**EMPLOYMENT
      AGREEMENT**




This
      agreement has been made on the date set out below.




BETWEEN
      Neonode, Inc., hereafter “the Company” AND Mikael Hagman “the
      Employee”.




**§
                1**
            **Form
                of employment and position**




The
      Employee is hereby employed as CEO.




The
      parties agree that the position entails duties and conditions of employment
      such
      that the employee shall be deemed to occupy a managerial or comparable
      position.




**§
                2**
            **Work
                duties**




The
      Employee’s work duties shall accord with instruction, which may from time to
      time be given for the position of CEO. The Employee’s locality of employment is
      at present Sweden.




**§
                3**
            **Duration
                of the agreement and notice of
                termination**




This
      agreement shall apply as of 2006-03-05 and indefinitely thereafter. The
      agreement may be terminated upon observance of a period of notice of termination
      of 12 months by the Company, and 6 months by the Employee. For the length of
      the
      employee’s seniority and service within the Company, the date of this agreement
      shall apply.




Upon
      termination by the Company, the Company is entitled to remove the Employee
      from
      the conduct of the Company’s affairs during the period of notice or part
      thereof.




In
      such a
      case, the Employee is entitled to assume other employment or to conduct his
      own
      business with no other restriction than that which appears in the provision
      of
      non-competition of this agreement.




If
      the
      Employee is removed from his conduct of the Company’s affairs, then all property
      which the Employee uses in connection with the employment shall be returned
      to
      the Company within five days, however in no case later than the date of the
      employment’s termination.




**§
                4**
            **Work
                hours and vacation**




The
      Employee shall devote all of his work time to his post pursuant to this
      agreement, and according to the standard working hours of the
      Company.




Vacation
      shall consist of 30 vacation days per year pursuant to the provisions of law
      as
      may from time to time be applicable.




Vacations
      shall be planed in consultation with direct supervisor, and with respect to
      the
      business in the Company.









**§
                5**
            **Outside
                work**




The
      Employee may not hold another employment or be engaged in another business
      without the expressed and written approval of the board, nor may the Employee
      otherwise he engaged in activities, which can detrimentally affect his
      employment under this agreement.




**§
                6**
            **Salary
                and Remuneration for board membership**




Annual
      base salary applicable shall be 1.560.000 SEK.




A
      review
      of salary and benefits shall normally he made each year in connection with
      ordinary revision of the pay scale for the Company’s other employees. The first
      review of salary shall be made after six months.




According
      to the policy applicable to the Company the Employee is not entitled to receive
      remuneration for hoard membership in companies of the Company
      group.




No
      salary
      for overtime work or travel time shall be payable.




**§
                7**
            **Bonus
                and options**




The
      Employee is engaged into a separate bonus arrangement, annually established
      in
      discretion by the Company. Current bonus program in appendix 1.




The
      Employee is engaged into a separate stock options agreement with the Company.
      Appendix 2.




**§
                8**
            **Pension
                and sickness benefits etc**




In
      addition to benefits required by the national insurance act the Employee is
      entitled to the insurance policy of Neonode Inc. as may front time to time
      be
      applicable.




The
      Employee is also entitled to a pension benefit of 12% of the annual base salary
      per year, which will substitute the current scheme between the relevant employer
      and employee associations with regard to supplementary pension for salaried
      employees. By choosing a pension benefit the employee will not have the option
      to join “ITP tjanstepension” at any point of his employment with the
      Company




**§
                9**
            **Business
                Trips and parking lot provided by the
                employer**




In
      connection with business trips, the Employee shall receive compensation
      according to the Company’s travel and subsistence allowance rules. In connection
      with such trips, the Employee shall comply with the provisions on travel and
      accommodation expenditures contained in those rules.




The
      Employee shall be provided a parking lot nearby the office in Stockholm









**§
                10**
            **Summary
                dismissal**




The
      Company is entitled to summary dismiss the Employee, effective immediately,
      if
      the Employee has grossly neglected his statutory or contractual obligations.
      In
      the event of such summary dismissal the Employee forfeits any right to severance
      pay as well as the right to salary another employment benefits during the period
      or notice, if any.




**§
                11**
            **Severance**




The
      Employee is entitled to severance pay if




a) the
      Company dismisses the Employee; or




b) the
      Employee terminates the agreement due to the Company’s breach of
      contract.




Severance
      pay shall he paid at the minimum amount based on the Employee’s salary at the
      time of the agreement’s termination, corresponding to 12 months base
      salary.




Severance
      pay shall be paid monthly following the termination of the employment contract.
      The Company will not pay social security fees on the severance pay or insurance
      premiums unless so required by statue or contract. Severance pay is not combined
      with vacation pay.




If
      the
      Employee during the period that severance pay is paid pursuant to the proceeding
      paragraph, assume employment with another employer or become engaged in his
      own
      business, then the Company shall be notified of such circumstance and in such
      a
      case deduction of the severance pay shall be made.




**§
                12**
            **Secrecy**




The
      Employee agrees without any limitation in time not to disclose to third parties
      confidential information concerning the Company or any other company in the
      Company Group and their business activities.




“Confidential
      information”, as used in this provision means any information – technical,
      commercial or of any other nature – regardless of whether or not the
      information is documented, with the exception of information which is, or
      becomes generally known or which has come, or will come, to general knowledge
      other than through the Employee’s breach of this provision.




If
      the
      Employee commits a breach of the above secrecy undertaking the Employee shall,
      upon request by the Company pay a penalty of 250.000 SEK for each individual
      case. The Company is also entitled to damages above 250.000 SEK if the
      Employee’s breach of the secrecy agreement damage the Company for more than
      250.000 SEK.




**§
                13**
            **Non-competition**




The
      Employee agrees that during the period of employment and for a period of 12
      months after termination of the employment, not to, either directly or
      indirectly, conduct or in any manner further activities that competes with
      the
      business activities of the Company.









If
      the
      Employee commits a breach of the above prohibition against competition, the
      Employee shall upon request by the Company pay a penalty of 500.000 SEK for
      each
      individual breach. The Company is also entitled to damages above 500.000 SEK
      if
      the Employee’s breach of the competition damage the Company for more than
      500.000 SEK.




Payment
      of a penalty shall not prejudice the Company’s right to remedies other than
      damages due to breach of contract.




**§
                14**
            **Amendments**




Only
      those amendments and addition to this agreement that are made in writing and
      signed by the parties are valid.




**§
                15**
            **Entire
                agreement**




The
      agreement and its appendixes constitute the parties complete regulation of
      all
      questions which the agreement concerns. All written or undertakings or
      understandings which have proceeded the agreement or superseded by the contents
      of this agreement and its appendixes




**§
                16**
            **Governing
                law**




This
      agreement and any dispute in connection with this employment relationship is
      governed by Swedish law and Swedish courts.









This
      agreement has been executed in two copies of which the parties have taken one
      each.


Stockholm
                  2006-11-30
                Neonode
                  Inc
              
              Place
                  and date/s/
                  Per Bystedt
              
              /s/
                  Mikael HagmanPer
                  Bystedt
                Chairman
              
              Mikael
                  Hagman/s/
                  Magnus GoertzMagnus
                  Goertz
                Director









**Appendix
      1, bonus program**




The
      Company and the Employee shall in good faith work out the details for a bonus
      program, where the Employee is entitled to a yearly bonus of maximum twelve
      months salaries.









**Appendix
      2, stock option program**




The
      Employee is entitled to participate in the employee stock option program. The
      allocation to the Employee is 100.000 employee stock options at points in time
      over a period of 4 years.