Document:

AMENDMENT
      NO. 2 TO SECURITY AGREEMENT

     

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

     

    W
      I T N E
      S S E T H :

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

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

     

    [Signature
      Page Follows]

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SIGNATURE
      PAGE

    TO

    AMENDMENT
      NO. 2 TO SECURITY AGREEMENT

    Dated
      January ____, 2007

     

    
      	
              THE
                GRANTOR:

            	 
	 	
              Neonode,
                Inc. 

            
	 	
              a
                Delaware corporation

            
	 	 
	 	
              
                By:________________________________

              

            
	 	
              Name:

            
	 	
              Title:

            
	 	
              Address
                for Notices:

            
	 	
              Biblioteksgatan
                11

            
	 	
              S111
                46 Stockholm, Sweden

            
	 	
              Attention:
                President

            
	 	
              Fax:
                01146-8-678 18 51

            
	 	 
	
              SECURED
                PARTY:

            	 
	 	
              AIGH
                INVESTMENT PARTNERS, LLC

            
	 	
              By:________________________________

            
	 	
              Name:
                Orin Hirschman

            
	 	
              Title:
                Manager

            

    

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      I

     

    
      	
              EXISTING
                INVESTORS

            
	 	 
	
              Name
                and Address

            	
              Principal
                Amount of Amended and Restated Notes

            
	 	 
	
              AIGH
                Investment Partners, LLC

              6006
                Berkeley Avenue

              Baltimore,
                MD 21209

            	
              $4,000,000

            
	 	 
	
              Hershel
                P. Berkowitz

              441
                Yeshiva Lane

              Baltimore,
                MD 21208

            	
              $750,000

            
	 	 
	
              Joshua
                A. Hirsch

              1
                Longfellow Place, Suite 3407

              Boston,
                MA 12114

            	
              $250,000

            
	 	 
	
              NEW
                INVESTORS

            
	 
	
              Name
                and Address

            	
              Principal
                Amount of New NotesAMENDMENT
      NO. 2 TO STOCKHOLDER PLEDGE AND SECURITY AGREEMENT

     

    THIS
      AMENDMENT NO. 2 TO STOCKHOLDER PLEDGE AND SECURITY AGREEMENT, dated as of
      January ___, 2007 (this “Agreement”),
      by
      and among [Pledgor], a company organized under the laws of Sweden (“Pledgor”)
      and
      AIGH Investment Partners, LLC (“AIGH”)
      as the
      Pledgeholder for an on behalf of the Investors (as defined below) and as the
      Investors’ agent

     

    W
      I T N E
      S S E T H :

     

    WHEREAS,
      the parties hereto wish to amend the Stockholder Pledge and Security Agreement,
      dated as of February 28, 2006, as amended from time to time (the “Stock
      Pledge Agreement”),
      by
      and among the Pledgor and AIGH as the Pledgeholder and agent for the investors
      identified on Exhibit
      A
      thereto;

     

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

     

    WHEREAS,
      Neonode (i) on February 28, 2006 issued certain senior secured notes in an
      aggregate principal amount of $4,000,000 (the “First
      Round Notes”)
      to
      AIGH and other investors (collectively in this capacity, the “First
      Round Investors”)
      and
      (ii) on November 20, 2006 issued an additional $1,000,000 principal amount
      of
      senior secured notes on substantially the same terms as the First Round Notes
      (collectively, with the First Round Notes, the “Old
      Notes”)
      to
      AIGH and other investors (collectively in this capacity, the “Second
      Round Investors”
and
      together with the First Round Investors, the “Existing
      Investors”);

     

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

     

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

     

    WHEREAS,
      the Pledgor, the Pledgeholder and the Existing Investors wish to amend the
      Stock
      Pledge Agreement to grant to the Investors a security interest in the Pledged
      Collateral to secure Neonode’s obligations to the Investors under the Amended
      and Restated Notes and the New Notes, which may from time to time, commencing
      on
      the date of this Amendment, be issued by Neonode to certain
      Investors.

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SECTION
      1. Amendments
      to the Stock Pledge Agreement.
      The
      Stock Pledge Agreement is hereby amended as follows:

     

    (a) Exhibit
      A
      to the
      Stock Pledge Agreement is hereby deleted in its entirety and replaced by
Exhibit
      A
      attached
      to this Amendment.

     

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

     

    (c) The
      term
“Notes” as used in the Stock Pledge Agreement shall be deemed to include the
      Amended and Restated Notes and the New Notes.

     

    (d) The
      reference to Hahn & Hessen LLP shall be deleted from Section 11 (Notices,
      Etc.) of the Stock Pledge Agreement.

     

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

     

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

     

    [balance
      of page intentionally left blank]

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SIGNATURE
      PAGE

    TO

    AMENDMENT
      NO. 2 TO STOCKHOLDER PLEDGE AGREEMENT

    January
      ___, 2007

     

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

     

    
      	
              THE
                PLEDGOR:

            	 
	 	
              [Pledgor]

            
	 	 
	 	 
	 	
              
                By:                                                                                   
                  

              

            
	 	
              Name:

            
	 	
              Title:

            
	 	 
	 	 
	
              THE
                PLEDGEHOLDER:

            	 
	 	
              AIGH
                INVESTMENT PARTNERS, LLC

            
	 	 
	 	
              By:                                                                                   
                

            
	 	
              Name:
                Orin Hirschman

            
	 	
              Title:
                Manager

            
	 	 
	 	 
	
              AGENT
                FOR INVESTORS:

            	 
	 	
              AIGH
                INVESTMENT PARTNERS, LLC

            
	 	 
	 	
              
                By:                                                                                   
                  

              

            
	 	
              Name:
                Orin Hirschman

            
	 	
              Title:
                Manager

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
      A

     

    INVESTORS

     

    AIGH
      Investment Partners, LLC

     

    Hershel
      P. Berkowitz

     

    Dr.
      Joshua A. Hirsch

     

    [Additional
      3rd
      Round
      Investors]

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