Exhibit 10.5


 


NEONODE INC.


NOTICE OF GRANT OF OPTION


 


The Participant has been granted an option (the “Option”)
to purchase certain Shares of Neonode Inc. (the “Company”) pursuant to the Neonode Inc. 2015 Stock Incentive
Plan (the “Plan”), as follows:


 


	Participant:	_______________________
	Date of Grant:	_______________________
	Number of Option Shares:	_______________________
	Exercise Price:	$_______________________
	Initial Vesting Date:	The date one (1) year after [vesting commencement date]
	Option Expiration Date:	The date ten (10) years after the Date of Grant
	Tax Status of Option:	_______________Stock
Option.  (Enter “Incentive” or “Nonstatutory.”  If blank, this Option will be a Nonstatutory
Stock Option.)
	Vested Shares:	Except as provided in the Award Agreement, the number of Vested Shares (disregarding any resulting fractional share) as of any date is determined by multiplying the Number of Option Shares by the “Vested Ratio” determined as of such date as follows:
	 	 	Vested Ratio
	 	On Initial Vesting Date, provided the Participant’s Service has not terminated prior to such date	

[1/4]
	 	Plus	 
	 	For each additional full month of the Participant’s continuous Service from Initial Vesting Date until the Vested Ratio equals 1/1, an additional	



[1/48]


 


Capitalized terms not defined herein shall have the
meaning as set forth in the Stock Incentive Plan.


 


Upon termination of Participant’s Service, any
portion of the Option that is not vested and exercisable as of such date of termination shall automatically expire in accordance
with the Award Agreement.


 


The Exercise Price represents an amount the Company
believes to be no less than the fair market value of a Share as of the Date of Grant, determined in good faith in compliance with
the requirements of Section 409A of the Code. However, there is no guarantee that the Internal Revenue Service will agree with
the Company’s determination. A subsequent IRS determination that the Exercise Price is less than such fair market value could
result in adverse tax consequences to the Participant. By signing below, the Participant agrees that the Company, its Directors,
Officers and stockholders shall not be held liable for any tax, penalty, interest or cost incurred by the Participant as a result
of such determination by the IRS. The Participant is urged to consult with his or her own tax advisor regarding the tax consequences
of the Option, including the application of Section 409A.


 


By their signatures below, the Company and the Participant
agree that the Option is governed by this Grant Notice and by the provisions of the Plan and the Award Agreement, both of which
are attached to and made a part of this document. The Participant acknowledges receipt of copies of the Plan and the Award Agreement,
represents that the Participant has read and is familiar with their provisions, and hereby accepts the Option subject to all of
their terms and conditions.


 


	NEONODE INC.	PARTICIPANT
	 	 
	By:
_______________________	
_______________________
	 	Signature
	Its:

_______________________	
_______________________
	 	Date
	Address:	 	
_______________________
	 	 	Address
	 	 	
_______________________


ATTACHMENTS: Neonode
Inc. 2015 Stock Incentive Plan, as amended to the Date of Grant; Award Agreement and Exercise Notice


 






     

     

    

 





NEONODE inc.


OPTION AWARD AGREEMENT


 


Neonode Inc. has granted to the Participant named in
the Notice of Grant of Option (the “Grant Notice”) to which this Award Agreement is attached an
Option to purchase certain Shares of Stock upon the terms and conditions set forth in the Grant Notice and this Award Agreement.
The Option has been granted pursuant to and shall in all respects be subject to the terms and conditions of the Neonode Inc. 2015
Stock Incentive Plan (the “Plan”), as amended to the Date of Grant, the provisions of which are incorporated
herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant
has read and is familiar with the terms and conditions of, the Grant Notice, this Award Agreement and the Plan, (b) accepts the
Option subject to all of the terms and conditions of the Grant Notice, this Award Agreement and the Plan, and (c) agrees to accept
as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Grant Notice,
this Award Agreement or the Plan.


 


 1.          Definitions and Construction.




 


1.1.        Definitions.
Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.


 


1.2.        Construction.
Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision
of this Award Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural
shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.


 


 2.          Tax Consequences.




 


2.1.        Tax
Status of Option. This Option is intended to have the tax status designated in the Grant Notice.


 


a.        Incentive Stock Option. If the Grant Notice so designates, this Option is intended to be an Incentive Stock Option
within the meaning of Section 422(b) of the Code, but the Company does not represent or warrant that this Option qualifies as such.
The Participant should consult with the Participant’s own tax advisor regarding the tax effects of this Option and the requirements
necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period
requirements. (NOTE TO PARTICIPANT: If the Option is exercised more than three (3) months after the date on which you cease to
be an Employee (other than by reason of your death or permanent and total disability as defined in Section 22(e)(3) of the Code),
the Option will be treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required by Section
422 of the Code.)


 


b.        Nonstatutory
Stock Option. If the Grant Notice so designates, this Option is intended to be a Nonstatutory Stock Option and shall not
be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code.


 



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2.2        ISO Fair Market
Value Limitation. If the Grant Notice designates this Option as an Incentive Stock Option, then to the extent that the
Option (together with all Incentive Stock Options granted to the Participant under all stock plans of the Participating Company
Group, including the Plan) becomes exercisable for the first time during any calendar year for shares of Stock having a Fair Market
Value greater than One Hundred Thousand Dollars ($100,000), the portion of such Options which exceeds such amount will be treated
as Nonstatutory Stock Options. For purposes of this Subsection 2.2, options designated as Incentive Stock Options are taken into
account in the order in which they were granted, and the Fair Market Value of Stock is determined as of the time the option with
respect to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this Subsection
2.2, such different limitation shall be deemed incorporated herein effective as of the date required or permitted by such amendment
to the Code. If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason
of the limitation set forth in this Subsection 2.2, the Participant may designate which portion of such Option the Participant
is exercising. In the absence of such designation, the Participant shall be deemed to have exercised the Incentive Stock Option
portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option.
(NOTE TO PARTICIPANT: If the aggregate Exercise Price of the Option (that is, the Exercise Price multiplied by the Number of Option
Shares) plus the aggregate exercise price of any other Incentive Stock Options you hold (whether granted pursuant to the Plan or
any other stock plan of the Participating Company Group) is greater than $100,000, you should contact the Chief Financial Officer
of the Company to ascertain whether the entire Option qualifies as an Incentive Stock Option.)


 


2.3        Notice
of Sales Upon Disqualifying Disposition.
The Participant shall dispose of the shares of Stock acquired pursuant
to the Option only in accordance with the provisions of this Award Agreement. In addition, if the Grant Notice designates this
Option as an Incentive Stock Option, the Participant shall (a) promptly notify the stock plan administrator for the Company
if the Participant disposes of any of the shares of Stock acquired pursuant to the Option within one (1) year after the date the
Participant exercises all or part of the Option or within two (2) years after the Date of Grant and (b) provide the Company with
a description of the circumstances of such disposition. Until such time as the Participant disposes of such shares of Stock in
a manner consistent with the provisions of this Award Agreement, unless otherwise expressly authorized by the Company, the Participant
shall hold all shares of Stock acquired pursuant to the Option in the Participant’s name (and not in the name of any nominee)
for the one-year period immediately after the exercise of the Option and the two-year period immediately after Date of Grant.
At any time during the one-year or two-year periods set forth above, the Company may place a legend on any certificate representing
shares of Stock acquired pursuant to the Option requesting the transfer agent for the Company’s stock to notify the Company
of any such transfers. The obligation of the Participant to notify the Company of any such transfer shall continue notwithstanding
that a legend has been placed on the certificate pursuant to the preceding sentence.


 



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3.          Exercise
of the Option.


 


3.1        Right to Exercise.
Except as otherwise provided herein, the Option shall be exercisable on and after the Initial Vesting Date and prior to the termination
of the Option in an amount not to exceed the number of Vested Shares less the number of shares previously acquired upon exercise
of the Option.


 


3.2        Method of Exercise.
Exercise of the Option shall be by means of electronic or written notice (the “Exercise Notice”) in a
form authorized by the Company. An electronic Exercise Notice must be digitally signed or authenticated by the Participant in such
manner as required by the notice and transmitted to the Company or an authorized representative of the Company (including a third-party
administrator designated by the Company). In the event that the Participant is not authorized or is unable to provide an electronic
Exercise Notice, the Option shall be exercised by a written Exercise Notice addressed to the Company, which shall be signed by
the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission,
or by such other means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party
administrator designated by the Company). Each Exercise Notice, whether electronic or written, must state the Participant’s
election to exercise the Option, the number of shares of Stock for which the Option is being exercised and such other representations
and agreements as to the Participant’s investment intent with respect to such shares of Stock as may be required pursuant
to the provisions of this Award Agreement. Further, each Exercise Notice must be received by the Company prior to the termination
of the Option as set forth in Section 4 and must be accompanied by full payment of the aggregate Exercise Price for the number
of shares of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Company of such electronic or
written Exercise Notice and the aggregate Exercise Price.


 


3.3        Payment of Exercise
Price.


 


a.        Forms of Consideration
Authorized. Forms of Consideration Authorized. Except as otherwise provided below, payment of the exercise price for the
number of shares of Stock being purchased pursuant to any Option shall be made (i) in cash, by check or in cash equivalent, (ii)
by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Participant having a Fair Market Value
not less than the exercise price, (iii) by delivery of a properly executed notice of exercise together with irrevocable instructions
to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares
being acquired upon the exercise of the Option (including, without limitation, through an exercise complying with the provisions
of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “Cashless
Exercise”), or (iv) by such other consideration as may be approved by the Board from time to time to the extent permitted
by applicable law, or (v) by any combination thereof. The Board may at any time or from time to time grant Options which do not
permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one
or more forms of consideration.


 



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3.4        Tax Withholding.


 


(a)        In
General. At the time the Award Agreement is executed, or at any time thereafter as requested by the Company, the Participant
hereby authorizes withholding from payroll and any other amounts payable
to the Participant, and
otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company, if any, which arise in connection with the grant, vesting or exercise of the Option or the issuance
of shares of Stock in settlement thereof. The Company shall have no obligation to deliver shares of Common Stock until the tax
obligations of the Company have been satisfied by the Participant.


 


(b)        Withholding
in Securities. The Company may, in its discretion, permit or require the Participant to satisfy all or any portion of
the tax obligations by deducting from the shares of Stock otherwise deliverable to the Participant in settlement of the Option
a number of shares of Stock having a fair market value, as determined by the Company as of the date on which the tax obligations
arise, not in excess of the amount of such tax obligations determined by the applicable withholding rates. In the event that the
Company determines that the tax obligations will not be satisfied by the method described above, Participant authorizes the designated
plan administrator or any successor plan administrator, to sell a number of shares of Stock that are purchased under the Option,
which the Company determines is sufficient to generate an amount that meets the tax obligations plus additional shares of Stock,
as necessary. To account for rounding and market fluctuation, and to pay such tax withholding amounts to the Company. The shares
of Stock may be sold as part of a block trade with other Participants of the Plan in which all Participants receive an average
price. Any adverse consequences to the Participant resulting from the procedure permitted under this Subsection 3.4(b) including,
without limitation, tax consequences, shall be the sole responsibility of the Participant.


 


(c)        Consultation. The Participant
hereby acknowledges that he or she understands that the Participant may suffer adverse tax consequences as a result of the Participant’s
exercise of the Option or disposition of the Stock. The Participant hereby represents that the Participant has consulted with any
tax consultants the Participant deems advisable in connection with the exercise of the Option or disposition of the Stock and that
the Participant is not relying on the Company for any tax advice.


 


3.5        Beneficial Ownership
of Stock; Certificate Registration. The Participant hereby authorizes the Company, in its sole discretion, to deposit for
the benefit of the Participant with any broker with which the Participant has an account relationship of which the Company has
notice any or all shares of Stock acquired by the Participant pursuant to the exercise of the Option. Except as provided by the
preceding sentence, a certificate for the Stock as to which the Option is exercised shall be registered in the name of the Participant,
or, if applicable, in the names of the heirs of the Participant.


 


4.          Termination
of the Option.


 


The Option shall terminate and may no longer
be exercised after the first to occur of (a) the close of business on the Option Expiration Date, (b) the close of business on
the last date for exercising the Option following termination of the Participant’s Service as described in Section 5, or
(c) a Change in Control to the extent provided in Section 6.


 



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5.           Effect
of Termination of Service.


 


5.1        Option Exercisability.
The Option shall terminate immediately upon the Participant’s termination of Service to the extent that it is then unvested
and shall be exercisable after the Participant’s termination of Service to the extent it is then vested only during the applicable
time period as determined below and thereafter shall terminate.


 


a.        Disability.
If the Participant’s Service terminates because of the Disability of the Participant, the Option, to the extent unexercised
and exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant
(or the Participant’s guardian or legal representative) at any time prior to the expiration of twelve (12) months after the
date on which the Participant’s Service terminated, but in any event no later than the Option Expiration Date.


 


b.        Death.
If the Participant’s Service terminates because of the death of the Participant, the Option, to the extent unexercised and
exercisable for Vested Shares on the date on which the Participant’s Service terminated, may be exercised by the Participant’s
legal representative or other person who acquired the right to exercise the Option by reason of the Participant’s death at
any time prior to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but
in any event no later than the Option Expiration Date. The Participant’s Service shall be deemed to have terminated on account
of death if the Participant dies within three (3) months after the Participant’s termination of Service.


 


c.        Termination for
Cause. Notwithstanding any other provision of this Award Agreement, if the Participant’s Service is terminated for
Cause, the Option shall terminate and cease to be exercisable immediately upon such termination of Service.


 


d.        Other Termination
of Service. If the Participant’s Service terminates for any reason, except Disability, death or Cause, the Option,
to the extent unexercised and exercisable for Vested Shares by the Participant on the date on which the Participant’s Service
terminated, may be exercised by the Participant at any time prior to the expiration of three (3) months after the date on which
the Participant’s Service terminated, but in any event no later than the Option Expiration Date.


 


5.2        Extension if
Exercise Prevented by Law. Notwithstanding the foregoing other than termination of Service for Cause, if the exercise of
the Option within the applicable time periods set forth herein is prevented by Applicable Law, the Option shall remain exercisable
until the later of (a) thirty (30) days after the date such exercise first would no longer be prevented by such provisions or (b)
the end of the applicable time period under Subsection 5.1, but in any event no later than the Option Expiration Date.


 



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6.           Effect
of Change in Control.


 


In the event of a Change in Control, the surviving,
continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “Acquiror”),
may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations
under all or any portion of the Option or substitute for all or any portion of the Option a substantially equivalent option for
the Acquiror’s stock. For purposes of this Section 8, the Option or any portion thereof shall be deemed assumed if, following
the Change in Control, the Option confers the right to receive, subject to the terms and conditions of the Plan and this Award
Agreement, for each share of Stock subject to such portion of the Option immediately prior to the Change in Control, the consideration
(whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective
date of the Change in Control was entitled; provided, however, that if such consideration is not solely common stock of the Acquiror,
the Board may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Option for
each Share to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received
by holders of Stock pursuant to the Change in Control. If any portion of such consideration may be received by holders of Stock
pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its discretion, determine such Fair Market
Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value
of the probable future payment of such consideration. The Option shall terminate and cease to be outstanding effective as of the
time of consummation of the Change in Control to the extent that the Option is neither assumed or continued by the Acquiror in
connection with the Change in Control nor exercised as of the date of the Change in Control. Notwithstanding the foregoing, Stock
acquired upon exercise of the Option prior to the Change in Control and any consideration received pursuant to the Change in Control
with respect to such Stock shall continue to be subject to all applicable provisions of this Award Agreement except as otherwise
provided herein.


 


7.          Miscellaneous
Provisions.


 


7.1        Compliance with
Section 409A. The Company intends that income realized by the Participant pursuant to the Plan and this Award Agreement
will not be subject to taxation under Section 409A of the Code. The provisions of the Plan and this Award Agreement shall be interpreted
and construed in favor of satisfying any applicable requirements of Section 409A of the Code. The Company, in its reasonable discretion,
may amend (including retroactively) the Plan and this Agreement in order to conform to the applicable requirements of Section 409A
of the Code, including amendments to facilitate the Participant’s ability to avoid taxation under Section 409A of the Code.
However, the preceding provisions shall not be construed as a guarantee by the Company of any particular tax result for income
realized by the Participant pursuant to the Plan or this Award Agreement. In any event, no Participating Company shall be responsible
for the payment of any applicable taxes on income realized by the Participant pursuant to the Plan or this Award Agreement.


 


7.2        Further Instruments.
The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Award Agreement.


 


7.3        Binding Effect.
Subject to the restrictions on transfer set forth herein, this Award Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators, successors and assigns.


 


7.4        Integrated Agreement.
The Grant Notice, this Award Agreement and the Plan, together with any employment, service or other agreement with the Participant
and a Participating Company referring to the Option, shall constitute the entire understanding and agreement of the Participant
and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements,
understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect
to such subject matter. To the extent contemplated herein or therein, the provisions of the Grant Notice, the Award Agreement and
the Plan shall survive any exercise of the Option and shall remain in full force and effect.


  


7.5        Applicable Law.
This Award Agreement shall be governed by the laws of the State of Delaware as such laws are applied to agreements between Delaware
residents entered into and to be performed entirely within the State of Delaware.


 


7.6        Counterparts.
The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.







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	__Incentive
    Stock Option 	 	Participant:_______________________
	__Nonstatutory
    Stock Option	 	 






 


Date: ______________________________


 


OPTION EXERCISE NOTICE


Neonode Inc.


Attention: ________________


 


Ladies and Gentlemen:


 


1.           Option. I was granted an option
(the “Option”) to purchase shares of the common stock (the “Stock”) of Neonode
Inc. (the “Company”) pursuant to the Company’s Stock Incentive Plan (the “Plan”),
my Notice of Grant of Option (the “Grant Notice”) and my Award Agreement as follows:


 





	 	Date
    of Grant:	______________________________
	 	Number
    of Option Shares: 	______________________________
	 	Exercise
    Price per Share:	$
    _____________________________



 











 


2.            Exercise
of Option. I hereby elect to exercise the Option to purchase the following number of shares of Stock, all of which are
Vested Shares, in accordance with the Grant Notice and the Award Agreement:


 





	 	Total
    Shares Purchased:	 _____________________________
	 	Total
    Exercise Price (Total Shares X Price per Share)	$
    _____________________________



 


3.            Payments.
I enclose payment in full of the total exercise price for the Stock in the following form(s), as authorized by my Award Agreement:


 





	 	__
    Cashless Exercise	
	 	__
    Cash / Check: 	$_____________________________
	 	__
    Tender of Company Stock: 	Contact
    Plan Administrator



 


4.            Tax
Withholding. I authorize payroll withholding, net-share withholding and otherwise will make adequate provision for the
federal, state, local and foreign tax withholding obligations of the Company, if any, in connection with the Option.


 


5.            Participant
Information.


 





	 	My
    address is:	_____________________________
	 	My
    Social Security Number is:	_____________________________ 



 


6.            Notice of Disqualifying Disposition.
If the Option is an Incentive Stock Option, I agree that I will promptly notify the Chief Financial Officer of the Company if I
transfer any of the Stock within one (1) year from the date I exercise all or part of the Option or within two (2) years of the
Date of Grant.


 


7.            Tax Consultation. I hereby
acknowledge that I understand that I may suffer adverse tax consequences as a result of my purchase or disposition of the Stock.
I hereby represent that I am not relying on the Company for any tax advice.


 


8.            Binding Effect. I understand
that I am purchasing the Shares pursuant to the terms of the Plan, the Grant Notice and my Award Agreement, copies of which I have
received and carefully read and understand. This Agreement shall inure to the benefit of and be binding upon my heirs, executors,
administrators, successors and assigns.


 





	 	Very truly yours,
	 	_____________________________
	 	(Signature)



 


Receipt of the above is hereby acknowledged.


Neonode Inc.


 





	By:	_____________________________	 
	Title:	_____________________________	 
	Dated:	_____________________________	 









 


 


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