NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    


    COMMON
      STOCK PURCHASE WARRANT

    


    To
      Purchase 500,000 Shares
      of
      Common Stock of

     

    NEAH
      POWER SYSTEMS, INC.

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, EPD
      Investment Co., LLC,
      a
      California limited liability company, or its assignee or designee (the
      “Holder”),
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the five-year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Neah
      Power Systems, Inc.,
      a
      Nevada corporation (the “Company”),
      five
      hundred thousand (500,000) shares
      (the “Warrant
      Shares”)
      of
      Common Stock, $.001 par value, of the Company (the “Common
      Stock”).
      The
      purchase price of one share of Common Stock under this Warrant shall be equal
      to
      the Exercise Price, as defined in Section 2(b). 

     

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Purchase Agreement (the “Purchase
      Agreement”),
      dated
      November 9, 2007, between the Company and the Purchaser signatory
      thereto.

     

    Section
      2. Exercise.

     

    	a)  	
            Exercise
              of Warrant.
              Exercise of the purchase rights represented by this Warrant may be
              made at
              any time or times on or after the Initial Exercise Date and on or before
              the Termination Date by delivery to the Company of a duly executed
              facsimile copy of the Notice of Exercise Form annexed hereto (or such
              other office or agency of the Company as it may designate by notice
              in
              writing to the registered Holder at the address of such Holder appearing
              on the books of the Company); provided,
              however,
              within 5 Trading Days of the date said Notice of Exercise is delivered
              to
              the Company, the Holder shall have surrendered this Warrant to the
              Company
              and the Company shall have received payment of the aggregate Exercise
              Price of the shares thereby purchased by wire transfer or cashier’s check
              drawn on a United States bank. 

          


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    	b)  	
            Exercise
              Price.
              The exercise price of the Common Stock under this Warrant shall be
              $0.29
              (the “Exercise
              Price”).

          


     

    	c)  	
            Cashless
              Exercise.
              If at any time after January 1, 2008 during the term of this Warrant
              there
              is no effective registration statement registering, or no current
              prospectus available for, the issuance or resale of the Warrant Shares
              by
              the Holder, then this Warrant may also be exercised at such time by
              means
              of a “cashless exercise” in which the Holder shall be entitled to receive
              a certificate for the number of Warrant Shares equal to the quotient
              obtained by dividing [(A-B) (X)] by (A),
              where:

          


     

      (A)
      = the
      VWAP on the Trading Day immediately preceding the date of such
      election;

    


    (B)
      = the
      Exercise Price of this Warrant, as adjusted; and 

    


    (X)
      = the
      number of Warrant Shares issuable upon exercise of this Warrant in accordance
      with the terms of this Warrant by means of a cash exercise rather than a
      cashless exercise.

    


    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    	d)  	
            Exercise
              Limitations;
              Holder’s
              Restrictions.
              The Holder shall not have the right to exercise any portion of this
              Warrant, pursuant to Section 2(c) or otherwise, to the extent that
              after
              giving effect to such issuance after exercise, the Holder (together
              with
              the Holder’s affiliates), as set forth on the applicable Notice of
              Exercise, would beneficially own in excess of 4.9% of the number of
              shares
              of the Common Stock outstanding immediately after giving effect to
              such
              issuance.  For purposes of the foregoing sentence, the number of
              shares of Common Stock beneficially owned by the Holder and its affiliates
              shall include the number of shares of Common Stock issuable upon exercise
              of this Warrant with respect to which the determination of such sentence
              is being made, but shall exclude the number of shares of Common Stock
              which would be issuable upon (A) exercise of the remaining, nonexercised
              portion of this Warrant beneficially owned by the Holder or any of
              its
              affiliates and (B) exercise or conversion of the unexercised or
              nonconverted portion of any other securities of the Company (including,
              without limitation, any other Notes or Warrants) subject to a limitation
              on conversion or exercise analogous to the limitation contained herein
              beneficially owned by the Holder or any of its affiliates.  Except as
              set forth in the preceding sentence, for purposes of this Section 2(d),
              beneficial ownership shall be calculated in accordance with Section
              13(d)
              of the Exchange Act, it being acknowledged by Holder that the Company
              is
              not representing to Holder that such calculation is in compliance with
              Section 13(d) of the Exchange Act and Holder is solely responsible
              for any
              schedules required to be filed in accordance therewith. To the extent
              that
              the limitation contained in this Section 2(d) applies, the determination
              of whether this Warrant is exercisable (in relation to other securities
              owned by the Holder) and of which a portion of this Warrant is exercisable
              shall be in the sole discretion of such Holder, and the submission
              of a
              Notice of Exercise shall be deemed to be such Holder’s determination of
              whether this Warrant is exercisable (in relation to other securities
              owned
              by such Holder) and of which portion of this Warrant is exercisable,
              in
              each case subject to such aggregate percentage limitation, and the
              Company
              shall have no obligation to verify or confirm the accuracy of such
              determination. For purposes of this Section 2(d), in determining the
              number of outstanding shares of Common Stock, the Holder may rely on
              the
              number of outstanding shares of Common Stock as reflected in (x) the
              Company’s most recent Form 10-QSB or Form 10-KSB (or similar form), as the
              case may be, (y) a more recent public announcement by the Company or
              (z)
              any other notice by the Company or the Company’s Transfer Agent setting
              forth the number of shares of Common Stock outstanding.  Upon the
              written or oral request of the Holder, the Company shall within two
              Trading Days confirm orally and in writing to the Holder the number
              of
              shares of Common Stock then outstanding.  In any case, the number of
              outstanding shares of Common Stock shall be determined after giving
              effect
              to the conversion or exercise of securities of the Company, including
              this
              Warrant, by the Holder or its affiliates since the date as of which
              such
              number of outstanding shares of Common Stock was reported. The provisions
              of this Section 2(d) may be waived by the Holder upon, at the election
              of
              the Holder, not less than 61 days’ prior notice to the Company, and the
              provisions of this Section 2(d) shall continue to apply until such
              61st
              day (or such later date, as determined by the Holder, as may be specified
              in such notice of waiver).

          


    


    	e)  	
            Mechanics
              of Exercise.
              

          


    


    	i)  	
             Authorization
              of Warrant Shares.
              The Company covenants that all Warrant Shares which may be issued upon
              the
              exercise of the purchase rights represented by this Warrant will, upon
              exercise of the purchase rights represented by this Warrant, be duly
              authorized, validly issued, fully paid and nonassessable and free from
              all
              taxes, liens and charges in respect of the issue thereof (other than
              taxes
              in respect of any transfer occurring contemporaneously with such issue).
              The Company covenants that during the period the Warrant is outstanding,
              it will reserve from its authorized and unissued Common Stock a sufficient
              number of shares to provide for the issuance of the Warrant Shares
              upon
              the exercise of any purchase rights under this Warrant. The Company
              further covenants that its issuance of this Warrant shall constitute
              full
              authority to its officers who are charged with the duty of executing
              stock
              certificates to execute and issue the necessary certificates for the
              Warrant Shares upon the exercise of the purchase rights under this
              Warrant. The Company will take all such reasonable action as may be
              necessary to assure that such Warrant Shares may be issued as provided
              herein without violation of any applicable law or regulation, or of
              any
              requirements of the Trading Market upon which the Common Stock may
              be
              listed.

          


     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    	ii)  	
             Delivery
              of Certificates Upon Exercise.
              Certificates for shares purchased hereunder shall be transmitted by
              the
              transfer agent of the Company to the Holder by crediting the account
              of
              the Holder’s prime broker with the Depository Trust Company through its
              Deposit Withdrawal Agent Commission (“DWAC”)
              system if the Company is a participant in such system, and otherwise
              by
              physical delivery to the address specified by the Holder in the Notice
              of
              Exercise within 3 Trading Days from the delivery to the Company of
              the
              Notice of Exercise Form, surrender of this Warrant and payment of the
              aggregate Exercise Price as set forth above (“Warrant
              Share Delivery Date”).
              This Warrant shall be deemed to have been exercised on the date the
              Exercise Price is received by the Company. The Warrant Shares shall
              be
              deemed to have been issued, and Holder or any other person so designated
              to be named therein shall be deemed to have become a holder of record
              of
              such shares for all purposes, as of the date the Warrant has been
              exercised by payment to the Company of the Exercise Price and all taxes
              required to be paid by the Holder, if any, pursuant to Section 2(e)(vii)
              prior to the issuance of such shares, have been paid.
              

          


     

    	iii)  	
             Delivery
              of New Warrants Upon Exercise.
              If this Warrant shall have been exercised in part, the Company shall,
              at
              the time of delivery of the certificate or certificates representing
              Warrant Shares, deliver to Holder a new Warrant evidencing the rights
              of
              Holder to purchase the unpurchased Warrant Shares called for by this
              Warrant, which new Warrant shall in all other respects be identical
              with
              this Warrant.

          


     

    	iv)  	
             Rescission
              Rights.
              If the Company fails to cause its transfer agent to transmit to the
              Holder
              a certificate or certificates representing the Warrant Shares pursuant
              to
              this Section 2(e)(iv) by the Warrant Share Delivery Date, then the Holder
              will have the right to rescind such
              exercise.

          


     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    	v)  	
             Compensation
              for Buy-In on Failure to Timely Deliver Certificates Upon
              Exercise.
              In addition to any other rights available to the Holder, if the Company
              fails to cause its transfer agent to transmit to the Holder a certificate
              or certificates representing the Warrant Shares pursuant to an exercise
              on
              or before the Warrant Share Delivery Date, and if after such date the
              Holder is required by its broker to purchase (in an open market
              transaction or otherwise) shares of Common Stock to deliver in
              satisfaction of a sale by the Holder of the Warrant Shares which the
              Holder anticipated receiving upon such exercise (a “Buy-In”),
              then the Company shall (1) pay in cash to the Holder the amount by
              which
              (x) the Holder’s total purchase price (including brokerage commissions, if
              any) for the shares of Common Stock so purchased exceeds (y) the amount
              obtained by multiplying (A) the number of Warrant Shares that the Company
              was required to deliver to the Holder in connection with the exercise
              at
              issue times (B) the price at which the sell order giving rise to such
              purchase obligation was executed, and (2) at the option of the Holder,
              either reinstate the portion of the Warrant and equivalent number of
              Warrant Shares for which such exercise was not honored or deliver to
              the
              Holder the number of shares of Common Stock that would have been issued
              had the Company timely complied with its exercise and delivery obligations
              hereunder. For example, if the Holder purchases Common Stock having
              a
              total purchase price of $11,000 to cover a Buy-In with respect to an
              attempted exercise of shares of Common Stock with an aggregate sale
              price
              giving rise to such purchase obligation of $10,000, under clause (1)
              of
              the immediately preceding sentence the Company shall be required to
              pay
              the Holder $1,000. The Holder shall provide the Company written notice
              indicating the amounts payable to the Holder in respect of the Buy-In,
              together with applicable confirmations and other evidence reasonably
              requested by the Company. Nothing herein shall limit a Holder’s right to
              pursue any other remedies available to it hereunder, at law or in equity
              including, without limitation, a decree of specific performance and/or
              injunctive relief with respect to the Company’s failure to timely deliver
              certificates representing shares of Common Stock upon exercise of the
              Warrant as required pursuant to the terms
              hereof.

          


     

    	vi)  	
             No
              Fractional Shares or Scrip.
              No fractional shares or scrip representing fractional shares shall
              be
              issued upon the exercise of this Warrant. As to any fraction of a share
              which Holder would otherwise be entitled to purchase upon such exercise,
              the Company shall pay a cash adjustment in respect of such final fraction
              in an amount equal to such fraction multiplied by the Exercise
              Price.

          


     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    	vii)  	
             Charges,
              Taxes and Expenses.
              Issuance of certificates for Warrant Shares shall be made without charge
              to the Holder for any issue or transfer tax or other incidental expense
              in
              respect of the issuance of such certificate, all of which taxes and
              expenses shall be paid by the Company, and such certificates shall
              be
              issued in the name of the Holder or in such name or names as may be
              directed by the Holder; provided,
              however,
              that in the event certificates for Warrant Shares are to be issued
              in a
              name other than the name of the Holder, this Warrant when surrendered
              for
              exercise shall be accompanied by the Assignment Form attached hereto
              duly
              executed by the Holder; and the Company may require, as a condition
              thereto, the payment of a sum sufficient to reimburse it for any transfer
              tax incidental thereto.

          


     

    	viii)  	
            Closing
              of Books.
              The Company will not close its stockholder books or records in any
              manner
              which prevents the timely exercise of this Warrant, pursuant to the
              terms
              hereof.

          


     

    Section
      3. Certain Adjustments.

     

    	a)  	
             Stock
              Dividends and Splits.
              If the Company, at any time while this Warrant is outstanding: (A)
              pays a
              stock dividend or otherwise make a distribution or distributions on
              shares
              of its Common Stock or any other equity or equity equivalent securities
              payable in shares of Common Stock (which, for avoidance of doubt, shall
              not include any shares of Common Stock issued by the Company pursuant
              to
              this Warrant), (B) subdivides outstanding shares of Common Stock into
              a
              larger number of shares, (C) combines (including by way of reverse
              stock
              split) outstanding shares of Common Stock into a smaller number of
              shares,
              or (D) issues by reclassification of shares of the Common Stock any
              shares
              of capital stock of the Company, then in each case the Exercise Price
              shall be multiplied by a fraction of which the numerator shall be the
              number of shares of Common Stock (excluding treasury shares, if any)
              outstanding before such event and of which the denominator shall be
              the
              number of shares of Common Stock outstanding after such event and the
              number of shares issuable upon exercise of this Warrant shall be
              proportionately adjusted. Any adjustment made pursuant to this Section
              3(a) shall become effective immediately after the record date for the
              determination of stockholders entitled to receive such dividend or
              distribution and shall become effective immediately after the effective
              date in the case of a subdivision, combination or
              re-classification.

          


     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    	b)  	
            Pro
              Rata Distributions.
              If the Company, at any time prior to the Termination Date, shall
              distribute to all holders of Common Stock (and not to Holders of the
              Warrants) evidences of its indebtedness or assets or rights or warrants
              to
              subscribe for or purchase any security other than the Common Stock
              (which
              shall be subject to Section 3(b)), then in each such case the Exercise
              Price shall be adjusted by multiplying the Exercise Price in effect
              immediately prior to the record date fixed for determination of
              stockholders entitled to receive such distribution by a fraction of
              which
              the denominator shall be the VWAP determined as of the record date
              mentioned above, and of which the numerator shall be such VWAP on such
              record date less the then per share fair market value at such record
              date
              of the portion of such assets or evidence of indebtedness so distributed
              applicable to one outstanding share of the Common Stock as determined
              by
              the Board of Directors in good faith. In either case the adjustments
              shall
              be described in a statement provided to the Holders of the portion
              of
              assets or evidences of indebtedness so distributed or such subscription
              rights applicable to one share of Common Stock. Such adjustment shall
              be
              made whenever any such distribution is made and shall become effective
              immediately after the record date mentioned
              above.

          


     

    	c)  	
            Calculations.
              All calculations under this Section 3 shall be made to the nearest
              cent or
              the nearest 1/100th of a share, as the case may be. The number of shares
              of Common Stock outstanding at any given time shall not includes shares
              of
              Common Stock owned or held by or for the account of the Company, and
              the
              description of any such shares of Common Stock shall be considered
              on
              issue or sale of Common Stock. For purposes of this Section 3, the
              number
              of shares of Common Stock deemed to be issued and outstanding as of
              a
              given date shall be the sum of the number of shares of Common Stock
              (excluding treasury shares, if any) issued and
              outstanding.

          


     

    d)  Notice
      to Holders.
      

     

    i.  Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
      shall promptly mail to each Holder a notice setting forth the Exercise Price
      after such adjustment and setting forth a brief statement of the facts requiring
      such adjustment. If the Company issues a variable rate security, the Company
      shall be deemed to have issued Common Stock or Common Stock Equivalents at
      the
      lowest possible conversion or exercise price at which such securities may be
      converted or exercised.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    ii.  Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution) on the Common
      Stock; (B) the Company shall declare a special nonrecurring cash dividend on
      or
      a redemption of the Common Stock; (C) the Company shall authorize the granting
      to all holders of the Common Stock rights or warrants to subscribe for or
      purchase any shares of capital stock of any class or of any rights; (D) the
      approval of any stockholders of the Company shall be required in connection
      with
      any reclassification of the Common Stock, any consolidation or merger to which
      the Company is a party, any sale or transfer of all or substantially all of
      the
      assets of the Company, of any compulsory share exchange whereby the Common
      Stock
      is converted into other securities, cash or property; (E) the Company shall
      authorize the voluntary or involuntary dissolution, liquidation or winding
      up of
      the affairs of the Company; then, in each case, the Company shall cause to
      be
      mailed to the Holder at its last addresses as it shall appear upon the Warrant
      Register of the Company, at least 20 calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the date
      on
      which a record is to be taken for the purpose of such dividend, distribution,
      redemption, rights or warrants, or if a record is not to be taken, the date
      as
      of which the holders of the Common Stock of record to be entitled to such
      dividend, distributions, redemption, rights or warrants are to be determined
      or
      (y) the date on which such reclassification, consolidation, merger, sale,
      transfer or share exchange is expected to become effective or close, and the
      date as of which it is expected that holders of the Common Stock of record
      shall
      be entitled to exchange their shares of the Common Stock for securities, cash
      or
      other property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange; provided,
      that
      the failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      20-day period commencing the date of such notice to the effective date of the
      event triggering such notice.

     

    	e)  	
            Fundamental
              Transaction.
              If, at any time while this Warrant is outstanding, (A) the Company
              effects
              any merger or consolidation of the Company with or into another Person,
              (B) the Company effects any sale of all or substantially all of its
              assets
              in one or a series of related transactions, (C) any tender offer or
              exchange offer (whether by the Company or another Person) is completed
              pursuant to which holders of Common Stock are permitted to tender or
              exchange their shares for other securities, cash or property, or (D)
              the
              Company effects any reclassification of the Common Stock or any compulsory
              share exchange pursuant to which the Common Stock is effectively converted
              into or exchanged for other securities, cash or property (in any such
              case, a “Fundamental
              Transaction”),
              then, upon any subsequent conversion of this Warrant, the Holder shall
              have the right to receive, for each Warrant Share that would have been
              issuable upon such exercise absent such Fundamental Transaction, at
              the
              option of the Holder, (a) upon exercise of this Warrant, the number
              of
              shares of Common Stock of the successor or acquiring corporation or
              of the
              Company, if it is the surviving corporation, and Alternate Consideration
              receivable upon or as a result of such reorganization, reclassification,
              merger, consolidation or disposition of assets by a Holder of the number
              of shares of Common Stock for which this Warrant is exercisable
              immediately prior to such event or (b) cash equal to the value of this
              Warrant as determined in accordance with the Black-Scholes option pricing
              formula (the “Alternate
              Consideration”).
              For purposes of any such exercise, the determination of the Exercise
              Price
              shall be appropriately adjusted to apply to such Alternate Consideration
              based on the amount of Alternate Consideration issuable in respect
              of one
              share of Common Stock in such Fundamental Transaction, and the Company
              shall apportion the Exercise Price among the Alternate Consideration
              in a
              reasonable manner reflecting the relative value of any different
              components of the Alternate Consideration. If holders of Common Stock
              are
              given any choice as to the securities, cash or property to be received
              in
              a Fundamental Transaction, then the Holder shall be given the same
              choice
              as to the Alternate Consideration it receives upon any exercise of
              this
              Warrant following such Fundamental Transaction. To the extent necessary
              to
              effectuate the foregoing provisions, any successor to the Company or
              surviving entity in such Fundamental Transaction shall issue to the
              Holder
              a new warrant consistent with the foregoing provisions and evidencing
              the
              Holder’s right to exercise such warrant into Alternate Consideration. The
              terms of any agreement pursuant to which a Fundamental Transaction
              is
              effected shall include terms requiring any such successor or surviving
              entity to comply with the provisions of this paragraph (f) and insuring
              that this Warrant (or any such replacement security) will be similarly
              adjusted upon any subsequent transaction analogous to a Fundamental
              Transaction.

          


     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    	f)  	
            Voluntary
              Adjustment By Company.
              The Company may at any time during the term of this Warrant reduce
              the
              then current Exercise Price to any amount and for any period of time
              deemed appropriate by the Board of Directors of the
              Company.

          


     

    Section
      4. Transfer
      of Warrant.

     

    	a)  	
            Transferability.
              Subject to compliance with any applicable securities laws and the
              conditions set forth in Sections 5(a) and 4(d) hereof, this Warrant
              and
              all rights hereunder are transferable, in whole or in part, upon surrender
              of this Warrant at the principal office of the Company, together with
              a
              written assignment of this Warrant substantially in the form attached
              hereto duly executed by the Holder or its agent or attorney and funds
              sufficient to pay any transfer taxes payable upon the making of such
              transfer. Upon such surrender and, if required, such payment, the Company
              shall execute and deliver a new Warrant or Warrants in the name of
              the
              assignee or assignees and in the denomination or denominations specified
              in such instrument of assignment, and shall issue to the assignor a
              new
              Warrant evidencing the portion of this Warrant not so assigned, and
              this
              Warrant shall promptly be cancelled. A Warrant, if properly assigned,
              may
              be exercised by a new holder for the purchase of Warrant Shares without
              having a new Warrant issued. 

          


     

    	b)  	
            New
              Warrants.
              This Warrant may be divided or combined with other Warrants upon
              presentation hereof at the aforesaid office of the Company, together
              with
              a written notice specifying the names and denominations in which new
              Warrants are to be issued, signed by the Holder or its agent or attorney.
              Subject to compliance with Section 4(a), as to any transfer which may
              be
              involved in such division or combination, the Company shall execute
              and
              deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
              to be divided or combined in accordance with such
              notice.

          


     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    	c)  	
            Warrant
              Register.
              The Company shall register this Warrant, upon records to be maintained
              by
              the Company for that purpose (the “Warrant
              Register”),
              in the name of the record Holder hereof from time to time. The Company
              may
              deem and treat the registered Holder of this Warrant as the absolute
              owner
              hereof for the purpose of any exercise hereof or any distribution to
              the
              Holder, and for all other purposes, absent actual notice to the
              contrary.

          


     

    	d)  	
            Transfer
              Restrictions.
              If,
              at the time
              of the surrender of this Warrant in connection with any transfer of
              this
              Warrant, the transfer of this Warrant shall not be registered pursuant
              to
              an effective registration
              statement under the Securities Act
              and under
              applicable state securities or blue sky laws, the Company may require,
              as
              a condition of allowing such transfer (i) that the Holder or transferee
              of
              this Warrant, as the case may be, furnish to the Company a written
              opinion
              of counsel (which opinion shall be in form, substance and scope customary
              for opinions of counsel in comparable transactions) to the effect that
              such transfer may be made without
              registration under
              the
              Securities Act and under applicable state securities or blue sky laws,
              (ii) that the holder or transferee execute and deliver to the Company
              an
              investment letter in form and substance acceptable to the Company and
              (iii) that the transferee be an “accredited
              investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
              promulgated under the Securities Act or a qualified institutional buyer
              as
              defined in Rule 144A(a) under the Securities
              Act.

          


     

    Section
      5. Miscellaneous.

     

    	a)  	
            Title
              to Warrant.
              Prior to the Termination Date and subject to compliance with applicable
              laws and Section 4 of this Warrant, this Warrant and all rights hereunder
              are transferable, in whole or in part, at the office or agency of the
              Company by the Holder in person or by duly authorized attorney, upon
              surrender of this Warrant together with the Assignment Form annexed
              hereto
              properly endorsed. The transferee shall sign an investment letter in
              form
              and substance reasonably satisfactory to the
              Company.

          


     

    	b)  	
            No
              Rights as Shareholder Until Exercise.
              This Warrant does not entitle the Holder to any voting rights or other
              rights as a shareholder of the Company prior to the exercise hereof.
              Upon
              the surrender of this Warrant and the payment of the aggregate Exercise
              Price (or by means of a cashless exercise), the Warrant Shares so
              purchased shall be and be deemed to be issued to such Holder as the
              record
              owner of such shares as of the close of business on the later of the
              date
              of such surrender or payment.

          


     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    	c)  	
            Loss,
              Theft, Destruction or Mutilation of Warrant.
              The Company covenants that upon receipt by the Company of evidence
              reasonably satisfactory to it of the loss, theft, destruction or
              mutilation of this Warrant or any stock certificate relating to the
              Warrant Shares, and in case of loss, theft or destruction, of indemnity
              or
              security reasonably satisfactory to it (which, in the case of the Warrant,
              shall not include the posting of any bond), and upon surrender and
              cancellation of such Warrant or stock certificate, if mutilated, the
              Company will make and deliver a new Warrant or stock certificate of
              like
              tenor and dated as of such cancellation, in lieu of such Warrant or
              stock
              certificate.

          


     

    	d)  	
            Saturdays,
              Sundays, Holidays, etc.
              If the last or appointed day for the taking of any action or the
              expiration of any right required or granted herein shall be a Saturday,
              Sunday or a legal holiday, then such action may be taken or such right
              may
              be exercised on the next succeeding day not a Saturday, Sunday or legal
              holiday.

          


     

    	e)  	
            Authorized
              Shares.
              The Company covenants that during the period the Warrant is outstanding,
              it will reserve from its authorized and unissued Common Stock a sufficient
              number of shares to provide for the issuance of the Warrant Shares
              upon
              the exercise of any purchase rights under this Warrant. The Company
              further covenants that its issuance of this Warrant shall constitute
              full
              authority to its officers who are charged with the duty of executing
              stock
              certificates to execute and issue the necessary certificates for the
              Warrant Shares upon the exercise of the purchase rights under this
              Warrant. The Company will take all such reasonable action as may be
              necessary to assure that such Warrant Shares may be issued as provided
              herein without violation of any applicable law or regulation, or of
              any
              requirements of the trading market upon which the Common Stock may
              be
              listed. 

          


     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    	f)  	
            Jurisdiction.
              All questions concerning the construction, validity, enforcement and
              interpretation of this Warrant shall be determined in accordance with
              the
              provisions of the Purchase Agreement.

          


     

    	g)  	
            Restrictions.
              The Holder acknowledges that the Warrant Shares acquired upon the exercise
              of this Warrant, if not registered, will have restrictions upon resale
              imposed by state and federal securities
              laws.

          


     

    	h)  	
            Nonwaiver
              and Expenses.
              No course of dealing or any delay or failure to exercise any right
              hereunder on the part of Holder shall operate as a waiver of such right
              or
              otherwise prejudice Holder’s rights, powers or remedies, notwithstanding
              the fact that all rights hereunder terminate on the Termination Date.
              If
              the Company willfully and knowingly fails to comply with any provision
              of
              this Warrant, which results in any material damages to the Holder,
              the
              Company shall pay to Holder such amounts as shall be sufficient to
              cover
              any costs and expenses including, but not limited to, reasonable
              attorneys’ fees, including those of appellate proceedings, incurred by
              Holder in collecting any amounts due pursuant hereto or in otherwise
              enforcing any of its rights, powers or remedies
              hereunder.

          


     

    	i)  	
            Notices.
              Any notice, request or other document required or permitted to be given
              or
              delivered to the Holder by the Company shall be delivered in accordance
              with the notice provisions of the Purchase
              Agreement.

          


     

    	j)  	
            Limitation
              of Liability.
              No provision hereof, in the absence of any affirmative action by Holder
              to
              exercise this Warrant or purchase Warrant Shares, and no enumeration
              herein of the rights or privileges of Holder, shall give rise to any
              liability of Holder for the purchase price of any Common Stock or as
              a
              stockholder of the Company, whether such liability is asserted by the
              Company or by creditors of the Company.

          


     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    	k)  	
            Remedies.
              Holder, in addition to being entitled to exercise all rights granted
              by
              law, including recovery of damages, will be entitled to specific
              performance of its rights under this Warrant. The Company agrees that
              monetary damages would not be adequate compensation for any loss incurred
              by reason of a breach by it of the provisions of this Warrant and hereby
              agrees to waive the defense in any action for specific performance
              that a
              remedy at law would be adequate.

          


     

    	l)  	
            Successors
              and Assigns.
              Subject to applicable securities laws, this Warrant and the rights
              and
              obligations evidenced hereby shall inure to the benefit of and be binding
              upon the successors of the Company and the successors and permitted
              assigns of Holder. The provisions of this Warrant are intended to be
              for
              the benefit of all Holders from time to time of this Warrant and shall
              be
              enforceable by any such Holder or holder of Warrant
              Shares.

          


     

    	m)  	
            Amendment.
              This Warrant may be modified or amended or the provisions hereof waived
              with the written consent of the Company and the
              Holder.

          


     

    	n)  	
            Severability.
              Wherever possible, each provision of this Warrant shall be interpreted
              in
              such manner as to be effective and valid under applicable law, but
              if any
              provision of this Warrant shall be prohibited by or invalid under
              applicable law, such provision shall be ineffective to the extent of
              such
              prohibition or invalidity, without invalidating the remainder of such
              provisions or the remaining provisions of this
              Warrant.

          


     

    	o)  	
            Headings.
              The headings used in this Warrant are for the convenience of reference
              only and shall not, for any purpose, be deemed a part of this
              Warrant.

          


     

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

     

    Dated:
      November 12, 2007 

    
      	
               

              NEAH
                POWER SYSTEMS, INC.

            
	
              By__________________________________________

              Name:
                

              Title:
                

            


    

    


     

    



    
      
        
           

        

         

      

      
        13

        
          

        

      

      
         

        
        

      

    

     

    NOTICE
      OF EXERCISE

    


    TO:
      

    


    (1)  The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2)  Payment
      shall take the form of (check applicable box):

     

    [
      ] in
      lawful money of the United States; or

     

    [
      ] the
      cancellation of such number of Warrant Shares as is necessary, in accordance
      with the formula set forth in subsection 2(c), to exercise this Warrant with
      respect to the maximum number of Warrant Shares purchasable pursuant to the
      cashless exercise procedure set forth in subsection 2(c).

     

    (3)  Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

     

    


    The
      Warrant Shares shall be delivered to the following:

    


    _______________________________

     

    _______________________________

     

    _______________________________

    


    (4)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    


    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________


    
      
         

         

      

      
         

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
      FORM

    


    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    


    


    


    FOR
      VALUE
      RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
      assigned to

     

    


    _______________________________________________
      whose address is

    


    _______________________________________________________________.

    


    


    


    _______________________________________________________________

    


    Dated:
      ______________, _______

    


    


    Holder’s
      Signature: _____________________________

    


    Holder’s
      Address: _____________________________

     

    _____________________________

    


    


    


    Signature
      Guaranteed: ___________________________________________

    


    


    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.