Document:

EXHIBIT
      F

    

    SUBSIDIARY
      GUARANTEE

    

    SUBSIDIARY
      GUARANTEE, dated as of March 5, 2008 (this “Guarantee”),
      made
      by each of the signatories hereto (together with any other entity that may
      become a party hereto as provided herein, the “Guarantors”),
      in
      favor of the purchasers signatory (the “Purchasers”)
      to
      that certain Securities Purchase Agreement, dated as of the date hereof, between
      Statmon Technologies Corp., a Nevada corporation (the “Company”)
      and
      the Purchasers. 

     

    W
      I T N E S S E T H:

    

    WHEREAS,
      pursuant to that certain Securities Purchase Agreement, dated as of the date
      hereof, by and between the Company and the Purchasers (the “Purchase
      Agreement”),
      the
      Company has agreed to sell and issue to the Purchasers, and the Purchasers
      have
      agreed to purchase from the Company the Company’s Original
      Issue Discount Senior Secured Convertible Debentures,
      due
      March 5, 2010
      (the
      “Debentures”),
      subject to the terms and conditions set forth therein; and

    

    WHEREAS,
      each Guarantor will directly benefit from the extension of credit to the Company
      represented by the issuance of the Debentures; and 

     

    NOW,
      THEREFORE, in consideration of the premises and to induce the Purchasers to
      enter into the Purchase Agreement and to carry out the transactions contemplated
      thereby, each Guarantor hereby agrees with the Purchasers as
      follows:

     

    1. Definitions.
      Unless
      otherwise defined herein, terms defined in the Purchase Agreement and used
      herein shall have the meanings given to them in the Purchase Agreement. The
      words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import
      when used in this Guarantee shall refer to this Guarantee as a whole and not
      to
      any particular provision of this Guarantee, and Section and Schedule references
      are to this Guarantee unless otherwise specified. The meanings given to terms
      defined herein shall be equally applicable to both the singular and plural
      forms
      of such terms. The following terms shall have the following
      meanings:

    

    “Guarantee”
means
      this Subsidiary Guarantee, as the same may be amended, supplemented or otherwise
      modified from time to time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Obligations”
means,
      in addition to all other costs and expenses of collection incurred by Purchasers
      in enforcing any of such Obligations and/or this Guarantee, all
      of
      the liabilities
      and obligations (primary, secondary, direct, contingent, sole, joint or several)
      due or to become due, or that are now or may be hereafter contracted or
      acquired, or owing to, of any Debtor to the Secured Parties, including, without
      limitation, all
      obligations under this Agreement, the Debentures, this Guarantee and any other
      instruments, agreements or other documents executed and/or delivered in
      connection herewith or therewith, in each case, whether now or hereafter
      existing, voluntary or involuntary, direct or indirect, absolute or contingent,
      liquidated or unliquidated, whether or not jointly owed with others, and whether
      or not from time to time decreased or extinguished and later increased, created
      or incurred, and all or any portion of such obligations or liabilities that
      are
      paid, to the extent all or any part of such payment is avoided or recovered
      directly or indirectly from any of the Secured Parties as a preference,
      fraudulent transfer or otherwise as such obligations may be amended,
      supplemented, converted, extended or modified from time to time. Without
      limiting the generality of the foregoing, the term “Obligations” shall include,
      without limitation: (i) principal of, and interest on the Debentures and the
      loans extended pursuant thereto; (ii) any and all other fees, indemnities,
      costs, obligations and liabilities of the Debtors from time to time under or
      in
      connection with this Agreement, the Debentures, the Guarantee and any other
      instruments, agreements or other documents executed and/or delivered in
      connection herewith or therewith; and (iii) all amounts (including but not
      limited to post-petition interest) in respect of the foregoing that would be
      payable but for the fact that the obligations to pay such amounts are
      unenforceable or not allowable due to the existence of a bankruptcy,
      reorganization or similar proceeding involving any Debtor. 

     

    2. Guarantee.

    

    (a) Guarantee.

     

    
      	 	
              (i)

            	
              The
                Guarantors hereby, jointly and severally, unconditionally and irrevocably,
                guarantee to the Purchasers and their respective successors, indorsees,
                transferees and assigns, the prompt and complete payment and performance
                by the Company when due (whether at the stated maturity, by acceleration
                or otherwise) of the Obligations. 

            

    

     

    
      	 	
              (ii)

            	
              Anything
                herein or in any other Transaction Document to the contrary
                notwithstanding, the maximum liability of each Guarantor hereunder
                and
                under the other Transaction Documents shall in no event exceed the
                amount
                which can be guaranteed by such Guarantor under applicable federal
                and
                state laws, including laws relating to the insolvency of debtors,
                fraudulent conveyance or transfer or laws affecting the rights of
                creditors generally (after giving effect to the right of contribution
                established in Section 2(b)). 

            

    

    

    
      	 	
              (iii)

            	
              Each
                Guarantor agrees that the Obligations may at any time and from time
                to
                time exceed the amount of the liability of such Guarantor hereunder
                without impairing the guarantee contained in this Section 2 or affecting
                the rights and remedies of the Purchasers
                hereunder.

            

    

     

    
      
         

      

      
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              (iv)

            	
              The
                guarantee contained in this Section 2 shall remain in full force
                and
                effect until all the Obligations and the obligations of each Guarantor
                under the guarantee contained in this Section 2 shall have been satisfied
                by payment in full. 

            

    

    

    
      	 	
              (v)

            	
              No
                payment made by the Company, any of the Guarantors, any other guarantor
                or
                any other Person or received or collected by the Purchasers from
                the
                Company, any of the Guarantors, any other guarantor or any other
                Person by
                virtue of any action or proceeding or any set-off or appropriation
                or
                application at any time or from time to time in reduction of or in
                payment
                of the Obligations shall be deemed to modify, reduce, release or
                otherwise
                affect the liability of any Guarantor hereunder which shall,
                notwithstanding any such payment (other than any payment made by
                such
                Guarantor in respect of the Obligations or any payment received or
                collected from such Guarantor in respect of the Obligations), remain
                liable for the Obligations up to the maximum liability of such Guarantor
                hereunder until the Obligations are paid in
                full.

            

    

    

    
      	 	
              (vi)

            	
              Notwithstanding
                anything to the contrary in this Agreement, with respect to any defaulted
                non-monetary Obligations the specific performance of which by the
                Guarantors is not reasonably possible (e.g. the issuance of the Company's
                Common Stock), the Guarantors shall only be liable for making the
                Purchasers whole on a monetary basis for the Company's failure to
                perform
                such Obligations in accordance with the Transaction Documents.
                

            

    

    

    (b) Right
      of Contribution.
      Each
      Guarantor hereby agrees that to the extent that a Guarantor shall have paid
      more
      than its proportionate share of any payment made hereunder, such Guarantor
      shall
      be entitled to seek and receive contribution from and against any other
      Guarantor hereunder which has not paid its proportionate share of such payment.
      Each Guarantor's right of contribution shall be subject to the terms and
      conditions of Section 2(c). The provisions of this Section 2(b) shall in no
      respect limit the obligations and liabilities of any Guarantor to the
      Purchasers, and each Guarantor shall remain liable to the Purchasers for the
      full amount guaranteed by such Guarantor hereunder.

     

    
      
         

      

      
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    (c) No
      Subrogation.
      Notwithstanding any payment made by any Guarantor hereunder or any set-off
      or
      application of funds of any Guarantor by the Purchasers, no Guarantor shall
      be
      entitled to be subrogated to any of the rights of the Purchasers against the
      Company or any other Guarantor or any collateral security or guarantee or right
      of offset held by the Purchasers for the payment of the Obligations, nor shall
      any Guarantor seek or be entitled to seek any contribution or reimbursement
      from
      the Company or any other Guarantor in respect of payments made by such Guarantor
      hereunder, until all amounts owing to the Purchasers by the Company on account
      of the Obligations are paid in full. If any amount shall be paid to any
      Guarantor on account of such subrogation rights at any time when all of the
      Obligations shall not have been paid in full, such amount shall be held by
      such
      Guarantor in trust for the Purchasers, segregated from other funds of such
      Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
      to the Purchasers in the exact form received by such Guarantor (duly indorsed
      by
      such Guarantor to the Purchasers, if required), to be applied against the
      Obligations, whether matured or unmatured, in such order as the Purchasers
      may
      determine.

     

    (d) Amendments,
      Etc. With Respect to the Obligations.
      Each
      Guarantor shall remain obligated hereunder notwithstanding that, without any
      reservation of rights against any Guarantor and without notice to or further
      assent by any Guarantor, any demand for payment of any of the Obligations made
      by the Purchasers may be rescinded by the Purchasers and any of the Obligations
      continued, and the Obligations, or the liability of any other Person upon or
      for
      any part thereof, or any collateral security or guarantee therefor or right
      of
      offset with respect thereto, may, from time to time, in whole or in part, be
      renewed, extended, amended, modified, accelerated, compromised, waived,
      surrendered or released by the Purchasers, and the Purchase Agreement and the
      other Transaction Documents and any other documents executed and delivered
      in
      connection therewith may be amended, modified, supplemented or terminated,
      in
      whole or in part, as the Purchasers may deem advisable from time to time, and
      any collateral security, guarantee or right of offset at any time held by the
      Purchasers for the payment of the Obligations may be sold, exchanged, waived,
      surrendered or released. The Purchasers shall have no obligation to protect,
      secure, perfect or insure any Lien at any time held by them as security for
      the
      Obligations or for the guarantee contained in this Section 2 or any property
      subject thereto. 

     

    
      
         

      

      
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    (e) Guarantee
      Absolute and Unconditional.
      Each
      Guarantor waives any and all notice of the creation, renewal, extension or
      accrual of any of the Obligations and notice of or proof of reliance by the
      Purchasers upon the guarantee contained in this Section 2 or acceptance of
      the
      guarantee contained in this Section 2; the Obligations, and any of them, shall
      conclusively be deemed to have been created, contracted or incurred, or renewed,
      extended, amended or waived, in reliance upon the guarantee contained in this
      Section 2; and all dealings between the Company and any of the Guarantors,
      on
      the one hand, and the Purchasers, on the other hand, likewise shall be
      conclusively presumed to have been had or consummated in reliance upon the
      guarantee contained in this Section 2. Each Guarantor waives to the extent
      permitted by law diligence, presentment,
      protest, demand for payment and notice of default or nonpayment to or upon
      the
      Company or any of the Guarantors with respect to the Obligations. Each Guarantor
      understands and agrees that the guarantee contained in this Section 2 shall
      be
      construed as a continuing, absolute and unconditional guarantee of payment
      without regard to (a) the validity or enforceability of the Purchase Agreement
      or any other Transaction Document, any of the Obligations or any other
      collateral security therefor or guarantee or right of offset with respect
      thereto at any time or from time to time held by the Purchasers, (b) any
      defense, set-off or counterclaim (other than a defense of payment or performance
      or fraud or misconduct by Purchasers) which may at any time be available to
      or
      be asserted by the Company or any other Person against the Purchasers, or (c)
      any other circumstance whatsoever (with or without notice to or knowledge of
      the
      Company or such Guarantor) which constitutes, or might be construed to
      constitute, an equitable or legal discharge of the Company for the Obligations,
      or of such Guarantor under the guarantee contained in this Section 2, in
      bankruptcy or in any other instance. When making any demand hereunder or
      otherwise pursuing its rights and remedies hereunder against any Guarantor, the
      Purchasers may, but shall be under no obligation to, make a similar demand
      on or
      otherwise pursue such rights and remedies as they may have against the Company,
      any other Guarantor or any other Person or against any collateral security
      or
      guarantee for the Obligations or any right of offset with respect thereto,
      and
      any failure by the Purchasers to make any such demand, to pursue such other
      rights or remedies or to collect any payments from the Company, any other
      Guarantor or any other Person or to realize upon any such collateral security
      or
      guarantee or to exercise any such right of offset, or any release of the
      Company, any other Guarantor or any other Person or any such collateral
      security, guarantee or right of offset, shall not relieve any Guarantor of
      any
      obligation or liability hereunder, and shall not impair or affect the rights
      and
      remedies, whether express, implied or available as a matter of law, of the
      Purchasers against any Guarantor. For the purposes hereof, “demand” shall
      include the commencement and continuance of any legal proceedings.

     

    (f) Reinstatement.
      The
      guarantee contained in this Section 2 shall continue to be effective, or be
      reinstated, as the case may be, if at any time payment, or any part thereof,
      of
      any of the Obligations is rescinded or must otherwise be restored or returned
      by
      the Purchasers upon the insolvency, bankruptcy, dissolution, liquidation or
      reorganization of the Company or any Guarantor, or upon or as a result of the
      appointment of a receiver, intervenor or conservator of, or trustee or similar
      officer for, the Company or any Guarantor or any substantial part of its
      property, or otherwise, all as though such payments had not been
      made.

    

    (g) Payments.
      Each
      Guarantor hereby guarantees that payments hereunder will be paid to the
      Purchasers without set-off or counterclaim in U.S. dollars at the address set
      forth or referred to in the Purchase Agreement.

    

    
      
         

      

      
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    3. Representations
      and Warranties.
      Each
      Guarantor hereby makes the following representations and warranties to
      Purchasers as of the date hereof:

     

    (a) Organization
      and Qualification.
      The
      Guarantor is a corporation, duly incorporated, validly existing and in good
      standing under the laws of the applicable jurisdiction set forth on Schedule
      1,
      with the requisite corporate power and authority to own and use its properties
      and assets and to carry on its business as currently conducted. The Guarantor
      has no subsidiaries other than those identified as such on the Disclosure
      Schedules to the Purchase Agreement. The Guarantor is duly qualified to do
      business and is in good standing as a foreign corporation in each jurisdiction
      in which the nature of the business conducted or property owned by it makes
      such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, could not, individually or in the aggregate,
      (x)
      adversely affect the legality, validity or enforceability of any of this
      Guaranty in any material respect, (y) have a material adverse effect on the
      results of operations, assets, prospects, or financial condition of the
      Guarantor or (z) adversely impair in any material respect the Guarantor's
      ability to perform fully on a timely basis its obligations under this Guaranty
      (a “Material
      Adverse Effect”).

     

    (b) Authorization;
      Enforcement.
      The
      Guarantor has the requisite corporate power and authority to enter into and
      to
      consummate the transactions contemplated by this Guaranty, and otherwise to
      carry out its obligations hereunder. The execution and delivery of this Guaranty
      by the Guarantor and the consummation by it of the transactions contemplated
      hereby have been duly authorized by all requisite corporate action on the part
      of the Guarantor. This Guaranty has been duly executed and delivered by the
      Guarantor and constitutes the valid and binding obligation of the Guarantor
      enforceable against the Guarantor in accordance with its terms, except as such
      enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation or similar laws relating to, or
      affecting generally the enforcement of, creditors' rights and remedies or by
      other equitable principles of general application.

    

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Guaranty by the Guarantor and the
      consummation by the Guarantor of the transactions contemplated thereby do not
      and will not (i) conflict with or violate any provision of its Certificate
      of
      Incorporation or By-laws or (ii) conflict with, constitute a default (or an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, indenture or instrument to which the Guarantor
      is a party, or (iii) result in a violation of any law, rule, regulation, order,
      judgment, injunction, decree or other restriction of any court or governmental
      authority to which the Guarantor is subject (including Federal and state
      securities laws and regulations), or by which any material property or asset
      of
      the Guarantor is bound or affected, except in the case of each of clauses (ii)
      and (iii), such conflicts, defaults, terminations, amendments, accelerations,
      cancellations and violations as could not, individually or in the aggregate,
      have or result in a Material Adverse Effect. The business of the Guarantor
      is
      not being conducted in violation of any law, ordinance or regulation of any
      governmental authority, except for violations which, individually or in the
      aggregate, do not have a Material Adverse Effect.

     

    
      
         

      

      
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    (d) Consents
      and Approvals.
      The
      Guarantor is not required to obtain any consent, waiver, authorization or order
      of, or make any filing or registration with, any court or other federal, state,
      local, foreign or other governmental authority or other person in connection
      with the execution, delivery and performance by the Guarantor of this
      Guaranty.

    

    (e) Purchase
      Agreement.
      The
      representations and warranties of the Company set forth in the Purchase
      Agreement as they relate to such Guarantor, each of which is hereby incorporated
      herein by reference, are true and correct as of each time such representations
      are deemed to be made pursuant to such Purchase Agreement, and the Purchasers
      shall be entitled to rely on each of them as if they were fully set forth
      herein, provided that each reference in each such representation and warranty
      to
      the Company's knowledge shall, for the purposes of this Section 3, be deemed
      to
      be a reference to such Guarantor's knowledge. 

    

    (f) Foreign
      Law.
      Each
      Guarantor has consulted with appropriate foreign legal counsel with respect
      to
      any of the above representations for which non-U.S. law is applicable. Such
      foreign counsel have advised each applicable Guarantor that such counsel knows
      of no reason why any of the above representations would not be true and
      accurate. Such foreign counsel were provided with copies of this Subsidiary
      Guarantee and the Transaction Documents prior to rendering their advice.

    

    4. Covenants.
      

    

    (a) Each
      Guarantor covenants and agrees with the Purchasers that, from and after the
      date
      of this Guarantee until the Obligations shall have been paid in full, such
      Guarantor shall take, and/or shall refrain from taking, as the case may be,
      each
      commercially reasonable action that is necessary to be taken or not taken,
      as
      the case may be, so that no Event of Default is caused by the failure to take
      such action or to refrain from taking such action by such Guarantor.

     

    (b) So
      long
      as any of the Obligations are outstanding, each Guarantor will not directly
      or
      indirectly on or after the date of this Guarantee:

    

    i. Except
      with respect to a Permitted Indebtedness (as defined in the Debentures), enter
      into, create, incur, assume or suffer to exist any indebtedness for borrowed
      money of any kind, including but not limited to, a guarantee, on or with respect
      to any of its property or assets now owned or hereafter acquired or any interest
      therein or any income or profits therefrom;

    

    
      
         

      

      
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    ii. Except
      with respect to a Permitted Liens (as defined in the Debentures), enter into,
      create, incur, assume or suffer to exist any liens of any kind, on or with
      respect to any of its property or assets now owned or hereafter acquired or
      any
      interest therein or any income or profits therefrom;

    

    iii. amend
      its
      certificate of incorporation, bylaws or other charter documents so as to
      adversely affect any rights of the Holder hereunder;

    

    iv. repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a de
      minimis number of shares of its securities or debt obligations; 

    

    v. pay
      cash
      dividends on any equity securities of the Company;

    

    vi. enter
      into any transaction with any Affiliate of the Guarantor which would be required
      to be disclosed in any public filing of the Company with the Commission, unless
      such transaction is made on an arm’s-length basis and expressly approved by a
      majority of the disinterested directors of the Company (even if less than a
      quorum otherwise required for board approval); or

    

    vii. enter
      into any agreement with respect to any of the foregoing.

    

    5. Miscellaneous.

    

    (a) Amendments
      in Writing.
      None of
      the terms or provisions of this Guarantee may be waived, amended, supplemented
      or otherwise modified except in writing by the Purchasers.

     

    (b) Notices.
      All
      notices, requests and demands to or upon the Purchasers or any Guarantor
      hereunder shall be effected in the manner provided for in the Purchase
      Agreement, provided that any such notice, request or demand to or upon any
      Guarantor shall be addressed to such Guarantor at its notice address set forth
      on Schedule
      5(b).

    

    
      
         

      

      
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    (c) No
      Waiver By Course Of Conduct; Cumulative Remedies.
      The
      Purchasers shall not by any act (except by a written instrument pursuant to
      Section 5(a)), delay, indulgence, omission or otherwise be deemed to have waived
      any right or remedy hereunder or to have acquiesced in any default under the
      Transaction Documents or Event of Default. No failure to exercise, nor any
      delay
      in exercising, on the part of the Purchasers, any right, power or privilege
      hereunder shall operate as a waiver thereof. No single or partial exercise
      of
      any right, power or privilege hereunder shall preclude any other or further
      exercise thereof or the exercise of any other right, power or privilege. A
      waiver by the Purchasers of any right or remedy hereunder on any one occasion
      shall not be construed as a bar to any right or remedy which the Purchasers
      would otherwise have on any future occasion. The rights and remedies herein
      provided are cumulative, may be exercised singly or concurrently and are not
      exclusive of any other rights or remedies provided by law.

    

    (d) Enforcement
      Expenses; Indemnification.

    

    
      	 	
              (i)

            	
              Each
                Guarantor agrees to pay, or reimburse the Purchasers for, all its
                costs
                and expenses incurred in collecting against such Guarantor under
                the
                guarantee contained in Section 2 or otherwise enforcing or preserving
                any
                rights under this Guarantee and the other Transaction Documents to
                which
                such Guarantor is a party, including, without limitation, the reasonable
                fees and disbursements of counsel to the
                Purchasers.

            

    

     

    
      	 	
              (ii)

            	
              Each
                Guarantor agrees to pay, and to save the Purchasers harmless from,
                any and
                all liabilities with respect to, or resulting from any delay in paying,
                any and all stamp, excise, sales or other taxes which may be payable
                or
                determined to be payable in connection with any of the transactions
                contemplated by this Guarantee.

            

    

    

    
      	 	
              (iii)

            	
              Each
                Guarantor agrees to pay, and to save the Purchasers harmless from,
                any and
                all liabilities, obligations, losses, damages, penalties, actions,
                judgments, suits, costs, expenses or disbursements of any kind or
                nature
                whatsoever with respect to the execution, delivery, enforcement,
                performance and administration of this Guarantee to the extent the
                Company
                would be required to do so pursuant to the Purchase
                Agreement.

            

    

    

    
      	 	
              (iv)

            	
              The
                agreements in this Section shall survive repayment of the Obligations
                and
                all other amounts payable under the Purchase Agreement and the other
                Transaction Documents. 

            

    

    

    (e) Successor
      and Assigns.
      This
      Guarantee shall be binding upon the successors and assigns of each Guarantor
      and
      shall inure to the benefit of the Purchasers and their respective successors
      and
      assigns; provided that no Guarantor may assign, transfer or delegate any of
      its
      rights or obligations under this Guarantee without the prior written consent
      of
      the Purchasers.

     

    
      
         

      

      
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    (f) Set-Off.
      Each
      Guarantor hereby irrevocably authorizes the Purchasers at any time and from
      time
      to time while an Event of Default under any of the Transaction Documents shall
      have occurred and be continuing, without notice to such Guarantor or any other
      Guarantor, any such notice being expressly waived by each Guarantor, to set-off
      and appropriate and apply any and all deposits, credits, indebtedness or claims,
      in any currency, in each case whether direct or indirect, absolute or
      contingent, matured or unmatured, at any time held or owing by the Purchasers
      to
      or for the credit or the account of such Guarantor, or any part thereof in
      such
      amounts as the Purchasers may elect, against and on account of the obligations
      and liabilities of such Guarantor to the Purchasers hereunder and claims of
      every nature and description of the Purchasers against such Guarantor, in any
      currency, whether arising hereunder, under the Purchase Agreement, any other
      Transaction Document or otherwise, as the Purchasers may elect, whether or
      not
      the Purchasers have made any demand for payment and although such obligations,
      liabilities and claims may be contingent or unmatured. The Purchasers shall
      notify such Guarantor promptly of any such set-off and the application made
      by
      the Purchasers of the proceeds thereof, provided that the failure to give such
      notice shall not affect the validity of such set-off and application. The rights
      of the Purchasers under this Section are in addition to other rights and
      remedies(including, without limitation, other rights of set-off) which the
      Purchasers may have.

     

    (g) Counterparts.
      This
      Guarantee may be executed by one or more of the parties to this Guarantee on
      any
      number of separate counterparts (including by telecopy), and all of said
      counterparts taken together shall be deemed to constitute one and the same
      instrument. 

    

    (h) Severability.
      Any
      provision of this Guarantee which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction. 

    

    (i) Section
      Headings.
      The
      Section headings used in this Guarantee are for convenience of reference only
      and are not to affect the construction hereof or be taken into consideration
      in
      the interpretation hereof.

    

    (j) Integration.
      This
      Guarantee and the other Transaction Documents represent the agreement of the
      Guarantors and the Purchasers with respect to the subject matter hereof and
      thereof, and there are no promises, undertakings, representations or warranties
      by the Purchasers relative to subject matter hereof and thereof not expressly
      set forth or referred to herein or in the other Transaction
      Documents.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (k) Governing
      Law.
      THIS
      GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
      WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY PRINCIPLES OF
      CONFLICTS OF LAWS. 

    

    (l) Submission
      to Jurisdictional; Waiver.
      Each
      Guarantor hereby irrevocably
      and unconditionally:

    

    
      	 	
              (i)

            	
              submits
                for itself and its property in any legal action or proceeding relating
                to
                this Guarantee and the other Transaction Documents to which it is
                a party,
                or for recognition and enforcement of any judgment in respect thereof,
                to
                the non-exclusive general jurisdiction of the Courts of the State
                of New
                York, located in New York County, New York, the courts of the United
                States of America for the Southern District of New York, and appellate
                courts from any thereof; 

            

    

     

    
      	 	
              (ii)

            	
              consents
                that any such action or proceeding may be brought in such courts
                and
                waives any objection that it may now or hereafter have to the venue
                of any
                such action or proceeding in any such court or that such action or
                proceeding was brought in an inconvenient court and agrees not to
                plead or
                claim the same; 

            

    

    

    
      	 	
              (iii)

            	
              agrees
                that service of process in any such action or proceeding may be effected
                by mailing a copy thereof by registered or certified mail (or any
                substantially similar form of mail), postage prepaid, to such Guarantor
                at
                its address referred to in the Purchase Agreement or at such other
                address
                of which the Purchasers shall have been notified pursuant
                thereto;

            

    

    

    
      	 	
              (iv)

            	
              agrees
                that nothing herein shall affect the right to effect service of process
                in
                any other manner permitted by law or shall limit the right to sue
                in any
                other jurisdiction; and 

            

    

    

    
      	 	
              (v)

            	
              waives,
                to the maximum extent not prohibited by law, any right it may have
                to
                claim or recover in any legal action or proceeding referred to in
                this
                Section any special, exemplary, punitive or consequential damages.
                

            

    

    

    (m) Acknowledgements.
      Each
      Guarantor hereby acknowledges that:

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	 	
              (i)

            	
              it
                has been advised by counsel in the negotiation, execution and delivery
                of
                this Guarantee and the other Transaction Documents to which it is
                a party;
                

            

    

     

    
      	 	
              (ii)

            	
              the
                Purchasers have no fiduciary relationship with or duty to any Guarantor
                arising out of or in connection with this Guarantee or any of the
                other
                Transaction Documents, and the relationship between the Guarantors,
                on the
                one hand, and the Purchasers, on the other hand, in connection herewith
                or
                therewith is solely that of debtor and creditor; and
                

            

    

    

    
      	 	
              (iii)

            	
              no
                joint venture is created hereby or by the other Transaction Documents
                or
                otherwise exists by virtue of the transactions contemplated hereby
                among
                the Guarantors and the Purchasers. 

            

    

    

    (n) Additional
      Guarantors.
      The
      Company shall cause each of its subsidiaries formed or acquired on or subsequent
      to the date hereof to become a Guarantor for all purposes of this Guarantee
      by
      executing and delivering an Assumption
      Agreement in the form of Annex 1 hereto.

     

    (o) Release
      of Guarantors.
      Subject
      to Section 2.6, each Guarantor will be released from all liability hereunder
      concurrently with the repayment in full of all amounts owed under the Purchase
      Agreement, the Debentures and the other Transaction Documents. 

    

    (p) Seniority.
      The
      Obligations of each of the Guarantors hereunder rank senior in priority to
      any
      other Indebtedness (as defined in the Purchase Agreement) of such Guarantor.
      

    

    (q) Waiver
      of Jury Trial.
      EACH
      GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, THE PURCHASERS, HEREBY
      IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
      PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM
      THEREIN.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, each of the undersigned has caused this Guarantee to
      be
      duly executed and delivered as of the date first above written.

     

    
      	 	
              [SUBSIDIARY]

            
	 	 	 
	 	
              By:

            	 	
            
	 	 	
                      Name:

            
	 	 	
                      Title:

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    SCHEDULE
      1

    

    GUARANTORS

    

    The
      following are the names, notice addresses and jurisdiction of organization
      of
      each Guarantor.

    

    
      	 	 	 	 	
              COMPANY

            
	 	 	
              JURISDICTION
                OF 

            	 	
              OWNED
                BY

            
	 	 	
              INCORPORATION
                

            	 	
              PERCENTAGE

            
	 	 	 	 	 

    

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    Annex
      1
      to

    SUBSIDIARY
      GUARANTEE

    

    ASSUMPTION
      AGREEMENT, dated as of ____ __, ______ made by ______________________________,
      a
      ______________ corporation (the “Additional
      Guarantor”),
      in
      favor of the Purchasers pursuant to the Purchase Agreement referred to below.
      All capitalized terms not defined herein shall have the meaning ascribed to
      them
      in such Purchase Agreement. 

    

    W
      I T N E S S E T H :

    

      WHEREAS,
      Statmon Technologies Corp., a Nevada corporation (the “Company”)
      and
      the Purchasers have entered into a Securities Purchase Agreement, dated as
      of
      March 5, 2008 (as amended, supplemented or otherwise modified from time to
      time,
      the “Purchase
      Agreement”);
      

    

    WHEREAS,
      in connection with the Purchase Agreement, the Company and its Subsidiaries
      (other than the Additional Guarantor) have entered into the Subsidiary
      Guarantee, dated as of March 5, 2008 (as amended, supplemented or otherwise
      modified from time to time, the “Guarantee”)
      in
      favor of the Purchasers; 

    

    WHEREAS,
      the Purchase Agreement requires the Additional Guarantor to become a party
      to
      the Guarantee; and

    

    WHEREAS,
      the Additional Guarantor has agreed to execute and deliver
      this Assumption Agreement in order to become a party to the
      Guarantee;

    

    NOW,
      THEREFORE, IT IS AGREED:

    

    1. Guarantee.
      By
      executing and delivering this Assumption Agreement, the Additional Guarantor,
      as
      provided in Section 5(n) of the Guarantee, hereby becomes a party to the
      Guarantee as a Guarantor thereunder with the same force and effect as if
      originally named therein as a Guarantor and, without limiting the generality
      of
      the foregoing, hereby expressly assumes all obligations and liabilities of
      a
      Guarantor thereunder. The information set forth in Annex 1-A hereto is hereby
      added to the information set forth in Schedule 1 to the Guarantee. The
      Additional Guarantor hereby represents and warrants that each of the
      representations and warranties contained in Section 3 of the Guarantee is true
      and correct on and as the date hereof as to such Additional Guarantor (after
      giving effect to this Assumption Agreement) as if made on and as of such
      date.

     

    2. Governing
      Law.
      THIS
      ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
      ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the undersigned has caused this Assumption Agreement
      to be duly executed and delivered as of the date first above
      written.

     

    
      	 	
              [ADDITIONALGUARANTOR]

            	 
	 	 	 
	 	
              By:

            	 	 
	 	Name:	 
	 	Title:	 

    

     

    
      
         

      

      
        16SUBSCRIPTION
      AGREEMENT

     

    THIS
      SUBSCRIPTION AGREEMENT
      (this
“Agreement”),
      is
      effective as of March 4, 2008, by and among Neonode Inc., a Delaware
corporation
      (the
“Company”),
      and
      the subscribers identified on Exhibit A hereto (each a “Subscriber”
and
      collectively “Subscribers”).

     

    WHEREAS,
      the
      Company and the Subscribers are executing and delivering this Agreement in
      reliance upon an exemption from securities registration afforded by the
      provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
      D”)
      as
      promulgated by the United States Securities and Exchange Commission (the
“Commission”)
      under
      the Securities Act of 1933, as amended (the “1933
      Act”).

     

    WHEREAS,
      the
      parties desire that, upon the terms and subject to the conditions contained
      herein, the Company shall issue and sell to the Subscribers, as provided herein,
      and the Subscribers shall purchase from the Company, for up to an aggregate
      of
      $4,500,000 (the "Purchase
      Price"),
      up to
      1,800,000 shares of the Company’s Common Stock, $0.001 par value (the
“Common
      Stock”),
      at a
      per share purchase price of $2.50 (the “Shares”
or
      “Securities”).
      The
      forgoing transaction is sometimes referred to as the “Offering.”

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Agreement the Company and the Subscriber hereby agree as follows:

     

    1. Closing
      Date.
      The
“Closing
      Date”
shall
      be the date that the Purchase Price is transmitted by wire transfer from the
      Escrow Account (as defined below) or otherwise credited to or for the benefit
      of
      the Company. There may be multiple Closing Dates. The consummation of the
      transactions contemplated herein shall take place at the offices of Reed Smith,
      LLP II Embarcadero Center, 20th Floor, San Francisco, CA 94111, or remotely
      via
      the exchange of documents and signatures, upon the satisfaction or waiver of
      all
      conditions to closing set forth in this Agreement. This subscription is
      submitted to you in accordance with and subject to the terms and conditions
      described in this Subscription Agreement, and the Confidential Private Placement
      Memorandum dated February 26, 2008, as amended or supplemented from time to
      time, including all documents incorporated by reference therein and all
      attachments, schedules and exhibits thereto (the “Memorandum”),
      relating to the Offering. Subject to the satisfaction or waiver of the terms
      and
      conditions of this Agreement, on the Closing Date, the Subscribers shall
      purchase and the Company shall sell to each Subscriber the number of Shares
      set
      forth beside such Subscriber’s name on Exhibit A at a price per Share of $2.50
      for an aggregate cash payment equal to the amount set forth beside such
      Subscriber’s name on Exhibit A. Pending the occurrence of the Closing,
      Subscriber’s funds shall be deposited into an Escrow account (“Escrow
      Account”)
      maintained by Signature Bank, a New York State chartered bank, with offices
      at
      261 Madison Avenue, New York, NY 10016 (“Escrow
      Agent”)
      pursuant to an Escrow Agreement dated February 26, 2008 between the Company,
      the
      Broker (as defined in Section 5 hereto) and the Escrow Agent. Proceeds shall
      be
      released from the Escrow Account on the Closing Date.

     

    2. Subscriber
      Representations and Warranties.
      Each
      Subscriber hereby represents and warrants to and agrees with the Company
      that:

    

    (a) Organization
      and Standing of the Subscriber.
      If
      Subscriber is an entity, such Subscriber is a corporation, partnership or other
      entity duly incorporated or organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation or
      organization.

    

    (b) Authorization
      and Power.
      The
      Subscriber has the requisite power and authority to enter into and perform
      this
      Agreement and to purchase the Shares being sold to it hereunder. The execution,
      delivery and performance of this Agreement by the Subscriber and the
      consummation by it of the transactions contemplated hereby and thereby have,
      if
      Subscriber is an entity, been duly authorized by all necessary corporate or
      partnership action, and no further consent or authorization of the Subscriber
      or
      its Board of Directors, stockholders, partners, members, as the case may be,
      is
      required. 

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (c) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement and the consummation
      by
      the Subscriber of the transactions contemplated hereby and thereby or relating
      hereto do not and will not (i) result in a violation of the Subscriber’s charter
      documents or bylaws or other organizational documents or (ii) conflict with,
      or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of any agreement, indenture or
      instrument or obligation to which the Subscriber is a party or by which its
      properties or assets are bound, or result in a violation of any law, rule,
      or
      regulation, or any order, judgment or decree of any court or governmental agency
      applicable to the Subscriber or its properties (except for such conflicts,
      defaults and violations as would not, individually or in the aggregate, have
      a
      material adverse effect on the Subscriber). The Subscriber is not required
      to
      obtain any consent, authorization or order of, or make any filing or
      registration with, any court or governmental agency in order for it to execute,
      deliver or perform any of its obligations under this Agreement, or to purchase
      the Securities in accordance with the terms hereof, provided that for purposes
      of the representation made in this sentence, the Subscriber is assuming and
      relying upon the accuracy of the relevant representations and agreements of
      the
      Company herein.

    

    (d) Information
      on Company.
      The
      Subscriber has been furnished with the Memorandum and has been furnished with
      or
      has had access at the EDGAR Website of the Commission to the Company's Form
      10-K
      filed on January 29, 2007 for the fiscal year ended October 31, 2006, and the
      financial statements included therein for the year ended October 31, 2006,
      together with all subsequent filings made with the Commission available at
      the
      EDGAR website including the filings relating to the meeting of the Company’s
      stockholders held on August 10, 2007 (hereinafter referred to collectively
      as
      the "Reports").
      In
      addition, the
      Subscriber may have received in writing from the Company such other information
      concerning its operations, financial condition and other matters as the
      Subscriber has requested in writing, identified thereon as OTHER WRITTEN
      INFORMATION (the Memorandum and such other information is collectively, the
      "Other
      Written Information"),
      and
      considered all factors the
      Subscriber deems material in deciding on the advisability of investing in the
      Securities. The Other Written Information is qualified in its entirety by the
      information disclosed by the Company in the Reports. The Subscriber has not
      relied upon any representation or other information (oral or written) other
      than
      as stated in the Reports or the Other Written Information or as contained in
      documents so furnished to the Subscriber by the Company in writing. The
      Subscriber has had the opportunity to obtain any additional information, to
      the
      extent the Company had such information in their possession or could acquire
      it
      without unreasonable effort or expense, necessary to verify the accuracy of
      the
      information contained in the Memorandum and all documents received or reviewed
      in connection with the purchase of the Securities and has had the opportunity
      to
      have representatives of the Company provide him with such additional information
      regarding the terms and conditions of this particular investment and the
      financial condition, results of operations, business and prospects of the
      Company deemed relevant by the Subscriber, and all such requested information,
      to the extent the Company had such information in its possession or could
      acquire it without unreasonable effort or expense, has been provided by the
      Company in writing to the full satisfaction of the Subscriber.

     

    (e) Information
      on Subscriber.
      The
      Subscriber is an "accredited
      investor",
      as
      such term is defined in Regulation D promulgated by the Commission under the
      1933 Act, is experienced in investments and business matters, has a preexisting
      business relationship with the Broker (as defined in Section 5 herein), has
      made
      investments of a speculative nature and has purchased securities of United
      States publicly-owned companies in private placements in the past and, with
      its
      representatives, has such knowledge and experience in financial, tax and other
      business matters as to enable the
      Subscriber to utilize the information made available by the Company to evaluate
      the merits and risks of and to make an informed investment decision with respect
      to the proposed purchase, which represents a speculative investment. The
      Subscriber has the authority and is duly and legally qualified to purchase
      and
      own the Securities. The Subscriber is aware that an investment in the Securities
      involves a number of very significant risks and has carefully read and
      considered the matters set forth in the Memorandum and, in particular, the
      matters under the caption “Risk Factors” therein, and, in particular,
      acknowledges that such risks may materially adversely affect the Company’s
      results of operations and future prospects. The Subscriber is able to bear
      the
      risk of such investment for an indefinite period and to afford a complete loss
      thereof. The information set forth on the signature page hereto and in the
      Investor Questionnaire provided herewith regarding the
      Subscriber is accurate.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (f) Purchase
      of Shares.
      On the
      Closing Date, the
      Subscriber will purchase the Shares as principal for its own account for
      investment only and not with a view toward, or for resale in connection with,
      the public sale or any distribution thereof.

     

    (g) Compliance
      with Securities Laws.
      The
      Subscriber understands and agrees that the Securities have not been registered
      under the 1933 Act or any applicable state securities laws, by reason of their
      issuance in a transaction that does not require registration under the 1933
      Act
      (based in part on the accuracy of the representations and warranties of
the
      Subscriber contained herein), and that such Securities must be held indefinitely
      unless a subsequent disposition is registered under the 1933 Act or any
      applicable state securities laws or is exempt from such registration.
      The
      Subscriber will comply with all applicable rules and regulations in connection
      with the sales of the Securities including laws relating to short
      sales.

    (h) Shares
      Legend.
      The
      Shares shall bear the following or similar legend:

     

    "THE
      ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE
      SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
      OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
      THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
      ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
      SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
      FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
      SECURITIES."

     

    (i) Communication
      of Offer.
      The
      offer to sell the Securities was directly communicated to the Subscriber by
      the
      Company or the Broker. At no time was the Subscriber presented with or solicited
      by any leaflet, newspaper or magazine article, radio or television
      advertisement, or any other form of general advertising or solicited or invited
      to attend a promotional meeting otherwise than in connection and concurrently
      with such communicated offer.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (j) Authority;
      Enforceability.
      This
      Agreement and other agreements delivered together with this Agreement or in
      connection herewith have been duly authorized, executed and delivered by the
      Subscriber and are valid and binding agreements enforceable in accordance with
      their terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights generally and to general principles of equity;
      and the Subscriber has full power and authority necessary to enter into this
      Agreement and such other agreements and to perform its obligations hereunder
      and
      under all other agreements entered into by the Subscriber relating
      hereto.

    

    (k) Restricted
      Securities.
      The
      Subscriber understands that the Securities have not been registered under the
      1933 Act and the Subscriber will not sell, offer to sell, assign, pledge,
      hypothecate or otherwise transfer any of the Securities unless pursuant to
      an
      effective registration statement under the 1933 Act, or unless an exemption
      from
      registration is available. Notwithstanding anything to the contrary contained
      in
      this Agreement, the Subscriber may transfer (without restriction and without
      the
      need for an opinion of counsel) the Securities to its Affiliates (as defined
      below) provided that each such Affiliate is an “accredited investor” under
      Regulation D and such Affiliate agrees to be bound by the terms and conditions
      of this Agreement. For the purposes of this Agreement, an “Affiliate”
of
      any
      person or entity means any other person or entity directly or indirectly
      controlling, controlled by or under direct or indirect common control with
      such
      person or entity. Affiliate includes each Subsidiary of the Subscriber. For
      purposes of this definition, “control”
means
      the power to direct the management and policies of such person or firm, directly
      or indirectly, whether through the ownership of voting securities, by contract
      or otherwise.

    

    (l) No
      Governmental Review.
      The
      Subscriber understands that no United States federal or state agency or any
      other governmental or state agency has passed on or made recommendations or
      endorsement of the Securities or the suitability of the investment in the
      Securities nor have such authorities passed upon or endorsed the merits of
      the
      offering of the Securities or
      confirmed the accuracy or determined the adequacy of the Memorandum. The
      Memorandum has not been reviewed by any Federal, state or other regulatory
      authority.

    

    (m) Correctness
      of Representations.
      The
      Subscriber represents as to the Subscriber that the foregoing representations
      and warranties are true and correct as of the date hereof and, unless the
      Subscriber otherwise notifies the Company prior to the Closing Date shall be
      true and correct as of the Closing Date.

    

    (n) Survival.
      The
      foregoing representations and warranties shall survive the Closing
      Date.

     

    3. Company
      Representations and Warranties.
      The
      Company represents and warrants to and agrees with the Subscriber that except
      as
      set forth or disclosed in any Report or as disclosed in a Schedule attached
      hereto:

     

    (a) Due
      Incorporation.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation and has the
      requisite corporate power to own its properties and to carry on its business
      as
presently
      conducted. The Company is duly qualified as a foreign corporation to do business
      and is in good standing in each jurisdiction where the nature of the business
      conducted or property owned by it makes such qualification necessary, other
      than
      those jurisdictions in which the failure to so qualify would not have a Material
      Adverse Effect. For purposes of this Agreement, a “Material
      Adverse Effect”
shall
      mean a material adverse effect on the financial condition, results of
      operations, prospects, properties or business of the Company and its
      Subsidiaries taken as a whole. For purposes of this Agreement, “Subsidiary”
means,
      with respect to any entity at any date, any corporation, limited or general
      partnership, limited liability company, trust, estate, association, joint
      venture or other business entity of which more than 50% of (i) the
      outstanding capital stock having (in the absence of contingencies) ordinary
      voting power to elect a majority of the board of directors or other managing
      body of such entity, (ii) in the case of a partnership or limited liability
      company, the interest in the capital or profits of such partnership or limited
      liability company or (iii) in the case of a trust, estate, association,
      joint venture or other entity, the beneficial interest in such trust, estate,
      association or other entity business is, at the time of determination, owned
      or
      controlled directly or indirectly through one or more intermediaries, by such
      entity. The Subsidiaries as of the Closing Date are set forth on Schedule
      3(a).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b) Outstanding
      Stock.
      All
      issued and outstanding shares of capital stock of the Company and Subsidiary
      have been duly authorized and validly issued and are fully paid and
      non-assessable.

     

    (c) Authority;
      Enforceability.
      The
      Memorandum, this Agreement and any other agreements delivered together with
      this
      Agreement or in connection herewith (collectively “Transaction
      Documents”)
      have
      been duly authorized, executed and delivered by the Company and are valid and
      binding agreements of the Company enforceable in accordance with their terms,
      subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
      moratorium and similar laws of general applicability relating to or affecting
      creditors' rights generally and to general principles of equity. The Company
      has
      full corporate power and authority necessary to enter into and deliver the
      Transaction Documents and to perform its obligations thereunder.

     

    (d) Capitalization
      and Additional Issuances.
      The
      authorized and outstanding capital stock of the Company and Subsidiaries as
      of
      the date of this Agreement and the Closing Date (not including the Securities)
      are set forth on Schedule
      3(d).
      There
      are
      no outstanding agreements or preemptive or similar rights affecting the
      Company's Common Stock or equity and no outstanding rights, warrants or options
      to acquire, or instruments convertible into or exchangeable for, or agreements
      or understandings with respect to the sale or issuance of any shares of Common
      Stock or equity of the Company or Subsidiaries or other equity interest in
      the
      Company except as described on Schedule
      3(d) or
      as
      disclosed in the Reports.

     

    (e) Consents.
      No
      consent, approval, authorization or order of any court, governmental agency
      or
      body or arbitrator having jurisdiction over the Company, or any of its
      Affiliates, the Nasdaq Capital Market (the “NCM”)
      or the
      Company's shareholders is required for the execution by the Company of the
      Transaction Documents and compliance and performance by the Company of its
      obligations under the Transaction Documents, including, without limitation,
      the
      issuance and sale of the Securities. The Transaction Documents and the Company’s
      performance of its obligations thereunder have been unanimously approved by
      the
      Company’s Board of Directors.

     

    (f) No
      Violation or Conflict.
      Assuming the representations and warranties of the Subscriber in Section 2
      are
      true and correct, neither the issuance and sale of the Securities nor the
      performance of the Company’s obligations under the Transaction Documents by the
      Company will:

     

    (i) violate,
      conflict with, result in a breach of, or constitute a default (or an event
      which
      with the giving of notice or the lapse of time or both would be reasonably
      likely to constitute a default) under (A) the articles or certificate of
      incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
      any decree, judgment, order, law, treaty, rule, regulation or determination
      applicable to the Company of any court, governmental agency or body, or
      arbitrator having jurisdiction over the Company or over the properties or assets
      of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
      note or any other evidence of indebtedness, or any agreement, stock option
      or
      other similar plan, indenture, lease, mortgage, deed of trust or other
      instrument to which the Company or any of its Affiliates is a party, by which
      the Company or any of its Affiliates is bound, or to which any of the properties
      of the Company or any of its Affiliates is subject, or (D) the terms of any
      "lock-up" or similar provision of any underwriting or similar agreement to
      which
      the Company, or any of its Affiliates is a party;
      or

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (ii) result
      in
      the creation or imposition of any lien, charge or encumbrance upon the
      Securities or any of the assets of the Company or any of its Affiliates except
      as described herein; or

     

    (iii) except
      as
      described in Schedule
      3(d),
      result
      in the activation of any anti-dilution rights or a reset or repricing of any
      debt or security instrument of any other creditor or equity holder of the
      Company, nor result in the acceleration of the due date of any obligation of
      the
      Company.

     

    (g) The
      Securities.
      The
      Securities upon issuance:

     

    (i) are,
      or
      will be, free and clear of any security interests, liens, claims or other
      encumbrances, subject to restrictions upon transfer under the 1933 Act and
      any
      applicable state securities laws;

     

    (ii) have
      been, or will be, duly and validly authorized and on the date of issuance of
      the
      Shares, such Shares will be duly and validly issued, fully paid and
      non-assessable;

     

    (iii) will
      not
      have been issued or sold in violation of any preemptive or other similar rights
      of the holders of any securities of the Company;

     

    (iv) will
      not
      subject the holders thereof to personal liability by reason of being such
      holders; and

     

    (v) assuming
      the representations and warranties of the Subscribers as set forth in Section
      2
      hereof are true and correct, will not result in a violation of Section 5 under
      the 1933 Act.

     

    (h) Litigation.
      There
      is no pending or, to the best knowledge of the Company, threatened action,
      suit,
      proceeding or investigation before any court, governmental agency or body,
      or
      arbitrator having jurisdiction over the Company, or any of its Affiliates that
      would affect the execution by the Company or the performance by the Company
      of
      its obligations under the Transaction Documents. Except as disclosed in the
      Reports, there is no pending or, to the best knowledge of the Company, basis
      for
      or threatened action, suit, proceeding or investigation before any court,
      governmental agency or body, or arbitrator having jurisdiction over the Company,
      or any of its Affiliates which litigation if adversely determined would have
      a
      Material Adverse Effect.

     

    (i) No
      Market Manipulation.
      The
      Company and its Affiliates have not taken, and will not take, directly or
      indirectly, any action designed to, or that might reasonably be expected to,
      cause or result in stabilization or manipulation of the price of the Common
      Stock to
      facilitate the sale or resale of the Securities or affect the price at which
      the
      Securities may be issued or resold.

     

    (j) Information
      Concerning Company.
      The
      Reports including the exhibits and financial statements included therewith,
      and
      Other Written Information contain all material information relating to the
      Company and its operations and financial condition as of their respective dates
      which information is required to be disclosed therein. Since the dates of the
      most recent financial statements included in the Reports, and except as modified
      in the Other Written Information or in the Schedules hereto, there has been
      no
      Material Adverse Event relating to the Company's business, financial condition
      or affairs not disclosed in the Reports. The Reports including the exhibits
      and
      financial statements included therewith, and Other Written Information do not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein,
      taken
      as a whole, not misleading in light of the circumstances when made.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (k) Stop
      Transfer.
      The
      Company will not issue any stop transfer order or other order impeding the
      sale,
      resale or delivery of any of the Securities, except as may be required by any
      applicable federal or state securities laws and unless contemporaneous notice
      of
      such instruction is given to the Subscriber.

     

    (l) Defaults.
      Except
      as set forth in Schedule
      3(l),
      the
      Company is not in violation of its articles of incorporation or bylaws. The
      Company is (i) not in default under or in violation of any other material
      agreement or instrument to which it is a party or by which it or any of its
      properties are bound or affected, which default or violation would have a
      Material Adverse Effect,
      (ii)
      not in default with respect to any order of any court, arbitrator or
      governmental body or subject to or party to any order of any court or
      governmental authority arising out of any action, suit or proceeding under
      any
      statute or other law respecting antitrust, monopoly, restraint of trade, unfair
      competition or similar matters, or (iii) not in violation of any statute, rule
      or regulation of any governmental authority which violation would have a
      Material Adverse Effect.

     

    (m) No
      Integrated Offering.
      Neither
      the Company, nor any of its Affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would cause
      the offer of the Securities pursuant to this Agreement to be integrated with
      prior offerings by the Company for purposes of the 1933 Act or any applicable
      stockholder approval provisions, including, without limitation, under the rules
      and regulations of the NCM which would impair the exemptions relied upon in
      this
      Offering or the Company’s ability to timely comply with its obligations
      hereunder. Neither the Company nor any of its Affiliates will take any action
      or
      steps that would cause the offer or issuance of the Securities to be integrated
      with other offerings which would impair the exemptions relied upon in this
      Offering or the Company’s ability to timely comply with its obligations
      hereunder. The Company will not conduct any offering other than the transactions
      contemplated hereby that will be integrated with the offer or issuance of the
      Securities that would impair the exemptions relied upon in this Offering or
      the
      Company’s ability to timely comply with its obligations hereunder.

     

    (n) No
      General Solicitation.
      Neither
      the Company, nor any of its Affiliates, nor to its knowledge, any person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D under the 1933 Act)
      in
      connection with the offer or sale of the Securities.

     

    (o) No
      Undisclosed Liabilities.
      The
      Company has no liabilities or obligations which are material, individually
      or in
      the aggregate, other than those incurred in the ordinary course of the Company
      businesses since the date of the most recent audited financial statements of
      the
      Company contained in the Reports, and which, individually or in the aggregate,
      would reasonably be expected to have a Material Adverse Effect,
      except
      as disclosed in the Reports or on Schedule
      3(o).

     

    (p) No
      Undisclosed Events or Circumstances.
      Since
      the date of the most recent audited financial statements of the Company
      contained in the Reports, no event has occurred with respect to the Company
      or
      its businesses, properties, operations or financial condition, that, under
      applicable law, rule or regulation, requires public disclosure prior to the
      date
      hereof by the Company but which has not been so publicly disclosed.

     

    (q) Investment
      Company.
      Neither
      the Company nor any Affiliate of the Company is an “investment company” within
      the meaning of the Investment Company Act of 1940, as amended.

     

    (r) Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any funds
      for unlawful contributions, gifts, entertainment or other unlawful expenses
      related to foreign or domestic political activity, (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic political parties or campaigns from corporate funds, (iii)
      failed to disclose fully any contribution made by the Company (or made by any
      person acting on its behalf of which the Company is aware) which is in violation
      of law, or (iv) violated in any material respect any provision of the Foreign
      Corrupt Practices Act of 1977, as amended.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    (s) Reporting
      Company.
      The
      Company is a publicly-held company subject to reporting obligations pursuant
      to
      Section 13 of the Securities Exchange Act of 1934, as amended (the "1934
      Act")
      and
      has a class of Common Stock registered pursuant to Section 12(g) of the 1934
      Act. Pursuant to the provisions of the 1934 Act, the Company has timely filed
      all reports and other materials required to be filed thereunder with the
      Commission (the “SEC
      Reports”)
      during
      the preceding twelve months except where the failure to so timely file has
      not
      had a continuing Material Adverse Effect on the Company as of the Closing Date.
      As of their respective dates, the SEC Reports complied in all material respects
      with the requirements of the 1933 Act and the 1934 Act, as applicable, and
      none
      of the SEC Reports, when filed, contained any untrue statement of a material
      fact or omitted to state a material fact required to be stated therein or
      necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the Commission with respect thereto as in effect at the time of filing.
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”), except as may be otherwise specified in such
      financial statements or the notes thereto and except that unaudited financial
      statements may not contain all footnotes required by GAAP, and fairly present
      in
      all material respects the financial position of the Company and its consolidated
      subsidiaries as of and for the dates thereof and the results of operations
      and
      cash flows for the periods then ended, subject, in the case of unaudited
      statements, to normal, immaterial, year-end audit adjustments.

    

    (t) Listing.
      The
      Company's Common Stock is quoted on the NCM under the symbol NEON. Except as
      disclosed on a current report on Form 8-K filed with the Commission on March
      23,
      2007, the Company has not received any oral or written notice that its Common
      Stock is not eligible nor will become ineligible for listing on the NCM nor
      that
      its Common Stock does not meet all requirements for the continuation of such
      listing. The Company satisfies all the requirements for the continued listing
      of
      its Common Stock on the NCM.

    

    (u) DTC
      Status.
      The
      Company’s transfer agent is a participant in, and the Common Stock is eligible
      for transfer pursuant to, the Depository Trust Company Automated Securities
      Transfer Program. The name, address, telephone number, fax number, contact
      person and email address of the Company transfer agent is set forth on
Schedule
      3(u)
      hereto.

    

    (v) Intellectual
      Property.
      To the
      Company’s knowledge, the Company and its Subsidiaries own, or possess adequate
      rights or licenses to use, all registered trademarks, trade names, service
      marks, service mark registrations, service names, patents, patent applications,
      patent rights, copyrights, inventions, licenses, approvals, governmental
      authorizations, trade secrets and other intellectual property rights
      (“Intellectual Property Rights”) necessary to conduct their respective
      businesses
      now
      conducted. None of the Company’s Intellectual Property Rights have expired, or
      are expected to expire, within six months from the date of this Agreement.
      The
      Company does not have any knowledge of any infringement by the Company or its
      Subsidiaries of Intellectual Property Rights of others. There is no pending,
      or
      to the best knowledge of the Company, threatened action,
      suit, proceeding or any investigation, before any court, governmental agency,
      or
      body or arbitrator having jurisdiction over the Company, or any of its
      affiliates
      regarding its Intellectual Property Rights. The
      Company and its Subsidiaries have taken reasonable security measures to protect
      the secrecy, confidentiality and value of all of their intellectual properties,
      except where failure to do so could not, individually or in the aggregate,
      reasonably be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    (w) Company
      Predecessor and Subsidiaries.
      The
      Company makes each of the representations contained in Sections 3(a), (b),
      (c),
      (d), (e), (f), (h), (j), (l), (o), (p), (q), and (v) of this Agreement, as
      same
      relate to each Subsidiary of the Company. All representations made by or
      relating to the Company of a historical or prospective nature and all
      undertakings described in Sections 6(d) through 6(g) shall relate, apply and
      refer to the Company and its predecessors. The Company represents that it owns
      100% of the outstanding equity of the Subsidiaries and rights to receive equity
      of the Subsidiaries free and clear of all liens, encumbrances and claims. No
      person or entity other than the Company has the right to own and receive any
      equity interest in the Subsidiaries.

    

    (x) Correctness
      of Representations.
      The
      Company represents that the foregoing representations and warranties are true
      and correct as of the date hereof in all material respects, and, unless the
      Company otherwise notifies the Subscriber prior to the Closing Date, shall
      be
      true and correct in all material respects as of the Closing Date; provided,
      that, if such representation or warranty is made as of a different date, in
      which case such representation or warranty shall be true as of such
      date.

     

    (y) Survival.
      The
      foregoing representations and warranties shall survive the Closing
      Date.

     

    4. Regulation
      D Offering,
      The
      offer and issuance of the Securities to the Subscriber is being made pursuant
      to
      the exemption from the registration provisions of the 1933 Act afforded by
      Section 4(2) or Section 4(6) of the 1933 Act and/or Rule 506 of Regulation
      D
      promulgated thereunder.

    5. Broker
      Fees; Indemnification,
      The
      Company on the one hand, and the Subscriber on the other hand, agrees to
      indemnify the other against and hold the other harmless from any and all
      liabilities to any persons claiming brokerage commissions or similar fees other
      than Empire Asset Management, Inc. (the “Broker”)
      on
      account of services purported to have been rendered on behalf of the
      indemnifying party in connection with this Agreement or the transactions
      contemplated hereby and arising out of such party’s actions. The Subscriber
      acknowledges that the Company will (i) pay the Broker an aggregate cash fee
      up
      to 10% of the Purchase Price on the Closing Date, which shall be allocated
      as
      follows: selling commissions of 5%, a placement fee of 2.5% and a management
      fee
      of 2.5%, (ii) pay the Broker $25,000.00 to apply towards reimbursement of
      offering expenses, and pay additional offering expenses in excess of $25,000
      submitted to the Company for reimbursement by the Broker, and (iii) issue to
      the
      Broker one share of Common Stock for every 15 shares of Common Stock sold in
      this Offering (120,000 shares if the maximum is sold). The Company represents
      that there are no other parties entitled to receive fees, commissions, or
      similar payments in connection with the offering described in this Agreement
      except the Broker.

     

    6. Covenants
      of the Company.
      The
      Company covenants and agrees with the Subscriber as follows:

     

    (a) Filing
      Requirements.
      For as
      long as the Company is a reporting issuer with the Commission, the
      Company shall file all reports and other materials required to be filed under
      the 1934 Act with the Commission.

     

    (b) Listing/Quotation.
      The
      Company shall promptly secure the quotation or listing of the Shares upon each
      national securities exchange, or automated quotation system upon which they
      are
      or become eligible for quotation or listing (subject to official notice of
      issuance).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c) Market
      Regulations.
      The
      Company shall notify the Commission, the NCM and applicable state authorities,
      in accordance with their requirements, of the transactions contemplated by
      this
      Agreement, and shall take all other necessary action and proceedings as may
      be
      required and permitted by applicable law, rule and regulation, for the legal
      and
      valid issuance of the Securities to the Subscriber.

     

    (d) Books
      and Records.
      From the
      date of this Agreement until the date twelve months following the Closing Date
      (the “End
      Date”),
      the
      Company will keep true records and books of account in which full, true and
      correct entries will be made of all dealings or transactions in relation to
      its
      business and affairs in accordance with generally accepted accounting principles
      applied on a consistent basis.

     

    (e) Governmental
      Authorities.
      From the
      date of this Agreement and until the End Date, the Company shall duly observe
      and conform in all material respects to all valid requirements of governmental
      authorities relating to the conduct of its business or to its properties or
      assets.

     

    (f) Non-Public
      Information.
      The
      Company covenants and agrees that except for the Reports, Other Written
      Information and schedules and exhibits to this Agreement, which information
      the
      Company undertakes to publicly disclose not later than the sooner of the
      required or actual filing date of a Form 8-K, neither it nor any other person
      acting on its behalf will at any time provide the Subscriber or its agents
      or
      counsel with any information that the Company believes constitutes material
      non-public information, unless (i) such disclosure is required under the terms
      of this Agreement or (ii) prior thereto the Subscriber shall have agreed in
      writing to keep such information in confidence. The Company understands and
      confirms that the Subscriber shall be relying on the foregoing representations
      in effecting transactions in securities of the Company.

     

    (g) Notices.
      Until
      the End Date, the Company will maintain a United States address and United
      States fax number for notices purposes under the Transaction
      Documents.

     

    (h) Use
      of
      Proceeds.
      Except
      as set forth on Schedule 6(h) attached hereto, the Company shall use the net
      proceeds from the sale of the Securities hereunder for working capital purposes
      and shall not use such proceeds for (a) the satisfaction of any portion of
      the
      Company’s debt (other than payment of trade payables in the ordinary course of
      the Company’s business and prior practices), (b) the redemption of any Common
      Stock or Common Stock equivalents or (c) the settlement of any outstanding
      litigation. 

     

    7. Piggy-Back
      Registration Rights and Indemnification.
      

     

    (a)
       Piggy-Back
      Rights.
      As used
      in this Section 7(a): 

     

    “Effective
      Date”
shall
      mean the date the Registration Statement is declared effective by the
      Commission.

     

    “Prospectus”
shall
      mean the prospectus included in the Registration Statement (including a
      prospectus that includes any information previously omitted from a prospectus
      filed as part of an effective registration statement in reliance upon Rule
      430A
      promulgated under the 1933 Act), as amended or supplemented by any prospectus
      supplement, with respect to the terms of the offering of any portion of the
      Registrable Securities covered by the Registration Statement, and all other
      amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    “Registrable
      Securities”
shall
      mean any Shares together with any securities issued or issuable upon any stock
      split, dividend or other distribution, adjustment, recapitalization or similar
      event with respect to the foregoing. 

     

    “Registration
      Statement”
shall
      mean a registration statement, including the Prospectus, amendments and
      supplements to such registration statement or Prospectus, including pre- and
      post-effective amendments, all exhibits thereto, and all material incorporated
      by reference or deemed to be incorporated by reference in such registration
      statement.

     

    (i)
      If,
      at any time during the period beginning on the Closing Date and ending on the
      sooner of (A) the day falling 24 months after the Closing Date and (B) when
      the
      Registrable Securities may be sold without restriction and without volume
      limitations pursuant to Rule 144 of the 1933 Act, the Company shall determine
      to
      prepare and file with the Commission a Registration Statement relating to an
      offering for its own account or the account of others under the 1933 Act of
      any
      of its equity securities, other than on Form S-4 or Form S-8 (each as
      promulgated under the 1933 Act) or their then equivalents relating to equity
      securities to be issued solely in connection with any acquisition of any entity
      or business or equity securities issuable in connection with stock option or
      other employee benefit plans (a “Registration”),
      then
      the Company shall promptly send to the Subscriber a written notice of such
      determination and if, within 15 days after receipt of such notice, the
      Subscriber shall so request in writing, the Company shall include in such
      Registration Statement all or any part of such Registrable Securities the
      Subscriber requests to be registered provided, however, that (A)
      if such
      registration involves an underwritten public offering, the Subscriber requesting
      such registration must sell its Registrable Securities to the underwriters
      on
      the same terms (to the extent applicable) as apply to the Company and (B) if,
      at
      any time after giving such written notice of its intention to register its
      equity securities and prior to the Effective Date of the Registration Statement
      filed in connection with such registration, the Company shall, for any reason,
      terminate its attempt to register such equity securities, the Company shall
      give
      written notice to the Subscriber and, thereupon, the Company shall be relieved
      of its obligation to register any Registrable Securities in connection with
      such
      registration.

     

    (ii)
      If a
      Registration involves an underwritten public offering and the managing
      underwriter thereof advises the Company that, in its view, the number of shares
      of Common Stock proposed to be included in such Registration exceeds the largest
      number of shares of Common Stock that can be sold without having an adverse
      effect on such public offering (the “Maximum
      Offering Size”),
      the
      Company will include in such Registration only that number of shares of Common
      Stock which does not cause the Maximum Offering Size to be exceeded, in the
      following order of priorities: (A) first, all securities the Company proposes
      to
      sell for its own account, (B) second, up to the full number of securities
      proposed to be registered for the account of the holders of securities entitled
      to inclusion of their securities in the registration statement by reason of
      registration rights existing on or prior to the date hereof, (C) third, the
      securities requested to be registered by the Subscriber and (D) fourth, the
      securities requested to be registered by other holders of securities entitled
      to
      participate in the Registration. If as a result of the provisions of this
      Section 7(a)(ii), the Subscriber is not entitled to include all such Registrable
      Securities in such registration, the Subscriber may elect to withdraw its
      request to include any Registrable Securities in such registration.

     

    (iii)
      If
      the Company undertakes a Registration, the Company shall:

     

    (A)
      Notify the Subscriber as promptly as reasonably possible of any of the following
      events: (I) if the Commission issues any stop order suspending the effectiveness
      of the Registration Statement or initiates any action, claim, suit,
      investigation or proceeding for that purpose; (II) the Company receives notice
      of any suspension of the qualification or exemption from qualification of any
      Registrable Securities for sale in any jurisdiction, or the initiation or threat
      of any action, claim, suit, investigation or proceeding for such purpose; or
      (III) the financial statements included in the Registration Statement become
      ineligible for inclusion therein or any statement made in the Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference is untrue in any material respect or any
      revision to the Registration Statement, Prospectus or other document is required
      so that it will not contain any untrue statement of a material fact or omit
      to
      state any material fact required to be stated therein or necessary to make
      the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If the Company notifies the Subscriber in accordance with this
      paragraph, then the Subscriber shall suspend the use of the Prospectus until
      the
      Company (i) provides copies of a supplemented or amended Prospectus, or (ii)
      advises in writing that the use of the Prospectus may be resumed and has
      received copies of any additional or supplemental filings that are incorporated
      by reference in the Prospectus. Notwithstanding the foregoing, the Company
      shall
      not be required to amend or supplement the Registration Statement, any related
      Prospectus or any document incorporated by reference therein for a period not
      to
      exceed 60 consecutive days (or 120 days in the aggregate in any calendar year)
      if there occurs or exists any pending corporate development the disclosure
      of
      which would, in the good faith judgment of the Board of Directors of the
      Company, be harmful to the business, operations, prospects, or condition
      (financial or otherwise) of the Company and its subsidiaries, taken as a
      whole;

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (B)
      Deliver to the Subscriber, which delivery may be made electronically, by the
      fifth business day after a Subscriber request, without charge, such reasonable
      number of copies of the Prospectus or Prospectuses (including each form of
      prospectus) and each amendment or supplement thereto as the Subscriber may
      reasonably request;

     

    (C)
      To
      the extent required by law, prior to registration hereunder, use its reasonable
      efforts to register or qualify or cooperate with the Subscriber in connection
      with the registration or qualification (or exemption from such registration
      or
      qualification) of such Registrable Securities for offer and sale under the
      securities or “blue sky” laws of such jurisdictions within the United States as
      the Subscriber requests in writing and to do any and all other acts or things
      necessary or advisable to enable the disposition in such jurisdictions of the
      Registrable Securities covered by a Registration Statement; provided, however,
      that the Company shall not be required for any such purpose to (I) qualify
      generally to do business as a foreign corporation in any jurisdiction wherein
      it
      would not be otherwise required to qualify but for the requirements of this
      Section 7(a), or (II) subject itself to taxation; and

     

    (D)
      Comply in all material respects with all applicable rules and regulations of
      the
      Commission and the principal stock exchange or market on which the Common Stock
      is then listed or eligible for trading.

     

    (iv)
      The
      Subscriber shall have the right to select one legal counsel to review and
      oversee any Registration (“Subscriber
      Counsel”)
      at the
      Subscriber’s expense. Broker shall have the right to select its own legal
      counsel to review and oversee any Registration (“Broker’s Counsel,” and together
      with Subscriber’s Counsel “Legal Counsel”) at the Company’s expense, subject to
      a $5,000 cap on legal expenses. The Company and Legal Counsel shall reasonably
      cooperate with each other in performing the Company’s obligations under this
      Agreement.

     

    (v)
      The
      Company shall pay all reasonable fees and expenses incident to a Registration
      by
      the Company, including (A) all registration and filing fees and expenses
      (including those related to filings with the Commission, in connection with
      applicable state securities or “blue sky” laws and to Nasdaq), (B) printing
      expenses (including expenses of printing certificates for Registrable Securities
      and of printing copies of Prospectuses reasonably requested by the Subscriber),
      (C) messenger, telephone and delivery expenses, (D) fees and disbursements
      of
      counsel for the Company, and (E) fees and expenses of all other Persons retained
      by the Company in connection with the Registration. Notwithstanding
      the foregoing or anything in this Agreement to the contrary, each holder of
      the
      Registrable Securities being registered shall pay all commissions and
      underwriting discounts with respect to any Registrable Securities sold by it
      and
      the fees and disbursements of any counsel or other advisors or experts retained
      by such holders (severally or jointly). 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (vi)
      In
      connection with the preparation of a registration statement including the
      Registrable Securities pursuant to this Section 7, Subscriber agrees to furnish
      to the Company a completed questionnaire in a form acceptable to the Company
      upon request. Subscriber agrees further to supplement the questionnaire as
      necessary to enable the Company to respond to comments, if any, received by
      the
      Commission. The Company shall not be required to include any Subscriber that
      does not complete, date and execute a selling stockholder
      questionnaire.

     

    (b) Indemnification.
      

     

    (i) Indemnification
      by the Company.
      The
      Company agrees to indemnify and hold harmless the Subscriber and all of its
      members, officers and employees (and each person, if any, who controls the
      Subscriber within the meaning of Section 15 of the 1933 Act or Section 20 of
      the
      1934 Act) (collectively, the “Indemnitees”),
      from
      and against any losses, claims, damages or liabilities (collectively,
“Losses”)
      to
      which they may become subject (under the 1933 Act or otherwise) insofar as
      such
      Losses (or actions or proceedings in respect thereof) arise out of, or are
      based
      upon, any untrue statement or alleged untrue statement of a material fact
      contained in the Registration Statement or any omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein, in light of the circumstances under which they were
      made, not misleading or arise out of any failure by the Company to fulfill
      any
      undertaking included in the Registration Statement and the Company will, as
      incurred, reimburse the Indemnitees for any legal or other expenses reasonably
      incurred in investigating, defending or preparing to defend any such action,
      proceeding or claim; provided, however, that the Company shall not be liable
      in
      any such case to the extent that such Loss arises out of, or is based upon,
      an
      untrue statement or omission or alleged untrue statement or omission made in
      such Registration Statement in reliance upon and in conformity with written
      information furnished to the Company by or on behalf of such Indemnitees
      specifically for use in preparation of the Registration Statement; provided,
      further, however, that the foregoing indemnification shall not inure to the
      benefit of any Indemnitee who failed to deliver a final Prospectus or an
      amendment or supplement thereto (provided by the Company to such Indemnitee
      in
      the requisite quantity and on a timely basis to permit proper delivery on or
      prior to the relevant transaction date) to the person asserting any losses,
      claims, damages and liabilities and judgments caused by any untrue statement
      of
      a material fact contained in any Prospectus, or caused by any omission to state
      therein a material fact required to be stated therein or necessary to make
      the
      statements therein, in light of the circumstances under which they were made,
      not misleading, if such material misstatement or omission was cured in such
      final Prospectus or amendment or supplement thereto.

     

    (ii)  Indemnification
      by the Subscriber.
      The
      Subscriber agrees to indemnify and hold harmless the Company (and
      each
      person, if any, who controls the Company within the meaning of Section 15 of
      the
      1933 Act or Section 20 of the 1934 Act, each
      officer of the Company who signs the Registration Statement and each director
      of
      the Company), from and against any losses, claims, damages or liabilities to
      which the Company (or any such officer, director or controlling person) may
      become subject (under the 1933 Act or otherwise), insofar as such losses,
      claims, damages or liabilities (or actions or proceedings in respect thereof)
      arise out of, or are based upon, any untrue statement or alleged untrue
      statement of a material fact contained in the Registration Statement or any
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading in each case, on the
      effective date thereof, if, and to the extent, such untrue statement or omission
      or alleged untrue statement or omission was made in reliance upon and in
      conformity with written information furnished by or on behalf of the Subscriber
      specifically for use in preparation of the Registration Statement, and such
      Subscriber will reimburse the Company (and each of its officers, directors
      or
      controlling persons) for any legal or other expenses reasonably incurred in
      investigating, defending or preparing to defend any such action, proceeding
      or
      claim; provided, however, that in no event shall any indemnity under this
      Section 7(b)(ii) be greater in amount than the net proceeds to the Subscriber
      as
      a result of the sale of Registrable Securities pursuant to such Registration
      Statement.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (iii) Conduct
      of Indemnification Proceedings.
      If any
      action, claim, suit, investigation or proceeding (a “Proceeding”)
      shall
      be brought or asserted against any person entitled to indemnity hereunder (an
      “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall be entitled to participate therein,
      and to the extent that it shall wish to assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof. After notice from the Indemnifying Party to such Indemnified Party
      of
      its election to assume the defense thereof, such Indemnifying Party shall not
      be
      liable to such Indemnified Party for any legal expenses subsequently incurred
      by
      Indemnified Party in connection with the defense thereof. An Indemnified Party
      shall have the right to employ separate counsel in any such Proceeding and
      to
      participate in the defense thereof, but the fees and expenses of such counsel
      shall be at the expense of such Indemnified Party or Parties. If there exists
      or
      shall exist a conflict of interest that would make it inappropriate in the
      reasonable judgment of the Indemnified Party for the same counsel to represent
      both the Indemnified Party and such Indemnifying Party or any affiliate or
      associate thereof, the Indemnified Party shall be entitled to retain its own
      counsel at the expense of such Indemnifying Party; provided, further, that
      no
      Indemnifying Party shall be responsible for the fees and expense of more than
      one separate counsel for all Indemnified Parties. The Indemnifying Party shall
      not settle an action without the consent of the Indemnified Party, which consent
      shall not be unreasonably withheld, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on claims
      that are the subject matter of such Proceeding. All reasonable fees and expenses
      of the Indemnified Party (including reasonable fees and expenses to the extent
      incurred in connection with investigating or preparing to defend such Proceeding
      in a manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten trading days of written notice thereof to the
      Indemnifying Party (regardless of whether it is ultimately determined that
      an
      Indemnified Party is not entitled to indemnification hereunder; provided, that
      the Indemnifying Party may require such Indemnified Party to undertake to
      reimburse all such reasonable fees and expenses to the extent it is finally
      judicially determined that such Indemnified Party is not entitled to
      indemnification hereunder).

     

    (iv) Contribution.
      If a
      claim for indemnification under Section 7(b)(i) or (ii) is unavailable to an
      Indemnified Party (by reason of public policy or otherwise), then each
      Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
      contribute to the amount paid or payable by such Indemnified Party as a result
      of such Losses, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or related to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in Section 7(b)(iii), any reasonable attorneys’ or other reasonable fees or
      expenses incurred by such party in connection with any Proceeding to the extent
      such party would have been indemnified for such fees or expenses if the
      indemnification provided for in this Section 7(b)(iv) was available to such
      party in accordance with its terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 7(b)(iv) were determined by pro rata allocation or
      by
      any other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 7(b)(iv), the Subscriber shall
      not be required to contribute, in the aggregate, any amount which exceeds the
      net proceeds actually received by the Subscriber from the sale of the
      Registrable Securities subject to the Proceeding. No person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
      be
      entitled to contribution from any person who was not guilty of such fraudulent
      misrepresentation. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    8. Miscellaneous.

     

    (a)  Termination.
      This
      Agreement may be terminated by any Subscriber, as to such Subscriber’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Subscribers, by written notice to the other
      parties, if the Closing has not been consummated on or before March 31, 2008,
      subject to a 15 day extension; provided, however, that no such termination
      will
      affect the right of any party to sue for any breach by the other party (or
      parties).

     

    (b)  Independent
      Nature of Subscribers’ Obligations and Rights.
      The
      obligations of each Subscriber under this Agreement is several and not joint
      with the obligations of any other Subscriber, and no Subscriber shall be
      responsible in any way for the performance or non-performance of the obligations
      of any other Subscriber under this Agreement or any other document relating
      to
      this Agreement. Nothing contained herein and no action taken by any Subscriber
      pursuant thereto, shall be deemed to constitute the Subscribers as a
      partnership, an association, a joint venture or any other kind of entity, or
      create a presumption that the Subscribers are in any way acting in concert
      or as
      a group with respect to such obligations or the transactions contemplated by
      the
      Transaction Documents. Each Subscriber shall be entitled to independently
      protect and enforce its rights, including without limitation, the rights arising
      out of this Agreement or any other document relating to this Agreement, and
      it
      shall not be necessary for any other Subscriber to be joined as an additional
      party in any proceeding for such purpose. Each Subscriber has been represented
      by its own separate legal counsel in their review and negotiation of this
      Agreement. 

     

    (c)  No
      Third-Party Beneficiaries This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person, except as otherwise set
      forth
      in Sections 2, 3, 7(b) and any other specific provision hereof. Notwithstanding
      the foregoing, the Broker shall be a third party beneficiary to the
      representations and warranties made by the Company in section 3 of this
      Agreement.

     

    (d)  Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: (i) if to the Company, to: Neonode Inc., 4000 Executive
      Parkway, Suite 200, San Ramon, CA 94583, Attn: CFO, telecopier:
      (925) 355-2020, and Biblioteksgatan 11, S111 46 Stockholm, Sweden, Attn:
      President, telecopier: 01146 8678 1851, with a copy only by hand delivery to:
      Reed Smith, LLP, II Embarcadero Center, 20th
      Floor,
      San Francisco, CA 94111 Attn: Don Reinke (ii) if to the Subscribers, to: the
      address and telecopier number indicated on the signature pages hereto with
      a
      copy to the Broker: Empire Asset Management Company, 2 Rector Street,
      15th
      Floor,
      New York, New York 10006, Attn: Gregg Zeoli, President, telecopier (212)
      417-8229.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (e) Entire
      Agreement; Assignment/Amendment.
      This
      Agreement and other documents delivered in connection herewith represent the
      entire agreement between the parties hereto with respect to the subject matter
      hereof and may be amended only by a writing executed by the Company and the
      Subscriber. Neither the Company nor the Subscriber have relied on any
      representations not contained or referred to in this Agreement and the documents
      delivered herewith. No right or obligation of the Company shall be assigned
      without prior notice to and the written consent of the Subscriber. Any provision
      under this Agreement or any Transaction Document may be amended, waived,
      terminated, suspended, cancelled or otherwise modified if in writing signed
      by
      both the Company and Subscribers holding more than 67% of the Shares.

     

    (f) Counterparts/Execution.
      This
      Agreement may be executed in any number of counterparts and by the different
      signatories hereto on separate counterparts, each of which, when so executed,
      shall be deemed an original, but all such counterparts shall constitute but
      one
      and the same instrument. This Agreement may be executed by (i) facsimile
      signature and delivered by facsimile transmission or (ii) “.pdf” format
      signature page and delivery by email.

     

    (g) Law
      Governing this Agreement.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of California without regard to principles of conflicts of laws. Any
      action brought by either party against the other concerning the transactions
      contemplated by this Agreement shall be brought only in the state courts of
      California or in the federal courts located in the state of California. The
      parties to this Agreement hereby irrevocably waive any objection to such
      jurisdiction and venue of any action instituted hereunder and shall not assert
      any defense based on lack of such jurisdiction or venue or based upon
forum
      non conveniens.
      The
      parties executing this Agreement and other agreements referred to herein or
      delivered in connection herewith on behalf of the Company agree to submit to
      the
      in personam jurisdiction of such courts and hereby irrevocably waive trial
      by
      jury. The
      prevailing party shall be entitled to recover from the other party its
      reasonable attorney's fees and costs. In the event that any provision of this
      Agreement or any other agreement delivered in connection herewith is invalid
      or
      unenforceable under any applicable statute or rule of law, then such provision
      shall be deemed inoperative to the extent that it may conflict therewith and
      shall be deemed modified to conform with such statute or rule of law. Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any agreement.
      Each party hereby irrevocably waives personal service of process and consents
      to
      process being served in any suit, action or proceeding in connection with this
      Agreement or any other Transaction Document by mailing a copy thereof via
      registered or certified mail or overnight delivery (with evidence of delivery)
      to such party at the address in effect for notices to it under this Agreement
      and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to limit
      in
      any way any right to serve process in any other manner permitted by
      law.

     

    (h) Specific
      Enforcement, Consent to Jurisdiction.
      The
      Company and Subscriber acknowledge and agree that irreparable damage would
      occur
      in the event that any of the provisions of this Agreement were not performed
      in
      accordance with their specific terms or were otherwise breached. It is
      accordingly agreed that the parties shall be entitled to seek an injunction
      or
      injunctions to prevent or cure breaches of the provisions of this Agreement
      and
      to enforce specifically the terms and provisions hereof, this being in addition
      to any other remedy to which any of them may be entitled by law or
      equity.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    (i) Calendar
      Days.
      All
      references to “days” in the Transaction Documents shall mean calendar days
      unless otherwise stated. The terms “business days” and “trading days” shall mean
      days that the New York Stock Exchange is open for trading for three or more
      hours. Time periods shall be determined as if the relevant action, calculation
      or time period were occurring in San Francisco. Any deadline that falls on
      a
      non-business day in any of the Transaction Documents shall be automatically
      extended to the next business day and interest, if any, shall be calculated
      and
      payable through such extended period. 

    

    (j) Captions:
      Certain Definitions.
      The
      captions of the various sections and paragraphs of this Agreement have been
      inserted only for the purposes of convenience; such captions are not a part
      of
      this Agreement and shall not be deemed in any manner to modify, explain, enlarge
      or restrict any of the provisions of this Agreement. As used in this Agreement
      the term “person”
shall
      mean and include an individual, a partnership, a joint venture, a corporation,
      a
      limited liability company, a trust, an unincorporated organization and a
      government or any department or agency thereof.

     

    (k) Severability.
      In the
      event that any term or provision of this Agreement shall be finally determined
      to be superseded, invalid, illegal or otherwise unenforceable pursuant to
      applicable law by an authority having jurisdiction and venue, that determination
      shall not impair or otherwise affect the validity, legality or enforceability:
      (i) by or before that authority of the remaining terms and provisions of this
      Agreement, which shall be enforced as if the unenforceable term or provision
      were deleted, or (ii) by or before any other authority of any of the terms and
      provisions of this Agreement.

     

    [THIS
      SPACE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
      PAGE TO SUBSCRIPTION AGREEMENT

     

    Please
      acknowledge your acceptance of the foregoing Subscription Agreement by signing
      and returning a copy to the undersigned whereupon it shall become a binding
      agreement between us.

     

      	 	 	 	
              NEONODE
                INC.

              a
                Delaware corporation

            
	 	 	 	 
	
            	 	 	
              By:_________________________________

              Name:
                

              Title:
                

              Dated:_____________,
                2008

            

    

     

    
      	
              SUBSCRIBER

            	
              AGGREGATE
                PURCHASE PRICE (CASH)

            	
              SHARES

            
	
              Name
                of Subscriber: 

               

              ______________________________________

               

              Address:
                

              ______________________________________

               

              ______________________________________

               

              Fax
                No.: ______________________________

              Email
                address (not to - notice): 

              _________________________

              Taxpayer
                ID# : 

              ____________________________

              Jurisdiction
                of organization (for entities): __________________________

               

               

              ______________________________________

              (Signature)

              Name:
                ________________________________

              Title:
                _________________________________

               

              ______________________________________

              (Signature)

              Name:
                ________________________________

              Title:
                _________________________________

               

            	 	 

    

    
      
         

         

        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    LIST
      OF EXHIBITS AND SCHEDULES

     

    
      
        	
                 

                Exhibit
                  A

              	
                 

                Subscribers

              
	
                 

                Schedule
                  3(a)

              	
                 

                Subsidiaries

              
	
                 

                Schedule
                  3(d)

              	
                 

                Capitalization/Anti-Dilution
                  Rights

              
	
                 

                Schedule
                  3(l)

              	
                 

                Defaults

              
	
                 

                Schedule
                  3(o)

              	
                 

                Undisclosed
                  Liabilities

              
	
                 

                Schedule
                  3(u)

              	
                 

                Transfer
                  Agent

              
	
                 

                Schedule
                  6(h)

              	
                 

                Use
                  of Proceeds

              

      

       

      
        
          
          

        

        
          19

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