Document:

EXHIBIT 10.23

                      AMENDED AND RESTATED PROMISSORY NOTE

$ 138,990.00                                            West Palm Beach, Florida
                                                                October 23, 2006

For value  received,  KEVIN LUETJE,  (the  "MAKER"),  promises to pay, in lawful
money of the United States of America, to the order of NEAH POWER SYSTEMS, INC.,
a Nevada  Corporation  (the  "COMPANY"),  the  principal  sum of ONE HUNDRED AND
THIRTY-EIGHT  THOUSAND NINE HUNDRED AND NINETY DOLLARS ($138,990) or such lesser
amount as shall equal the  outstanding  principal  amount hereof,  together with
interest hereon at a rate equal to twelve percent (12%) per annum (the "INTEREST
RATE"),  calculated  from the date of this amended and restated  promissory note
("NOTE")  until the principal  amount hereof and all interest  accrued hereon at
the Interest Rate shall be paid in full.

        1. PAYMENTS.  The principal  amount of this Note,  together with accrued
interest at the Interest Rate (the "Payment"),  shall be payable by Maker to the
Company in lawful  money of the United  States  of America on  November  3, 2006
(the  "MATURITY  DATE").  The Maker has the right to prepay  the  principal  and
accrued  interest,  in  whole or in part,  then due  under  the Note at any time
before the Maturity Date without any penalty or premium of any kind.

This Note amends and  restates in its  entirety a  $1,500,000  promissory  note,
dated April 27, 2006,  as amended and  restated on June 23,  2006,  September 8,
2006 and September 25, 2006  (collectively,  the "PRIOR NOTES"). An aggregate of
$1,390,000  was paid in respect of the Prior Notes as of October 23, 2006,  none
of which has been applied toward payment of accrued interest on the Prior Notes;
such accrued  interest  having been added to the  principal  amount of the Prior
Notes and this Note.

        2. COLLATERAL AND ASSIGNMENT OF PLEDGED SHARES.

               (a) As collateral to secure  payment of this Note,  when due, the
Maker has pledged to the Company all 4,000,000  shares of common  stock,  $0.001
par value per share,  of the Company  (the  "PLEDGED  SHARES")  purchased by the
Maker on the date of this Note;  all pursuant to the terms and  conditions  of a
pledge agreement, dated April 27, 2006, as amended and restated on September 25,
2006 and October 23, 2006,  between the Maker, as pledgor,  and the Company,  as
pledgee  (as so amended and  restated,  the "PLEDGE  AGREEMENT");  which  Pledge
Agreement  the Maker  hereby  affirms in all respects as being valid and binding
and  enforceable  against him as Pledgor,  in accordance  with its terms. A true
copy of the Pledge  Agreement  is annexed to this Note as EXHIBIT "A" and made a
part hereof.

               (b) Upon  payment in full of this Note,  the Maker shall have the
right to  assign  all of the  Pledged  Shares  to the  Maker's  affiliate  Atlas
Ventures,  Inc. ("ATLAS"), at which time the Company shall cause legal ownership
of the Pledged  Shares to be registered in the name of Atlas or any other entity
designed by the Maker.

        3. EVENTS OF DEFAULT.  The  occurrence  and  continuation  of any of the
following shall constitute an "Event of Default" under this Note:

               (a)  FAILURE TO PAY.  The Maker  fails to pay the Payment of this
Note on the Maturity Date; or

               (b) VOLUNTARY  BANKRUPTCY OR  INSOLVENCY  PROCEEDINGS.  The Maker
shall  (i) apply for or  consent  to the  appointment  of a  receiver,  trustee,
liquidator  or  custodian  of  itself  or of all or a  substantial  part  of its
property,  (ii) be unable,  or admit in writing its inability,  to pay its debts
generally as

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they mature,  (iii) make a general  assignment  for the benefit of its or any of
its creditors,  (iv) be dissolved or liquidated,  (v) become  insolvent (as such
term may be defined or interpreted under any applicable statute),  (vi) commence
a voluntary case or other  proceeding  seeking  liquidation,  reorganization  or
other  relief  with  respect  to  itself  or its  debts  under  any  bankruptcy,
insolvency  or other  similar law now or  hereafter  in effect or consent to any
such relief or to the appointment of or taking possession of its property by any
official in an involuntary  case or other  proceeding  commenced  against it, or
(vii) take any action for the purpose of effecting any of the foregoing; or

               (c)   INVOLUNTARY    BANKRUPTCY'   OR   INSOLVENCY   PROCEEDINGS.
Proceedings for the appointment of a receiver,  trustee, liquidator or custodian
of the Maker or any material  subsidiary of the Maker or of all or a substantial
part of the property thereof or an involuntary case or other proceedings seeking
liquidation,  reorganization  or other  relief with respect to the Maker or such
material  subsidiary or the debts thereof  under any  bankruptcy,  insolvency or
other similar law now or hereafter in effect shall be commenced and an order for
relief entered or such  proceeding  shall not be dismissed or discharged  within
thirty (30) days of commencement; or

               (d) BREACH OF  REPRESENTATIONS,  WARRANTIES OR COVENANTS.  In the
event  that the Maker  shall  breach or  otherwise  fail to  perform  any of its
representations,  warranties or covenants set forth in Section 5 of this Note or
in the Pledge  Agreement and such breach shall remain uncured for a period of 15
days of the written notice thereof is received by Maker from Company.

        4. RIGHTS OF COMPANY UPON DEFAULT.  Upon the  occurrence  and during the
continuation  of any Event of  Default,  immediately  and  without  notice,  all
outstanding  principal  and  accrued  but unpaid  interest  payable by the Maker
hereunder  shall  automatically  become  immediately  due and  payable,  without
presentment,  demand,  protest or any other notice of any kind, all of which are
hereby   expressly   waived,   anything   contained   herein  to  the   contrary
notwithstanding.  In addition to the foregoing remedies,  upon the occurrence or
existence of any Event of Default,  Company may exercise any other right,  power
or remedy granted to it by this Note or otherwise permitted to it by law, either
by suit in equity or by action at law, or both,  including,  without limitation,
all of the rights of the Company, as pledgee, under the Pledge Agreement.

        5.  REPRESENTATIONS,  WARRANTIES AND COVENANTS OF MAKER.  The Maker does
hereby represent, warrant and covenant to the Company, as follows:

               a)  DUE   AUTHORIZATION.   The  Note  and  the  Pledge  Agreement
(collectively,  the  "LOAN  DOCUMENTS")  have all been  duly  authorized  by all
necessary and appropriate action on the part of the Maker;

               (b) NO  VIOLATION  OF  AGREEMENTS.  The  execution  of  the  Loan
Documents and consummation of the Loan will not violate the terms and conditions
of any agreement, loan facility, covenant or undertaking to which the Maker is a
party,  and will not result in the  acceleration of any other  indebtedness  for
money borrowed owed by the Maker.

        6.  SUCCESSORS AND ASSIGNS.  The rights and obligations of the Maker and
Company of this Note shall be binding upon and benefit the successors,  assigns,
heirs, administrators and transferees of the parties.

        7.  WAIVER AND  AMENDMENT.  Any  provision  of this Note may be amended,
waived or modified upon the written consent of the Maker and Company.

        8.  ASSIGNMENT  BY  PARTIES.  This  Note and the  rights,  interests  or
obligations  hereunder may not be assigned, in whole or in part, by any party to
this agreement without the prior approval of the other party.

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<PAGE>

        9.  NOTICES.  Any  notice,  request or other  communication  required or
permitted  hereunder  shall be in writing  and shall be deemed to have been duly
given If personally delivered or mailed by registered or certified mail, postage
prepaid,  or by  recognized  overnight  courier  or  personal  delivery  at  the
respective  addresses  of  the  parties  as  set  forth  in a  subscription  and
investment  representation  agreement,  dated April 27, 2006 (the  "SUBSCRIPTION
AGREEMENT").  Any party  hereto may by notice so given  change its  address  for
future notice hereunder.  Notice shall conclusively be deemed to have been given
when received.

        10. EXPENSES; WAIVERS. If action is instituted to collect this Note, the
Maker  promises to pay all costs and expenses,  including,  without  limitation,
reasonable  attorneys' fees, and costs, incurred in connection with such action.
The Maker hereby  waives notice of default,  presentment  or demand for payment,
protest or notice of  nonpayment  or dishonor  and all other  notices or demands
relative to this instrument.

        11.  GOVERNING  LAW.  THIS  NOTE AND ALL  ACTIONS  ARISING  OUT OF OR IN
CONNECTION  WITH THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE  :LAWS OF THE  STATE  OF  NEVADA  APPLICABLE  TO  AGREEMENTS  MADE AND TO BE
PERFORMED  ENTIRELY  WITHIN  SUCH STATE,  WITHOUT  REGARD TO THE  PRINCIPLES  OF
CONFLICT OF LAWS.  THE MAKER AND COMPANY HEREBY SUBMIT TO THE  JURISDICTIONS  OF
ANY STATE  COURT OR ANY UNITED  STATES  FEDERAL  COURT  LOCATED  IN NEVADA  WITH
RESPECT TO ANY DISPUTE  ARISING UNDER THIS NOTE, THE AGREEMENTS  ENTERED INTO IN
CONNECTION  HEREWITH OR THE TRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY.  BOTH
PARTIES   IRREVOCABLY  WAIVE  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE
OF  PROCESS  UPON A PARTY  MAILED BY FIRST  CLASS  MAIL SHALL BE DEEMED IN EVERY
RESPECT  EFFECTIVE  SERVICE  OF  PROCESS  UPON THE  PARTY  IN ANY  SUCH  SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY  OTHER  MANNER   PERMITTED  BY  LAW.   BOTH  PARTIES   AGREE  THAT  A  FINAL
NON-APPEALABLE  JUDGMENT IN ANY SUCH SUIT OR PROCEEDING  SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER  JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL  MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE  ARISING  UNDER
THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES,  INCLUDING  ATTORNEYS'
FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

        12.  HEADINGS.  The  headings of the sections  and  subsections  of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

        13. SEVERABILITY.  In case anyone or more of the provisions contained in
this  Agreement  shall be  deemed  invalid,  illegal,  or  unenforceable  in any
respect,  the validity,  legality and enforceability of the remaining provisions
contained herein shall not m any way be affected or impaired thereby.

        14.  MISCELLANEOUS.  If this Note or any other Loan  Documents are lost,
stolen,  mutilated  or  destroyed,  and the  Company  delivers  to the  Maker an
indemnification in the Maker's favor, signed by the Company, the Maker will sign
and deliver to Company, a Loan Document identical in form and content which will
have the effect of the original for all purposes.

    [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS]

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        IN WITNESS  WHEREOF,  the Maker has caused  this Note to be issued as of
the date first written above.

        MAKER:

             /s/ KEVIN LUETJE
        ---------------------------------
        Name: KEVIN LUETJE

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                      AMENDED AND RESTATED PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT  ("AGREEMENT"),  dated as of October 23, 2006, is executed
by and between KEVIN LUETJE (the  "PLEDGOR"),  and NEAH POWER  SYSTEMS,  INC., a
Nevada corporation (the "PLEDGEE"").

                                   BACKGROUND:

          WHEREAS,  Pledgor has issued that  certain  $1,500,000.00  installment
promissory  note  payable to the Pledgee,  dated April 27, 2006,  as amended and
restated on June 23, 2006, September 8, 2006, September 25, 2006 and October 23,
2006  (individually and collectively and as amended,  restated,  supplemented or
otherwise modified and in effect from time to time, the "NOTE"); and

          WHEREAS,  in  order to  secure  the  payment  and  performance  of the
obligations,  liabilities and  indebtedness of Pledgor in favor of Pledgee under
the Note,  the  Pledgor  has  agreed to pledge to  Pledgee,  for the  benefit of
Pledgee, 100% of the all of the shares of capital stock of the Pledgee purchased
by Pledgor from the Pledgee under a subscription  and investment  representation
agreement dated of even date herewith (the "AGREEMENT");

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants  set forth herein and for other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
hereby agree as follows:

        1. PLEDGE.  Pledgor hereby pledge and grant to Pledgee,  for the benefit
of Pledgee,  a first priority lien on and security  interest in all of Pledgor's
right, title and interest in and to all of the 4,000,0000 shares of common stock
of  the  Company   purchased  by  Pledgor  under  the  Agreement  (the  "PLEDGED
COLLATERAL").  In such connection,  Pledgor hereby agrees to execute and deliver
to Pledgee (i) assignments  separate from certificate  substantially in the form
of EXHIBIT A hereto,  undated and appropriately  endorsed in blank, with respect
to any certificated Pledged Collateral and (ii) such other documents of transfer
as  Pledgee  may from  time to time  reasonably  request  to enable  Pledgee  to
transfer,  after  the  occurrence  and  during  the  continuance  of an Event of
Default, the Pledged Collateral into its name or the name of Its nominee (all of
the foregoing are hereinafter collectively referred to as the "POWERS").

        2. SECURITY FOR SECURED LIABILITIES.  The Pledged Collateral secures the
prompt and complete payment,  performance and observance of the Note (including,
without limitation, all obligations and liabilities of Pledgor hereunder).

        3.  PERFECTION  OF SECURITY  INTEREST.  Pledgor  agrees to (i)  promptly
deliver to Pledgee or Pledgee's  nominee all  certificates or other  instruments
evidencing  any of the Pledged  Collateral,  if any, (ii) execute and deliver to
Pledgee such financing statements as Pledgee may reasonably request with respect
to the Pledged  Collateral (or, if execution by Pledgor is not required pursuant
to the applicable  Uniform  Commercial Code, Pledgor hereby authorize Pledgee to
file all  financing  statements  deemed  necessary  by Pledgee  to  perfect  the
security  interests  granted  hereunder),  and (iii)  take such  other  steps as
Pledgee  may from time to  reasonably  request  to  perfect  Pledgee's  security
interest in the Pledged Collateral or any part thereof under applicable law.

        4. PLEDGED COLLATERAL ADJUSTMENTS. If during the term of this Agreement:

               (a) any  non-cash  dividend  or  distribution,  reclassification,
readjustment  or other  change is declared or made in the capital  structure  of
Company,  or any  option,  warrant or  similar

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instrument included within the Pledged Collateral is exercised, or both, or

               (b) any  subscription,  warrants,  options  shall  be  issued  in
connection with the Pledged Collateral,

then Pledgor shall (i) promptly deliver new,  substituted and additional shares,
warrants,  options,  or other equity securities,  issued by reason of any of the
foregoing,  and all  certificates and other  instruments  evidencing the same to
Pledgee  to be held  under the  terms of this  Agreement  and  shall  constitute
Pledged  Collateral  hereunder,  and  (ii)  promptly  deliver  to  Pledgee  such
additional Pledged Collateral.

        5. SUBSEQUENT CHANGES AFFECTING PLEDGED  COLLATERAL.  Pledgee may, after
the occurrence and during the continuance of an Event of Default, without notice
and at its  option,  transfer or register  the  Pledged  Collateral  or any part
thereof into its or its nominee's name with or without any indication  that such
Pledged Collateral is subject to the lien created hereunder.  In addition,  upon
the occurrence and during the continuance of an Event of Default, Pledgee may at
any time exchange  certificates or other instruments  representing or evidencing
Pledged  Collateral for  certificates or other  instruments of smaller or larger
denominations.

        6. REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represent and warrant
as of the effective date hereof to Pledgee as follows:

               (a)  Pledgor is the legal and  beneficial  owners of the  Pledged
Collateral  owned by  Pledgor,  free and clear of any lien,  except for the lien
created by tins Agreement;

               (b) The  Pledged  Collateral  has been duly  authorized  and been
fully paid and non-assessable; and

               (c)  Pledgor  has full  power and  authority  to enter  into this
Agreement and has the right to vote, assign, deposit, pledge and grant a lien on
or otherwise transfer all of its rights in the Pledged Collateral free and clear
of any liens;

        7.  VOTING  RIGHTS.  During  the term of this  Agreement,  and except as
otherwise  provided in this Section 7, Pledgor  shall have the right to vote the
Pledged  Collateral  on all  questions  and Pledgee will  deliver all  necessary
documents to allow Pledgor to take such action upon Pledgor's request. After the
occurrence and during the  continuance  of an Event of Default,  Pledgee may, at
Pledgee's  option,  exercise all voting and other  consensual  rights and powers
pertaining  to the  Pledged  Collateral.  Pledgor  hereby  agree to execute  all
proxies  or  other  Instruments,   documents  or  agreements  deemed  reasonably
necessary  by Pledgee to evidence  the right to vote the Pledged  Collateral  as
provided hereunder, and Pledgor agrees that it shall not be entitled to rescind,
revoke or otherwise  modify  Pledgee's  vote  executed in  accordance  with this
Section 7. Any and all proxies  executed by Pledgor  pursuant to this  Section 7
shall be deemed for all  purposes to be a proxy  coupled  with an  interest  and
shall be  irrevocable  until the  payment in full,  in cash,  of all amounts due
under the Note (the  "LIABILITIES") and termination of all amounts due under the
Notes.

        8. DIVIDENDS AND OTHER DISTRIBUTIONS.

               (a) (i)  Pledgor  shall be entitled to receive and retain any and
all dividends and other distributions paid in respect of the Pledged Collateral;
and

                      (ii) Pledgee shall promptly  execute and deliver (or cause
to be executed and delivered) to Pledgor all such proxies and other  instruments
as Pledgor  may  request  for the  purpose of  enabling  Pledgor to receive  the
dividends or interest payments.

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               (b) After the occurrence  and during the  continuance of an Event
of Default:

                      (i) All rights of Pledgor to receive the dividend payments
which it would otherwise be authorized to receive and retain pursuant to Section
8(a)(i) hereof shall cease, and all such rights shall thereupon become vested in
Pledgee,  which  shall  thereupon  have the sale  right to  receive  and hold as
Pledged Collateral such dividends and interest payments; and

                      (ii)  Pledgor  shall,  upon the  request  of  Pledgee,  at
Pledgor's expense,  do or cause to be done all such other acts and things as may
reasonably be necessary to make such sale of the Pledged  Collateral or any part
thereof valid and binding and in compliance with applicable law.

        9.  TRANSFERS AND OTHER LIENS.  Pledgor agrees that It will not (i) sell
or  otherwise  dispose of, or grant any option or other  rights with respect to,
any of the Pledged Collateral without the prior written consent of Pledgee,  and
that upon any sale or disposition of Pledged  Collateral as permitted under this
Section 9, it shall reimburse  Pledgee for all reasonable  expenses  incurred by
Pledgee  m  connection  with the  release  of any lien in  connection  with such
permitted sale or disposition or (ii) create or permit to exist any lien upon or
with  respect to any of the Pledged  Collateral,  except for the lien created by
this Agreement.

        10.  REMEDIES.  Subject  at all times to the  provisions  of  Section 11
below:

               (a) Pledgee  shall have,  in addition to any other  rights  given
under  this  Agreement,  the Note or by  applicable  law,  all of the rights and
remedies  with respect to the Pledged  Collateral  of a secured  party under the
Uniform  Commercial  Code as in effect from time to time in the State of Nevada.
In addition,  after the  occurrence  and during the  continuance  of an Event of
Default,  Pledgee  shall,  subject to the  provisions  of Section  78-220 of the
Nevada General Corporation Law, have such powers of sale and other powers as may
be conferred by applicable  law.  With respect to the Pledged  Collateral or any
part thereof which shall then be in or shall thereafter come into the possession
or custody of Pledgee,  or which  Pledgee  shall  otherwise  have the ability to
transfer under  applicable  law,  Pledgee may, in its sole  discretion,  without
notice  except  as  specified  below,   after  the  occurrence  and  during  the
continuance of an Event of Default, sell or cause the same to be sold in private
sale, in one or more sales or lots, at such price as Pledgee may deem best,  for
cash or on credit or for future delivery, without assumption of any credit risk,
and  the  purchaser  of  any or all of the  Pledged  Collateral  so  sold  shall
thereafter own the same,  absolutely free and clear from any subordinate  claim,
encumbrance or right of any kind whatsoever. Pledgee may, in its own name, or in
the  name  of a  designee  or  nominee,  buy  the  Pledged  Collateral,  in full
satisfaction of all obligations under the Note at any private sale. Pledgor will
pay to Pledgee all  expenses  (including,  without  limitation,  court costs and
reasonable  attorneys' fees and expenses) of, or incident to, the enforcement of
any of the provisions hereof by Pledgee. Pledgee agrees to apply any proceeds of
the sale of the Pledged  Collateral to the  Liabilities  in accordance  with the
terms of the Note, and, to the extent any surplus remains after the repayment in
full in cash of the Liabilities,  Pledgee agrees to distribute any such proceeds
as required by law.

               (b) Unless any of the  Pledged  Collateral  threatens  to decline
speedily  in value  or is or  becomes  of a type  sold on a  recognized  market,
Pledgee will give Pledgor  reasonable notice of the time and place of any public
sale  thereof,  or of the time after  which any private  sale or other  intended
disposition  is to be made.  Any sale of the  Pledged  Collateral  conducted  in
conformity with reasonable  commercial  practices of banks,  commercial  finance
companies,  insurance  companies or other  financial  institutions  disposing of
property  similar to the Pledged  Collateral  shall be deemed to be commercially
reasonable.  Notwithstanding  any  provision to the contrary  contained  herein,
Pledgor agrees that any  requirements of reasonable  notice shall be met if such
notice is received by Pledgor as  provided in this  Agreement  at least ten (10)
days before the time of the sale or disposition; provided, that Pledgee may give
any shorter notice that is commercially reasonable under the circumstances.  Any
other  requirement  of  notice,  demand or  advertisement  for sale is waived by
Pledgor, to the extent permitted by law.

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               (c) In view of the fact that  federal and state  securities  laws
may impose  certain  restrictions  on the method by which a sale of the  Pledged
Collateral may be effected after an Event of Default,  Pledgor agrees that after
the occurrence and during the  continuance of an Event of Default,  Pledgee may,
from time to time,  attempt to sell all or any part of the Pledged Collateral by
means 0f a private placement restricting the bidders and prospective  purchasers
to those who are qualified and will represent and agree that they are purchasing
for investment only and not for distribution.  In so doing,  Pledgee may solicit
offers  to buy the  Pledged  Collateral,  or any  part of It,  from  one or more
investors  deemed by Pledgee,  in its  reasonable  judgment,  to be  financially
responsible   parties  who  might  be  interested  in  purchasing   the  Pledged
Collateral.  The  acceptance  by Pledgee of the highest and best offer  obtained
therefrom shall be deemed to be a commercially reasonable method of disposing of
such Pledged Collateral

        11.  ALTERNATIVE  REMEDY.  Notwithstanding  the provisions of Section 10
above,  on and after an Event of  Default,  the  Pledgee  may (but  shall not be
obligated to) elect, in lieu of the remedies  specified in Section 10, to retain
all of the Pledged  Collateral as full and complete  liquidated  damages for any
amounts  then due and owing by the  Pledgor to the Pledgee  under the Note.  The
Pledgor does hereby waive any and all rights of a debtor under Section 78-220 of
the Nevada General  Corporation Law or any other applicable  Uniform  Commercial
Code  provisions  respecting  pledged  collateral  and agrees  that  Pledgee may
cancel,  resell or otherwise deal in the Pledged  Collateral free of any notice,
demand or advertisement for sale or other right of redemption. The provisions of
Section 16 of this  Agreement  shall be  applicable  to the  alternative  remedy
provided in this Section 11.

        12. TERM. This Agreement shall remain in full force and effect until all
Liabilities  under the Note have been  indefeasibly  paid and satisfied in full.
Upon the termination of this Agreement as provided above (other than as a result
of the sale of the Pledged  Collateral),  Pledgee will promptly upon the request
of Pledgor,  release the security interest created hereunder and, if it then has
possession of the Pledged  Collateral,  will deliver the Pledged  Collateral and
the  Powers  to the  Pledgor  free and clear of all  liens  granted  in favor of
Pledgee.

        13.  DEFINITIONS.  The singular  shall include the plural and vice versa
and any gender shall include any other gender as the context may require.

        14.  SUCCESSORS AND ASSIGNS.  This  Agreement  shall be binding upon and
inure to the benefit of Pledgor,  Pledgee and their  respective  successors  and
assigns.  Pledgor's successors and assigns shall include,  without limitation, a
receiver, trustee or debtor-in-possession of or for Pledgor.

        15.  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA  WITHOUT REGARD TO CONFLICT
OF LAWS  PRINCIPLES  THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY STATE
OTHER THAN THE STATE OF NEVADA.

        16.  SEVERABILITY.  Whenever possible,  each provision of this Agreement
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law,  but, if any  provision of this  Agreement  shall be held to be
prohibited or invalid under  applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity,  without  invalidating the
remainder of such provision or the remaining provisions of this Agreement.

        17.  FURTHER  ASSURANCES.  Pledgor  agrees that it will  cooperate  with
Pledgee and will execute and deliver, or cause to be executed and delivered, all
such other  assignments  separate from  certificate,  proxies,  instruments  and
documents, and will take all such other actions, including,  without limitation,
the  execution  and filing of financing  statements,  as Pledgee may  reasonably
request  from time to time m order to carry out the  provisions  and purposes of
this Agreement.

                                       4
<PAGE>

        18.  NOTICES.  Except  as  otherwise  provided  herein,  whenever  it is
provided herein that any notice, demand, request, consent, approval, declaration
or other  communications  shall or may be  given  to or  served  upon any of the
parties by any other party,  or whenever  any of the parties  desires to give or
serve upon any other  communication  with respect to this  Agreement,  each such
notice, demand, request, consent,  approval,  declaration or other communication
shall be in writing  and shall be given (and  deemed to have been  given) to the
address on record with the sending party and  otherwise in  accordance  with and
subject to the terms of the Note.

        19. AMENDMENTS,  WAIVERS AND CONSENTS.  No amendment to, modification or
waiver of, or consent with respect to, any provision of this Agreement  shall in
any event be  effective  unless  the same  shall be in  writing  and  signed and
delivered by Pledgee and  Pledgor,  and then any such  amendment,  modification,
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

        20.  SECTION  HEADINGS.  The  section  headings  in this  Agreement  are
inserted for convenience of reference and shall not be considered a part of this
Agreement or used in its interpretation.

        21.  EXECUTION IN  COUNTERPARTS.  This  Agreement may be executed in any
number of  counterparts,  each of which shall be an  original,  but all of which
shall together constitute one and the same agreement. Any such counterpart which
may be delivered by facsimile  transmission shall be deemed the equivalent of an
originally  signed  counterpart and shall be fully admissible in any enforcement
proceedings regarding this Agreement.

        22. MERGER. This Agreement represents the final agreement of Pledgor and
Pledgee with respect to the matters contained herein and may not be contradicted
by  evidence  of  prior  or  contemporaneous   agreements,  or  subsequent  oral
agreements, between Pledgor and Pledgee.

      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

                                       5
<PAGE>

IN WITNESS  WHEREOF,  Pledgor and Pledgee have each caused this  Agreement to be
executed and delivered by its duly  authorized  officer as of the date first set
forth above.

PLEDGOR:

              /s/ KEVIN LUETJE
--------------------------------------------
Name:         KEVIN LUETJE
Address:      201 South Narcissus,
              Unit 1401
              West Palm Beach, FL 33401

PLEDGEE:

NEAH POWER SYSTEMS, INC.

By:     /s/ PAUL ABRAMOWITZ
    -----------------------------------------
        PAUL ABRAMOWITZ, PRESIDENT

                                       6
<PAGE>

                                                                       EXHIBIT A

                  FORM OF ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, the undersigned, ________________________, does hereby sell,
assign and transfer unto , shares of Common Stock of NEAH POWER SYSTEMS, INC., a
Nevada  corporation  (the "SHARES"),  standing in the name of the undersigned on
the books of said corporation and does hereby irrevocably constitute and appoint
____________________________________,  as Agent, as the  undersigned's  true and
lawful attorney,  for it and in its name and stead, to sell, assign and transfer
all or any of the Shares, and for that purpose to make and execute all necessary
acts of assignment and transfer  thereof;  and to substitute one or more persons
with like full power,  hereby ratifying and confirming all that said attorney or
substitute or substitutes shall lawfully do by virtue hereof.

Dated: ___________________

 [_________________________, a________________, ____________]

By:      _______________________________________________

Name: __________________________________________________

Its: ___________________________________________________

-------------------------------------------

                                       7EXHIBIT 10.1

                      AMENDED AND RESTATED PROMISSORY NOTE

$ 138,990.00                                            West Palm Beach, Florida
                                                                October 23, 2006

For value  received,  KEVIN LUETJE,  (the  "MAKER"),  promises to pay, in lawful
money of the United States of America, to the order of NEAH POWER SYSTEMS, INC.,
a Nevada  Corporation  (the  "COMPANY"),  the  principal  sum of ONE HUNDRED AND
THIRTY-EIGHT  THOUSAND NINE HUNDRED AND NINETY DOLLARS ($138,990) or such lesser
amount as shall equal the  outstanding  principal  amount hereof,  together with
interest hereon at a rate equal to twelve percent (12%) per annum (the "INTEREST
RATE"),  calculated  from the date of this amended and restated  promissory note
("NOTE")  until the principal  amount hereof and all interest  accrued hereon at
the Interest Rate shall be paid in full.

        1. PAYMENTS.  The principal  amount of this Note,  together with accrued
interest at the Interest Rate (the "Payment"),  shall be payable by Maker to the
Company in lawful  money of the United  States  of America on  November  3, 2006
(the  "MATURITY  DATE").  The Maker has the right to prepay  the  principal  and
accrued  interest,  in  whole or in part,  then due  under  the Note at any time
before the Maturity Date without any penalty or premium of any kind.

This Note amends and  restates in its  entirety a  $1,500,000  promissory  note,
dated April 27, 2006,  as amended and  restated on June 23,  2006,  September 8,
2006 and September 25, 2006  (collectively,  the "PRIOR NOTES"). An aggregate of
$1,390,000  was paid in respect of the Prior Notes as of October 23, 2006,  none
of which has been applied toward payment of accrued interest on the Prior Notes;
such accrued  interest  having been added to the  principal  amount of the Prior
Notes and this Note.

        2. COLLATERAL AND ASSIGNMENT OF PLEDGED SHARES.

               (a) As collateral to secure  payment of this Note,  when due, the
Maker has pledged to the Company all 4,000,000  shares of common  stock,  $0.001
par value per share,  of the Company  (the  "PLEDGED  SHARES")  purchased by the
Maker on the date of this Note;  all pursuant to the terms and  conditions  of a
pledge agreement, dated April 27, 2006, as amended and restated on September 25,
2006 and October 23, 2006,  between the Maker, as pledgor,  and the Company,  as
pledgee  (as so amended and  restated,  the "PLEDGE  AGREEMENT");  which  Pledge
Agreement  the Maker  hereby  affirms in all respects as being valid and binding
and  enforceable  against him as Pledgor,  in accordance  with its terms. A true
copy of the Pledge  Agreement  is annexed to this Note as EXHIBIT "A" and made a
part hereof.

               (b) Upon  payment in full of this Note,  the Maker shall have the
right to  assign  all of the  Pledged  Shares  to the  Maker's  affiliate  Atlas
Ventures,  Inc. ("ATLAS"), at which time the Company shall cause legal ownership
of the Pledged  Shares to be registered in the name of Atlas or any other entity
designed by the Maker.

        3. EVENTS OF DEFAULT.  The  occurrence  and  continuation  of any of the
following shall constitute an "Event of Default" under this Note:

               (a)  FAILURE TO PAY.  The Maker  fails to pay the Payment of this
Note on the Maturity Date; or

               (b) VOLUNTARY  BANKRUPTCY OR  INSOLVENCY  PROCEEDINGS.  The Maker
shall  (i) apply for or  consent  to the  appointment  of a  receiver,  trustee,
liquidator  or  custodian  of  itself  or of all or a  substantial  part  of its
property,  (ii) be unable,  or admit in writing its inability,  to pay its debts
generally as

                                       1
<PAGE>

they mature,  (iii) make a general  assignment  for the benefit of its or any of
its creditors,  (iv) be dissolved or liquidated,  (v) become  insolvent (as such
term may be defined or interpreted under any applicable statute),  (vi) commence
a voluntary case or other  proceeding  seeking  liquidation,  reorganization  or
other  relief  with  respect  to  itself  or its  debts  under  any  bankruptcy,
insolvency  or other  similar law now or  hereafter  in effect or consent to any
such relief or to the appointment of or taking possession of its property by any
official in an involuntary  case or other  proceeding  commenced  against it, or
(vii) take any action for the purpose of effecting any of the foregoing; or

               (c)   INVOLUNTARY    BANKRUPTCY'   OR   INSOLVENCY   PROCEEDINGS.
Proceedings for the appointment of a receiver,  trustee, liquidator or custodian
of the Maker or any material  subsidiary of the Maker or of all or a substantial
part of the property thereof or an involuntary case or other proceedings seeking
liquidation,  reorganization  or other  relief with respect to the Maker or such
material  subsidiary or the debts thereof  under any  bankruptcy,  insolvency or
other similar law now or hereafter in effect shall be commenced and an order for
relief entered or such  proceeding  shall not be dismissed or discharged  within
thirty (30) days of commencement; or

               (d) BREACH OF  REPRESENTATIONS,  WARRANTIES OR COVENANTS.  In the
event  that the Maker  shall  breach or  otherwise  fail to  perform  any of its
representations,  warranties or covenants set forth in Section 5 of this Note or
in the Pledge  Agreement and such breach shall remain uncured for a period of 15
days of the written notice thereof is received by Maker from Company.

        4. RIGHTS OF COMPANY UPON DEFAULT.  Upon the  occurrence  and during the
continuation  of any Event of  Default,  immediately  and  without  notice,  all
outstanding  principal  and  accrued  but unpaid  interest  payable by the Maker
hereunder  shall  automatically  become  immediately  due and  payable,  without
presentment,  demand,  protest or any other notice of any kind, all of which are
hereby   expressly   waived,   anything   contained   herein  to  the   contrary
notwithstanding.  In addition to the foregoing remedies,  upon the occurrence or
existence of any Event of Default,  Company may exercise any other right,  power
or remedy granted to it by this Note or otherwise permitted to it by law, either
by suit in equity or by action at law, or both,  including,  without limitation,
all of the rights of the Company, as pledgee, under the Pledge Agreement.

        5.  REPRESENTATIONS,  WARRANTIES AND COVENANTS OF MAKER.  The Maker does
hereby represent, warrant and covenant to the Company, as follows:

               a)  DUE   AUTHORIZATION.   The  Note  and  the  Pledge  Agreement
(collectively,  the  "LOAN  DOCUMENTS")  have all been  duly  authorized  by all
necessary and appropriate action on the part of the Maker;

               (b) NO  VIOLATION  OF  AGREEMENTS.  The  execution  of  the  Loan
Documents and consummation of the Loan will not violate the terms and conditions
of any agreement, loan facility, covenant or undertaking to which the Maker is a
party,  and will not result in the  acceleration of any other  indebtedness  for
money borrowed owed by the Maker.

        6.  SUCCESSORS AND ASSIGNS.  The rights and obligations of the Maker and
Company of this Note shall be binding upon and benefit the successors,  assigns,
heirs, administrators and transferees of the parties.

        7.  WAIVER AND  AMENDMENT.  Any  provision  of this Note may be amended,
waived or modified upon the written consent of the Maker and Company.

        8.  ASSIGNMENT  BY  PARTIES.  This  Note and the  rights,  interests  or
obligations  hereunder may not be assigned, in whole or in part, by any party to
this agreement without the prior approval of the other party.

                                       2
<PAGE>

        9.  NOTICES.  Any  notice,  request or other  communication  required or
permitted  hereunder  shall be in writing  and shall be deemed to have been duly
given If personally delivered or mailed by registered or certified mail, postage
prepaid,  or by  recognized  overnight  courier  or  personal  delivery  at  the
respective  addresses  of  the  parties  as  set  forth  in a  subscription  and
investment  representation  agreement,  dated April 27, 2006 (the  "SUBSCRIPTION
AGREEMENT").  Any party  hereto may by notice so given  change its  address  for
future notice hereunder.  Notice shall conclusively be deemed to have been given
when received.

        10. EXPENSES; WAIVERS. If action is instituted to collect this Note, the
Maker  promises to pay all costs and expenses,  including,  without  limitation,
reasonable  attorneys' fees, and costs, incurred in connection with such action.
The Maker hereby  waives notice of default,  presentment  or demand for payment,
protest or notice of  nonpayment  or dishonor  and all other  notices or demands
relative to this instrument.

        11.  GOVERNING  LAW.  THIS  NOTE AND ALL  ACTIONS  ARISING  OUT OF OR IN
CONNECTION  WITH THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE  :LAWS OF THE  STATE  OF  NEVADA  APPLICABLE  TO  AGREEMENTS  MADE AND TO BE
PERFORMED  ENTIRELY  WITHIN  SUCH STATE,  WITHOUT  REGARD TO THE  PRINCIPLES  OF
CONFLICT OF LAWS.  THE MAKER AND COMPANY HEREBY SUBMIT TO THE  JURISDICTIONS  OF
ANY STATE  COURT OR ANY UNITED  STATES  FEDERAL  COURT  LOCATED  IN NEVADA  WITH
RESPECT TO ANY DISPUTE  ARISING UNDER THIS NOTE, THE AGREEMENTS  ENTERED INTO IN
CONNECTION  HEREWITH OR THE TRANSACTIONS  CONTEMPLATED  HEREBY OR THEREBY.  BOTH
PARTIES   IRREVOCABLY  WAIVE  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE
OF  PROCESS  UPON A PARTY  MAILED BY FIRST  CLASS  MAIL SHALL BE DEEMED IN EVERY
RESPECT  EFFECTIVE  SERVICE  OF  PROCESS  UPON THE  PARTY  IN ANY  SUCH  SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY  OTHER  MANNER   PERMITTED  BY  LAW.   BOTH  PARTIES   AGREE  THAT  A  FINAL
NON-APPEALABLE  JUDGMENT IN ANY SUCH SUIT OR PROCEEDING  SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER  JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL  MANNER.  THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE  ARISING  UNDER
THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES,  INCLUDING  ATTORNEYS'
FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

        12.  HEADINGS.  The  headings of the sections  and  subsections  of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

        13. SEVERABILITY.  In case anyone or more of the provisions contained in
this  Agreement  shall be  deemed  invalid,  illegal,  or  unenforceable  in any
respect,  the validity,  legality and enforceability of the remaining provisions
contained herein shall not m any way be affected or impaired thereby.

        14.  MISCELLANEOUS.  If this Note or any other Loan  Documents are lost,
stolen,  mutilated  or  destroyed,  and the  Company  delivers  to the  Maker an
indemnification in the Maker's favor, signed by the Company, the Maker will sign
and deliver to Company, a Loan Document identical in form and content which will
have the effect of the original for all purposes.

    [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS]

                                       3
<PAGE>

        IN WITNESS  WHEREOF,  the Maker has caused  this Note to be issued as of
the date first written above.

        MAKER:

             /s/ KEVIN LUETJE
        ---------------------------------
        Name: KEVIN LUETJE

                                       4
<PAGE>

                      AMENDED AND RESTATED PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT  ("AGREEMENT"),  dated as of October 23, 2006, is executed
by and between KEVIN LUETJE (the  "PLEDGOR"),  and NEAH POWER  SYSTEMS,  INC., a
Nevada corporation (the "PLEDGEE"").

                                   BACKGROUND:

          WHEREAS,  Pledgor has issued that  certain  $1,500,000.00  installment
promissory  note  payable to the Pledgee,  dated April 27, 2006,  as amended and
restated on June 23, 2006, September 8, 2006, September 25, 2006 and October 23,
2006  (individually and collectively and as amended,  restated,  supplemented or
otherwise modified and in effect from time to time, the "NOTE"); and

          WHEREAS,  in  order to  secure  the  payment  and  performance  of the
obligations,  liabilities and  indebtedness of Pledgor in favor of Pledgee under
the Note,  the  Pledgor  has  agreed to pledge to  Pledgee,  for the  benefit of
Pledgee, 100% of the all of the shares of capital stock of the Pledgee purchased
by Pledgor from the Pledgee under a subscription  and investment  representation
agreement dated of even date herewith (the "AGREEMENT");

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants  set forth herein and for other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
hereby agree as follows:

        1. PLEDGE.  Pledgor hereby pledge and grant to Pledgee,  for the benefit
of Pledgee,  a first priority lien on and security  interest in all of Pledgor's
right, title and interest in and to all of the 4,000,0000 shares of common stock
of  the  Company   purchased  by  Pledgor  under  the  Agreement  (the  "PLEDGED
COLLATERAL").  In such connection,  Pledgor hereby agrees to execute and deliver
to Pledgee (i) assignments  separate from certificate  substantially in the form
of EXHIBIT A hereto,  undated and appropriately  endorsed in blank, with respect
to any certificated Pledged Collateral and (ii) such other documents of transfer
as  Pledgee  may from  time to time  reasonably  request  to enable  Pledgee  to
transfer,  after  the  occurrence  and  during  the  continuance  of an Event of
Default, the Pledged Collateral into its name or the name of Its nominee (all of
the foregoing are hereinafter collectively referred to as the "POWERS").

        2. SECURITY FOR SECURED LIABILITIES.  The Pledged Collateral secures the
prompt and complete payment,  performance and observance of the Note (including,
without limitation, all obligations and liabilities of Pledgor hereunder).

        3.  PERFECTION  OF SECURITY  INTEREST.  Pledgor  agrees to (i)  promptly
deliver to Pledgee or Pledgee's  nominee all  certificates or other  instruments
evidencing  any of the Pledged  Collateral,  if any, (ii) execute and deliver to
Pledgee such financing statements as Pledgee may reasonably request with respect
to the Pledged  Collateral (or, if execution by Pledgor is not required pursuant
to the applicable  Uniform  Commercial Code, Pledgor hereby authorize Pledgee to
file all  financing  statements  deemed  necessary  by Pledgee  to  perfect  the
security  interests  granted  hereunder),  and (iii)  take such  other  steps as
Pledgee  may from time to  reasonably  request  to  perfect  Pledgee's  security
interest in the Pledged Collateral or any part thereof under applicable law.

        4. PLEDGED COLLATERAL ADJUSTMENTS. If during the term of this Agreement:

               (a) any  non-cash  dividend  or  distribution,  reclassification,
readjustment  or other  change is declared or made in the capital  structure  of
Company,  or any  option,  warrant or  similar

                                       1
<PAGE>

instrument included within the Pledged Collateral is exercised, or both, or

               (b) any  subscription,  warrants,  options  shall  be  issued  in
connection with the Pledged Collateral,

then Pledgor shall (i) promptly deliver new,  substituted and additional shares,
warrants,  options,  or other equity securities,  issued by reason of any of the
foregoing,  and all  certificates and other  instruments  evidencing the same to
Pledgee  to be held  under the  terms of this  Agreement  and  shall  constitute
Pledged  Collateral  hereunder,  and  (ii)  promptly  deliver  to  Pledgee  such
additional Pledged Collateral.

        5. SUBSEQUENT CHANGES AFFECTING PLEDGED  COLLATERAL.  Pledgee may, after
the occurrence and during the continuance of an Event of Default, without notice
and at its  option,  transfer or register  the  Pledged  Collateral  or any part
thereof into its or its nominee's name with or without any indication  that such
Pledged Collateral is subject to the lien created hereunder.  In addition,  upon
the occurrence and during the continuance of an Event of Default, Pledgee may at
any time exchange  certificates or other instruments  representing or evidencing
Pledged  Collateral for  certificates or other  instruments of smaller or larger
denominations.

        6. REPRESENTATIONS AND WARRANTIES.  Pledgor hereby represent and warrant
as of the effective date hereof to Pledgee as follows:

               (a)  Pledgor is the legal and  beneficial  owners of the  Pledged
Collateral  owned by  Pledgor,  free and clear of any lien,  except for the lien
created by tins Agreement;

               (b) The  Pledged  Collateral  has been duly  authorized  and been
fully paid and non-assessable; and

               (c)  Pledgor  has full  power and  authority  to enter  into this
Agreement and has the right to vote, assign, deposit, pledge and grant a lien on
or otherwise transfer all of its rights in the Pledged Collateral free and clear
of any liens;

        7.  VOTING  RIGHTS.  During  the term of this  Agreement,  and except as
otherwise  provided in this Section 7, Pledgor  shall have the right to vote the
Pledged  Collateral  on all  questions  and Pledgee will  deliver all  necessary
documents to allow Pledgor to take such action upon Pledgor's request. After the
occurrence and during the  continuance  of an Event of Default,  Pledgee may, at
Pledgee's  option,  exercise all voting and other  consensual  rights and powers
pertaining  to the  Pledged  Collateral.  Pledgor  hereby  agree to execute  all
proxies  or  other  Instruments,   documents  or  agreements  deemed  reasonably
necessary  by Pledgee to evidence  the right to vote the Pledged  Collateral  as
provided hereunder, and Pledgor agrees that it shall not be entitled to rescind,
revoke or otherwise  modify  Pledgee's  vote  executed in  accordance  with this
Section 7. Any and all proxies  executed by Pledgor  pursuant to this  Section 7
shall be deemed for all  purposes to be a proxy  coupled  with an  interest  and
shall be  irrevocable  until the  payment in full,  in cash,  of all amounts due
under the Note (the  "LIABILITIES") and termination of all amounts due under the
Notes.

        8. DIVIDENDS AND OTHER DISTRIBUTIONS.

               (a) (i)  Pledgor  shall be entitled to receive and retain any and
all dividends and other distributions paid in respect of the Pledged Collateral;
and

                      (ii) Pledgee shall promptly  execute and deliver (or cause
to be executed and delivered) to Pledgor all such proxies and other  instruments
as Pledgor  may  request  for the  purpose of  enabling  Pledgor to receive  the
dividends or interest payments.

                                       2
<PAGE>

               (b) After the occurrence  and during the  continuance of an Event
of Default:

                      (i) All rights of Pledgor to receive the dividend payments
which it would otherwise be authorized to receive and retain pursuant to Section
8(a)(i) hereof shall cease, and all such rights shall thereupon become vested in
Pledgee,  which  shall  thereupon  have the sale  right to  receive  and hold as
Pledged Collateral such dividends and interest payments; and

                      (ii)  Pledgor  shall,  upon the  request  of  Pledgee,  at
Pledgor's expense,  do or cause to be done all such other acts and things as may
reasonably be necessary to make such sale of the Pledged  Collateral or any part
thereof valid and binding and in compliance with applicable law.

        9.  TRANSFERS AND OTHER LIENS.  Pledgor agrees that It will not (i) sell
or  otherwise  dispose of, or grant any option or other  rights with respect to,
any of the Pledged Collateral without the prior written consent of Pledgee,  and
that upon any sale or disposition of Pledged  Collateral as permitted under this
Section 9, it shall reimburse  Pledgee for all reasonable  expenses  incurred by
Pledgee  m  connection  with the  release  of any lien in  connection  with such
permitted sale or disposition or (ii) create or permit to exist any lien upon or
with  respect to any of the Pledged  Collateral,  except for the lien created by
this Agreement.

        10.  REMEDIES.  Subject  at all times to the  provisions  of  Section 11
below:

               (a) Pledgee  shall have,  in addition to any other  rights  given
under  this  Agreement,  the Note or by  applicable  law,  all of the rights and
remedies  with respect to the Pledged  Collateral  of a secured  party under the
Uniform  Commercial  Code as in effect from time to time in the State of Nevada.
In addition,  after the  occurrence  and during the  continuance  of an Event of
Default,  Pledgee  shall,  subject to the  provisions  of Section  78-220 of the
Nevada General Corporation Law, have such powers of sale and other powers as may
be conferred by applicable  law.  With respect to the Pledged  Collateral or any
part thereof which shall then be in or shall thereafter come into the possession
or custody of Pledgee,  or which  Pledgee  shall  otherwise  have the ability to
transfer under  applicable  law,  Pledgee may, in its sole  discretion,  without
notice  except  as  specified  below,   after  the  occurrence  and  during  the
continuance of an Event of Default, sell or cause the same to be sold in private
sale, in one or more sales or lots, at such price as Pledgee may deem best,  for
cash or on credit or for future delivery, without assumption of any credit risk,
and  the  purchaser  of  any or all of the  Pledged  Collateral  so  sold  shall
thereafter own the same,  absolutely free and clear from any subordinate  claim,
encumbrance or right of any kind whatsoever. Pledgee may, in its own name, or in
the  name  of a  designee  or  nominee,  buy  the  Pledged  Collateral,  in full
satisfaction of all obligations under the Note at any private sale. Pledgor will
pay to Pledgee all  expenses  (including,  without  limitation,  court costs and
reasonable  attorneys' fees and expenses) of, or incident to, the enforcement of
any of the provisions hereof by Pledgee. Pledgee agrees to apply any proceeds of
the sale of the Pledged  Collateral to the  Liabilities  in accordance  with the
terms of the Note, and, to the extent any surplus remains after the repayment in
full in cash of the Liabilities,  Pledgee agrees to distribute any such proceeds
as required by law.

               (b) Unless any of the  Pledged  Collateral  threatens  to decline
speedily  in value  or is or  becomes  of a type  sold on a  recognized  market,
Pledgee will give Pledgor  reasonable notice of the time and place of any public
sale  thereof,  or of the time after  which any private  sale or other  intended
disposition  is to be made.  Any sale of the  Pledged  Collateral  conducted  in
conformity with reasonable  commercial  practices of banks,  commercial  finance
companies,  insurance  companies or other  financial  institutions  disposing of
property  similar to the Pledged  Collateral  shall be deemed to be commercially
reasonable.  Notwithstanding  any  provision to the contrary  contained  herein,
Pledgor agrees that any  requirements of reasonable  notice shall be met if such
notice is received by Pledgor as  provided in this  Agreement  at least ten (10)
days before the time of the sale or disposition; provided, that Pledgee may give
any shorter notice that is commercially reasonable under the circumstances.  Any
other  requirement  of  notice,  demand or  advertisement  for sale is waived by
Pledgor, to the extent permitted by law.

                                       3
<PAGE>

               (c) In view of the fact that  federal and state  securities  laws
may impose  certain  restrictions  on the method by which a sale of the  Pledged
Collateral may be effected after an Event of Default,  Pledgor agrees that after
the occurrence and during the  continuance of an Event of Default,  Pledgee may,
from time to time,  attempt to sell all or any part of the Pledged Collateral by
means 0f a private placement restricting the bidders and prospective  purchasers
to those who are qualified and will represent and agree that they are purchasing
for investment only and not for distribution.  In so doing,  Pledgee may solicit
offers  to buy the  Pledged  Collateral,  or any  part of It,  from  one or more
investors  deemed by Pledgee,  in its  reasonable  judgment,  to be  financially
responsible   parties  who  might  be  interested  in  purchasing   the  Pledged
Collateral.  The  acceptance  by Pledgee of the highest and best offer  obtained
therefrom shall be deemed to be a commercially reasonable method of disposing of
such Pledged Collateral

        11.  ALTERNATIVE  REMEDY.  Notwithstanding  the provisions of Section 10
above,  on and after an Event of  Default,  the  Pledgee  may (but  shall not be
obligated to) elect, in lieu of the remedies  specified in Section 10, to retain
all of the Pledged  Collateral as full and complete  liquidated  damages for any
amounts  then due and owing by the  Pledgor to the Pledgee  under the Note.  The
Pledgor does hereby waive any and all rights of a debtor under Section 78-220 of
the Nevada General  Corporation Law or any other applicable  Uniform  Commercial
Code  provisions  respecting  pledged  collateral  and agrees  that  Pledgee may
cancel,  resell or otherwise deal in the Pledged  Collateral free of any notice,
demand or advertisement for sale or other right of redemption. The provisions of
Section 16 of this  Agreement  shall be  applicable  to the  alternative  remedy
provided in this Section 11.

        12. TERM. This Agreement shall remain in full force and effect until all
Liabilities  under the Note have been  indefeasibly  paid and satisfied in full.
Upon the termination of this Agreement as provided above (other than as a result
of the sale of the Pledged  Collateral),  Pledgee will promptly upon the request
of Pledgor,  release the security interest created hereunder and, if it then has
possession of the Pledged  Collateral,  will deliver the Pledged  Collateral and
the  Powers  to the  Pledgor  free and clear of all  liens  granted  in favor of
Pledgee.

        13.  DEFINITIONS.  The singular  shall include the plural and vice versa
and any gender shall include any other gender as the context may require.

        14.  SUCCESSORS AND ASSIGNS.  This  Agreement  shall be binding upon and
inure to the benefit of Pledgor,  Pledgee and their  respective  successors  and
assigns.  Pledgor's successors and assigns shall include,  without limitation, a
receiver, trustee or debtor-in-possession of or for Pledgor.

        15.  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA  WITHOUT REGARD TO CONFLICT
OF LAWS  PRINCIPLES  THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY STATE
OTHER THAN THE STATE OF NEVADA.

        16.  SEVERABILITY.  Whenever possible,  each provision of this Agreement
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable  law,  but, if any  provision of this  Agreement  shall be held to be
prohibited or invalid under  applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity,  without  invalidating the
remainder of such provision or the remaining provisions of this Agreement.

        17.  FURTHER  ASSURANCES.  Pledgor  agrees that it will  cooperate  with
Pledgee and will execute and deliver, or cause to be executed and delivered, all
such other  assignments  separate from  certificate,  proxies,  instruments  and
documents, and will take all such other actions, including,  without limitation,
the  execution  and filing of financing  statements,  as Pledgee may  reasonably
request  from time to time m order to carry out the  provisions  and purposes of
this Agreement.

                                       4
<PAGE>

        18.  NOTICES.  Except  as  otherwise  provided  herein,  whenever  it is
provided herein that any notice, demand, request, consent, approval, declaration
or other  communications  shall or may be  given  to or  served  upon any of the
parties by any other party,  or whenever  any of the parties  desires to give or
serve upon any other  communication  with respect to this  Agreement,  each such
notice, demand, request, consent,  approval,  declaration or other communication
shall be in writing  and shall be given (and  deemed to have been  given) to the
address on record with the sending party and  otherwise in  accordance  with and
subject to the terms of the Note.

        19. AMENDMENTS,  WAIVERS AND CONSENTS.  No amendment to, modification or
waiver of, or consent with respect to, any provision of this Agreement  shall in
any event be  effective  unless  the same  shall be in  writing  and  signed and
delivered by Pledgee and  Pledgor,  and then any such  amendment,  modification,
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given.

        20.  SECTION  HEADINGS.  The  section  headings  in this  Agreement  are
inserted for convenience of reference and shall not be considered a part of this
Agreement or used in its interpretation.

        21.  EXECUTION IN  COUNTERPARTS.  This  Agreement may be executed in any
number of  counterparts,  each of which shall be an  original,  but all of which
shall together constitute one and the same agreement. Any such counterpart which
may be delivered by facsimile  transmission shall be deemed the equivalent of an
originally  signed  counterpart and shall be fully admissible in any enforcement
proceedings regarding this Agreement.

        22. MERGER. This Agreement represents the final agreement of Pledgor and
Pledgee with respect to the matters contained herein and may not be contradicted
by  evidence  of  prior  or  contemporaneous   agreements,  or  subsequent  oral
agreements, between Pledgor and Pledgee.

      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

                                       5
<PAGE>

IN WITNESS  WHEREOF,  Pledgor and Pledgee have each caused this  Agreement to be
executed and delivered by its duly  authorized  officer as of the date first set
forth above.

PLEDGOR:

              /s/ KEVIN LUETJE
--------------------------------------------
Name:         KEVIN LUETJE
Address:      201 South Narcissus,
              Unit 1401
              West Palm Beach, FL 33401

PLEDGEE:

NEAH POWER SYSTEMS, INC.

By:     /s/ PAUL ABRAMOWITZ
    -----------------------------------------
        PAUL ABRAMOWITZ, PRESIDENT

                                       6
<PAGE>

                                                                       EXHIBIT A

                  FORM OF ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, the undersigned, ________________________, does hereby sell,
assign and transfer unto , shares of Common Stock of NEAH POWER SYSTEMS, INC., a
Nevada  corporation  (the "SHARES"),  standing in the name of the undersigned on
the books of said corporation and does hereby irrevocably constitute and appoint
____________________________________,  as Agent, as the  undersigned's  true and
lawful attorney,  for it and in its name and stead, to sell, assign and transfer
all or any of the Shares, and for that purpose to make and execute all necessary
acts of assignment and transfer  thereof;  and to substitute one or more persons
with like full power,  hereby ratifying and confirming all that said attorney or
substitute or substitutes shall lawfully do by virtue hereof.

Dated: ___________________

 [_________________________, a________________, ____________]

By:      _______________________________________________

Name: __________________________________________________

Its: ___________________________________________________

-------------------------------------------

                                       7

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