must correspond with the name as recorded
on the Warrants in every particular without alteration or enlargement or any
change whatever.  The signature of the person executing this transfer must be
medallion guaranteed.

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