Exhibit 10.6


                             COLLABORATION AGREEMENT

         This COLLABORATION AGREEMENT (the "Agreement") is made and entered into
between: Neah Power Systems, Inc., with its principal place of business at 22118
20th Ave SE, Suite 142, Bothell, Washington 98021 ("Neah") and Novellus Systems,
Inc. with its principal place of business at 4000 North First Street, San Jose,
CA 95134 ("Novellus"), effective as of April 1, 2004 ("Effective Date").

                                    RECITALS

         Neah is in the business of developing silicon-based fuel cell
technology. Novellus is a provider of advanced deposition and surface
preparation systems for the semiconductor industry. Neah desires to collaborate
with Novellus to develop technology related to the application of catalyst and
conductive films to silicon to be used as a fuel cell electrode, and Novellus is
willing to enter into such collaboration on the terms set forth in this
Agreement.

         NOW, THEREFORE, for valuable consideration, receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

                                    AGREEMENT

1.0      DEFINITIONS.

         1.1      "BACKGROUND IP" shall mean all inventions, discoveries, works
         of authorship, designs, ideas, and technology Developed prior to or
         outside the course of performance of the Project.

         1.2      "COMPONENTS" shall mean porous silicon (a) to which catalyst
         and conductive films have been applied, and (b) that are designed,
         developed or manufactured using any Project IP.

         1.3      "COMPONENT EQUIPMENT" shall mean equipment that (a) is
         designed, developed or manufactured using any Project IP, and (b) is
         specifically designed to manufacture Components.

         1.4      "COMPONENT EQUIPMENT PROCESSES" shall mean all unit processes
         performed by Component Equipment.

         1.5      "DEVELOPED" shall mean, (a) conceived, with respect to
         inventions and discoveries, (b) fixed in a tangible medium of
         expression, with respect to works of authorship, and (c) created with
         respect to other designs, ideas, and technology.

         1.6      "FUEL CELL FIELD OF USE" shall mean the design, development,
         manufacturing, sale and other distribution of Components used as fuel
         cell electrodes, but not the design, development, manufacturing, sale
         or other distribution of Component Equipment or the use or exploitation
         of Component Equipment Processes.

         1.7      "INTELLECTUAL PROPERTY RIGHTS" shall mean all copyrights,
         copyright applications, patents, patent applications, trade secrets,
         trademarks, moral rights,

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         author's rights, and all other intellectual and proprietary rights of
         any kind, as may now or hereafter come into existence, and all renewals
         and extensions thereof, regardless of whether such rights arise under
         the laws of the United States, or any other state, country or
         jurisdiction.

         1.8      "JOINTLY DEVELOPED IP" shall mean all Project IP which is
         Developed jointly by Neah and Novellus in connection with the
         activities contemplated by this Agreement.

         1.9      "NEAH PROJECT IP" shall mean all Project IP which is Developed
         by Neah in connection with the Project independently of Novellus.

         1.10     "NOVELLUS PROJECT IP" shall mean all Project IP which is
         Developed by Novellus in connection with the Project independently of
         Neah.

         1.11     "PROJECT" shall mean the joint development of technology
         related to Components, Component Equipment and Component Equipment
         Processes pursuant to this Agreement in accordance with the Project
         Plan, and commencing on the Effective Date.

         1.12     "PROJECT IP" shall mean all inventions, discoveries, works of
         authorship, designs, ideas, and technology Developed by either party,
         jointly or independently, in the course of performance of the Project,
         and shall not include any Background IP.

         1.13     "PROJECT PLAN" shall mean the detailed plan for the Project, a
         draft of which is set forth on EXHIBIT A and shall be finalized by
         mutual agreement of the parties prior to June 1, 2004, as may be
         amended by mutual written agreement of the parties from time to time.

2.0      THE PROJECT.

         2.1      COLLABORATION. The parties agree to collaborate to complete
         the Project in accordance with this Agreement and the Project Plan. The
         parties agree, prior to June 1, 2004, to mutually identify each party's
         obligations under the Project Plan.

         2.2      NOVELLUS PERSONNEL. During the term of the Project, Novellus
         shall provide Neah with the services of Novellus technical personnel,
         to be mutually agreed upon and listed in EXHIBIT B (the "Novellus
         Personnel"), on a full time or part time basis, to be mutually agreed
         upon and specified on EXHIBIT B. Novellus reserves the right to change
         the Novellus Personnel in its reasonable discretion, and shall consult
         with Neah prior to such change if such consultation is reasonably
         practicable.

                  2.2.1    Some of the Novellus Personnel, to be mutually agreed
                  upon and specified on EXHIBIT B, may relocate to Neah's
                  Seattle, Washington facility during the Project Term to
                  perform work on the Project. Neah shall reimburse Novellus in
                  a lump-sum amount to be mutually agreed upon in accordance
                  with Novellus' standard relocation policies and specified on
                  Exhibit B for the reasonable relocation costs for such
                  Novellus Personnel.

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                  2.2.2    Neah shall reimburse Novellus for (a) the gross
                  amount of all salaries and wages, benefit costs and other
                  compensation associated with the Novellus Personnel with
                  respect to the time period of their work on the Project, in an
                  amount to be mutually agreed upon and specified on EXHIBIT B,
                  and (b) for costs approved in advance by Neah, in accordance
                  with rates and procedures to be mutually agreed upon and
                  specified on EXHIBIT B. Novellus shall invoice Neah for such
                  costs on a monthly basis.

                  2.2.3    All Novellus Personnel shall at all times remain the
                  employees of Novellus. Neah shall have no responsibility for
                  withholding of taxes or other matters which are customarily
                  the responsibility of an employer. All Novellus Personnel
                  shall comply with reasonable workplace rules and procedures
                  established by Neah.

                  2.2.4    Neah shall indemnify, defend and hold harmless
                  Novellus and its officers, directors, employees, shareholders
                  and agents (each an "Indemnified Party"), from and against any
                  and all claims, demands, liabilities, costs, damages, expenses
                  (including attorneys' fees and expenses), and causes of action
                  of any nature whatsoever (collectively, "Losses") brought by
                  or on behalf of a member of the Novellus Personnel arising
                  from or in any way related to (a) workplace conditions at
                  Neah's Seattle, Washington facility, or (b) the actions or
                  omissions of any Neah employee or contractor, except for
                  Losses arising from or in any way related to the gross
                  negligence or willful misconduct of the Novellus Personnel.
                  Losses may include, but are not limited to, claims related to
                  personal injury or alleged emotional distress, damage to
                  personal property, or employment practices.

                  2.2.5    Neah shall provide a suitable and safe work
                  environment for the Novellus Personnel during the time period
                  of their work on the Project, and the Novellus Personnel shall
                  not be required to sign Neah's nondisclosure or invention
                  assignment agreement, or a waiver or release in connection
                  with their work on the Project. Novellus and each of the
                  Novellus Personnel shall have executed Novellus' standard
                  proprietary information and inventions agreement prior to the
                  time period of his or her work on the Project.

         2.3      NEAH PERSONNEL. During the term of the Project, Neah shall
         dedicate a sufficient number of technical personnel to diligently
         perform its obligations under the Project Plan. Neah shall provide the
         Novellus Personnel with access to qualified Neah technical personnel
         and shall otherwise provide reasonable technical support to the
         Novellus Personnel in connection with the Project.

         2.4      EXCLUSIVITY. During the Project term, neither Novellus nor
         Neah shall enter into any discussions or agreements with any third
         parties with respect to the application of catalyst and conductive
         films to silicon to be used as a fuel cell electrode. Except for the
         foregoing restriction, nothing herein shall be deemed to restrict, in
         any way, the freedom of either party to conduct any business or
         activity whatsoever without any accountability to the other party.

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         2.5      EQUIPMENT. Novellus shall loan Neah equipment to be reasonably
         determined by Novellus and described on EXHIBIT C, together with such
         other equipment as may be agreed upon in writing by the parties (the
         "Equipment") for use during the Project term, at no cost to Neah. The
         Equipment (a) shall be delivered to Neah's Seattle, Washington facility
         at Neah's cost, (b) shall not be moved or transferred from such
         facility without Novellus' prior written consent, and (c) shall be
         returned by Neah to Novellus upon termination of this Agreement at
         Neah's expense and in the same condition as received, normal wear
         excepted. While the Equipment is in Neah's possession, Neah shall be
         responsible for all necessary maintenance of the Equipment as specified
         by Novellus to Neah, shall bear all risk of loss or damage to the
         Equipment, and shall maintain physical damage insurance covering the
         Equipment on an "all risks" of physical loss or damage basis, for the
         full replacement cost (subject to reasonable deductible amounts). Such
         insurance policy will (i) be in form and content reasonably acceptable
         to Novellus, (ii) provide that such insurance will not be canceled or
         coverage changed unless thirty (30) days' prior written notice has been
         given to Novellus, and (iii) will name Novellus as an additional
         insured. Neah will deliver such policy or certificate thereof to
         Novellus on or before five (5) days prior to delivery of Equipment by
         Novellus to Neah.

         2.6      WARRANT. Upon execution of this Agreement, Neah shall grant
         Novellus a warrant to purchase one million shares of the common stock
         of Neah at an exercise price of twenty-five cents ($0.25) per share in
         accordance with the terms set forth on EXHIBIT D attached hereto. The
         Warrant shall vest upon completion of the milestones as provided in
         EXHIBIT D.

         2.7      INDEPENDENT RELATIONSHIP. The parties shall at all times act
         as independent contractors and nothing contained in this Agreement
         shall be deemed to constitute either party as the partner, agent, or
         legal representative of the other party, or to create any fiduciary
         relationship between them for any purpose whatsoever. Neither party
         hereto shall have any authority to act for or to assume any obligation
         or responsibility on behalf of the other party, except as may be
         expressly authorized in writing by the other party.

3.0      SUPPLY OF COMPONENTS AND COMPONENT EQUIPMENT. It is the intent of the
         parties that Neah and Novellus shall enter into an agreement pursuant
         to which Novellus shall manufacture Components, and Neah hereby grants
         Novellus a right of first negotiation with respect to the manufacture
         of Components.

         3.1      COMPONENTS: RIGHT OF FIRST NEGOTIATION. Prior to commencing
         negotiations with any third party with respect to the manufacture of
         Components, Neah shall notify Novellus and the parties shall enter into
         discussions, in good faith, with respect to terms pursuant to which
         Novellus shall have, for a period of five years (subject to renewal on
         mutually acceptable terms), (a) the exclusive right to manufacture
         Components for use by or sale to Neah, (b) the exclusive right to sell
         such Components to Neah, and (c) an exclusive license under all of
         Neah's Intellectual Property Rights necessary for such manufacture and
         sale. If the parties have been unable to enter into an agreement with
         respect to the manufacture of Components by Novellus within thirty (30)
         days following the date of the notice from Neah, the parties shall
         enter

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         into non-binding mediation as provided in Section 11.4.1 below in an
         attempt to agree upon the terms of such an agreement. If the parties
         continue to be unable to reach agreement within sixty (60) days
         following the commencement of the mediation, Neah may negotiate with
         third parties with respect to the manufacture of Components used as
         fuel cell electrodes, but shall not enter into an agreement with any
         such third party unless (i) each material term of such agreement is no
         more favorable to such third party than the term offered by Neah to
         Novellus during the negotiations pursuant to this Section 3.1, and (ii)
         the terms of such agreement (and any related or side agreements), taken
         as a whole, are no more favorable to such third party than the terms,
         taken as a whole, offered by Neah to Novellus during the negotiations
         pursuant to this Section 3.1. If the terms of a proposed agreement with
         a third party do not meet the conditions of (i) and (ii) above, then
         Neah must notify Novellus of the terms of the proposed agreement and
         must repeat the procedures set forth in this Section 3.1 with Novellus
         with respect to such terms. At Novellus' request, Neah shall provide a
         copy of all agreements with respect to the manufacture of Components
         used as fuel cell electrodes (and any related or side agreements) to an
         independent party selected by Novellus and under a duty not to disclose
         the terms of such agreements (or any related or side agreements) for
         the purposes of confirming to Novellus whether such agreements meet the
         conditions of (i) and (ii) above.

         3.2      TECHNICAL INFORMATION. In the event that, pursuant to Section
         3.1, Neah enters into an agreement with a third party with respect to
         the manufacture of Components used as fuel cell electrodes, Novellus
         shall, at Neah's expense, provide reasonable cooperation to Neah and
         such third party to provide Neah and such third party with technical
         information solely related to Project IP necessary to manufacture
         Components used as fuel cell electrodes, but not technical information
         related to Project IP that can be used to manufacture Component
         Equipment or to use or exploit Component Equipment Processes. For
         purposes of clarification, no license, express or implied, is granted
         by Novellus to Neah or such third party under any Intellectual Property
         Rights to Novellus Background IP or under Novellus' rights pursuant to
         Section 5.6.

         3.3      COMPONENT EQUIPMENT.

                  3.3.1    Novellus agrees not to sell Component Equipment if
                  Novellus knows (with no duty to investigate) that such sale
                  would constitute contributory infringement by Novellus of
                  Neah's rights under patents to the Project IP in the Fuel Cell
                  Field of Use ("Contributory Infringement"). If Novellus has
                  sold Component Equipment to a third party and Neah believes
                  that such sale would constitute Contributory Infringement, the
                  parties shall enter into non-binding mediation and binding
                  arbitration as provided in Section 11.4 below to determine
                  whether such sale constituted Contributory Infringement.

                  3.3.2    In the event Novellus provides notice to Neah that it
                  has decided not to use and commercialize the Project IP for
                  the design, development, manufacturing, sale and other
                  distribution of Component Equipment, Novellus shall negotiate
                  the grant of a royalty-free, non-exclusive license to Neah to
                  use and commercialize the Project IP for the design,
                  development, manufacturing, sale and other distribution of
                  Component Equipment, and the use or exploitation of Component
                  Equipment Processes.

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                  3.3.3    Neah and any third party designee who will
                  manufacture Components on Neah's behalf (each, a "Purchaser")
                  agree to purchase Component Equipment only from Novellus,
                  subject to the procedures set forth in this Section 3.3.3. A
                  third party designee shall not purchase Component Equipment
                  unless authorized to manufacture Components used as fuel cell
                  electrodes in accordance with the right of first negotiation
                  granted to Novellus in Section 3.1 above. In the event that a
                  Purchaser desires to purchase Component Equipment following
                  completion of the Project, Neah shall notify Novellus and the
                  parties shall negotiate the sale of Component Equipment to
                  such Purchaser. If the parties have been unable to enter into
                  an agreement with respect to such sale within thirty (30) days
                  following the date of the notice from Neah, the parties shall
                  enter into non-binding mediation as provided in Section 11.4.1
                  in an attempt to agree upon the terms of such an agreement. If
                  the parties continue to be unable to reach agreement within
                  sixty (60) days following the commencement of the mediation,
                  the parties shall enter into binding arbitration as provided
                  in Section 11.4.2 below to establish terms that would be
                  commercially reasonable for such sale. At such time, Novellus
                  shall, at its option, either (a) agree to sell such Component
                  Equipment to the Purchaser on the commercially reasonable
                  terms established through arbitration, in which case Purchaser
                  shall be obligated to purchase such Component Equipment on
                  such terms, or (b) grant a royalty-free, non-exclusive,
                  non-transferable, and non-sublicenseable license to the
                  Purchaser to use and commercialize the Project IP for the
                  design, development, manufacturing, sale and other
                  distribution of Component Equipment, and the use or
                  exploitation of Component Equipment Processes.

         3.4      TECHNICAL INFORMATION. In the event that, pursuant to Section
         3.3.2 or 3.3.3, Novellus grants a license to use and commercialize the
         Project IP for the design, development, manufacturing, sale and other
         distribution of Component Equipment, and the use or exploitation of
         Component Equipment Processes, Novellus shall, at Neah's expense,
         provide reasonable cooperation to Neah to provide Neah with technical
         information solely related to Project IP necessary to manufacture
         Component Equipment or to use or exploit Component Equipment Processes.
         For purposes of clarification, no license, express or implied, is
         granted by Novellus to Neah or such third party under any Intellectual
         Property Rights to Novellus Background IP.

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4.0      CONFIDENTIALITY.

         4.1      "PROJECT CONFIDENTIAL INFORMATION" shall mean any and all
         information and materials (whether in writing, or in oral, graphic,
         electronic or any other form) developed by either party, jointly or
         independently, in the course of performance of the Project, and that
         derives independent economic value, actual or potential, from not being
         generally known to the public or to other persons who can obtain
         economic value from its disclosure or use.

         4.2      OBLIGATIONS REGARDING PROJECT CONFIDENTIAL INFORMATION. Each
         party agrees that it shall protect the confidentiality of Project
         Confidential Information with at least the same degree of care as it
         uses to protect its own confidential information (but in no event less
         than reasonable care). Each party agrees not to use Project
         Confidential Information for any purpose other than (a) its performance
         of the Project, (b) as reasonably necessary to register, confirm or
         perfect the Project IP as mutually agreed upon by the parties pursuant
         to Section 5.8, (c) as reasonably necessary to exercise such party's
         rights to commercialize Project IP under Section 5.5 or 5.6,
         respectively, (d) as reasonably necessary to enforce such party's
         rights to Intellectual Property Rights in the Project IP in accordance
         with Section 5.12, and (e) as reasonably necessary to defend itself in
         accordance with Section 5.13. Each party shall not disclose Project
         Confidential Information to any person or entity other than (i) to its
         officers, employees and consultants that need access to such Project
         Confidential Information in order to effect the intent of this
         Agreement and who agree to be bound by the terms of this Section 4 or a
         similar written agreement, (ii) as reasonably necessary to register,
         confirm or perfect the Project IP as mutually agreed upon by the
         parties pursuant to Section 5.8, (iii) as reasonably necessary to
         exercise such party's rights to commercialize Project IP under Section
         5.5 or 5.6, respectively; provided that such disclosure is subject to
         confidentiality obligations similar to the terms of this Section 4,
         (iv) as reasonably necessary to enforce such party's rights to
         Intellectual Property Rights in the Project IP in accordance with
         Section 5.12, and (v) as reasonably necessary to defend itself in
         accordance with Section 5.13.

         4.3      "BACKGROUND CONFIDENTIAL INFORMATION" shall mean any and all
         information and materials (whether in writing, or in oral, graphic,
         electronic or any other form), other than Project Confidential
         Information, disclosed by one party to the other party that is marked
         as confidential or that from its nature should reasonably be considered
         to be confidential.

         4.4      OBLIGATIONS REGARDING BACKGROUND CONFIDENTIAL INFORMATION.
         Each party agrees that it shall protect the confidentiality of the
         other party's Background Confidential Information with at least the
         same degree of care as it uses to protect its own confidential
         information (but in no event less than reasonable care). Each party
         agrees not to use the other party's Background Confidential Information
         for any purpose other than its performance of the Project. Each party
         shall not disclose the other party's Background Confidential
         Information to any person or entity other than its officers, employees
         and consultants that need access to such Confidential Information in
         order to effect the intent of this Agreement and who agree to be bound
         by the terms of this Section 4 or a similar written agreement.

         4.5      UNAUTHORIZED USE OR DISCLOSURE. Each party shall immediately
         give notice to the other party of any unauthorized use or disclosure of
         Project Confidential Information or the other party's Background
         Confidential Information, and agrees to assist the other party to
         remedy such unauthorized use or disclosure.

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         4.6      SURVIVAL. The obligations set forth in this Section 4 shall
         survive for a period of five (5) years following the termination of
         this Agreement.

         4.7      EXCEPTIONS. Notwithstanding the foregoing, the parties agree
         that (a) all information and materials which are or become available to
         the general public other than through breach of this Agreement, and (b)
         a party's Background Confidential Information which (i) is rightfully
         in the recipient's possession prior to disclosure by such party, as
         evidenced by the recipient's contemporaneous written records, (ii) is
         disclosed to the recipient by a third party without breach of any
         confidentiality obligation, or (iii) is independently developed by the
         recipient without use of the other party's Background Confidential
         Information, as evidenced by the recipient's contemporaneous written
         records, shall not be subject to the restrictions set forth in this
         Section 4.

5.0      INTELLECTUAL PROPERTY RIGHTS

         5.1      OWNERSHIP OF BACKGROUND IP. All right, title and interest
         (including Intellectual Property Rights) to Background IP of a party
         shall remain the property of such party and no licenses or other rights
         with respect to such Background IP are granted to the other party. Upon
         Neah's request, Novellus shall use commercially reasonable efforts to
         identify and provide notice to Neah of all patents owned by Novellus
         (excluding patents to Project IP) that may be infringed upon by
         Background IP incorporated by Novellus into Components. Upon Novellus'
         request, Neah shall use commercially reasonable efforts to identify and
         provide notice to Novellus of all patents owned by Neah (excluding
         patents to Project IP) that may be infringed upon by Background IP
         incorporated by Neah into Component Equipment or Component Equipment
         Processes.

         5.2      OWNERSHIP OF INDEPENDENTLY DEVELOPED PROJECT IP. Subject only
         to the express license granted in Section 5.5, all right, title and
         interest (including Intellectual Property Rights) to Novellus Project
         IP shall be owned solely and exclusively by Novellus. Subject only to
         the express license granted in Section 5.6, all right, title and
         interest (including Intellectual Property Rights) to Neah Project IP
         shall be owned solely and exclusively by Neah.

         5.3      OWNERSHIP OF JOINTLY DEVELOPED IP. Subject only to the express
         licenses granted in Sections 5.5 and 5.6, all right, title and interest
         (including Intellectual Property Rights) to Jointly Developed IP shall
         be owned jointly by the parties. Each party shall have an equal,
         undivided, joint ownership interest in all right, title and interest
         (including Intellectual Property Rights) in and to such Jointly
         Developed IP immediately upon its creation. Neah hereby assigns to
         Novellus and Novellus hereby assigns to Neah an equal, undivided, joint
         ownership interest in Jointly Developed IP so that Neah and Novellus,
         respectively, each has an equal, undivided, joint ownership interest in
         the Jointly Developed IP.

         5.4      USE OF JOINTLY DEVELOPED IP. Subject to the terms of Sections
         5.5 and 5.6, each party shall have the right to use, make, have made,
         sell, import and

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         otherwise exploit the Jointly Developed IP, and hereby consents to any
         licenses granted by the other party to third parties to use, make, have
         made, sell, import and otherwise exploit the Jointly Developed IP.
         Neither party shall have a "duty to account" or share profits from the
         Jointly Developed IP with the other party.

         5.5      EXCLUSIVE RIGHT TO COMMERCIALIZE IN THE FUEL CELL FIELD OF
         USE. Notwithstanding the other terms of this Agreement, Neah shall have
         the exclusive right to use and commercialize the Project IP in the Fuel
         Cell Field of Use, except that Novellus shall have the right to use and
         commercialize the Project IP in connection with the supply of
         Components by Novellus to Neah. Novellus agrees that it shall not,
         directly or indirectly, use or commercialize, or license third parties
         to use or commercialize, the Project IP in the Fuel Cell Field of Use,
         except in connection with the supply of Components to Neah. Novellus
         hereby grants Neah an exclusive, perpetual, transferable,
         sublicensable, worldwide, irrevocable, royalty-free license to use,
         make, have made, sell, offer to sell and import goods and services
         under the Intellectual Property Rights to the Novellus Project IP and
         the Jointly Developed IP, solely in the Fuel Cell Field of Use.

         5.6      EXCLUSIVE RIGHT TO COMMERCIALIZE OUTSIDE THE FUEL CELL FIELD
         OF USE. Notwithstanding the other terms of this Agreement, Novellus
         shall have the exclusive right to use and commercialize the Project IP
         outside the Fuel Cell Field of Use. Neah agrees that it shall not,
         directly or indirectly, use or commercialize, or license third parties
         to use or commercialize, the Project IP outside the Fuel Cell Field of
         Use. Neah hereby grants Novellus an exclusive, perpetual, transferable,
         sublicensable, worldwide, irrevocable, royalty-free license to use,
         make, have made, sell, offer to sell and import goods and services
         under the Intellectual Property Rights to the Neah Project IP and the
         Jointly Developed IP, solely outside the Fuel Cell Field of Use.

         5.7      BACKGROUND IP. The licenses referred to in Sections 5.5 and
         5.6 above shall not include any rights in any Background IP. Novellus
         agrees to negotiate the grant of a non-exclusive license to Neah on
         commercially reasonable terms under Novellus' Background IP as
         necessary for Neah to use and commercialize the Project IP in the Fuel
         Cell Field of Use. Neah agrees to negotiate the grant of a
         non-exclusive license to Novellus on commercially reasonable terms
         under Neah's Background IP as necessary for Novellus to use and
         commercialize the Project IP other than for the design, development,
         manufacturing, sale or other distribution of Components used as fuel
         cell electrodes or Component Equipment.

         5.8      IDENTIFICATION OF PROJECT IP. The parties agree to meet at
         least quarterly during the term of the Project to identify and discuss
         Project IP. Upon the identification of any such Project IP, the parties
         will discuss the necessary protection for the parties' rights in such
         Project IP, including whether the parties should file for patent,
         copyright, mask work, or trademark protection, the countries in which
         such filings should be made, and whether such Project IP shall be
         treated as trade secrets.

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         5.9      PATENTS ON JOINTLY DEVELOPED IP.

                  5.9.1    JOINT PATENTS. Each patent (including divisions,
                           reissues, renewals, continuations and
                           continuations-in-part) issuing from patent
                           applications for Jointly Developed IP (each, a "Joint
                           Patent") shall be owned jointly by the parties in
                           accordance with Section 5.3. The Joint Patents shall
                           be subject to the licenses granted in Sections 5.5
                           and 5.6.

                  5.9.2    PROCESS FOR PROPOSING PROSECUTION. Either party may
                           suggest the prosecution of a patent application for
                           Jointly Developed IP or any portion thereof in any
                           country. The proposing party ("Proposing Party")
                           shall describe the scope of the proposed patent
                           application and the countries in which it desires to
                           seek patent protection.

                  5.9.3    PROCESS FOR JOINING PROSECUTION. The other party
                           ("Nonproposing Party") shall have sixty (60) days to
                           give notice of its desire to join in the prosecution
                           of such patent application in all or some of the
                           countries in the notice. The Nonproposing Party may
                           propose additional countries in which it desires to
                           seek patent protection, in which case it will be
                           deemed the Proposing Party with respect to such
                           additional countries for the purposes of this Section
                           5.9.

                  5.9.4    EFFECT OF NOT JOINING PROSECUTION. If the
                           Nonproposing Party fails to respond within such sixty
                           (60) day period, the Proposing Party shall
                           exclusively control the prosecution of such patent
                           application. If the Nonproposing Party declines to
                           join in the prosecution of the patent application in
                           a particular country or countries, the Proposing
                           Party shall exclusively control the prosecution of
                           such patent application only in such country or
                           countries. The Nonproposing Party shall provide, at
                           the expense of the Proposing Party, information
                           reasonably necessary for the Proposing Party to
                           prosecute such patent application. The Proposing
                           Party shall be responsible for paying one hundred
                           percent (100%) of the costs and expenses for such
                           prosecution, and one hundred percent (100%) of the
                           fees related to the maintenance of the resulting
                           Joint Patent. The Nonproposing Party shall reimburse
                           the Proposing Party for fifty percent (50%) of the
                           prosecution costs and expenses and maintenance fees
                           related to the resulting Joint Patent, solely to the
                           extent the Non-Proposing Party receives royalties
                           from the license of such Joint Patent or an amount as
                           mutually agreed upon by the parties which would
                           approximate a reasonable royalty for the sale of
                           products which would otherwise infringe such Joint
                           Patent.

                  5.9.5    EFFECT OF JOINING PROSECUTION. If the Nonproposing
                           Party chooses to join in the prosecution of the
                           patent application in a particular country or
                           countries, the parties shall mutually control the
                           prosecution of such patent application in such
                           country or countries, and shall mutually select a
                           patent attorney for such prosecution. Each party
                           shall be responsible for paying fifty

                                 Page 10 of 20
<PAGE>

                           percent (50%) of the prosecution costs and expenses
                           and maintenance fees related to the resulting Joint
                           Patent.

                  5.9.6    FAILURE TO PAY PROSECUTION COSTS AND EXPENSES, OR
                           MAINTENANCE FEES. If a party (the "Non-Paying Party")
                           fails to pay its share of the prosecution costs and
                           expenses or maintenance fees pursuant to Section
                           5.9.5 within thirty (30) days following receipt of a
                           notice of nonpayment from the other party (the
                           "Paying Party"), the Paying Party may give notice of
                           its intent to continue to prosecute the relevant
                           patent application or maintain the relevant Joint
                           Patent, and shall thereafter pay one hundred percent
                           (100%) of the costs and expenses for such
                           prosecution, and one hundred percent (100%) of the
                           fees related to the maintenance fees for such Joint
                           Patent. The Paying Party shall control the
                           prosecution of such patent application, and the
                           Non-Paying Party shall provide, at the expense of the
                           Paying Party, information reasonably necessary for
                           the Paying Party to prosecute such patent
                           application. The Non-Paying Party shall reimburse the
                           Paying Party for fifty percent (50%) of the
                           prosecution costs and expenses and maintenance fees
                           related to the Joint Patent, solely to the extent the
                           Non-Paying Party receives royalties from the license
                           of such Joint Patent or an amount as mutually agreed
                           upon by the parties which would approximate a
                           reasonable royalty for the sale of products which
                           would otherwise infringe such Joint Patent.

                  5.9.7    ABANDONMENT OF PATENT APPLICATION OR JOINT PATENT. If
                           a party (the "Abandoning Party") desires to abandon a
                           patent application for Jointly Developed IP or a
                           Joint Patent in a particular country or countries, it
                           shall give the other party (the "Non-Abandoning
                           Party") sixty (60) days prior written notice of its
                           intention to abandon such patent application or Joint
                           Patent. If the Non-Abandoning Party desires to
                           continue to prosecute such patent application or
                           maintain such Joint Patent, it shall give notice of
                           such intent to the Abandoning Party within such
                           period and shall thereafter pay one hundred percent
                           (100%) of the costs and expenses for such prosecution
                           and one hundred percent (100%) of the fees related to
                           the maintenance of such Joint patent. The
                           Non-Abandoning Party shall control the prosecution in
                           such country or countries, and the Abandoning Party
                           shall provide, at the expense of the Non-Abandoning
                           Party, information reasonably necessary for the
                           Non-Abandoning Party to prosecute such patent
                           application. The Abandoning Party shall reimburse the
                           Non-Abandoning Party for fifty percent (50%) of the
                           prosecution costs and expenses and maintenance fees
                           related to the Joint Patent, solely to the extent the
                           Abandoning Party receives royalties from the license
                           of such Joint Patent or an amount as mutually agreed
                           upon by the parties which would approximate a
                           reasonable royalty for the sale of products which
                           would otherwise infringe such Joint Patent.

                                 Page 11 of 20
<PAGE>

         5.10     PATENTS ON INDEPENDENTLY DEVELOPED PROJECT IP.

                  5.10.1   NON-JOINT PATENT. Each patent (including divisions,
                           reissues, renewals, continuations and
                           continuations-in-part) issuing from a patent
                           application for Neah Project IP or Novellus Project
                           IP (each, a "Non-Joint Patent") shall be owned solely
                           and exclusively by Neah or Novellus, respectively, in
                           accordance with Section 5.2. The Non-Joint Patents
                           shall be subject to the licenses granted in Sections
                           5.5 and 5.6.

                  5.10.2   PROCESS FOR PROPOSING PROSECUTION. In the event that
                           (a) Neah desires to prosecute a patent application
                           for Novellus Project IP which is licensed to it by
                           Novellus pursuant to Section 5.5, or (b) Novellus
                           desires to prosecute a patent application for Neah
                           Project IP which is licensed to it by Neah pursuant
                           to Section 5.6, such party (the "Requesting Party")
                           shall notify the other party (the "Responding
                           Party").

                  5.10.3   OPTION TO PROSECUTE. The Responding Party shall have
                           the sole right to initiate the prosecution of the
                           patent application within ninety days following
                           receipt of the notice from the Requesting Party. If
                           the Responding Party initiates the prosecution of the
                           patent application within such time, the Responding
                           Party shall exclusively control the prosecution of
                           such patent application and the Requesting Party
                           shall reimburse the Responding Party for one hundred
                           percent (100%) of the reasonable costs and expenses
                           for such prosecution.

                  5.10.4   FAILURE TO INITIATE PROSECUTION. If the Responding
                           Party fails to initiate the prosecution of the patent
                           application within ninety (90) days following receipt
                           of the notice from the Requesting Party, the
                           Requesting Party may prosecute, at its own expense,
                           the patent application, and shall exclusively control
                           such prosecution. In such event, the Responding Party
                           shall execute such documents and take such other
                           action in connection therewith as may be reasonably
                           requested by the Requesting Party, at the Requesting
                           Party's expense.

                  5.10.5   MAINTENANCE FEES. The Requesting Party shall be
                           responsible for paying one hundred percent (100%) of
                           the fees related to the maintenance of the Non-Joint
                           Patent.

         5.11     COOPERATION.

                  5.11.1   JOINTLY DEVELOPED IP. Each party shall provide to the
                           other party copies of all documentation and other
                           information in support of any patent application or
                           other agreed upon registration process for Jointly
                           Developed IP.

         5.12     INFRINGEMENT OF PROJECT IP.

                  5.12.1   NOTIFICATION OF INFRINGEMENT. If either party learns
                           of an infringement by a third party of Intellectual
                           Property Rights to the Project IP, such party shall
                           promptly notify the other party and

                                 Page 12 of 20
<PAGE>

                           shall provide the other party with available evidence
                           of such infringement.

                  5.12.2   ENFORCEMENT BY THE PARTIES. Neah shall have the
                           exclusive right, at its expense, but not the
                           obligation, to bring and maintain any action in its
                           own name alleging that a third party has infringed or
                           misappropriated Intellectual Property Rights to
                           Project IP in the Fuel Cell Field of Use. Novellus
                           shall have the exclusive right, at its expense, but
                           not the obligation, to bring and maintain any action
                           in its own name alleging that a third party has
                           infringed or misappropriated Intellectual Property
                           Rights to Project IP outside the Fuel Cell Field of
                           Use. In no event shall the non-enforcing party be
                           obligated to join as a party in any such action,
                           whether or not the non-enforcing party is deemed an
                           indispensable party thereto, and the enforcing party
                           shall not seek to join the non-enforcing party. There
                           shall be no accounting to the other party in the
                           event of a favorable judgment or award in such
                           action. Neither party may settle any such dispute
                           without the consent of the other party, unless such
                           settlement would not adversely affect the rights of
                           the other party.

         5.13     INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.

                  5.13.1   NOTIFICATION OF INFRINGEMENT. If either party learns
                           that the performance of the Project may infringe upon
                           the Intellectual Property Rights of a third party,
                           such party shall promptly notify the other party and
                           shall provide the other party with available evidence
                           of such potential infringement.

                  5.13.2   DEFENSE. In the event a third party brings an action
                           against either party alleging infringement of any
                           third party's Intellectual Property Rights arising
                           out of the commercial exploitation of Project IP, the
                           party against whom such action is brought (the
                           "Defending Party") shall defend such action at its
                           expense. In the event of such action, the parties
                           shall confer with each other, cooperate and provide
                           reasonable assistance to each other during the
                           defense of the action.

6.0      TERM AND TERMINATION.

         6.1      TERM. This Agreement shall commence on the Effective Date and,
         unless earlier terminated in accordance with Section 6.2 and 6.3, shall
         continue until the earlier of (i) the completion of the Project, or
         (ii) December 31, 2005. The term of this Agreement may be extended upon
         mutual agreement of the parties.

         6.2      TERMINATION FOR CAUSE. Either party may terminate this
         Agreement by written notice if the other party materially breaches this
         Agreement and does not cure such breach within thirty (30) days of
         receipt of notice of such breach. Either party may also terminate this
         Agreement by written notice to the other party in the event that the
         other party (a) becomes or is insolvent; (b) makes an assignment for
         the benefit of its creditors; (c) applies for or consents to the

                                 Page 13 of 20
<PAGE>

         appointment of a receiver, trustee or liquidator for substantially all
         of its assets, or such a receiver, trustee or liquidator is appointed
         for the other party; (d) files a voluntary petition or proceeding under
         any statute of any state or country relating to insolvency or the
         protection of the rights of creditors; or (e) has filed against it an
         involuntary petition or proceeding under any statute of any state or
         country relating to insolvency or the protection of the rights of
         creditors that has not been dismissed within sixty (60) days thereof.

         6.3      TERMINATION UPON ACQUISITION. Novellus may terminate this
         Agreement if Neah undergoes a change of control, including, without
         limitation, through the sale of all or substantially all of Neah's
         assets, the sale of fifty percent (50%) of the outstanding voting
         securities of Neah, or the reorganization, consolidation or merger of
         Neah where the holders of Neah's securities before the transaction
         beneficially own less than fifty percent (50%) of the outstanding
         voting securities of the surviving entity after the transaction,
         provided that the acquirer is (a) a competitor of Novellus, as
         reasonably determined by Novellus, or (b) a semiconductor equipment
         manufacturer.

         6.4      EFFECTS OF TERMINATION. Termination of this Agreement by
         either party shall not act as a waiver of any breach of this Agreement
         and shall not release either party from any liability for breach of
         such party's obligations under this Agreement. All other rights and
         obligations of the parties shall terminate as of the termination or
         expiration of this Agreement, except that each party's rights and
         obligations pursuant to Sections 2.2.4, 2.5(c), 2.7, 3, 4, 5, 6.4, 9,
         10, and 11 of this Agreement shall survive.

7.0      RELATIONSHIP MANAGER. Each party agrees to appoint, in writing, an
         individual to coordinate activities under this Agreement and to act as
         the primary point of contact for the other party (the "Relationship
         Manager"). The Relationship Managers shall meet at least monthly to
         discuss the activities conducted, and to be conducted, pursuant to this
         Agreement. The Relationship Managers shall review the Project Plan at
         least once every ninety (90) days and discuss amendments and updates
         thereto. Either party may change their designated Relationship Manager
         upon written notice to the other. The initial Relationship Managers
         are:

                           INITIAL RELATIONSHIP MANAGER FOR NEAH:

                           Name:     Arthur S. Homa
                           Address:  22118 20th Ave. SE
                                     Suite 142
                                     Bothell, WA 98021
                           Phone:    425-424-3324 Ext. 108
                           Fax:      425-483-8454
                           Email:    ahoma@neahpower.com

                           INITIAL RELATIONSHIP MANAGER FOR NOVELLUS:

                           (Name:    John Drewery
                           Address:  4000 North First Street
                                     San Jose, CA 95134
                           Phone:    408-545-3590
                           Fax:      408-953-4665
                           Email:    john.drewery@novellus.com

                                 Page 14 of 20
<PAGE>

8.0      NO OTHER CONSIDERATION. Neither party shall have any monetary or other
obligations to the other arising out of or related to this Agreement except as
expressly provided for herein. Each party further acknowledges and agrees that
any and all costs, expenses or liabilities incurred by a party arising out of or
related to this Agreement shall be the responsibility of the party incurring
such cost, expense or liability, and neither party shall be liable or obligated
to pay any cost, expense or liability paid or incurred by the other.

9.0      DISCLAIMER OF WARRANTIES. NEITHER PARTY MAKES ANY WARRANTIES (WHETHER
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) RELATING TO THIS AGREEMENT, THE
PROJECT, ITS BACKGROUND IP, OR ITS BACKGROUND CONFIDENTIAL INFORMATION,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, OR ANY WARRANTY THAT MAY ARISE OUT
OF COURSE OF PERFORMANCE, COURSE OF DEALING, OR USAGE IN TRADE.

10.0     LIMITATION OF LIABILITY. EXCEPT FOR THE OBLIGATIONS OF THE PARTIES
UNDER SECTION 4 ABOVE, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, OR FOR ANY
LOSS OF PROFITS, LOSS OF REVENUE, OR LOSS RESULTING FROM INTERRUPTION OF
BUSINESS, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROJECT,
REGARDLESS OF THE FORM OF ACTION OR IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE OTHER PARTY HAS
ENTERED INTO THIS AGREEMENT IN RELIANCE UPON THE LIMITATIONS OF LIABILITY SET
FORTH HEREIN, AND THAT THE SAME FORM AN ESSENTIAL BASIS OF THE BARGAIN BETWEEN
THE PARTIES, WITHOUT WHICH SUCH PARTY WOULD NOT HAVE ENTERED INTO THIS
AGREEMENT. EACH PARTY AGREES THAT THE LIMITATIONS OF LIABILITY SET FORTH HEREIN
WILL SURVIVE AND APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE.

11.0     GENERAL TERMS

         11.1     NON-SOLICITATION. During the term of this Agreement and for a
         period of one year following the termination of this Agreement, neither
         party will directly or indirectly solicit, hire or attempt to hire any
         of the other party's employees, or cause others to solicit, hire or
         attempt to hire any such employees; provided, however, this obligation
         shall not apply to or be breached by (a) advertising of open positions,
         or other forms of soliciting employees or contractors that are general
         in nature, or (b) responding to unsolicited inquiries about employment
         or contract opportunities from any individual or agent.

         11.2     ASSIGNMENT. Neither party shall assign, delegate or otherwise
         transfer this Agreement or any of the rights and obligations under this
         Agreement voluntarily, by operation of law, or otherwise, without the
         other party's prior written consent, not to be unreasonably withheld,
         provided, however, that either party may assign, delegate and otherwise
         transfer all of its rights and obligations under this Agreement to a
         successor in connection with a merger or sale of all or substantially
         all of the party's business to which this Agreement relates. An

                                 Page 15 of 20
<PAGE>

         assignment without the requisite consent, if required, shall be void
         and unenforceable. Subject to the foregoing, this Agreement will be
         binding and inure to the benefit of the parties and their respective
         successors and permitted assigns.

         11.3     GOVERNING LAW. This Agreement shall be governed by and
         construed in accordance with the laws of the State of California,
         without giving effect to its provisions governing conflicts of law.

         11.4     DISPUTES. All disputes arising under this Agreement shall be
         resolved by non-binding mediation and binding arbitration in accordance
         with the following terms.

                  11.4.1   Either party may commence an action by notifying the
                           other party and the American Arbitration Association
                           ("AAA"). Unless the parties agree upon a mediator
                           within thirty (30) days following such notification,
                           AAA will promptly designate a mediator who is
                           independent, impartial and has relevant industry
                           experience, and AAA's decision about the identity of
                           the mediator will be final and binding. The parties
                           agree to conduct at least eight (8) consecutive hours
                           of non-binding mediated negotiations within 30 days
                           after the notice is sent. Each party shall bear its
                           own expenses for the mediation and they shall each
                           share equally in the expenses and fees of the
                           mediator.

                  11.4.2   If the dispute is not resolved by negotiation or
                           mediation within thirty (30) days after the first
                           notice to AAA is sent, then, upon notice by either
                           party to the other and to AAA, the controversy or
                           dispute will be submitted for binding arbitration in
                           accordance with AAA's Commercial Arbitration Rules.
                           The arbitrator may be selected by mutual agreement of
                           the parties. If the parties cannot mutually agree
                           upon an arbitrator within thirty (30) days of notice
                           of the controversy or dispute, then each party shall
                           select an arbitrator, and such arbitrators shall
                           select a third arbitrator. The arbitration shall be
                           held at a mutually agreeable location in the city of
                           San Francisco, California, and the United States
                           Arbitration Act will govern the arbitration, 9 U.S.C.
                           Sections 1-16 (or by the same principles enunciated
                           by such Act in the event it may not be technically
                           applicable). The parties agree that they will abide
                           by and perform any judgment rendered by the
                           arbitrator(s). The judgment of the arbitrator(s) will
                           be final and binding on the parties. Each party shall
                           bear its own expenses for the arbitration and they
                           shall each share equally in the expenses and fees of
                           the arbitrator(s). Notwithstanding the foregoing,
                           neither party shall be precluded from seeking
                           injunctive relief from a court of competent
                           jurisdiction pending the resolution of any dispute in
                           accordance with this Section 11.4.

         11.5     ENTIRE AGREEMENT. This Agreement contains the entire agreement
         between the parties and supersedes all prior or contemporaneous
         agreements or representations, written or oral.

                                 Page 16 of 20
<PAGE>

         11.6     NOTICES. Any notice required or permitted under this Agreement
         shall be given in writing and shall be deemed effectively given (a)
         upon personal delivery to the party to be notified, (b) upon
         confirmation of receipt by fax by the party to be notified, or (c) one
         (1) business day after deposit with a reputable overnight courier,
         prepaid for overnight delivery and addressed to the party to be
         notified at the address indicated for such party in Section 7, or at
         such other address as such party may designate by five (5) days advance
         written notice to the other party given in the foregoing manner.

         11.7     FURTHER ASSURANCES. The parties shall perform all such further
         acts, provide such further documents or written assurances, and execute
         such further documents as are reasonably required or necessary to carry
         out the acts and transactions contemplated by this Agreement.

         11.8     COUNTERPARTS. This Agreement may be executed by facsimile and
         in counterparts, each of which shall be deemed an original and all of
         which together shall constitute one instrument.

         11.9     SEVERABILITY. If one or more provisions of this Agreement are
         held to be unenforceable under applicable law, such provision shall be
         excluded from this Agreement and the balance of the Agreement shall be
         interpreted as if such provision were so excluded and shall be
         enforceable in accordance with its terms.

         11.10    HEADINGS. The headings in this Agreement are for convenience
         only, and shall not affect the interpretation of this Agreement.

         11.11    BANKRUPTCY CODE. The licenses granted under this Agreement
         shall be treated as a license of rights to "intellectual property" (as
         defined in Section 101(35A) of Title II of the Unites States Code, as
         amended (the "BANKRUPTCY CODE")) for purposes of Section 365(n) of the
         Bankruptcy Code. The parties agree that the recipient of each license
         may elect to retain and may fully exercise all of its rights and
         elections under the Bankruptcy Code provided that such party abides by
         the terms of this Agreement, including without limitation the terms of
         all licenses granted by such recipient to the other party hereunder.

         11.12    AMENDMENT; WAIVER. No modification, amendment or waiver of any
         provision of this Agreement shall be effective except pursuant to a
         writing signed by a duly authorized representative of each party. The
         waiver by either party of a breach of or a default under any provision
         of this Agreement shall not be construed as a waiver of any subsequent
         breach of or default under the same or any other provision of this
         Agreement, nor shall any delay or omission on the part of either party
         to exercise or avail itself of any right or remedy that it has or may
         have hereunder operate as a waiver of any right or remedy.

                                 Page 17 of 20
<PAGE>

IN WITNESS WHEREOF, THE parties hereto have executed this Agreement as of the
Effective Date.

NEAH POWER SYSTEMS, INC.                          NOVELLUS SYSTEMS, INC.

By: /s/ David Dorheim                             By: /s/ Kevin S. Royal

Name: David Dorheim                               Name: Kevin S. Royal

Title: President & CEO                            Title: Chief Financial Officer

Date: April 30, 2004                              Date: April 28, 2004

<PAGE>

LIST OF EXHIBITS


EXHIBIT A - PROJECT PLAN

EXHIBIT B - NOVELLUS PERSONNEL

EXHIBIT C - EQUIPMENT

EXHIBIT D - WARRANT

<PAGE>

                                   EXHIBIT D

                                    WARRANT