AMENDMENT
      NO. 2 TO SECURITY AGREEMENT




THIS
      AMENDMENT NO. 2 dated as of January  ,
      2007
      (this “ Amendment ”)
      to the
      Security Agreement dated as of February 28, 2006, as amended from time to time
      (the “ Security
      Agreement ”),
      by
      and between Neonode, Inc., a Delaware corporation (the “ Grantor ”),
      and
      AIGH Investment Partners, LLC, a Delaware limited liability company, or assigns,
      as agent for the Investors (as defined in the Security Agreement) (the
“ Secured
      Party ”).




W
      I T N E
      S S E T H :




WHEREAS,
      capitalized terms not otherwise defined in this Amendment shall have the meaning
      set forth in the Security Agreement;




WHEREAS,
      the Grantor on February 28, 2006, borrowed an aggregate principal amount of
      $4,000,000 pursuant to senior secured notes (the “ First
      Round Notes ”)
      from
      the Secured Party and other Investors (collectively, in this capacity, the
      “ First
      Round Investors ”);




WHEREAS,
      the Grantor on November 20, 2006, borrowed an aggregate principal amount of
      $1,000,000 pursuant to senior secured notes on substantially the same terms
      as
      the First Round Notes (collectively, with the First Round Notes, the
“ Old
      Notes ”)
      from
      the Secured Party and other Investors (collectively, in this capacity, the
      “ Second
      Round Investors ”)
      and
      together with the First Round Investors, the “ Existing
      Investors ”);




WHEREAS,
      the Grantor intends to sell additional senior secured notes to the Existing
      Investors and to other investors (the “ New
      Notes ”)
      in an
      aggregate principal amount of up to $5,000,000 (the “ Offering ”),
      in
      substantially the form attached as Exhibit
      1 to that
      certain Note Purchase Agreement, dated January 22, 2007 (the “ Note
      Purchase Agreement ”),
      among
      the Grantor, the Secured Party and those persons who execute the Note Purchase
      Agreement from time to time as a purchaser of the New Notes (collectively,
      in
      this capacity, the “ New
      Investors ”);
      and




WHEREAS,
      the Existing Investors intend to exchange the Old Notes for amended and restated
      notes of similar tenor to the New Notes (the “ Amended
      and Restated Notes ”)
      pursuant to the terms of that certain Bridge Note Exchange Agreement, dated
      as
      of January 22, 2007, by and among the Grantor and the Existing Investors;
      and




WHEREAS,
      the parties hereto wish to amend the Security Agreement to add as Obligations
      the obligations of the Grantor under the Amended and Restated Notes and the
      New
      Notes.




NOW,
      THEREFORE, in consideration of the mutual covenants contained herein and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties to the Security Agreement hereby agree as
      follows:




SECTION
      1.  Amendments
      to the Security Agreement .
      The
      Security Agreement is hereby amended, effective upon completion of the purchase
      from time to time of any New Notes, as follows:







(a)  Schedule
      I to the
      Security Agreement is hereby amended to be and read in its entirety as Schedule
      I attached
      to this Amendment.




(b)  The
      parties hereto agree that the Obligations under the Security Agreement include
      the obligations of the Grantor under the Amended and Restated Notes and the
      New
      Notes; provided that the aggregate principal amount of the Amended and Restated
      Notes together with the aggregate principal amount of the New Notes does not
      exceed $10,000,000.




(c)  The
      parties hereto agree that the New Notes shall be pari passu with the Amended
      and
      Restated Notes.




SECTION
      2.  Effect
      of Amendment .
      Except
      as expressly provided in this Amendment, each of the terms and provisions of
      the
      Security Agreement shall remain in full force and effect.




SECTION
      3.  Counterparts .
      This
      Amendment may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original, but all of which taken together shall constitute
      one
      and the same instrument.




IN
      WITNESS WHEREOF, the Grantor and the Second Party have caused this Amendment
      to
      be duly executed and delivered by a duly authorized representative as of the
      date first above written.




[Signature
      Page Follows]











SIGNATURE
      PAGE


TO


AMENDMENT
      NO. 2 TO SECURITY AGREEMENT


Dated
      January ____, 2007




THE
                GRANTOR:Neonode,
                Inc.a
                Delaware corporationBy:________________________________Name:Title:*Address
                for Notices:*Biblioteksgatan
                11S111
                46 Stockholm, SwedenAttention:
                PresidentFax:
                01146-8-678 18 51SECURED
                PARTY:AIGH
                INVESTMENT PARTNERS, LLCBy:________________________________Name:
                Orin HirschmanTitle:
                Manager












SCHEDULE
      I




EXISTING
                INVESTORSName
                and Address
            Principal
                Amount of Amended and Restated NotesAIGH
                Investment Partners, LLC
              6006
                Berkeley Avenue
              Baltimore,
                MD 21209
            $4,000,000Hershel
                P. Berkowitz
              441
                Yeshiva Lane
              Baltimore,
                MD 21208
            $750,000Joshua
                A. Hirsch
              1
                Longfellow Place, Suite 3407
              Boston,
                MA 12114
            $250,000NEW
                INVESTORSName
                and Address
            Principal
                Amount of New Notes