SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”) is made as of February 12, 2009 by and between (i) Neah Power Systems, Inc. , a Nevada corporation (the “ Company ”), and (ii) Agile Opportunity Fund, LLC , a Delaware limited liability company (“ Agile ”), and Capitoline Advisors Inc. , a New York corporation (“ Capitoline ”; together with Agile, the “ Investors ”, each an “ Investor ”).

In consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1.            Purchase and Sale of Securities .

1.1            Sale and Issuance of Notes .   Subject to the terms and conditions of this Agreement and in reliance on the representations and warranties set forth or referred to herein, the Company hereby agrees to sell and issue to the Investors, and the Investors hereby severally agree (and not jointly) to purchase from the Company, (i) at the Initial Closing (as hereinafter defined), Original Issue Discount Term Convertible Promissory Notes in the aggregate face amount of $262,500.00 for an aggregate purchase price of $225,000.00 (the “ Initial Notes Purchase Price ”), such Promissory Notes to be in the form attached hereto as Exhibit A , each of the Investors purchasing the amount of Initial Notes set forth on Schedule 1.1 hereto (the " Initial Notes ") with a maturity date of August 12, 2009 (the “ Maturity Date ”), and (ii) at each Investor’s sole, absolute and several discretion, at the Subsequent Closing (as hereinafter defined), Original Issue Discount Term Promissory Notes in the maximum aggregate face amounts of $787,500.00 for a maximum aggregate purchase price of $675,000.00 (the “ Additional Notes Purchase Price ”), each such Promissory Note to be substantially in the form attached hereto as Exhibit B and having the same Maturity Date as the Initial Notes, each of the Investors severally purchasing up to the maximum amount of Additional Notes set forth on Schedule 1.1 hereto, the exact amount so purchased by each Investor to be determined by such Investor in its sole, absolute and several discretion (the “ Additional Notes ”; collectively with the Initial Notes, the “ Notes ”).

1.2            Initial Closing .   The closing of the purchase, sale and issuance of the Initial Notes shall take place at the offices of Westerman Ball Ederer Miller & Sharfstein, LLP, legal counsel to Agile (“ WBEMS ”), 170 Old Country Road, Fourth Floor, Mineola, New York 11501, simultaneous with the execution hereof (the " Initial Closing ").  At the Initial Closing, (i) the Company will deliver to each Investor its duly executed Initial Note to be delivered thereat pursuant to Section 1.1(i) hereof against delivery by such Investor to the Company of its Initial Notes Purchase Price by wire transfer of the amount thereof to the Company’s account or by such other method agreed to between the Investors and the Company, (ii) the Company shall execute a Security Agreement in favor of the Investors granting to the Investors a first priority security interest in the “Collateral” referred to therein in the form of Exhibit C attached hereto (the “ Security Agreement ”), (iii) the Company shall execute a Patent Security Agreement in favor of the Investors granting to the Investors a first priority security interest in the “Collateral” referred to therein in the form of Exhibit D attached hereto (the “ Patent Security Agreement ”), (iv) the Company shall cause to be delivered to the Investors any other Securities to be delivered thereat pursuant to any other Loan Documents, and (v) the Company shall pay to the Investors the amount of interest payable on the Initial Notes pursuant to the terms of the Initial Notes.

1.3            Subsequent Closing .   On such date as may be agreed to between the Company and the Investors, but not later than February 27, 2009, the closing of the purchase, sale and issuance of Additional Notes shall take place at the offices of WBEMS (the “ Subsequent Closing ”).  At the Subsequent Closing, (i) the Company shall deliver to each Investor its duly executed Additional Note to be delivered thereat pursuant to Section 1.1(ii) hereof against delivery by such Investor to the Company of the Additional Notes Purchase Price therefor by wire transfer of the amount thereof to the Company’s account or by such other method agreed to between the Investors and the Company, (ii) the Company shall cause to be delivered to the Investors any other Securities to be delivered thereat pursuant to any other Loan Documents and (iii) the Company shall pay to the Investors the amount of interest payable on the Additional Notes pursuant to the terms of the Additional Notes.  For the purpose of clarification, the Subsequent Closing shall take place at the sole, absolute and several discretion of each Investor, it being specifically contemplated and acknowledged that should only one Investor choose to proceed with the Subsequent Closing, such Investor and the Company may do so without any obligation of the other Investor to do so.

1.4            Monitoring Fees .   On the thirtieth (30 ^th ) day after the Subsequent Closing  and on every thirtieth (30 ^th ) day thereafter (each, a “ Monitoring Fee Date ”) for a total of six (6) consecutive thirty (30) day periods and Monitoring Fee Dates, a calculation shall be made of the aggregate dollar volume of Common Stock traded on the Principal Trading Market during the thirty (30) days preceding the applicable Monitoring Fee Date (the “ Calculated Monthly Dollar Volume Traded ”).  If on any such Monitoring Fee Date, the Calculated Monthly Dollar Volume Traded was less than $75,000.00, then the Company shall immediately pay to the Investors a monitoring fee of $7,500.00 for such Monitoring Fee Date (as between the Investors, such monitoring fee to be divided in proportion to the aggregate amount of Notes purchased by them).  

1.5            Other Fees and Expenses .

(a)           At the Initial Closing, the Company shall pay all fees due to third party agents and expenses incurred by the Investors and Agile Investments, LLC in connection with the transactions contemplated hereunder, including, without limitation, (i) the legal fees and expenses of corporate counsel to the Investors incurred in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby, which amount of legal fees is agreed to be $15,000 plus expenses of patent counsel and filing fees, (ii) $12,625 payable to Agile Investments, LLC for due diligence, structuring and monitoring fees and (iii) a finder’s fee of $11,250 payable to Cresta Capital Strategies, LLC.

(b)           At the Subsequent Closing, the Company shall pay (i) the patent counsel and filing fees not otherwise paid at the Initial Closing, (ii) a finder’s fee of $11,250 to Cresta Capital Strategies, LLC and (iii) an aggregate of $37,875 in due diligence and structuring fees to Agile Investments, LLC and Capitoline (and as between them in proportion to the amount of Additional Notes purchased by Agile and Capitoline at the Subsequent Closing); such fees to be reduced proportionately in the event that less than the maximum amount of Additional Notes are so purchased.

1.6            Defined Terms Used in this Agreement .   In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall be construed to have the meanings set forth below.

“ Approvals ” means, collectively, all actions, approvals, consents, waivers, exemptions, Orders, authorizations, registrations, declarations, filings and recordings.

“ Business or Condition ” of the Company means the business, operations, assets, properties, earnings, prospects or condition (financial or other) of the Company.

“ Common Stock ” means the common stock of the Company, par value $0.001 per share.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Free Trading Stock ” means shares of Common Stock that may be immediately freely sold into the public markets for the Common Stock on the Principal Trading Market free of any restrictions on transfer under the Securities Act and which are otherwise freely transferable on the books and records of the Company.

“ Governmental Body ” means any federal, state, municipal, local or other governmental department, commission, board, bureau, agency, instrumentality, political subdivision or taxing authority, of any country.

“ Intellectual Property ” any patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade names, copyrights, manufacturing processes, formulae, trade secrets and know-how of a Person.

“ Last Audited Date ” means December 31, 2007.

“ Loan Documents ” means, collectively, this Agreement, the Security Agreement, the Patent Security Agreement, the Notes and all other documents, certificates and instruments delivered in connection therewith.

 “ Material Adverse Change; Material Adverse Effect; Materially Adverse ” in, on or with respect to, the Company, shall mean a material adverse change in the Company’s Business or Condition, a material adverse effect on the Company’s Business or Condition or an event which is materially adverse to the Company's Business or Condition.

 “ Order ” means any order, writ, injunction, decree, judgment, award, determination, direction or demand by a Governmental Body, arbitrator or court.

“ Person ” means any individual, corporation, association, partnership, joint venture, limited liability company, trust or estate, organization, business, government or agency or political subdivision thereof, or any other entity.

“ Principal Trading Market ” means the OTC Bulletin Board or such other market on which the Common Stock is principally traded at the relevant time.

“ Restricted Stock ” means shares of Common Stock that may not be immediately sold except pursuant to an exemption from registration under the Securities Act.

“ Sale of the Company ” means either (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company or (ii) a transaction or series of transactions (including, without limitation, by way of merger, consolidation, or sale of equity) the result of which is that the holders of the Company’s outstanding voting securities immediately prior to such transactions are after giving effect to such transactions no longer, in the aggregate, the “beneficial owners” (as such term is defined in Rule 13d-3 and Rule 13D-5 promulgated under the Exchange Act), directly or indirectly through one or more intermediaries, of more than 50% of the voting power of the outstanding voting securities of the Company.

“ SEC ” means the Securities and Exchange Commission.

“ SEC Documents ” means all reports, documents and other filings made by the Company with the SEC and available via SEC’s EDGAR online electronic document retrieval system.

“ Securities ” means the Notes and all shares of Common Stock that are or may be issued to the Investors under any of the Loan Documents.

“ Securities Act ” means the Securities Act of 1933, as amended.

1.7            Beneficial Ownership Limitations .

(a)           Notwithstanding anything to the contrary contained herein, at no time shall either Investor together with any “affiliates” of the Investor (as defined in the Exchange Act) “beneficially own” enough shares of Common Stock to be deemed an “affiliate” of the Company within the meaning of the Exchange Act (a “ Company Affiliate ”).  Accordingly, each Investor (and its affiliates) will not convert any portion of the Notes issued to it in violation of the foregoing.  In addition, to the extent any shares of Common Stock issuable or deliverable to an Investor pursuant to any Loan Document would cause the Investor to be deemed a Company Affiliate in violation of the foregoing sentence, the Company shall not issue or cause to be delivered such shares of Common Stock to the Investor and the Investor shall not request the issuance or delivery thereof; provided , however , that the Company shall reserve out of its authorized share capital, sufficient shares of Common Stock to permit it to issue such shares but for the foregoing provisions of this Section 1.7 (“ Reserved Shares ”).

(b)           At such time as an Investor determines that the issuance or delivery of Reserved Shares to it can be made without violating the first sentence of Section 1.7(a) hereof, then the Investor may request that the Company issue and deliver such number of Reserved Shares as the Investor determines it can so receive without being deemed a Company Affiliate and which it so requests (an “ Issuance Request ”) and the Company shall comply with such Issuance Request as soon as possible thereafter; provided , however , that notwithstanding the foregoing provisions of this Section 1.7, should the Investor in its sole discretion determine that it may be deemed a Company Affiliate prior to the issuance or delivery of the Reserved Shares, the Issuance Request shall specify that the Reserved Shares so requested not be issued or delivered prior to 61 days after such Issuance Request is made (and the provisions of Section 1.7(a) shall continue to apply until the actual issuance or delivery thereof).

2.            Representations and Warranties of the Company .   The Company hereby represents and warrants to the Investors that:

2.1            Organization, Good Standing and Qualification .   The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to carry on its business as presently conducted or proposed to be conducted.  The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a Material Adverse Effect.  The Company has registered its Common Stock and is obligated to file reports pursuant to Section 12 or Section 15(d) of the Exchange Act.  The Common Stock is quoted on the Principal Trading Market.  The Company has received no notice, either oral or written, with respect to the eligibility or the continued eligibility of the Common Stock for such quotation on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation.

2.2            Capitalization .   As of immediately prior to the Closing, the authorized capital stock of the Company consists solely of (i) 500,000,000 shares of Common Stock, of which 230,374,275 shares are issued and outstanding, and (ii) 25,000,000 shares of Preferred Stock, par value $.001 per share, of which 10,000,000 shares are authorized as shares of Series A Preferred Stock, of which 23,532,600 shares are issued and outstanding and are convertible into an aggregate of 627,614,442 shares of Common Stock.  All of the outstanding shares of Common Stock have been duly authorized, are fully paid and nonassessable.  Except as set forth on Schedule 2.2 , the Beneficial Ownership Table contained in the latest periodic filing made by the Company with the SEC under the Exchange Act, is accurate and complete as of the date hereof.  Except as set forth on such Beneficial Ownership table, in the preceding sentences of this Section 2.2 or on Schedule 2.2 , there are no options, warrants, subscriptions, conversion rights or securities exchange rights or other securities or other contractual rights outstanding which require, or give any person the right to require the issuance, delivery or sale (including the right of conversion or exchange) of any capital stock of the Company whether or not such rights are presently exercisable.

2.3            Authorization .   All corporate action on the part of the Company necessary for the authorization, execution and delivery of this Agreement, and the authorization, issuance and delivery of the Securities has been taken and each of the Loan Documents, when executed and delivered by the Company and assuming due execution and delivery by the Investors, shall constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

2.4            Valid Issuance of Securities .   The Securities when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws, except for Free Trading Stock which shall be free of all restrictions on transfer under securities laws.

2.5            Consents and Approvals .   No Approval by, from or with and no other action in respect of, any Governmental Body or any other Person (including any trustee or holder of any indebtedness, securities or other obligations of the Company) is required (a) for or in connection with the valid execution and/or delivery by the Company of or the performance by the Company of its obligations under the Loan Documents or the consummation by the Company of the transactions contemplated thereby, including the offer, issuance, sale and delivery by the Company of the Securities, or (b) as a condition to the legality, validity or enforceability as against the Company and the Subsidiaries of the Loan Documents.

2.6            Intellectual Property .  The Company represents and warrants that it has full right, title and interest in and to, or otherwise has the right to license its Intellectual Property.   Schedule 2.6 identifies the Company’s material Intellectual Property. To the best of the Company's knowledge, no claim is pending nor has the Company received notice to the effect that its Intellectual Property infringes or will infringe upon or conflict with the asserted rights of any other Person, and to the best of the Company’s knowledge, there is no basis for any such claim (whether or not pending or threatened).  Except as set forth on Schedule 2.6 , there are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses, or agreements of any kind with respect to its Intellectual Property.  The Company is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner of or licensor or other claimant to its Intellectual Property.  No claim is pending or, to the Company's knowledge, threatened to the effect that the Intellectual Property is invalid or unenforceable by the Company, and there is no basis for any such claim (whether or not pending or, to the Company's knowledge, threatened).

2.7            Subsidiaries .   The Company does not own or control, directly or indirectly, any interest in any other company or subsidiary and none of them is a participant in any joint venture, partnership or similar arrangement.

2.9            Disclosure .   No representation or warranty of the Company contained in this Agreement, any certificate or document furnished or to be furnished to the Investors at the Initial or Subsequent Closing or the Financial Statements contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statement contained herein or therein not misleading in light of the circumstances under which they were made.

2.10            Rights of Others Affecting the Transactions .   There are no preemptive rights of any shareholder of the Company, as such, to acquire the Notes or any shares of stock that may be issued to the Investors or its designees in connection with any agreements between the parties hereto.  No party other than an Investor has a currently exercisable right of first refusal which would be applicable to any or all of the transactions contemplated by the Loan Documents.

2.11            Non-contravention .   The execution and delivery of this Agreement and each of the other Loan Documents by the Company, the issuance of the Securities, and the consummation by the Company of the transactions contemplated by this Agreement and each of the other Loan Documents do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the certificate of incorporation or by-laws of the Company, each as currently in effect, (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, including any listing agreement for the Common Stock except as herein set forth, or (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse Effect.

2.12            Filings .   None of the Company’s SEC Documents contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein in light of the circumstances under which they were made, not misleading.  Except for its Annual Report for the year ended September 30, 2008, since August 19, 2008, the Company has timely filed all requisite forms, reports and exhibits thereto, if any, required to be filed by the Company with the SEC.

2.13            Absence of Certain Changes .   Since the Last Audited Date, there has been no material adverse change and no Material Adverse Effect, except as disclosed in the Company’s SEC Documents. Since the Last Audited Date, except as provided in the Company’s SEC Documents, the Company has not (i) incurred or become subject to any material liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business consistent with past practices; (ii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (iii) declared or made any payment or distribution of cash or other property to shareholders with respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or transferred any other tangible assets, or canceled any debts owed to the Company by any third party  or claims of the Company against any third party, except in the ordinary course of business consistent with past practices; (v) waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of existing business; (vi) made any increases in employee compensation, except in the ordinary course of business consistent with past practices; or (vii) experienced any material problems with labor or management in connection with the terms and conditions of their employment.

2.14            Absence of Litigation .   There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any governmental authority or nongovernmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, any of the Loan Documents.  The Company is not aware of any valid basis for any such claim that (either individually or in the aggregate with all other such events and circumstances) could reasonably be expected to have a Material Adverse Effect. There are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to which the Company is a party or by which it or any of its properties is bound, that involve the transaction contemplated herein or that, alone or in the aggregate, could reasonably be expect to have a Material Adverse Effect.

2.15            Absence of Events of Default .   The Company is not in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material indenture, mortgage, deed of trust or other material agreement to which it is a party or by which its property is bound, and (ii) no Event of Default (or its equivalent term), as defined in the respective agreement to which the Company is a party, and no event which, with the giving of notice or the passage of time or both, would become an Event of Default (or its equivalent term) (as so defined in such agreement), has occurred and is continuing, which would have a Material Adverse Effect.

2.16            No Undisclosed Liabilities or Events .   To the best of the Company’s knowledge, the Company has no liabilities or obligations other than those disclosed in the Loan Documents or the Company's SEC Documents or those incurred in the ordinary course of the Company's business since the Last Audited Date, or which individually or in the aggregate, do not or would not have a Material Adverse Effect. No event or circumstances has occurred or exists with respect to the Company or its properties, business, operations, condition (financial or otherwise), or results of operations, which, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed.  There are no proposals currently under consideration or currently anticipated to be under consideration by the Board of Directors or the executive officers of the Company which proposal would (x) change the articles or certificate of incorporation or other charter document or by-laws of the Company, each as currently in effect, with or without shareholder approval, which change would reduce or otherwise adversely affect the rights and powers of the shareholders of the Common Stock or (y) materially or substantially change the business, assets or capital of the Company, including its interests in subsidiaries.

2.17            No Integrated Offering .   Neither the Company nor any of its Affiliates nor any Person acting on its or their behalf has, directly or indirectly, at any time since February 12, 2008, made any offer or sales of any security or solicited any offers to buy any security under circumstances that would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale of the Securities as contemplated hereby.

2.18            Fees to Brokers, Finders and Others .   Except as specifically contemplated in this Agreement, the Company has taken no action which would give rise to any claim by any Person for brokerage commission, finder's fees or similar payments by the Investors relating to this Agreement or the transactions contemplated hereby.  Investors shall have no obligation with respect to any such fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this paragraph that may be due in connection with the transactions contemplated hereby.  The Company shall indemnify and hold harmless each Investor, its employees, officers, directors, agents, and partners, and their respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered in respect of any such claimed or existing fees, as and when incurred.

2.19            Full Disclosure .   To the best of the Company’s knowledge, there is no fact known to the Company (other than general economic conditions known to the public generally or as disclosed in the Company’s SEC Documents) that has not been disclosed in writing to the Investors that would reasonably be expected to have or result in a Material Adverse Effect.

2.20            Confirmation .   The Company confirms that all statements of the Company contained herein shall survive acceptance of this Agreement by the Investors.  The Company agrees that, if any events occur or circumstances exist prior to the Subsequent Closing Date which would make any of the Company’s representations, warranties, agreements or other information set forth herein materially untrue or materially inaccurate as of such date, the Company shall immediately notify the Investors in writing prior to such date of such fact, specifying which representation, warranty or covenant is affected and the reasons therefor.

A breach of any of the representations and warranties in this section, shall be deemed a material breach of this Agreement and shall constitute an Event of Default (as defined in the Loan Documents) and the Investors shall be entitled to exercise all remedies available to them under the Loan Documents.

3.            Representations and Warranties of the Investors .   Each of the Investors hereby severally represents and warrants to the Company as to itself that:

3.1            Authorization .   The Investor has full power and authority to enter into this Agreement.  This Agreement, when executed and delivered by the Investor, assuming due execution and delivery by the other parties hereto, will constitute a valid and legally binding obligation of the Investor, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies.

3.2            Accredited Investor .   The Investor is (i) an “accredited investor” as that term is defined in Rule 501 of the General Rules and Regulations under the Securities Act, (ii) experienced in making investments of the kind described in this Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its Affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and to evaluate the merits and risks of an investment in the Securities, and (iv) able to afford the entire loss of its investment in the Securities.

3.3            Restricted Securities .   The Investor understands that the Notes and the Restricted Stock are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Investor must hold the Notes indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available.

4.            Miscellaneous .

           4.1            Registration Rights .  Each time the Company proposes to register any of its securities under the Securities Act whether for its own account or for the account of holders of its securities or both (except with respect to registration statements on Forms S-4, S-8 or any successor or similar form or “Rule 145” transactions), it shall include in the registration initiated by the Company (i) all of the shares of Restricted Stock issued to the Investors under any Loan Documents and (ii) all shares of Common Stock into which the Notes may be convertible or have been converted (collectively, " Registrable Stock ").  If any particular registration to be effected pursuant to this Section 4.1 shall be, in whole or in part, an underwritten public offering of Common Stock for the account of the Company, the number of shares of Registrable Stock to be included in such an underwriting on behalf of the Investor may be reduced if, and to the extent that, the managing underwriter shall be of the opinion (a written copy of which shall be delivered to the Investor) that the inclusion of all of the shares of Registrable Stock requested to be included in such underwriting by the Investor would materially and adversely affect the marketing of the Common Stock to be sold by the Company under such registration statement.  The Company shall comply with all legal requirements to maintain “evergreen” any registration statement that includes any Registrable Stock for so long as any Notes are outstanding or any Registrable Stock is outstanding that has not yet been sold thereunder.

4.2            Use of Proceeds .   The parties agree that the net proceeds from the issuance of the Notes will be used as set forth on Schedule 4.2 .

4.3            Certain Agreements and Covenants .   The Company hereby covenants with the Investors that (i) an agreement with a market awareness firm to perform investor and public relations services for the Company shall be entered into by the Company on or prior to February 27, 2009 and shall remain in full force and effect until the Notes have been repaid in full, (ii) that the Company’s cancelled Agreement and Plan of Merger with SolCool One, LLC dated November 26, 2008 will be re-entered into by the Initial Closing Date and closed subsequent thereto as soon as reasonably possible, (iii) that all other items listed as “Conditions to Closing” pursuant to that certain Term Sheet among the parties hereto and dated January 26, 2009 have been or will be delivered to the Investors on or prior to the Subsequent Closing Date and (iv) that the Company shall, if requested by any Investor, deliver to the Investors a legal opinion of Company counsel, such counsel and opinion as are acceptable to the Investors, on or prior to the Subsequent Closing, which opinion shall be with respect to such matters as such Investor may request.

(a) Authorization of Action .  Each Investor hereby appoints and authorizes Agile Opportunity Fund, LLC  (the “Agent”) to be its agent in its name and on its behalf and to exercise such rights or powers granted to the Agent or the Investors (i) under the Loan Documents to the extent specifically provided therein and on the terms thereof, together with such rights, powers and discretions as are reasonably incidental thereto.  As to any matters not expressly provided for by the Loan Documents, the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Investors, and any action so taken or not so taken by the Agent shall be binding upon all the Investors; provided , however , that the Agent shall not be required to take any action which exposes the Agent to liability in such capacity, which could result in the Agent incurring any costs and expenses or which is contrary to this Agreement or applicable law.

(b) Indemnification .  Each Investor hereby agrees to indemnify and hold harmless the Agent from and against any and all liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent (in its capacity as agent for the Investors) in any way relating to or arising out of the Loan Documents or any action taken or admitted by the Agent under or in respect of the Loan Documents; provided that no Investor shall be liable for any portion of such liabilities, obligations, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s gross negligence or willful misconduct.  Without limiting the generality of the foregoing, each Investor agrees to reimburse the Agent promptly upon demand on a pro rata basis in accordance with the then outstanding indebtedness, liabilities and obligations owing to such Investor by the Company in respect of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preservation of any rights of the Agent or the Investors under, the enforcement of, or legal advice in respect of the rights or responsibilities under, the Loan Documents, to the extent that the Agent is not reimbursed for such expenses by the Company.

(c) Successor Agent .  The Agent may, as hereinafter provided, resign at any time by giving not less than 30 days’ written notice thereof to the Investors and the Company. Upon any such resignation, the Investors shall have the right to appoint a successor Agent (the “ Successor Agent ”).  Upon the acceptance of any appointment as Agent hereunder by a Successor Agent, such Successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall thereupon be discharged from its further duties and obligations as Agent under the Loan Documents. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents.   Absent such a resignation by the Agent, the Agent’s appointment shall continue until revoked in writing by Investors holding 75% of the outstanding principal amount of the Notes, at which time such Investors shall appoint a new Agent.

(d) Taking and Enforcement of Remedies .  Each of the Investors hereby acknowledges that, to the extent permitted by applicable law, the remedies provided under the Loan Documents to the Investors are for the benefit of the Investors collectively and acting together and not severally and further acknowledges that its rights under the Loan Documents are to be exercised not severally, but collectively by the Agent upon the decision of the Investors; accordingly, notwithstanding any of the provisions contained in any of the Loan Documents, each of the Investors hereby covenants and agrees that it shall not be entitled to take any action with respect to the Loan Documents, including, without limitation, any acceleration of the indebtedness, liabilities or obligations of the Company, but that any such action shall be taken only by the Agent with the consent of the Investors, provided that, notwithstanding the foregoing:

(i)           in the absence of instructions from the Investors, the Agent may without notice to or consent of the Investors take such action on behalf of the Investors as it deems appropriate or desirable in the interest of the Investors;

(ii)           the commencement of litigation before any court shall be made in the name of each Investor individually unless the laws of the jurisdiction of such court permit such litigation to be commenced in the name of the Agent on behalf of the Investors (whether pursuant to a specific power of attorney in favor of the Agent or otherwise) and the Agent agrees to commence such litigation in its name; provided , however , that no litigation shall be commenced in the name of any Investor without the prior written consent of such Investor; and

(iii)          each of the Investors hereby further covenants and agrees that upon any such written consent being given by the Investors, they shall co-operate fully with the Agent to the extent requested by the Agent in the collective realization, including, without limitation, the appointment of a receiver and manager to act for their collective benefit; and each Investor covenants and agrees to do all acts and things to make, execute and deliver all agreements and other instruments, including, without limitation, any instruments necessary to effect any registrations, so as to fully carry out the intent and purpose of this Section; and each of the Investors hereby covenants and agrees that it has not heretofore and shall not seek, take, accept or receive any security for any of the obligations and liabilities of the Company under the Loan Documents or under any other document, instrument, writing or agreement ancillary thereto other than such security as is provided hereunder and shall not enter into any agreement with the Company relating in any manner whatsoever to the transactions contemplated hereunder, unless all of the Investors shall at the same time obtain the benefit of any such security or agreement, as the case may be.

Notwithstanding any other provision contained in the Loan Documents, no Investor shall be required to be joined as a party to any litigation commenced against the Company by the Agent under the Loan Documents (unless otherwise required by any court of competent jurisdiction) if it elects not to be so joined in which event any such litigation shall not include claims in respect of the rights of such Investor against the Company under the Loan Documents until such time as such Investor does elect to be so joined; provided that if at the time of such subsequent election it is not possible or practicable for such Investor to be so joined, then such Investor may commence proceedings in its own name in respect of its rights against the Company.

4.4            Successors and Assigns .   This Agreement may not be assigned by the Company without the prior written consent of the Investors.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.  This Agreement may be assigned by each of the Investors without the prior consent of the Company.

4.5            Governing Law .   This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law.  Each of the parties hereto submits to the personal jurisdiction of and each agrees that all proceedings relating hereto shall be brought in federal or state courts located within New York County in the State of New York.

4.6            Counterparts .   This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

4.7            Titles and Subtitles .   The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

4.8            Notices .   Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by fax (upon customary confirmation of receipt), or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page hereto, or as subsequently modified by written notice, and if to any of the Investors, with a copy to Westerman Ball Ederer Miller and Sharfstein, LLP, 170 Old Country Road, Suite 400, Mineola, New York 11501, Attn: Alan C. Ederer, Esq., and if to the Company, with a copy to Seyfarth Shaw LLP, 975 F Street, N.W., Washington, D.C. 20004, Attn: Ernest M. Stern, Esq.

4.9            Confidentiality .   This Agreement and each of the Loan Documents is confidential, and none of their provisions or terms shall be disclosed to anyone who is not an Investor or an officer or director of the Company or their agents, advisers, investors or legal counsel, unless required by law.  Further, prior to any time that the Company discloses the existence of this Agreement, any of the Loan Documents or any of their contents as may be required by law, including pursuant to securities laws, Agile shall be provided an advance copy of the proposed disclosure and an opportunity to comment thereon and the Company shall use its best efforts to incorporate Agile’s comments thereon, if any, in such disclosure.

4.10          Reimbursement of Expenses .   The Company shall reimburse the Investors for any reasonable legal fees and disbursements incurred by the Investors in enforcement of or protection of any of its rights under this Agreement, any of the Notes or any other Loan Document.

4.11          Entire Agreement .   This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled unless specifically incorporated herein.  This Agreement may be modified or amended only with the written consent of all of the parties hereto.

IN WITNESS WHEREOF, the parties have duly executed this Securities Purchase Agreement as of the date first written above.