Document:

EXECUTION
        COPY

       

    

    THIS
      NOTE
      AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) NOR UNDER ANY STATE
      SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE
      TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
      UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY
      RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL TO THE HOLDER
      OF
      SUCH NOTE WHICH OTHER COUNSEL IS SATISFACTORY TO THE COMPANY THAT SUCH NOTE
      AND/OR COMMON STOCK MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR TRANSFERRED
      WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
      SECURITIES LAWS.

     

    SENIOR
      SECURED NOTE

     

    
      	
              $
                150,000.00

            	
              New
                York, New York 

            
	 	
              November
                20, 2006

            

    

     

    FOR
      VALUE
      RECEIVED, the undersigned (sometimes referred to herein as the “Company”), a
      Delaware corporation having an address at Biblioteksgatan 11, S111 46 Stockholm,
      Sweden, hereby promises to pay to the order of Hershel P. Berkowitz, or assigns
      (“Lender”), at 441 Yeshiva Lane, Apt. 1A, Baltimore, MD 21208 or at such other
      place as the Lender may from time to time designate to the undersigned in
      writing, on August 28, 2007 subject to the conversion rights set forth herein,
      or such earlier date as required hereunder, the sum of ONE HUNDRED FIFTY
      THOUSAND DOLLARS ($ 150,000.00) at a rate per annum equal to four percent (4%).
      In no event, however, shall interest hereunder be in excess of the maximum
      interest rate permitted by law.

     

    The
      obligations of the undersigned are secured in accordance with the terms of
      (i)
      certain Stockholder Pledge and Security Agreements, dated February 28, 2006
      (as
      amended, restated, modified and supplemented from time to time, the “Stockholder
      Pledge Agreements”) between certain stockholders of the Company and Lender, by
      the pledge of certain Collateral, as defined in such Stockholder Pledge
      Agreements, respectively, and (ii) a Security Agreement, dated February 28,
      2006
      (as amended, restated, modified and supplemented from time to time, the
“Security Agreement”) between the Company and Lender, by the pledge of certain
      Collateral, as defined in such Security Agreement. This Note is one of the
      Senior Secured Notes (the “Notes”) issued pursuant to a certain Note Purchase
      Agreement dated the date hereof between the Company and each Lender (the “Note
      Purchase Agreement”) in connection with a financing of the undersigned up to an
      aggregate principal amount of ONE MILLION DOLLARS ($1,000,000).

     

    A. Prepayment;
      Conversion:

     

    
      	 	
              1.

            	
              This
                Note may be prepaid without premium or penalty, in whole or in part,
                on 20
                days notice; provided that the Lender shall have the opportunity,
                prior to
                such prepayment, to convert this Note into common stock of the Company
                at
                a price based on the pre money valuation set forth in Section A.2
                below.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.

            	
              In
                the event the undersigned completes a registered public offering
                with
                gross proceeds in excess of $5,500,000 on or before August 28, 2007,
                this
                Note, including without limitation all accrued interest (unless paid
                in
                cash by the undersigned) and other obligations under this Note, shall
                automatically convert without any action of the holder into the securities
                offered in such financing at a price per security equal to the price
                paid
                by public investors based on the pre-money valuation of the fully-diluted
                equity of the undersigned, including for this purpose as equity all
                debt
                held by stockholders or their affiliates, of FIFTEEN MILLION AND
                FIVE
                HUNDRED THOUSAND DOLLARS ($15,500,000) (determined based on the
                Capitalization Table attached as an exhibit to the Note Purchase
                Agreement); and provided further the undersigned has not suffered
                any
                material adverse change since the date
                hereof.

            

    

     

    
      	 	
              3.

            	
              In
                the event the undersigned fails to complete a registered public offering
                with gross proceeds in excess of $5,500,000 by August 28, 2007 due
                to
                circumstances beyond the undersigned’s control, this Note, including
                without limitation all accrued interest and other obligations under
                this
                Note, shall be converted into common stock of the undersigned at
                a price
                per share equal to the fair market value of such shares as determined
                by
                negotiations between the undersigned and the holder of this Note
                and in
                the aggregate amount of all such obligations, subject to compliance
                with
                applicable securities law; provided that (i) the pre-money valuation
                of
                the fully-diluted equity of the undersigned in the event and at the
                time
                of such conversion, including for this purpose as equity all debt
                held by
                stockholders or their affiliates, does not exceed US $15,500,000,
                (ii) the
                undersigned has not suffered any material adverse changes since the
                date
                hereof and (iii) the Lender and the undersigned enter into an investor
                rights agreement which provides the Lender with demand and piggyback
                registration rights, preemptive rights, tagalong rights with principal
                stockholders of the undersigned, rights to Company information and
                a bar
                on issuance of toxic preferreds or other death spiral convertible
                securities. During the term of the Notes, the undersigned shall not
                issue
                any equity securities or securities convertible into, exercisable
                to
                purchase or exchangeable for equity securities without offering to
                holders
                of Notes rights to purchase up to a percentage (the “Percentage”) of such
                issue equal to the ratio of (A) the aggregate principal amounts of
                notes
                of similar tenor to this Note then outstanding divided by (B) the
                sum of
                $15,500,000 and such aggregate principal amounts, and shall not permit
                Neonode AB to issue any such securities or incur any indebtedness
                other
                than reasonable accounts payable and indebtedness from
                affiliates.

            

    

     

    
      
        
        

      

      
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          2
          -

        
          

        

      

      
        
        

      

    

     

    B. Default;
      Remedy. If any one or more of the following events of default (each, an
“Event of Default”) shall occur, that is to say:

     

    
      	 	
              1.

            	
              default
                shall be made in the payment of any principal or interest of this
                Note
                when the same shall become due and payable, whether at maturity,
                by
                acceleration, by notice of intention to prepay or
                otherwise;

            

    

     

    
      	 	
              2.

            	
              the
                undersigned shall become unable to pay its debts as they mature,
                seek to
                auction all or a substantial portion of its assets, make a general
                assignment for the benefit of creditors, commence or cause to be
                commenced
                a meeting of his creditors or take advantage of any of the insolvency
                laws, or a case is commenced or a petition in bankruptcy or for an
                arrangement or reorganization under the Federal Bankruptcy Code (i)
                is
                filed against the undersigned, or (ii) is filed by the undersigned,
                or a
                custodian or receiver (or other court designee performing the functions
                of
                a receiver) is appointed for or takes possession of the undersigned’s
                assets or affairs, or an order for relief in a case commenced under
                the
                Federal Bankruptcy Code is entered;

            

    

     

    
      	 	
              3.

            	
              any
                judgment or judgments against the undersigned or its property for
                any
                amount remains unpaid, undischarged, unsatisfied, unbonded or undismissed
                for a period of ten (10) days, or a levy, sequestration or attachment
                against the undersigned or his property for any amount remains unpaid,
                undischarged, unstayed, unsatisfied or undismissed for a period of
                ten
                (10) days;

            

    

     

    
      	 	
              4.

            	
              any
                guaranty of the obligations of the undersigned to Lender is terminated
                or
                breached, or if any guarantor of the obligations of the undersigned
                to the
                Lender attempts to terminate, challenge the validity of, or its liability
                under, any such guaranty or similar agreement, or the undersigned
                terminates any guaranty which he has given to Lender to secure the
                indebtedness of any third party; or

            

    

     

    
      	 	
              5.

            	
              any
                event of default shall occur under any agreement between Lender and
                the
                undersigned, including without limitation the Security Agreement,
                any
                Stockholder Pledge Agreement or any guaranty related thereto, which
                is not
                cured within any applicable grace period,

            

    

     

    then
      this
      Note (x)(i) upon the occurrence of an Event of Default pursuant to subsection
      2
      of this Section (B) shall immediately become due and payable, without notice;
      and (ii) upon the occurrence of any other Event of Default, shall become due
      and
      payable, upon delivery of written notice of such Event of Default by Lender
      to
      the undersigned, in each case together with reasonable attorneys’ fees, if the
      collection hereof is placed in the hands of an attorney to obtain or enforce
      payment hereof; and (y) shall bear interest at a rate of interest per annum
      equal to fifteen percent (15%). To the extent permitted by applicable law
      interest shall accrue with respect to interest that is due and not paid. In
      the
      event the Lender takes action under the Security Agreement or any Stockholder
      Pledge Agreement, the Lenders shall proceed first under the Security Agreement
      and thereafter only if the Company’s obligations to the Lender are not
      satisfied, under such Stockholder Pledge Agreement.

     

    
      
        
        

      

      
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          3
          -

        
          

        

      

      
        
        

      

    

     

    C. Governing
      Law.
      This
      Note is being delivered in the State of New York, and shall be construed and
      enforced in accordance with the laws of such State. Any judicial proceeding
      by
      the undersigned against Lender involving, directly or indirectly, any matter
      or
      claim in any way arising out of, related to or connected with this Note, shall
      be brought only in federal or state court located in the City of New York,
      State
      of New York. Any judicial proceeding brought against the undersigned with
      respect to this Note may be brought in any court of competent jurisdiction
      in
      the City of New York, State of New York, United States of America, and, by
      execution and delivery of this Note, the undersigned accepts, generally and
      unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
      irrevocably agrees to be bound by any judgment rendered thereby in connection
      with this Note or any related agreement. Nothing herein shall affect the right
      to serve process in any manner permitted by law or shall limit the right of
      Lender to bring proceedings against the undersigned in the courts of any other
      jurisdiction. The undersigned waives any objection to jurisdiction and venue
      of
      any action instituted hereunder and shall not assert any defense based on lack
      of jurisdiction or venue or based upon forum
      non conveniens.

     

    D. Waiver
      of Jury Trial.
      THE
      UNDERSIGNED EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
      ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS NOTE OR ANY OTHER INSTRUMENT,
      DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2)
      IN
      ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
      HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE OR ANY OTHER INSTRUMENT,
      DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
      TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
      HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
      THE UNDERSIGNED HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
      OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT
      ANY
      PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
      AS WRITTEN
      EVIDENCE OF THIS WAIVER OF THE RIGHT TO TRIAL BY JURY.

     

    E. Notices.
      All
      notices required hereunder shall be given in the manner set forth in the Note
      Purchase Agreement.

     

    F. Transfer
      to
      Comply with the Securities Act of 1933.

     

    
      	 	
              1.

            	
              The
                holder of this Note, each transferee hereof and any holder and transferee
                of any shares issued upon conversion hereof other than in a registered
                public offering, by his acceptance thereof, agrees that (i) no public
                distribution of Notes or such shares will be made in violation of
                the Act,
                and (ii) during such period as the delivery of a prospectus with
                respect
                to such shares may be required by the Act, no public distribution
                of such
                shares will be made in a manner or on terms different from those
                set forth
                in, or without delivery of, a prospectus then meeting the requirements
                of
                Section 10 of the Act and in compliance with applicable state securities
                laws. The holder of this Note and each transferee hereof further
                agrees
                that if any distribution of any shares issued upon conversion hereof
                other
                than in a registered public offering is proposed to be made by them
                otherwise than by delivery of a prospectus meeting the requirements
                of
                Section 10 of the Act, such action shall be taken only after submission
                to
                the undersigned of an opinion of counsel, reasonably satisfactory
                in form
                and substance to the undersigned’s counsel, to the effect that the
                proposed distribution will not be in violation of the Act or of applicable
                state law. Furthermore, it shall be a condition to the transfer of
                this
                Note that any transferee thereof be bound by all of the terms and
                conditions contained in this Note.

            

    

     

    
      
        
        

      

      
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          4
          -

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.

            	
              Each
                certificate for shares issued upon conversion hereof shall bear a
                legend
                relating to the non-registered status of such shares under the Act,
                unless
                at the time of conversion of this Note such shares are subject to
                a
                currently effective registration statement under the
                Act.

            

    

     

    G. Certain
      Representations and Covenants.

     

    
      	 	
              1.

            	
              No
                information provide by the undersigned to the Lender contains or
                will on
                the Closing Date contain any untrue statement of a material fact
                or omits
                or will on the Closing Date omit to state any material fact necessary
                to
                make the statements contained herein or therein not misleading. During
                the
                term of this Note, the Company shall provide the Lender upon its
                request
                with any and all information about the Company reasonably deemed
                necessary
                for the Lender to evaluate this Note or a possible conversion
                thereof.

            

    

     

    
      	 	
              2.

            	
              While
                this Note is outstanding, the Company (a) shall not issue (i) any
                equity
                securities or securities convertible into, exercisable to purchase
                or
                exchangeable for equity securities without offering to the Lender
                and all
                other holders of notes of similar tenor rights to purchase an aggregate
                of
                up to the Percentage of such issue or (ii) any toxic convertibles
                or death
                spiral preferreds, and (b) shall not permit its 100% owned subsidiary
                Neonode AB, a Swedish corporation, to issue any such securities or
                incur
                any indebtedness other than reasonable accounts payable and indebtedness
                from affiliates.

            

    

     

    
      	 	
              3.

            	
              The
                Company shall keep reserved for issuance a sufficient number of authorized
                but unissued shares of Common Stock (or other securities into which
                the
                Notes are convertible) so that the Notes may be converted or exercised
                to
                purchase Common Stock (or such other securities) at any
                time.

            

    

     

    
      	 	
              4.

            	
              If
                any event occurs as to which the provisions of this Note are strictly
                applicable and the application thereof would not fairly protect the
                rights
                of the Lenders in accordance with the essential intent and principles
                of
                such provisions, including but not limited to protection from dilution,
                then the Company shall make such adjustments in the application of
                such
                provisions, in accordance with such essential intent and principles,
                as
                the Board of Directors, in good faith, determines to be reasonably
                necessary to protect such rights as
                aforesaid.

            

    

     

    H. The
      undersigned expressly waives any presentment, demand, protest, notice of
      protest, or notice of any kind.

     

    [Signature
      page follows]

     

    
      
        
        

      

      
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          5
          -

        
          

        

      

      
        
        

      

    

     

    
      	 	
              NEONODE,
                INC.

            
	 	 
	 	
              By:

            	 
	 	 	
              ,
                Authorized Signatory

            

    

    

    
      
        
        

      

      
        -
          6
          -EXECUTION
        COPY

    

     

    THIS
      NOTE
      AND THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) NOR UNDER ANY STATE
      SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE
      TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
      UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY
      RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR OTHER COUNSEL TO THE HOLDER
      OF
      SUCH NOTE WHICH OTHER COUNSEL IS SATISFACTORY TO THE COMPANY THAT SUCH NOTE
      AND/OR COMMON STOCK MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR TRANSFERRED
      WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
      SECURITIES LAWS.

     

    SENIOR
      SECURED NOTE

    

      
        	
                $
                  50,000.00

              	
                New
                  York, New York

              
	 	
                November
                  20, 2006

              

      

    

     

    FOR
      VALUE
      RECEIVED, the undersigned (sometimes referred to herein as the “Company”), a
      Delaware corporation having an address at Biblioteksgatan 11, S111 46 Stockholm,
      Sweden, hereby promises to pay to the order of Joshua A. Hirsch, or assigns
      (“Lender”), at 1 Longfellow Place, Suite 3407, Boston, MA 12114 or at such other
      place as the Lender may from time to time designate to the undersigned in
      writing, on August 28, 2007 subject to the conversion rights set forth herein,
      or such earlier date as required hereunder, the sum of FIFTY THOUSAND DOLLARS
      ($
      50,000.00) at a rate per annum equal to four percent (4%). In no event, however,
      shall interest hereunder be in excess of the maximum interest rate permitted
      by
      law.

     

    The
      obligations of the undersigned are secured in accordance with the terms of
      (i)
      certain Stockholder Pledge and Security Agreements, dated February 28, 2006
      (as
      amended, restated, modified and supplemented from time to time, the “Stockholder
      Pledge Agreements”) between certain stockholders of the Company and Lender, by
      the pledge of certain Collateral, as defined in such Stockholder Pledge
      Agreements, respectively, and (ii) a Security Agreement, dated February 28,
      2006
      (as amended, restated, modified and supplemented from time to time, the
“Security Agreement”) between the Company and Lender, by the pledge of certain
      Collateral, as defined in such Security Agreement. This Note is one of the
      Senior Secured Notes (the “Notes”) issued pursuant to a certain Note Purchase
      Agreement dated the date hereof between the Company and each Lender (the “Note
      Purchase Agreement”) in connection with a financing of the undersigned up to an
      aggregate principal amount of ONE MILLION DOLLARS ($1,000,000).

     

    A. Prepayment;
      Conversion:

     

    
      	 	
              1.

            	
              This
                Note may be prepaid without premium or penalty, in whole or in part,
                on 20
                days notice; provided that the Lender shall have the opportunity,
                prior to
                such prepayment, to convert this Note into common stock of the Company
                at
                a price based on the pre money valuation set forth in Section A.2
                below.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.

            	
              In
                the event the undersigned completes a registered public offering
                with
                gross proceeds in excess of $5,500,000 on or before August 28, 2007,
                this
                Note, including without limitation all accrued interest (unless paid
                in
                cash by the undersigned) and other obligations under this Note, shall
                automatically convert without any action of the holder into the securities
                offered in such financing at a price per security equal to the price
                paid
                by public investors based on the pre-money valuation of the fully-diluted
                equity of the undersigned, including for this purpose as equity all
                debt
                held by stockholders or their affiliates, of FIFTEEN MILLION AND
                FIVE
                HUNDRED THOUSAND DOLLARS ($15,500,000) (determined based on the
                Capitalization Table attached as an exhibit to the Note Purchase
                Agreement); and provided further the undersigned has not suffered
                any
                material adverse change since the date
                hereof.

            

    

     

    
      	 	
              3.

            	
              In
                the event the undersigned fails to complete a registered public offering
                with gross proceeds in excess of $5,500,000 by August 28, 2007 due
                to
                circumstances beyond the undersigned’s control, this Note, including
                without limitation all accrued interest and other obligations under
                this
                Note, shall be converted into common stock of the undersigned at
                a price
                per share equal to the fair market value of such shares as determined
                by
                negotiations between the undersigned and the holder of this Note
                and in
                the aggregate amount of all such obligations, subject to compliance
                with
                applicable securities law; provided that (i) the pre-money valuation
                of
                the fully-diluted equity of the undersigned in the event and at the
                time
                of such conversion, including for this purpose as equity all debt
                held by
                stockholders or their affiliates, does not exceed US $15,500,000,
                (ii) the
                undersigned has not suffered any material adverse changes since the
                date
                hereof and (iii) the Lender and the undersigned enter into an investor
                rights agreement which provides the Lender with demand and piggyback
                registration rights, preemptive rights, tagalong rights with principal
                stockholders of the undersigned, rights to Company information and
                a bar
                on issuance of toxic preferreds or other death spiral convertible
                securities. During the term of the Notes, the undersigned shall not
                issue
                any equity securities or securities convertible into, exercisable
                to
                purchase or exchangeable for equity securities without offering to
                holders
                of Notes rights to purchase up to a percentage (the “Percentage”) of such
                issue equal to the ratio of (A) the aggregate principal amounts of
                notes
                of similar tenor to this Note then outstanding divided by (B) the
                sum of
                $15,500,000 and such aggregate principal amounts, and shall not permit
                Neonode AB to issue any such securities or incur any indebtedness
                other
                than reasonable accounts payable and indebtedness from
                affiliates.

            

    

     

    B. Default;
      Remedy.
      If any
      one or more of the following events of default (each, an “Event of Default”)
      shall occur, that is to say:

    
       

      
        
          
          

        

        
          -
            2
            -

          
            

          

        

        
          
          

        

         

      

    

    
      	 	
              1.

            	
              default
                shall be made in the payment of any principal or interest of this
                Note
                when the same shall become due and payable, whether at maturity,
                by
                acceleration, by notice of intention to prepay or
                otherwise;

            

    

     

    
      	 	
              2.

            	
              the
                undersigned shall become unable to pay its debts as they mature,
                seek to
                auction all or a substantial portion of its assets, make a general
                assignment for the benefit of creditors, commence or cause to be
                commenced
                a meeting of his creditors or take advantage of any of the insolvency
                laws, or a case is commenced or a petition in bankruptcy or for an
                arrangement or reorganization under the Federal Bankruptcy Code (i)
                is
                filed against the undersigned, or (ii) is filed by the undersigned,
                or a
                custodian or receiver (or other court designee performing the functions
                of
                a receiver) is appointed for or takes possession of the undersigned’s
                assets or affairs, or an order for relief in a case commenced under
                the
                Federal Bankruptcy Code is entered;

            

    

     

    
      	 	
              3.

            	
              any
                judgment or judgments against the undersigned or its property for
                any
                amount remains unpaid, undischarged, unsatisfied, unbonded or undismissed
                for a period of ten (10) days, or a levy, sequestration or attachment
                against the undersigned or his property for any amount remains unpaid,
                undischarged, unstayed, unsatisfied or undismissed for a period of
                ten
                (10) days;

            

    

     

    
      	 	
              4.

            	
              any
                guaranty of the obligations of the undersigned to Lender is terminated
                or
                breached, or if any guarantor of the obligations of the undersigned
                to the
                Lender attempts to terminate, challenge the validity of, or its liability
                under, any such guaranty or similar agreement, or the undersigned
                terminates any guaranty which he has given to Lender to secure the
                indebtedness of any third party; or

            

    

     

    
      	 	
              5.

            	
              any
                event of default shall occur under any agreement between Lender and
                the
                undersigned, including without limitation the Security Agreement,
                any
                Stockholder Pledge Agreement or any guaranty related thereto, which
                is not
                cured within any applicable grace period,

            

    

     

    then
      this
      Note (x)(i) upon the occurrence of an Event of Default pursuant to subsection
      2
      of this Section (B) shall immediately become due and payable, without notice;
      and (ii) upon the occurrence of any other Event of Default, shall become due
      and
      payable, upon delivery of written notice of such Event of Default by Lender
      to
      the undersigned, in each case together with reasonable attorneys’ fees, if the
      collection hereof is placed in the hands of an attorney to obtain or enforce
      payment hereof; and (y) shall bear interest at a rate of interest per annum
      equal to fifteen percent (15%). To the extent permitted by applicable law
      interest shall accrue with respect to interest that is due and not paid. In
      the
      event the Lender takes action under the Security Agreement or any Stockholder
      Pledge Agreement, the Lenders shall proceed first under the Security Agreement
      and thereafter only if the Company’s obligations to the Lender are not
      satisfied, under such Stockholder Pledge Agreement.

     

    
      
        
        

      

      
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          3
          -

        
          

        

      

      
        
        

      

    

     

    C. Governing
      Law.
      This
      Note is being delivered in the State of New York, and shall be construed and
      enforced in accordance with the laws of such State. Any judicial proceeding
      by
      the undersigned against Lender involving, directly or indirectly, any matter
      or
      claim in any way arising out of, related to or connected with this Note, shall
      be brought only in federal or state court located in the City of New York,
      State
      of New York. Any judicial proceeding brought against the undersigned with
      respect to this Note may be brought in any court of competent jurisdiction
      in
      the City of New York, State of New York, United States of America, and, by
      execution and delivery of this Note, the undersigned accepts, generally and
      unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
      irrevocably agrees to be bound by any judgment rendered thereby in connection
      with this Note or any related agreement. Nothing herein shall affect the right
      to serve process in any manner permitted by law or shall limit the right of
      Lender to bring proceedings against the undersigned in the courts of any other
      jurisdiction. The undersigned waives any objection to jurisdiction and venue
      of
      any action instituted hereunder and shall not assert any defense based on lack
      of jurisdiction or venue or based upon forum
      non conveniens.

     

    D. Waiver
      of Jury Trial.
      THE
      UNDERSIGNED EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
      ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS NOTE OR ANY OTHER INSTRUMENT,
      DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2)
      IN
      ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
      HERETO OR ANY OF THEM WITH RESPECT TO THIS NOTE OR ANY OTHER INSTRUMENT,
      DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
      TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
      HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
      THE UNDERSIGNED HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
      OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT
      ANY
      PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
      AS WRITTEN
      EVIDENCE OF THIS WAIVER OF THE RIGHT TO TRIAL BY JURY.

     

    E. Notices.
      All
      notices required hereunder shall be given in the manner set forth in the Note
      Purchase Agreement.

     

    F. Transfer
      to
      Comply with the Securities Act of 1933.

     

    
      	 	
              1.

            	
              The
                holder of this Note, each transferee hereof and any holder and transferee
                of any shares issued upon conversion hereof other than in a registered
                public offering, by his acceptance thereof, agrees that (i) no public
                distribution of Notes or such shares will be made in violation of
                the Act,
                and (ii) during such period as the delivery of a prospectus with
                respect
                to such shares may be required by the Act, no public distribution
                of such
                shares will be made in a manner or on terms different from those
                set forth
                in, or without delivery of, a prospectus then meeting the requirements
                of
                Section 10 of the Act and in compliance with applicable state securities
                laws. The holder of this Note and each transferee hereof further
                agrees
                that if any distribution of any shares issued upon conversion hereof
                other
                than in a registered public offering is proposed to be made by them
                otherwise than by delivery of a prospectus meeting the requirements
                of
                Section 10 of the Act, such action shall be taken only after submission
                to
                the undersigned of an opinion of counsel, reasonably satisfactory
                in form
                and substance to the undersigned’s counsel, to the effect that the
                proposed distribution will not be in violation of the Act or of applicable
                state law. Furthermore, it shall be a condition to the transfer of
                this
                Note that any transferee thereof be bound by all of the terms and
                conditions contained in this Note.

            

    

     

    
      
        
        

      

      
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          4
          -

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.

            	
              Each
                certificate for shares issued upon conversion hereof shall bear a
                legend
                relating to the non-registered status of such shares under the Act,
                unless
                at the time of conversion of this Note such shares are subject to
                a
                currently effective registration statement under the
                Act.

            

    

     

    G. Certain
      Representations and Covenants.

     

    
      	 	
              1.

            	
              No
                information provide by the undersigned to the Lender contains or
                will on
                the Closing Date contain any untrue statement of a material fact
                or omits
                or will on the Closing Date omit to state any material fact necessary
                to
                make the statements contained herein or therein not misleading. During
                the
                term of this Note, the Company shall provide the Lender upon its
                request
                with any and all information about the Company reasonably deemed
                necessary
                for the Lender to evaluate this Note or a possible conversion
                thereof.

            

    

     

    
      	 	
              2.

            	
              While
                this Note is outstanding, the Company (a) shall not issue (i) any
                equity
                securities or securities convertible into, exercisable to purchase
                or
                exchangeable for equity securities without offering to the Lender
                and all
                other holders of notes of similar tenor rights to purchase an aggregate
                of
                up to the Percentage of such issue or (ii) any toxic convertibles
                or death
                spiral preferreds, and (b) shall not permit its 100% owned subsidiary
                Neonode AB, a Swedish corporation, to issue any such securities or
                incur
                any indebtedness other than reasonable accounts payable and indebtedness
                from affiliates.

            

    

     

    
      	 	
              3.

            	
              The
                Company shall keep reserved for issuance a sufficient number of authorized
                but unissued shares of Common Stock (or other securities into which
                the
                Notes are convertible) so that the Notes may be converted or exercised
                to
                purchase Common Stock (or such other securities) at any
                time.

            

    

     

    
      	 	
              4.

            	
              If
                any event occurs as to which the provisions of this Note are strictly
                applicable and the application thereof would not fairly protect the
                rights
                of the Lenders in accordance with the essential intent and principles
                of
                such provisions, including but not limited to protection from dilution,
                then the Company shall make such adjustments in the application of
                such
                provisions, in accordance with such essential intent and principles,
                as
                the Board of Directors, in good faith, determines to be reasonably
                necessary to protect such rights as
                aforesaid.

            

    

     

    H. The
      undersigned expressly waives any presentment, demand, protest, notice of
      protest, or notice of any kind.

     

    [Signature
      page follows]

     

    
      
        
        

      

      
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          5
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              NEONODE,
                INC.

            
	 	 	 
	 	
              By:

            	 
	 	 	
               

            	
              ,
                Authorized Signatory

            

    

     

    
      
        
        

      

      
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