WARRANT
      EXERCISE AGREEMENT

    


    This
      Warrant Exercise Agreement (“Agreement”)
      is
      entered into and effective as of __________, 2007, by and between Neah Power
      Systems, Inc., a Nevada corporation (“Company”),
      and
      the person whose name is set forth on the signature block below (“Investor”).
      Investor and Company are sometimes collectively referred to herein as the
“Parties.” 

    


    RECITALS

    


    1.  In
      connection with a May 11, 2007 public offering of the Company’s securities
      through Empire Financial Group, Inc., the Company issued to Investor a Stock
      Purchase Warrant (“Warrant”)
      to
      purchase a number of shares of Common Stock, par value $0.001 per share, of
      the
      Company, equal to 75% of the total number of shares of common stock purchased
      by
      Investor in the offering, as shown on the signature block below (the
      "Warrant
      Shares"),
      at
      the following exercise prices:

    


    A. Warrant
      A
      to purchase 25% warrant coverage of the Company's common stock purchased by
      Investor in the offering at an exercise price of $1.10 per share.

    


    B. Warrant
      B
      to purchase 25% warrant coverage of the Company's common stock purchased by
      Investor in the offering at an exercise price of $1.60 per share.

    


    C. Warrant
      C
      to purchase 25% warrant coverage of the Company’s common stock purchased by
      Investor in the offering at an exercise price of $2.00 per share.

    


    2. Investor
      desires to exercise the Warrant to purchase all of the Warrant Shares A, B
      and
      C, all at an exercise price of $0.20
      per
      Warrant Share (“New
      Exercise Price”).

    


    3. Company
      desires to permit such exercise in accordance with the terms of this
      Agreement.

    


    AGREEMENT

    


    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants, agreements and conditions herein stated,
      together with other good and valuable consideration, the receipt and sufficiency
      of which are hereby acknowledged, the Parties hereby agree as follows:


    


    1. Exercise
      of Warrant.
      Investor hereby elects to purchase all of the Warrant Shares pursuant to the
      terms of the Warrant, and tenders herewith full payment of the New Exercise
      Price for all of the Warrant Shares. The original Warrant is attached hereto
      as
Exhibit A.

    


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

    


    o
      wire
      transfer

     

    o
cashier's
      check

      

    3. Certificate.
      Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of Investor, as specified on the signature block below. The Warrant Shares
      shall
      be delivered to the address set forth on the signature block below, which
      Investor represents is its current address and place of business, citizenship
      or
      residence.

    


    4. Prohibited
      Transactions.
      Investor warrants and represents that neither Investor nor any of its affiliates
      has engaged in any short sale transaction within the last 10 trading days,
      and
      does not hold any open short position in the common stock of Company. Investor
      agrees that it will not use any of the Warrant Shares to cover any short
      position, and that it will not, and will cause its Affiliates not to, engage
      in
      any short sales of or hedging transactions with respect to the common stock
      of
      Company for a period of at least 90 days following the date hereof.

     

    
      
        
        

      

      
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    5. General.
      The
      Recitals are hereby incorporated by reference and, therefore, shall be part
      of
      the Agreement of the Parties. In addition to any other representations and
      warranties contained herein, the Parties hereby represent, warrant and agree
      that they have the full right, power, legal capacity and authority to enter
      into
      and fully perform this Agreement. This Agreement may be executed by the Parties
      in separate counterparts, each of which, when so executed, shall, together,
      constitute and be one and the same instrument. Each of the Parties acknowledges
      that no other party nor any agent or attorney of any other party has made any
      promise, representation or warranty whatsoever, express or implied, written
      or
      oral, not contained herein, to induce it to execute this Agreement, and each
      of
      the Parties acknowledges that it has not executed this Agreement in reliance
      on
      any promise, representation or warranty not expressly contained herein. This
      Agreement constitutes and contains the entire agreement and understanding
      concerning the subject matter hereof between the Parties and supersedes and
      replaces all prior negotiations and proposed agreements, written or oral. This
      Agreement shall be governed by and construed pursuant to the laws of the State
      of Nevada.

    


    IN
      WITNESS WHEREOF,
      the
      Parties have executed this Agreement as of the date first set forth above.
      

    


    INVESTOR:

    
      


      
        	
                Investor Name:
                  

              	 


      

       

      
        	
                By:

              	 
	 	 
                
	
                Its:
                  

              	 


      

       

       

      
        	
                Address:
                  

              	 
	 	 
	 	 


      

       

       

      
        	
                Number of Warrant Shares:
                  

              	 
	 	 
	
                Total New Exercise Price: $

              	 


      

       

      
        	
                COMPANY:

              
	 
	
                NEAH
                  POWER SYSTEMS, INC.

              
	 	 
	
                By:

              	 
	 	 
	
                Its:
                  

              	 


      

    

     

    
      
         

        
        

      

      
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    Exhibit
      A

    


    WARRANT

     

    
      
        
        

      

      
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