Preview | Bridge Loan Agreement |

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

THIS NOTE is one of a duly authorized issue of up to $1,550,000 of NEAH POWER SYSTEMS, INC., a corporation organized and existing under the laws of the State of Nevada (the "Company"), designated as its 6% Secured Promissory Note Series 06-01.

FOR VALUE RECEIVED, the Company promises to pay to ____________________, the registered holder hereof (the "Holder"), the principal sum of ______________ Thousand and 00/100 Dollars (US $__________) on the Maturity Date (as defined below) and to pay interest on the principal sum outstanding from time to time in arrears at the rate of 6% per annum (computed on the basis of the actual number of days elapsed and a year of 365 days), accruing from December 27 , 2006, the date of initial issuance of this Note (the Issue Date), to the date of payment. Such interest shall be payable on the date which is the earlier of (i) the Maturity Date, or (ii) the date of any prepayment of principal permitted hereunder. Accrual of interest shall commence on the Issue Date and shall continue to accrue on a daily basis until payment in full of the principal sum has been made or duly provided for (whether before or after the Maturity Date).

Anything herein to the contrary notwithstanding, on the Initial Stated Maturity Date (as defined below) the Company shall pay the interest on the principal on this Note in an amount equal to such principal (and such payment shall constitute the payment of all interest on this Note through the Initial Maturity Date hereof, but not beyond the Initial Stated Maturity Date.

This Note is being issued pursuant to the terms of the Bridge Loan Agreement, dated as of December 27, 2006 (the Loan Agreement), to which the Company and the Holder (or the Holders predecessor in interest) are parties. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement.

1. (a) The term Maturity Date means the earliest of (i) the Stated Maturity Date (as defined below), (ii) the New Transaction Threshold Date (as defined below), or (iii) the accelerated date as provided in Section 12 hereof.

(b) The term Stated Maturity Date means (i) May 26, 2007 (the Initial Stated Maturity Date), unless (ii) the Company gives the Holder, and the Holder receives at least ten (10) business days prior to the Initial Stated Maturity Date, a Maturity Date Extension Notice (as defined below), in which event it means June 26 , 2007 (the Extended Stated Maturity Date). The term Maturity Date Extension Notice means a written notice of the Companys election to extend the Stated Maturity Date to the Extended Stated Maturity Date; provided, however, that such Maturity Date Extension Notice shall be effective if, and only if, all of the following conditions are true:

(X) there is no Event of Default (as defined below; but without regard to the last clause of Section 12(g) hereof regarding the 30-day time period for dismissal of the relevant petition or the vacating of the relevant order) both on the date the Maturity Date Extension Notice is received by the Holder and on the Initial Stated Maturity Date, and