Document:

POKERTEK,
        INC. 

      2007
        STOCK INCENTIVE PLAN 

      

      Restricted
        Stock Award Agreement 

      

      THIS
        AGREEMENT (together with Schedule A, attached hereto, this "Agreement"),
        effective as of _______________ ___, 200__, between POKERTEK, INC., a North
        Carolina corporation (the "Corporation"), and ______________, an Employee,
        Independent Contractor or Director of the Corporation or an Affiliate (the
        "Participant"); 

       

      RECITALS:
        

       

      In
        furtherance of the purposes of the PokerTek, Inc. 2007 Stock Incentive Plan,
        as
        it may be hereafter amended and/or restated (the "Plan"), and in consideration
        of the services of the Participant and such other good and valuable
        consideration, the receipt and sufficiency of which are hereby acknowledged,
        the
        Corporation and the Participant hereby agree as follows: 

       

      1.  Incorporation
        of Plan.
        The
        rights and duties of the Corporation and the Participant under this Agreement
        shall in all respects be subject to and governed by the provisions of the
        Plan,
        the terms of which are incorporated herein by reference. In the event of
        any
        conflict between the provisions in this Agreement and those of the Plan,
        the
        provisions of the Plan shall govern. Unless otherwise defined herein,
        capitalized terms in this Agreement shall have the same definitions as set
        forth
        in the Plan. 

       

      2.  Terms
        of Award.
        The
        following terms used in this Agreement shall have the meanings set forth
        in this
        Section 2: 

       

      The
        "Participant" is ______________________. 

       

      The
        "Grant Date" is ______________________. 

       

      The
        "Restriction Period" is the period beginning on the Grant Date and ending
        on
        such date or dates and satisfaction of such conditions as described in Schedule
        A, which is attached hereto and expressly made a part of this Agreement.
        

       

      The
        number of shares of common stock of the Corporation ("Common Stock") subject
        to
        the Restricted Stock Award granted under this Agreement shall be ______________
        (the "Shares"). 

       

      3.  Grant
        of Restricted Stock Award.
        Subject
        to the terms of this Agreement and the Plan, the Corporation hereby grants
        the
        Participant a Restricted Stock Award (the "Award") for that number of Shares
        of
        Common Stock as is set forth in Section 2. 

       

      4.  Vesting
        and Earning of Award.
        Subject
        to the terms of the Plan, the Award shall be deemed vested and earned upon
        such
        date or dates, and subject to such conditions, as are described in this
        Agreement, including but not limited to the terms of Schedule A, attached
        hereto. The Administrator has sole authority to determine whether and to
        what
        degree the Award has vested and vested and is payable and to interpret the
        terms
        and conditions of this Agreement and the Plan. 

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      

      5.  Effect
        of Change in Control.
        

       

      (a)  Notwithstanding
        any other provision of the Plan to the contrary, and except as may be otherwise
        provided in an employment agreement or other agreement between the Participant
        and the Corporation, in the event of a Change in Control, the Award, if
        outstanding as of the date of such Change in Control, shall become fully
        vested,
        whether or not then otherwise vested. 

       

      (b)  Notwithstanding
        the foregoing, in the event that a Change in Control event occurs, then the
        Administrator may, in its sole and absolute discretion, determine that the
        Award
        shall not vest on an accelerated basis, if the Corporation or the surviving
        or
        acquiring corporation, as the case may be, shall have taken such action,
        including but not limited to the assumption of Awards granted under the Plan
        or
        the grant of substitute awards (in either case, with substantially similar
        terms
        or equivalent economic benefits as Awards granted under the Plan), as the
        Administrator determines to be equitable or appropriate to protect the rights
        and interests of Participants under the Plan. For the purposes herein, if
        the
        Committee is acting as the Administrator authorized to make the determinations
        provided for in this Section 5(b), the Committee shall be appointed by the
        Board
        of Directors, two-thirds of the members of which shall have been Directors
        of
        the Corporation prior to the Change in Control event. 

       

      (c)  The
        Administrator shall have full and final authority, in its discretion, to
        determine whether a Change in Control of the Corporation has occurred, the
        date
        of the occurrence of such Change in Control and any incidental matters relating
        thereto.

       

      6.  Termination
        of Employment or Service; Forfeiture of Award.
        Except
        as may be otherwise provided in the Plan or this Agreement, in the event
        that
        the employment or service of the Participant is terminated for any reason
        and
        all or part of the Award has not yet vested pursuant to Section 4, Section
        5
        and/or Schedule A herein, then the Award, to the extent not vested as of
        the
        Participant's Termination Date, shall be forfeited immediately upon such
        termination, and the Participant shall have no further rights with respect
        to
        the Award or the Shares, cash or other benefits underlying that portion of
        the
        Award that has not yet vested. The Participant expressly acknowledges and
        agrees
        that the termination of his or her employment or service shall result in
        forfeiture of the Award and the Shares to the extent the Award has not vested
        as
        of his or her Termination Date. 

       

      7.  Settlement
        of Award.
        The
        Award shall be payable in whole shares of Common Stock. 

       

      8.  No
        Right of Employment or Service; Forfeiture of Award.
        Neither
        the Plan, the grant of the Award, nor any other action related to the Plan
        shall
        confer upon the Participant any right to continue in the employment or service
        of the Corporation or an Affiliate or interfere in any way with the right
        of the
        Corporation or an Affiliate to terminate the Participant's employment or
        service
        at any time. Except as otherwise provided in the Plan or this Agreement,
        all
        rights of the Participant with respect to the Award shall terminate upon
        termination of the Participant's employment or service.

       

      9.  Nontransferability
        of Award and Shares.
        The
        Award, to the extent not vested, shall not be transferable (including by
        sale,
        assignment, pledge or hypothecation) other than by will or the laws of intestate
        succession. The designation of a beneficiary in accordance with the Plan
        does
        not constitute a transfer. The Participant shall not sell, transfer, assign,
        pledge or otherwise encumber the Shares (except as may be provided in Section
        13
        herein) until the Restriction Period has expired and all conditions to vesting
        and transfer have been met. 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      

       

      10.  Superseding
        Agreement.
        This
        Agreement supersedes any statements, representations or agreements of the
        Corporation with respect to the grant of the Award, any other equity-based
        awards or any related rights, and the Participant hereby waives any rights
        or
        claims related to any such statements, representations or agreements. This
        Agreement does not supersede or amend any confidentiality agreement,
        nonsolicitation agreement, noncompetition agreement, employment agreement
        or any
        other similar agreement between the Participant and the Corporation, including,
        but not limited to, any restrictive covenants contained in such agreements.
        

       

      11.  Governing
        Law.
        Except
        as otherwise provided in the Plan or herein, this Agreement shall be construed
        and enforced according to the laws of the State of North Carolina, without
        regard to the conflict of laws provisions of any state, and in accordance
        with
        applicable federal laws of the United States. 

       

      12.  Amendment
        and Termination; Waiver.
        Subject
        to the terms of the Plan and this Section 12, this Agreement may be modified
        or
        amended only by the written agreement of the parties hereto. Notwithstanding
        the
        foregoing, the Administrator shall have unilateral authority to amend the
        Plan
        and this Agreement (without Participant consent) to the extent necessary
        to
        comply with Applicable Laws or changes to Applicable Laws (including but
        not
        limited to Code Section 409A and federal securities laws). The waiver by
        the
        Corporation of a breach of any provision of this Agreement by the Participant
        shall not operate or be construed as a waiver of any subsequent breach by
        the
        Participant.

       

      13.  Certificates
        for Shares; Rights as Shareholder.
        The
        Participant and his or her legal representatives, legatees or distributees
        shall
        not be deemed to be the holder of any of the Shares and shall not have any
        rights of a shareholder unless and until certificates for such Shares have
        been
        issued to him or her or them. Unless the Administrator determines otherwise,
        a
        certificate or certificates for any of the Shares shall be issued in the
        name of
        the Participant as soon as practicable after the Award has been granted.
        Notwithstanding the foregoing, the Administrator may require that (a) the
        Participant deliver the certificate(s) for the Shares to the Administrator
        or
        its designee to be held in escrow until the Award vests (in which case the
        Shares will be released to the Participant) or is forfeited (in which case
        the
        Shares shall be returned to the Corporation); and/or (b) the Participant
        deliver
        to the Corporation a stock power, endorsed in blank, relating to the Shares
        that
        are subject to forfeiture. Except as otherwise provided in the Plan or this
        Agreement, the Participant shall have all voting, dividend and other rights
        of a
        shareholder with respect to the Shares following issuance of the certificate
        or
        certificates for the Shares. 

       

      14.  Withholding;
        Tax Matters.
        

       

      (a)  The
        Participant acknowledges that the Corporation shall require the Participant
        to
        pay the Corporation in cash the amount of any local, state, federal, foreign
        or
        other tax or other amount required by any governmental authority to be withheld
        and paid over by the Corporation to such authority for the account of the
        Participant, and the Participant agrees, as a condition to the grant of the
        Award and delivery of the Shares or any other benefit, to satisfy such
        obligations. Notwithstanding the foregoing, the Administrator may establish
        procedures to permit the Participant to satisfy such obligations in whole
        or in
        part, and any other local, state, federal, foreign or other income tax
        obligations relating to the Award, by electing (the "election") to have the
        Corporation withhold shares of Common Stock from the Shares to which the
        Participant is entitled. The number of the Shares to be withheld shall have
        a
        Fair Market Value as of the date that the amount of tax to be withheld is
        determined as nearly equal as possible to (but not exceeding) the amount
        of such
        obligations being satisfied. Each election must be made in writing to the
        Administrator in accordance with election procedures established by the
        Administrator. 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

       

      (b)  The
        Participant acknowledges that the Corporation has made no warranties or
        representations to the Participant with respect to the tax consequences
        (including, but not limited to, income tax consequences) related to the
        transactions contemplated by this Agreement, and the Participant is in no
        manner
        relying on the Corporation or its representatives for an assessment of such
        tax
        consequences. The Participant acknowledges that there may be adverse tax
        consequences upon acquisition or disposition of the Shares and that the
        Participant has been advised that he or she should consult with his or her
        own
        attorney, accountant, and/or tax advisor regarding the decision to enter
        into
        this Agreement and the consequences thereof. The Participant also acknowledges
        that the Corporation has no responsibility to take or refrain from taking
        any
        actions in order to achieve a certain tax result for the Participant.

       

      15.  Administration.
        The
        authority to construe and interpret this Agreement and the Plan, and to
        administer all aspects of the Plan, shall be vested in the Administrator,
        and
        the Administrator shall have all powers with respect to this Agreement as
        are
        provided in the Plan. Any interpretation of this Agreement by the Administrator
        and any decision made by it with respect to this Agreement is final and binding.
        

       

      16.  Notices.
        Except
        as may be otherwise provided by the Plan, any written notices provided for
        in
        this Agreement or the Plan shall be in writing and shall be deemed sufficiently
        given if either hand delivered or if sent by fax or overnight courier, or
        by
        postage paid first class mail. Notices sent by mail shall be deemed received
        three business days after mailed but in no event later than the date of actual
        receipt. Notices shall be directed, if to the Participant, at the Participant's
        address indicated by the Corporation's records (or such other address as
        may be
        designated by the Participant in a manner acceptable to the Administrator),
        or,
        if to the Corporation, at the Corporation's principal office, attention Chief
        Financial Officer. 

       

      17.  Severability.
        If
        any
        provision of this Agreement shall be held illegal or invalid for any reason,
        such illegality or invalidity shall not affect the remaining parts of this
        Agreement, and this Agreement shall be construed and enforced as if the illegal
        or invalid provision had not been included. 

       

      18.  Restrictions
        on Award and Shares.
        

       

      (a)  As
        a
        condition to the issuance and delivery of the Shares, or the grant of any
        benefit pursuant to the Plan, the Corporation may require the Participant
        or
        other person to become a party to this Agreement, any agreement(s) restricting
        the transfer, purchase or repurchase of shares of Common Stock, any voting
        agreement(s), any employment agreement(s), any consulting agreement(s), any
        non-competition agreement(s), any confidentiality agreement(s), any
        non-solicitation agreement(s) and/or any other agreement(s) imposing such
        restrictions as may be required by the Corporation. Without in any way limiting
        the effect of the foregoing, the Participant or other holder of any of the
        Shares shall be permitted to transfer such shares only if such transfer is
        in
        accordance with the terms of Section 15 of the Plan, this Agreement and/or
        any
        other applicable agreement(s). The Participant acknowledges that the acquisition
        of any of the Shares by the Participant or other holder is subject to, and
        conditioned upon, the agreement of the Participant or such holder to the
        restrictions described in Section 15 of the Plan, this Agreement and/or any
        other applicable agreement(s).

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

       

      (b)  The
        Corporation may impose such restrictions on the Award, the Shares and/or
        any
        other benefits underlying the Award as it may deem advisable, including without
        limitation restrictions under the federal securities laws, the requirements
        of
        any stock exchange or similar organization and any blue sky, state or foreign
        securities laws applicable to such securities. Notwithstanding any other
        provision in the Plan or this Agreement to the contrary, the Corporation
        shall
        not be obligated to issue, deliver or transfer shares of Common Stock, make
        any
        other distribution of benefits, or take any other action, unless such delivery,
        distribution or action is in compliance with Applicable Laws (including but
        not
        limited to the requirements of the Securities Act). The Corporation may cause
        a
        restrictive legend or legends (including but in no way limited to any legends
        that may be necessary or appropriate pursuant to Section 13 herein) to be
        placed
        on any certificate for any of the Shares issued pursuant to the Award in
        such
        form as may be prescribed from time to time by Applicable Laws or as may
        be
        advised by legal counsel. 

       

      19.  Counterparts;
        Further Instruments.
        This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed an original, but all of which together shall constitute one and the
        same
        instrument. The parties hereto agree to execute such further instruments
        and to
        take such further action as may be reasonably necessary to carry out the
        purposes and intent of this Agreement. 

       

      20.  Effect
        of Changes in Status.
        Unless
        the Administrator determines otherwise, the Award shall not be affected by
        any
        change in the terms, conditions or status of the Participant's employment
        or
        service, provided that the Participant continues to be an employee of, or
        in
        service to, the Corporation or an Affiliate. 

       

      21.  Rules
        of Construction.
        Headings are given to the sections of this Agreement solely as a conveni-ence
        to
        facilitate reference. The reference to any statute, regulation or other
        provision of law shall be construed to refer to any amendment to or successor
        of
        such provision of law.

       

      22.  Successors
        and Assigns.
        This
        Agreement shall be binding upon the Corporation and its successors and assigns,
        and the Participant and his or her executors, administrators and permitted
        transferees and beneficiaries.

       

      23.  Right
        of Offset.
        Notwithstanding any other provision of the Plan or this Agreement, the
        Corporation may reduce the amount of any payment or benefit otherwise payable
        to
        or on behalf of the Participant by the amount of any obligation of the
        Participant to or on behalf of the Corporation or an Affiliate that is or
        becomes due and payable.

       

      [Signature
        Page Follows]

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, this Agreement has been executed in behalf of the Corporation
        and by the Participant on the day and year first above written. 

       

      
        
          
            	 	POKERTEK,
                    INC.
	 	 	 
	 	
                    By:
                      

                  	 
	 	
                     

                  	
                    Gehrig
                      H. White

                  
	 	
                     

                  	
                    Chief
                      Executive Officer

                  

          

          Attest:

           

          
            	 	 
	
                    James
                      Crawford

                  	 
	
                    Secretary

                     

                  	 

          

           

          
            	 	
                    PARTICIPANT

                  
	 	
                     

                  	
                     

                  
	 	
                    Printed
                      Name

                  	
                     

                  

          

           

           

           

          
            
              
              

            

            
              6

              
                

              

            

            
              
              

            

          

        

      

      

      

      [Insert
        applicable Schedule A]

      

      POKERTEK,
        INC. 

      2007
        STOCK INCENTIVE PLAN 

       

      Restricted
        Stock Award Agreement 

       

      SCHEDULE
        A 

       

      PERFORMANCE
        MEASURES 

       

      1.  Purpose.
        The
        purpose of this Schedule A is to set forth the Performance Measures that
        will be
        applied to determine the amount of the Award to be made under the terms of
        the
        attached Restricted Stock Award Agreement (the "Agreement"). This Schedule
        A is
        incorporated into and forms a part of the Agreement. 

       

      2.  Revision
        of Performance Measures.
        The
        Performance Measures set forth in this Schedule A may be modified by the
        Administrator during, and after the end of, the Restriction Period to reflect
        significant events that occur during the Restriction Period. 

       

      3.  Performance
        Goals.
        The
        Performance Goals shall be as follows: 

       

      [Insert
        Schedule]

       

      4.  Amount
        of Award.
        The
        amount distributable to the Participant under the Agreement shall be determined
        in accordance with the following schedule: 

       

      [Insert
        Schedule]

      

      

      
        
          
          

        

        
          Schedule
            A-1

          
            

          

        

        
          
          

        

      

      [Insert
        applicable Schedule A] 

       

      POKERTEK,
        INC. 

      2007
        STOCK INCENTIVE PLAN 

       

      Restricted
        Stock Award Agreement 

       

      SCHEDULE
        A 

       

      SERVICE
        MEASURES 

       

      Grant Date:
                            ,
            .
        

       

      Number
        of
        Shares Subject to Award:                     
        shares.

       

      Restriction
        Period: The Shares subject to the Award shall vest and be earned, as provided
        below, subject to the terms and conditions as may be imposed by the Plan
        and the
        Agreement: 

       

      
        	 	 	 
	
                Date
                  of Vesting 

                  

                

              	
                 

              	
                Percentage
                  of Shares Vested

                
                  

                

              
	
                [Insert
                  Schedule]

              

      

      

      

      
        
          
          

        

        
          Schedule
            A-2

          
            

          

        

        
          
          

        

      

      [Insert
        applicable Schedule A] 

       

      POKERTEK,
        INC. 

      2007
        STOCK INCENTIVE PLAN 

       

      Restricted
        Stock Award Agreement 

       

      SCHEDULE
        A 

       

      COMBINATION
        OF PERFORMANCE AND SERVICE MEASURES 

       

      A. Performance
        Measures 

       

      1.  Purpose.
        The
        purpose of this portion of Schedule A is to set forth the Performance Measures
        that will be applied to determine the amount of the Award to be made under
        the
        terms of the attached Restricted Stock Award Agreement (the "Agreement").
        This
        Schedule A is incorporated into and forms a part of the Agreement. 

       

      2.  Revision
        of Performance Measures.
        The
        Performance Measures set forth in this Schedule A may be modified by the
        Administrator during, and after the end of, the Restriction Period to reflect
        significant events that occur during the Restriction Period. 

       

      3.  Performance
        Goals.
        The
        Performance Goals shall be as follows: 

       

      [Insert
        Schedule]

       

      4.  Amount
        of Award.
        The
        amount distributable to the Participant under the Agreement shall be determined
        in accordance with the following schedule: 

       

      [Insert
        Schedule]

       

      B. Service
        Measures 

       

      Grant Date:
                            ,
            .
        

       

      Number
        of
        Shares Subject to Award:                     
        shares.

       

      Restriction
        Period: The Shares subject to the Award shall vest and be earned, as provided
        below, subject to the terms and conditions as may be imposed by the Plan
        and the
        Agreement: 

       

       

        	 	 	 
	
                Date
                  of Vesting 

                  

                

              	
                 

              	
                Percentage
                  of Shares Vested

                
                  

                

              
	
                [Insert
                  Schedule]

              

      

      

      

      
        
          
          

        

        Exhibit
          A-1EMPLOYMENT
      AGREEMENT

    

    

     

         THIS
      EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 8th day of
      August, 2007, by and between Neah Power Systems, Inc., a Nevada corporation
      (“Employer”), and Paul Abramowitz, an individual (“Employee”). 

    RECITALS

     

         A. WHEREAS,
      Employer has agreed to employ Employee and Employee has agreed to enter into
      employment as the Chief Executive Officer (“CEO”) of Employer, on the terms set
      forth in this Agreement. 

         B. WHEREAS,
      Employer acknowledges that Employee desires definition of his compensation
      and
      benefits, and other terms of his employment. 

         NOW,
      THEREFORE, in consideration thereof and of the covenants and conditions
      contained herein, the parties agree as follows: 

    

    AGREEMENT

    

    

    
      	 	
              1.

            	
              TERM
                OF AGREEMENT 

            

    

    

    
      	 	
              1.1

            	
              Initial
                Term.
                The initial term of this Agreement shall begin on August 1, 2007
                (“Commencement Date”) and shall continue until the earlier of:
                (a) the date on which it is terminated pursuant to Section 5; or
                (b) December 31, 2008. At the conclusion of the Initial Term, and
                each successive term thereafter, the Agreement shall be automatically
                renewed for an additional two-year term, unless either party gives
                written
                notice of its intention to terminate the Agreement at least six months
                prior to the automatic renewal date.

            

    

    

    
      	 	
              2.

            	
              EMPLOYMENT

            

    

     

    
      	
            	2.1	
              Employment
                of Employee.
                Employer agrees to employ Employee to render services on the terms
                set
                forth herein. Employee hereby accepts such employment on the terms
                and
                conditions of this Agreement. 

            

    

    
      	
            	2.2	
              Position
                and Duties.
                Employee shall serve as Employer’s CEO, reporting directly to Employer’s
                Board of Directors (“Board”), and shall have the general powers, duties
                and responsibilities of management usually vested in that office
                in a
                corporation and such other additional powers and duties as may be
                prescribed from time to time by the Board.  In the event that
                Employee’s duties and responsibilities shall be significantly diminished
                or there shall be assigned to him duties and responsibilities materially
                inconsistent with his position and either situation continues for
                thirty
                (30) days after notice of either such situation is given such
                occurrence shall constitute a termination without Good Cause under
                Section 5.3. 

            

    

    
      	
            	2.3	
              Board
                Membership.
                Employer acknowledges that Employee is currently a member of the
                Board,
                and subject to the Board’s fiduciary obligations will take all reasonable
                action necessary to assure that Employee remains a member of the
                Board
                throughout the term of this Agreement. The Employee shall, to the
                extent
                appointed or elected, serve as a member of any committee of the Board,
                or
                the equivalent bodies in a subsidiary or affiliate, in all cases,
                without
                additional compensation or benefits and any compensation paid to
                the
                Employee, or benefits provided to the Employee, in such capacities
                shall
                be a credit with regard to the amounts due hereunder from the Employer.
                Employee shall, however, be entitled to retain any compensation,
                including
                the grant of stock options or other forms of non-cash consideration,
                payable generally to Board members for their services as members
                of Neah’s
                Board of Directors.

            

    

    
      	
            	2.4	
              Other
                Services.
                Employer acknowledges Mr. Abramowitz serves from time to time as
                an
                advisor, investor, consultant, trustee for companies unrelated to
                Neah. In
                addition, Employer acknowledges that Employee may do charity work
                and
                conduct other business as long as such activities do not materially
                interfere with the Employee’s duties hereunder.

            

    

    
      	
            	2.5	
              Relocation
                or Change of Duties.
                Employer shall not, without Employee’s consent, require Employee to
                permanently relocate. 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	
              3.

            	
              COMPENSATION 

            

    

    

    
      	
            	3.1	
              Compensation.
                During the term of this Agreement, Employer shall pay the amounts
                and
                provide the benefits described in this Section 3, and Employee agrees
                to accept such amounts and benefits in full payment for Employee’s
                services under this Agreement. 

            

    

    
      	
            	3.2	
              Base
                Salary.
                Employer shall pay to Employee a base annual salary of $275,000,
                subject
                to increases under Section 3.4. In no event shall Employee’s base
                annual salary be reduced below $275,000.

            

    

    
      	
            	3.3	
              Bonus
                Plan.
                Employee is eligible to receive an annual bonus in the reasonable
                discretion of the Board. The bonus will be based on a calendar year
                and
                paid no later than April 15th
                of
                the following year. 

            

    

    
      	
            	3.4	
              Upon
                the first day of each calendar year, Employee’s base salary and bonus
                target shall be reevaluated and adjusted by the Compensation Committee
                to
                ensure appropriate compensation in the competitive marketplace.
                

            

    

    
      	
            	3.5	
              Equity
                Incentive Plan.
                

            

    

    
      	
            	(a)	
              Employee
                shall be entitled to participate in any stock option, stock bonus,
                phantom
                stock right, equity pool, or other such plans or arrangements, which
                may
                exist during the term of his employment, provided that Employee’s
                entitlement is not inconsistent with the terms of any such arrangement
                or
                plan. 

            

    

    
      	
            	(b)	
              Except
                as otherwise set forth herein, vesting of options will cease upon
                the
                termination of Employee’s employment with Employer.
                

            

    

    
      	
            	3.6	
              Fringe
                Benefits.
                

            

    

    
      	 	
              (a)

            	
              Employer
                shall provide to Employee, at Employer’s cost, all perquisites to which
                other senior executives of the Employer are generally entitled and
                such
                other perquisites which are suitable to the character of the Employee’s
                position with the Employer and adequate for the performance of his
                duties
                hereunder in accordance with Employer’s
                policy.              

            

    

    
      	 	
              (b)

            	
              Employee
                shall be provided with group medical and dental insurance yes through
                Employer’s plan[s], as well as any fringe benefit plan(s) as Employer may
                offer from time to time to its personnel. Employee’s spouse and any
                dependent children of Employee shall be covered under the Employer’s
                health care and dental plan[s] at employer’s
                cost.            

            

    

    
      	 	
              (c)

            	
              To
                the extent legally permissible, the Employer shall not treat such
                amounts
                as income to the Employee. 

            

    

    
      	 	
              3.7

            	
              Deduction
                from Compensation.
                Employer shall deduct and withhold from all compensation payable
                to
                Employee all amounts required to be deducted or withheld pursuant
                to any
                present or future law, ordinance, regulation, order, writ, judgment,
                or
                decree requiring such deduction and withholding.
                

            

    

    

    
      	 	
              4.

            	
              REIMBURSEMENT
                OF EXPENSES

            

    

     

    
      	 	
              4.1

            	
              Travel
                and Other Expenses.
                Employer shall pay to or reimburse Employee for reasonable and necessary
                business, travel, promotional and similar expenditures incurred by
                Employee, inclusive of travel costs to and from Los Angele.
                

            

    

    
      	
            	4.2	
              Liability
                Insurance.
                Employer shall provide Employee with officers and directors’ insurance,
                consistent with usual business practices and acceptable to Employee.
                Employer shall also provide Employee with coverage for other forms
                of
                liability and property damage insurance (including, but not limited
                to,
                and by way of example only, automobile and travel accident), to cover
                Employee against all insurable events related to his employment with
                Employer. 

            

    

    
      	
            	4.3	
              Indemnification.
                Promptly upon written request from Employee, Employer shall indemnify,
                defend and hold harmless Employee pursuant to the indemnification
                agreement previously approved by the Board and attached as Exhibit
                __.

            

    

    

    
      	
            	5.	
              TERMINATION

            

    

     

    
      	 	
              5.1

            	
              Termination
                With Good Cause; Resignation Without Good Reason.
                Employer may terminate Employee’s employment at any time, with or without
                notice or Good Cause (as defined below). If Employer terminates Employee’s
                employment with Good Cause, or if Employee resigns without Good Reason
                (as
                defined below), Employer shall pay Employee his salary prorated through
                the date of termination, at the rate in effect at the time notice
                of
                termination is given, together with any benefits accrued through
                the date
                of termination. Employer shall have no further obligations to Employee
                under this Agreement or any other agreement, and all unvested options
                will
                terminate. To the extent legally permissible under the Plan, all
                vested
                options shall be exercisable until the end of their original
                term.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	 	
              5.2

            	
              Termination
                Without Good Cause; Resignation with Good Reason.
                Employee shall have the right to terminate his employment with notice
                and
                Good Reason. If Employer terminates Employee’s employment without Good
                Cause, or Employee resigns for Good Reason:

            

    

    
      	
            	(a)	
              Employer
                shall pay Employee his salary prorated through the date of termination,
                at
                the rate in effect at the time notice of termination is given, together
                with any benefits accrued through the date of termination;
                

            

    

    
      	
            	(b)	
              Employer
                shall pay Employee in a lump sum an amount equal to one year of additional
                (i) salary (at the rate in effect at the time of
                termination)

            

    

    
      	
            	(c)	
              All
                of Employee’s unvested stock options will vest immediately; and
                

            

    

    
      	
            	(d)	
              In
                addition to any rights under COBRA, all fringe benefits under
                Section 3.6 shall continue for a period of two (2) years from
                the date of termination, provided that medical insurance coverage
                will
                terminate sooner if Employee becomes eligible for coverage under
                another
                employer’s plan. 

            

    

    To
      be
      eligible for the compensation provided for in Section 5.2(b), (c) and
      (d) above, Employee must execute a full and complete release of any and all
      claims against Employer in the standard form then used by Employer (“Release”).
      Employer shall have no further obligations to Employee under this Agreement
      or
      any other agreement. 

    
      	 	
              5.3
                

            	
              Good
                Cause.
                For purposes of this Agreement, a termination shall be for “Good Cause” if
                Employee shall willfully: 

            

    

    
      	
            	(a)	
              Commit
                an act of fraud, moral turpitude, misappropriation of funds or
                embezzlement in connection with his duties;

            

    

    
      	
            	(b)	
              Violate
                a material provision of the Employer’s written Codes of Ethics as adopted
                by the Board, or any applicable state or federal law or regulation;
                

            

    

    
      	
            	(c)	
              Fail
                or refuse to comply with a relevant and material obligation assumable
                and
                chargeable to an executive of his corporate rank and responsibilities
                under the Sarbanes-Oxley Act and the regulations of the Securities
                and
                Exchange Commission promulgated thereunder; or

            

    

    
      	
            	(d)	
              Be
                convicted of, or enter a plea of guilty or no contest to, a felony
                under
                state or federal law, other than a traffic violation or offense not
                involving dishonesty or moral turpitude.  

            

    

    
      	
            	5.4	
              Good
                Reason.
                For purposes of this Agreement, a resignation shall be with “Good Reason”
                following: 

            

    

    
      	
            	(a)	
              The
                assignment to Employee of duties materially inconsistent with Employee’s
                status as CEO, the removal of Employee as CEO, or a substantial reduction
                in the nature or status of Employee’s responsibilities;
                

            

    

    
      	
            	(b)	
              Employer
                requiring Employee to be primarily based anywhere other than Employer’s
                principal executive offices (other than required periodic travel
                for
                Employer’s business); 

            

    

    
      	
            	(c)	
              Employer’s
                failure to cause any acquiring or successor entity following a Change
                in
                Control to assume Employer’s obligations under this Agreement, unless such
                assumption occurs by operation of law; or

            

    

    
      	
            	(d)	
              Material
                breach of this Agreement by Employer, or failure to timely pay to
                Employee
                any amount due under Section 3 which continues after written notice
                and reasonable opportunity to cure (not to exceed 10 business days
                after the date of receipt by Employer of such notice).
                

            

    

    
      	
            	5.5	
              Effects
                of Change in Control.
                Immediately upon a Change in Control (as defined below) all of Employee’s
                unvested options shall vest immediately, and remain exercisable for
                a
                period of three (3) years thereafter.

            

    

    
      	
            	5.6	
              Change
                in Control.
                For purposes of this Agreement, a “Change in Control” shall be defined as:
                

            

    

    
      	
            	(a)	
              The
                acquisition of Employer by another entity by means of a transaction
                or
                series of related transactions (including, without limitation, any
                reorganization, merger, stock purchase or consolidation); or
                

            

    

    
      	
            	(b)	
              The
                sale, transfer or other disposition of all or substantially all of
                the
                Employer’s assets. 

            

    

    
      	
            	5.7	
              No
                Change in Control.
                Notwithstanding the provisions of Section 5.6, the following shall
                not constitute a Change in Control:

            

    

    
      	
            	(a)	
              If
                the sole purpose of the transaction is to change the state of the
                Employer’s incorporation or to create or eliminate a holding company that
                will be owned in substantially the same proportions by the same beneficial
                owners as before the transaction; 

            

    

    
      	
            	(b)	
              If
                Employer’s stockholders of record as constituted immediately prior to the
                transaction will, immediately after the transaction (by virtue of
                securities issued as a consideration for Employer’s capital stock or
                assets or otherwise), hold more than 50% of the combined voting power
                of
                the surviving or acquiring entity’s outstanding securities;
                

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
            	(c)	
              An
                underwritten public offering of Employer’s common stock, if Employer’s
                stockholders of record as constituted immediately prior to the offering
                will, immediately after the offering, continue to hold more than
                50% of
                the combined voting power of Employer’s outstanding securities;
                

            

    

    
      	
            	(d)	
              The
                private placement of preferred or common stock, or the issuance of
                debt
                instruments convertible into preferred or common stock, for fair
                market
                value as determined by the Board, provided the acquiring person does
                not
                as a result of the transaction own more than 50% of the outstanding
                capital stock of Employer, have the right to vote more than 50% of
                the
                outstanding voting stock of Employer, or have the right to elect
                a
                majority of the Board; or 

            

    

    
      	
            	(e)	
              If
                Employee is a member of a group that acquires control of Employer
                in an
                event that would otherwise be a Change in Control, such event shall
                not be
                deemed a Change in Control and Employee shall have no right to benefits
                hereunder as a result of such event; provided, however, that Employee
                shall not be deemed a member of any acquiring group solely by virtue
                of
                his continued employment or ownership of stock or stock options following
                a Change in Control. 

            

    

    
      	
            	5.8	
              Gross-Up
                Payment. 

            

    

    
      	
            	(a)	
              Notwithstanding
                the above, if any of the compensation payable upon termination of
                Employee’s employment as provided for above (the “Payments”) triggers the
                application of Internal Revenue Code Section 280G, or makes Employee
                liable for payment of the excise tax (the “Excise Tax”) provided for under
                Section 4999 of the Code, or any other statute or regulation under
                which Employee may be penalized as a result of the nature or amount
                of
                such compensation, then Employer or the acquiring or successor entity
                of
                Employer shall pay to Employee an additional amount (the “Gross-Up”) such
                that the net after-tax amount retained by the Employee, after deduction
                of
                (X) any Excise Tax on the Payments, and (Y) any federal, state, local
                or foreign income, employment or other tax and Excise Tax upon any
                payment
                provided for by this Section 2(h), shall be equal to the Payments,
                reduced by the amount of any United States federal, state and local
                income
                or employment tax liability of the Employee calculated as if the
                Payments
                were not subject to the Excise Tax. The determination of whether
                any of
                the Payments will be subject to the Excise Tax and the amount of
                such
                Excise Tax will be made by Employer’s regular independent public
                accounting firm. 

            

    

    
      	
            	(b)	
              In
                the event that the Excise Tax is subsequently determined to be less
                than
                the amount taken into account under this Section 2(h), Employee shall
                repay to Employer at the time that the amount of such reduction of
                Excise
                Tax is finally determined, an amount equal to the sum of the following:
                (i) the amount of the reduction of the Excise Tax, (ii) the
                amount of the reduction in all other taxes generated by the reduction
                in
                the Excise Tax, and (iii) interest on the amount of the sum of
                (i) and (ii) at the rate provided in Section 1274(b)(2)(B)
                of the Code. 

            

    

    
      	
            	(c)	
              In
                the event that the Excise Tax is determined to exceed the amount
                previously taken into account under the Section 2(h) (including by
                reason
                of any payment the existence or amount of which cannot be determined
                at
                the time of the Gross-Up), 

            

    

    Employer
      shall make an additional Gross-Up payment in respect to such excess (plus any
      interest payable with respect to such excess) at the time that the amount of
      such excess is finally determined in accordance with the principles set forth
      above. 

    
      	
            	5.9	
              Death
                or Disability.
                To the extent consistent with federal and state law, Employee’s employment
                shall terminate on his death or Disability. “Disability” means any health
                condition, physical or mental, or other cause beyond Employee’s control
                that prevents him from performing his duties, even after reasonable
                accommodation is made by Employer, for a period of 180 consecutive
                days
                within an annual period of the Term. In the event of termination
                due to
                death or Disability, Employer shall pay Employee (or his legal
                representative) his salary prorated through the date of termination,
                at
                the rate in effect at the time of termination and continue to provide
                insurance and other fringe benefits to Employee and Employee’s spouse and
                dependent children for a period of one year from Employee’s termination
                date. In the event of a termination due to death or disability, in
                addition to all options already vested, 100% of the options set to
                vest in
                the year that death or disability occurs shall vest and Employee
                (or his
                legal representative) shall have until the end of the option term
                to
                exercise all options. Employer shall have no further obligations
                to
                Employee (or his legal representative) under this Agreement, except
                for
                those created under any stock option agreements executed prior to
                the
                effective date of termination, and any other vested rights under
                the
                employee benefit plans and programs and the right to receive reimbursement
                for business expenses (as defined in Section 4).
                

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
            	5.10	
              Return
                of Employer Property.
                Within fifteen (15) days after the Termination Date, Employee shall
                return to Employer all products, books, records, forms, specifications,
                formulae, data processes, designs, papers and writings relating to
                the
                business of Employer including without limitation proprietary or
                licensed
                computer programs, customer lists and customer data, and/or copies
                or
                duplicates thereof in Employee’s possession or under Employee’s control.
                Employee shall not retain any copies or duplicates of such property
                and
                all licenses granted to him by Employer to use computer programs
                or
                software shall be revoked on the Termination
                Date.

            

    

     

    
      	 	
              6.

            	
              DUTY
                OF LOYALTY 

            

    

    

    During
      the term of this Agreement, Employee shall not, without the prior written
      consent of Employer, engage in any activity directly competitive with the
      business or welfare of Employer, whether alone, as a partner, or as an officer,
      director, employee, consultant, or holder of more than 1 % of the capital
      interests of any other corporation or entity. Otherwise, Employee may make
      personal investments in any other business. The parties agree that the
      activities provided for in Section 2.4 are not directly competitive with the
      business or welfare of Employer.

     

    
      	 	
              7.

            	
              NO
                DISPARAGEMENT

            

    

     

    During
      Employee’s employment with Employer, and at all times thereafter, the parties
      agree that they will not disparage each other in any fashion.

      

    
      	 	
              8.

            	
              CONFIDENTIAL
                INFORMATION AND INTELLECTUAL PROPERTIES.

            

    

     

    Employee
      shall sign the Employer’s standard Employee Innovation, Proprietary Information
      and Confidentiality Agreement (“Confidentiality Agreement”).

    

    
      	 	
              9.

            	
              CURE
                PERIOD.
                

            

    

    

    In
      the
      event that Employee or Employer breaches this Agreement, the breaching party
      shall have thirty (30) calendar days within which to cure such breach,
      after receiving written notice from the other party specifying in reasonable
      detail the basis for the claimed breach (“Cure Period”). No breach of the
      Agreement shall be actionable if the breaching party is able to cure the breach
      within the Cure Period.

    

    
      	 	
              10.

            	
              OTHER
                PROVISIONS

            

    

     

    
      
        	
              	10.1	
                Compliance
                  With Other Agreements.
                  Employee represents to Employer that, to his knowledge and belief,
                  the
                  execution, delivery and performance of this Agreement will not
                  conflict
                  with or result in the violation or breach of any term or provision
                  of any
                  order, judgment, injunction, contract, agreement, commitment or
                  other
                  arrangement to which Employee is a party or by which he is bound.
                  Should
                  claims, demands, causes of action, costs or expenses (including
                  attorneys’
                  fees) arise from any alleged breach of contract as a result of
                  accepting
                  employment with Employer, Employer will indemnify Employee for
                  reasonable
                  legal fees, provided that Employee did not knowingly or willfully
                  breach
                  such agreement. Employer acknowledges that Employee is subject
                  to a
                  Confidentiality and Non-Disparagement agreement with Clearant.
                  

              

      

    

    
      	
            	10.2	
              Counsel.
                The parties acknowledge and represent that, prior to the execution
                of this
                Agreement, they have had an opportunity to consult with their respective
                counsel concerning the terms and conditions set forth herein.
                Additionally, Employee represents that he has had an opportunity
                to
                receive independent legal advice concerning the taxability of any
                consideration received under this Agreement. Employee has not relied
                upon
                any advice from Employer and/or its attorneys with respect to the
                taxability of any consideration received under this Agreement. Employee
                further acknowledges that Employer has not made any representations
                to him
                with respect to tax issues. 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
            	10.3	
              Nondelegable
                Duties.
                This is a contract for Employee’s personal services. The duties of
                Employee under this Agreement are personal and may not be delegated
                or
                transferred in any manner whatsoever, and shall not be subject to
                involuntary alienation, assignment or transfer by Employee during
                his
                life. 

            

    

    
      	
            	10.4	
              Governing
                Law.
                The validity, construction and performance of this Agreement shall
                be
                governed by the laws, without regard to the laws as to choice or
                conflict
                of laws, of the State of Washington.

            

    

    
      	
            	10.5	
              Venue.
                If any dispute arises regarding the application, interpretation or
                enforcement of any provision of this Agreement, including fraud in
                the
                inducement, such dispute shall be resolved either in federal or state
                court in Seattle, Washington. 

            

    

    
      	
            	10.6	
              Severability.
                The invalidity or unenforceability of any particular provision of
                this
                Agreement shall not affect the other provisions, and this Agreement
                shall
                be construed in all respects as if any invalid or unenforceable provision
                were omitted. 

            

    

    
      	
            	10.7	
              Binding
                Effect.
                The provisions of this Agreement shall bind and inure to the benefit
                of
                the parties and their respective successors and permitted assigns.
                

            

    

    
      	
            	10.8	
              Notice.
                Any notices or communications required or permitted by this Agreement
                shall be deemed sufficiently given if in writing and when delivered
                personally or four (4) business days after deposit with the United
                States Postal Service as registered or certified mail, postage prepaid
                and
                addressed as follows: 

            

    

    
      	 	
              (a) 

            	
              If
                to Employer, to the principal office of Employer in the State of
                Washington, marked “Attention: Compensation Committee,” with a copy to the
                Employer’s Chairman of its Board of Directors; or
                

            

    

    
      	 	
              (b) 

            	
              If
                to Employee, to the most recent address for Employee appearing in
                Employer’s records, with a copy to the person of choice to receive such
                notices designated by Employee in writing to Employer.
                

            

    

    
      	
            	10.9	
              Arbitration.
                Any disputes, controversies or claims arising out of or relating
                to this
                Agreement, not otherwise addressed in Section 10.5 above, shall be
                resolved by binding arbitration before a retired judge at JAMS in
                Santa
                Monica, California, in accordance with its Employment Arbitration
                Rules
                and Procedures. The prevailing party shall be awarded its reasonable
                attorney’s fees, costs and expenses.

            

    

    
      	
            	10.10	
              Headings.
                The Section and other headings contained in this Agreement are for
                reference purposes only and shall not affect in any way the meaning
                or
                interpretation of this Agreement. 

            

    

    
      	
            	10.11	
              Amendment
                and Waiver.
                This Agreement may be amended, modified or supplemented only by a
                writing
                executed by each of the parties. Either party may in writing waive
                any
                provision of this Agreement to the extent such provision is for the
                benefit of the waiving party. No waiver by either party of a breach
                of any
                provision of this Agreement shall be construed as a waiver of any
                subsequent or different breach, and no forbearance by a party to
                seek a
                remedy for noncompliance or breach by the other party shall be construed
                as a waiver of any right or remedy with respect to such noncompliance
                or
                breach. 

            

    

    
      	
            	10.12	
              Entire
                Agreement.
                This Agreement is the only agreement and understanding between the
                parties
                pertaining to the subject matter of this Agreement, and supersedes
                all
                prior agreements, summaries of agreements, descriptions of compensation
                packages, discussions, negotiations, understandings, representations
                or
                warranties, whether verbal or written, between the parties pertaining
                to
                such subject matter.

            

    

    

         IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

    

    EMPLOYEE:
      

    
      	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
                   

            	
               

            	
               

            
	
              Paul
                Abramowitz 

            	
               

            	
               

            

    

    

    
      	
               

            	
               

            	
               

            	
               

            
	
              EMPLOYER:

               

              Neah
                Power Systems, Inc.

               

            	
               

            
	
              By  

            	
                
                

            	
               

            	
              By  

            	 
	
               

            	
                    Daniel
                Rosen 

            	
               

            	
               

            	
                    Michael
                F. Solomon 

            
	
               

            	
                    Chairman
                of its Compensation

                    Committee 

            	
               

            	
               

            	
                    Compensation

                    Committee

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