Original Issue Discount Term Secured Convertible Promissory Note

NEITHER THIS NOTE NOR ANY SHARES OF STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. NEITHER THIS NOTE NOR ANY SHARES OF STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS NOTE OR SHARES OF STOCK ISSUABLE UPON CONVERSION OF THIS NOTE UNDER SUCH ACT UNLESS SUCH REGISTRATION IS NOT REQUIRED PURSUANT TO A VALID EXEMPTION THEREFROM UNDER THE ACT.

THE ISSUE PRICE OF THIS NOTE IS $225,000.00 (THE " ISSUE PRICE ").  THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS NOTE IS $37,500.00.  THE ISSUE DATE OF THIS NOTE IS FEBRUARY 12, 2009.

FOR VALUE RECEIVED, the undersigned Neah Power Systems, Inc. , a Nevada corporation (referred to herein as " Borrower " or the " Company "), promises to pay to the order of Agile Opportunity Fund, LLC, its successors or assigns (the " Lender "), the principal sum of Two Hundred Sixty Two Thousand Five Hundred and 00/100 Dollars ($262,500.00) (the " Face Amount ") on August 12, 2009 (the " Maturity Date "), together with interest on the Face Amount of this Note at a rate equal to eighteen percent (18%) per annum calculated on the basis of a 360 day year (the " Interest Rate ").  Interest to accrue hereunder through the Maturity Date (assuming no Event of Default hereunder) shall be payable in advance on the date hereof, the amount thereof being $23,625 (the “ Prepaid Interest ”).  Notwithstanding any other provision hereof, interest paid or becoming due hereunder and any other payments hereunder which may constitute interest shall in no event exceed the maximum rate permitted by applicable law.

Interest due hereunder is payable in lawful money of the United States of America to the Lender at the address set forth in that certain Securities Purchase Agreement between the Borrower, the Lender and the other investor thereunder, dated of even date herewith (the " Securities Purchase Agreement "), and pursuant to which this Note is issued.  The terms and conditions of the Securities Purchase Agreement and all other Loan Documents, including any other Note, are incorporated by reference herein and made a part hereof.  All capitalized terms not otherwise defined herein shall have the respective meanings as set forth in the Securities Purchase Agreement.

Section 1.   Conversion .

(a)           At any time from the original issue date hereof through the date that this Note is paid in full, Lender shall have the right, in its sole discretion, to convert the then outstanding Face Amount of this Note less the then as yet unamortized portion of the OID Amount (the “ Convertible Principal Balance ”) plus accrued but unpaid interest under this Note, in whole or in part, into shares (each, a “ Conversion Share ”) of Common Stock at a conversion price equal to $0.10 per Conversion Share, subject to adjustment as provided in Section 2 herein (the “ Conversion Price ”).

(b)           Lender may convert this Note at the Conversion Price by the surrender of this Note (properly endorsed) to the Company at the principal office of the Borrower, together with the form of Notice of Conversion attached hereto as Annex A (a “ Notice of Conversion ”) duly completed, dated and executed, specifying therein the principal amount of this Note and/or outstanding interest to be converted.  The “Conversion Date” shall be the date that such Notice of Conversion and this Note is duly provided to Borrower hereunder (or, at Lender's option, the next interest payment date with respect to Lender's conversion of any scheduled interest payment).  In the event that the Lender shall specify a name or names other than that of the Lender to receive any of the Conversion Shares issuable upon such exercise of the conversion option, the Notice of Conversion also shall be accompanied by payment of all transfer taxes payable upon the issuance of the Conversion Shares to such specified person(s).

(c)           On the date of receipt by the Company of the duly completed, dated and executed Notice of Conversion, this Note and applicable transfer taxes, if any, all in accordance with Section 1(b) with respect to a conversion of any portion of this Note, the Lender (and any person(s) receiving Conversion Shares in lieu of the Lender) shall be deemed to have become the holder of record for all purposes of the Conversion Shares to which such valid conversion relates.

(d)           As soon as practicable, but not in excess of five business days, after the valid conversion of any portion of this Note, the Company, at the Company’s expense (including the payment by Company of any applicable issuance and similar taxes, but excluding the transfer taxes referred to in Section 1(b)), will cause to be issued in the name of and delivered to the Lender (and/or such other person(s) identified in the Notice of Conversion with respect to such conversion), certificates evidencing the number of duly authorized, validly issued, fully paid and non-assessable Conversion Shares to which the Lender (and/or such other person(s) identified in such Notice of Conversion, shall be entitled to receive upon the conversion), such certificates to be in such reasonable denominations as Lender may request when delivering the Notice of Conversion.

(e)           If less than the entire Convertible Principal Balance of this Note is being converted, the Company shall execute and deliver to the Lender a new replacement Note (dated as of the date hereof) evidencing a face amount which is the percentage of the original Face Amount equal to the portion of the Convertible Principal Balance that has not been so converted.

Section 2.   Conversion Price Adjustment .

The initial Conversion Price as stated above shall be subject to adjustment from time to time and such Conversion Price as adjusted shall likewise be subject to further adjustment, all as hereinafter set forth.

(a)           If and whenever the Company issues or sells any additional securities for consideration equivalent to a per share price of Common Stock (the “ Base Price ”) less than the Conversion Price in effect immediately prior to such issuance or sale, then immediately upon such issuance or sale the Conversion Price shall be reduced to a new Conversion Price equal to the Base Price; provided , however , that this Section 2(a) shall not be applicable to the issuance of securities to pursuant to the Securities Purchase Agreement.

(b)           If the Borrower, at any time while this Note is outstanding, (i) shall pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, (iii) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of shares of the Common Stock any shares of capital stock of the Borrower, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding after such event. Any adjustment made pursuant to this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

(c)           Whenever the Conversion Price shall be adjusted as provided in this Section 2, the Company shall reasonably promptly provide notice of such adjustment to the Lender together with a written statement from an authorized officer of the Company, showing in reasonable detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment.  Notwithstanding the foregoing, no adjustment in the Conversion Price shall be required unless such adjustment would require a change of at least 1% in such Conversion Price; provided , however , that any adjustments which by reason of this Section are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(d)           In case of any consolidation or merger of the Borrower with or into another entity or the conveyance of all or substantially all of the assets of the Borrower to another entity (collectively, an “ Organic Change ”), this Note shall thereafter be convertible (to the extent such conversion is permitted hereunder) into the number of shares of Common Stock or other securities or property to which a holder of the number of shares of Common Stock of the Borrower deliverable upon conversion of this Note would have been entitled had this Note been converted immediately prior to such Organic Change and held until after the closing of such Organic Change; and, in any such case, appropriate adjustment shall be made in the application of the provisions herein set forth with respect to the rights and interest thereafter of Lender or any subsequent holder of this Note, to the end that the provisions set forth herein shall be thereafter applicable, as nearly as reasonably may be, in relation to any shares of Common Stock or other property thereafter deliverable upon the conversion of this Note.

Section 3.   Reservation of Stock .  The Borrower covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Note as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Lender, not less than such number