Re: Settlement of Obligations and Release by and between Hydrogen Power, Inc. (?HPI?) and Henry Fong, Gulfstream Financial Partners, LLC (?Gulfstream?), and Beacon Investments, Inc. (?Beacon?)

Henry Fong

309 Clematis Street, Suite 803

West Palm Beach, FL 33401

This letter reflects the understanding between you, Gulfsteam and Beacon, on one hand, and HPI, on the other hand, regarding the payment by HPI of its outstanding obligations to such parties. As of December 29, 2006, HPI acknowledges that it has debt obligations to you and Gulfstream and Beacon, two wholly owned affiliates of yours, in the aggregate amount of $653,500 in principal and interest (the “Obligations”). In full satisfaction of the Obligations, HPI has agreed to, on the date of your execution and delivery of this letter to HPI:

1.    Issue and deliver to you 100,000 fully paid and non-assessable shares of HPI’s common stock (the “Shares”). HPI further agrees that it will register the resale of the Shares on the next registration statement (other than any regi