Document:

EXECUTION
      COPY

     

    NEONODE,
      INC.

     

    NOTE
      PURCHASE AGREEMENT

     

    NOTE
      PURCHASE AGREEMENT (the “Agreement”)
      dated
      as of November 20, 2006 among NEONODE, INC., a Delaware corporation
      (“Company”),
      AIGH
      Investment Partners LLC, a Delaware limited liability company ( “AIGH”),
      and
      any other person who executes this agreement from time to time as purchaser
      of
      Notes (collectively with AIGH, the “New
      Investors”).

     

    Background:
      The
      Company desires to sell to the New Investors, and the New Investors desire
      to
      purchase up to, $1,000,000 in principal amount of Senior Secured Notes, in
      substantially the form attached hereto as Exhibit
      1
      (the
“Notes”).
      On
      February 28, 2006, the Company sold $4,000,000 principal amount of senior
      secured notes on substantially the same terms as the Notes to AIGH and other
      investors (collectively in this capacity, the “Investors”),
      and
      in connection therewith (i) the Company entered into the Security Agreement
      with
      AIGH (as agent for the Investors), (ii) AIGH entered the Intercreditor Agreement
      with Petrus, and (iii) the Pledgors entered into the Stockholder Pledge
      Agreements with the Investors. The Company may also sell additional notes of
      similar tenor to the Notes to the New Investors or other investors, on or before
      August 28, 2007, provided that the aggregate principal amount of such notes
      together with the Notes does not exceed $1,800,000. The proceeds are necessary
      for the development and continuance of the business of the Company and each
      of
      its subsidiaries.

     

    Certain
      Definitions:

     

    “Common
      Stock”
shall
      mean stock of the Company of any class (however designated) whether now or
      hereafter authorized, which generally has the right to participate in the voting
      and in the distribution of earnings and assets of the Company without limit
      as
      to amount or percentage, including the Company’s Common Stock, $.01 par value
      per share.

     

    “Company”
      includes the Company and any Person which shall succeed to or assume, directly
      or indirectly, the obligations of the Company hereunder.

     

    “Company
      Disclosure”
means
      the disclosure materials in the form attached as Exhibit
      6
      to this
      Agreement.

     

    “Governmental
      Body”
shall
      mean any: (a) nation, state, commonwealth, province, municipality or district;
      (b) federal, state, local, municipal, foreign or other government; or (c)
      governmental or quasi-governmental authority of any nature (including any
      governmental division, department, agency, commission, instrumentality,
      official, organization, unit, body or entity and any court or other
      tribunal).

     

    “Guaranties”
means
      the respective guaranties, dated February 28, 2006, delivered to the Investors
      identified on Exhibit
      A
      of the
      Stockholder Pledge Agreements, respectively.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Guarantors”
means
      each of Thomas Erickson, Magnus Goertz and Per Bystedt, each as a party to
      its
      respective Guaranty.

     

    “Intercreditor
      Agreement”
means
      the Intercreditor Agreement, dated February 28, 2006, between AIGH and
      Petrus.

     

    “Material
      Adverse Change”
shall
      mean any change in the facts represented by the Company in the Agreement or
      the
      business, financial condition, results of operation, prospects, properties
      or
      operations of the Company and its subsidiaries taken as a whole which may have
      a
      material adverse effect on the value of the Common Stock of the
      Company.

     

    “Material
      Adverse Effect”
shall
      mean a material adverse effect on the operations, assets, liabilities, financial
      condition, prospects or business of the Company.

     

    “Neonode
      AB”
means
      Neonode AB, a Swedish corporation.

     

    “Own”
shall
      mean own beneficially, as that term is defined in the rules and regulations
      of
      the SEC.

     

    “Petrus”
means
      Petrus Holdings, SA, a corporation organized under the laws of
      Luxembourg.

     

    “Person”
means
      any individual, sole proprietorship, partnership, corporation, limited liability
      company, business trust, unincorporated association, joint stock corporation,
      trust, joint venture or other entity, any university or similar institution,
      or
      any government or any agency or instrumentality or political subdivision
      thereof.

     

    “Pledgors”
means
      Rector AB, Iwo Jima Sarl and Wirelesstoys sweden AB, each as a party to its
      respective Stockholder Pledge Agreement.

     

    “Proprietary
      Assets”
shall
      mean any: (i) patent, patent application, trademark (whether registered or
      unregistered), trademark application, trade name, fictitious business name,
      service mark (whether registered or unregistered), service mark application,
      copyright (whether registered or unregistered), copyright application, maskwork,
      maskwork application, trade secret, know-how, customer list, franchise, system,
      computer software, computer program, invention, design, blueprint, engineering
      drawing, proprietary product, technology, proprietary right or other
      intellectual property right or intangible asset relating to the foregoing;
      or
      (ii) right to use or exploit any of the foregoing.

     

    “SEC”
means
      the Securities and Exchange Commission. “Securities Act” means the Securities
      Act of 1933, as amended.

     

    “Security
      Agreement”
means
      the Security Agreement, dated February 28, 2006, between the Company and AIGH,
      as agent for the Investors.

     

    “Stockholder
      Pledge Agreements”
means
      the Stockholder Pledge and Security Agreements, dated February 28, 2006, between
      the Investors and each of the Pledgors, respectively.

     

    
      
        
        

      

      
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    “Subsidiary”
shall
      mean, immediately prior to the Closing, any corporation of which stock or other
      interest having ordinary power to elect a majority of the board of directors
      (or
      other governing body) of such entity (regardless of whether or not at the time
      stock or interests of any other class or classes of such corporation shall
      have
      or may have voting power by reason of the happening of any contingency) is,
      immediately prior to the Closing, directly or indirectly Owned by the Company
      or
      by one or more of its Subsidiaries.

     

    In
      consideration of the mutual covenants contained herein, the parties agree as
      follows: 

     

    1. Purchase
      and Sale of Notes.

     

    1.1 Sale
      and Issuance of Notes.
      The
      Company shall sell to the New Investors and the New Investors shall purchase
      from the Company, an aggregate principal amount of $1,000,000 of Notes at par.
      The principal amount of Notes to be purchased by each of the New Investors
      from
      the Company at the Closing (as defined herein) is set forth opposite the name
      of
      each New Investor on the signature page hereof, subject to acceptance, in whole
      or in part, by the Company.

     

    1.2 Closing.
      The
      closing of the purchase and sale of $1,000,000 principal amount of Notes
      hereunder (the “Closing”)
      shall
      take place within three business days after the date hereof; provided the
      Company has not suffered any Material Adverse Change since the date hereof.
      The
      date on which the Closing occurs is referred to herein as the “Closing
      Date.”
The
      Closing shall take place at the offices of Hahn & Hessen LLP, the New
      Investors’ counsel, in New York, New York, or at such other location as is
      mutually acceptable to the New Investors and the Company.

     

    1.3 Conditions
      of the Closing.
      The
      obligation of the New Investors to complete the purchase of the Notes at the
      Closing is subject to fulfillment of the following conditions:

     

    (a) the
      Company and AIGH shall execute and deliver Amendment 1 to the Security
      Agreement, dated the Closing Date, in the form attached as Exhibit
      2
      (the
“Security
      Agreement Amendment”);

     

    (b) each
      Pledgor and AIGH shall execute and deliver Amendment 1 to such Pledgor’s
      respective Stockholder Pledge Agreement, dated the Closing Date, each in
      substantially the form attached as Exhibit
      3
      (the
“Stockholder
      Pledge Amendment”);

     

    (c) each
      Guarantor and AIGH shall execute and deliver Amendment 1 to such Guarantor’s
      respective Guaranty,
      dated the Closing Date, each in substantially the form attached as Exhibit
      4
      (the
“Guaranty
      Amendment”);

     

    (d) Petrus,
      the Investors, the New Investors and AIGH shall enter into Amendment 1 to the
      Intercreditor Agreement, dated the Closing Date, in the form attached hereto
      as
Exhibit
      5
      (the
“Intercreditor
      Agreement Amendment”,
      and
      with the Agreement, the Notes, the Security Agreement Amendments, the
      Stockholder Pledge Amendments, the Guaranty Amendments and other documents
      required in connection with the transactions contemplated in the Agreement,
      the
“Transaction
      Documents”);

     

    
      
        
        

      

      
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    (e) the
      Company shall have executed and delivered all documents, such as financing
      statements and assignments, reasonably requested by counsel for the New
      Investors;

     

    (f) the
      absence of any Material Adverse Change since the date hereof;

     

    (g) the
      Company shall pay the New Investors’ expenses to the extent set forth in Section
      6.9 hereof.

     

    2. Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to each of the New Investors as
      follows:

     

    2.1 Corporate
      Organization; Authority; Due Authorization.

     

    (a) The
      Company (i) is a corporation duly organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation, (ii) has
      the
      corporate power and authority to own or lease its properties as and in the
      places where such business is now conducted and to carry on its business as
      now
      conducted and (iii) is duly qualified and in good standing as a foreign
      corporation authorized to do business in every jurisdiction where the failure
      to
      so qualify, individually or in the aggregate, would have a Material Adverse
      Effect. Set forth in the Company Disclosure is a complete and correct list
      of
      all Subsidiaries. Each Subsidiary is duly incorporated, and validly existing
      under the laws of its jurisdiction of incorporation and is qualified to do
      business as a foreign corporation in each jurisdiction in which qualification
      is
      required, except where failure to so qualify would not have a Material Adverse
      Effect.

     

    (b) The
      Company (i) has the requisite corporate power and authority to execute, deliver
      and perform this Agreement and the other Transaction Documents to which it
      is a
      party and to incur the obligations herein and therein and (ii) has been
      authorized by all necessary corporate action to execute, deliver and perform
      this Agreement and the other Transaction Documents to which it is a party and
      to
      consummate the transactions contemplated hereby and thereby (the “Contemplated
      Transactions”).
      Each
      of this Agreement and the other Transaction Documents is a valid and binding
      obligation of the Company enforceable in accordance with its terms except as
      limited by applicable bankruptcy, reorganization, insolvency, moratorium or
      similar laws affecting the enforcement of creditors’ rights and the availability
      of equitable remedies (regardless of whether such enforceability is considered
      in a proceeding at law or equity).

     

    
      
        
        

      

      
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    2.2 Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company is 6,500,000 shares
      of Common Stock, $.01 par value per share. Except as contemplated by this
      Agreement and as set forth in the capitalization table included in the Company
      Disclosure, there are (i) no outstanding subscriptions, warrants, options,
      conversion privileges or other rights or agreements obligating the Company
      or
      Neonode AB to purchase or otherwise acquire or issue any shares of capital
      stock
      of the Company or Neonode AB (or shares reserved for such purpose), (ii) no
      preemptive rights contained in the Company’s Certificate of Incorporation, as
      amended (the “Certificate
      of Incorporation”),
      By-Laws of the Company or contracts to which the Company is a party or rights
      of
      first refusal with respect to the issuance of additional shares of capital
      stock
      of the Company, and (iii) no commitments or understandings (oral or written)
      of
      the Company or Neonode AB to issue any shares, warrants, options or other
      rights. Except as disclosed in the Company Disclosure with respect to each
      Subsidiary, (x) all the issued and outstanding shares of the Subsidiary’s
      capital stock have been duly authorized and validly issued, are fully paid
      and
      nonassessable, have been issued in compliance with applicable federal and state
      securities laws, were not issued in violation of or subject to any preemptive
      rights or other rights to subscribe for or purchase securities, (y) except
      as
      disclosed in the Company Disclosure, there are no outstanding options to
      purchase, or any preemptive rights or other rights to subscribe for or to
      purchase, any securities or obligations convertible into, or any contracts
      or
      commitments to issue or sell, shares of the Subsidiary’s capital stock or any
      such options, rights, convertible securities or obligations, and (z) the Company
      owns 100% of the outstanding equity of each Subsidiary.

     

    2.3 Validity
      of Notes.
      The
      issuance of the Notes has been duly authorized and the Notes are valid and
      binding and upon Closing will be in full force and effect and enforceable in
      accordance with their respective terms.

     

    2.4 Private
      Offering.
      Neither
      the Company nor anyone acting on its behalf has within the last 12 months
      issued, sold or offered any security of the Company (including, without
      limitation, any Notes) to any Person under circumstances that would cause the
      issuance and sale of the Notes, as contemplated by this Agreement, to be subject
      to the registration requirements of the Securities Act.

     

    2.5 Brokers
      and Finders.
      The
      Company has not retained any investment banker, broker or finder in connection
      with the Contemplated Transactions.

     

    2.6 Financial
      Statements; Absence of Certain Changes.
      Each of
      (a) the unaudited statement of liabilities of the Company as of September 30,
      2006, (b) the unaudited statements of income, retained earnings and cash flows
      of the Company for the period ended on September 30, 2006, and (c) the unaudited
      statements of income, retained earnings and cash flows of the Company for the
      period ended on September, 2006, included in the Company Disclosure (including
      any related notes and schedules, if any), (the “Financial
      Statements”)
      fairly
      presents, in all material respects, the financial position of the Company,
      or
      the results of operations, retained earnings or cash flows, as the case may
      be,
      of the Company as of the referenced date or for the periods set forth therein
      (subject to normal year-end audit adjustments which would not be material in
      amount or effect), in each case (other than the statement of liabilities) in
      accordance with generally accepted accounting principles consistently applied
      during the periods involved, except as may be noted therein and that the
      unaudited statements may not contain all footnotes required by generally
      accepted accounting principles. Neither the Company nor any Subsidiary has
      any
      liabilities or obligations of any nature (whether accrued, absolute, contingent
      or otherwise), including for taxes, that would be required to be reflected
      on,
      or reserved against in, Financial Statements, except for (i) liabilities or
      obligations that were so reserved on, or reflected in (including the notes
      to),
      the Financial Statements; and (ii) liabilities or obligations which would not,
      individually or in the aggregate, have a Material Adverse Effect. Other than
      the
      indebtedness as set forth in the Financial Statements or the Company Disclosure,
      neither the Company nor any Subsidiary has indebtedness as of the date hereof.
      Except as specifically contemplated by this Agreement or as set forth in the
      Company Disclosure and the Financial Statements, there has not been any Material
      Adverse Change since September 30, 2006.

     

    
      
        
        

      

      
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    2.7 Litigation.
      Except
      as set forth in the Company Disclosure, there are no claims, actions, suits,
      investigations, inquiries or proceedings (“Actions”)
      pending against the Company or its Subsidiaries or, to the knowledge of the
      Company, threatened against the Company or its Subsidiaries, or any officer,
      director, employee or agent thereof in his or her capacity as such, at
      law
      or in
      equity, or before or by any court, tribunal, arbitrator, mediator or any federal
      or state commission, board, bureau, agency or instrumentality that would
      reasonably be expected to have, either individually or in the aggregate, a
      material adverse effect. To the Company’s knowledge, there is no factual or
      legal basis for any such Action. The Company and each Subsidiary is not a party
      to or subject to the provisions of any order, writ, injunction, judgment or
      decree of any court or government agency or instrumentality and there is no
      Action by the Company or any Subsidiary currently pending or which the Company
      or any Subsidiary intends to initiate.

     

    2.8 Proprietary
      Assets.

     

    (a) The
      Company Disclosure sets forth, with respect to each Proprietary Asset of the
      Company and any Subsidiary registered with or issued by any Governmental Body
      or
      for which an application has been filed with any Governmental Body, (i) a brief
      description of such Proprietary Asset and (ii) the names of the jurisdictions
      covered by the applicable registration or application.
      The
      Company Disclosure identifies and provides a brief description of all other
      Proprietary Assets owned by the Company and any Subsidiary, and identifies
      and
      provides a brief description of each Proprietary Asset licensed to the Company
      and any Subsidiary by any person (except for any Proprietary Asset that is
      licensed to the Company or any Subsidiary under any third party license
      generally available to the public at a cost of less than $10,000), and
      identifies the license agreement under which such Proprietary Asset is being
      licensed to the Company or Subsidiary, as appropriate.
      Except
      as
      set forth in the Company Disclosure, the Company and its Subsidiaries, as a
      whole, have good, valid and marketable title to, or have a valid right to use,
      all of the Proprietary Assets used in the Company’s business (including without
      limitation all Proprietary Assets identified in the Company Disclosure), free
      and clear of all liens and other encumbrances to the knowledge of the Company;
      and are not obligated to make any payment to any person for the use of any
      Proprietary Asset.
      The
      Company and each Subsidiary has not developed jointly with any other person
      any
      Proprietary Asset with respect to which such other person has any
      rights.
      Except
      as
      set forth in the Company Disclosure, none of which shall have a Material Adverse
      Effect, the Company has no knowledge that any other person has any right, title
      or interest in any of the Proprietary Assets of the Company or its
      Subsidiaries.

     

    
      
        
        

      

      
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    (b) The
      Company and its Subsidiaries, as appropriate, have taken reasonable and
      customary measures and precautions to protect and maintain the confidentiality
      and secrecy of all Proprietary Assets of the Company and its Subsidiaries
      (except Proprietary Assets whose value would be unimpaired by public disclosure)
      and otherwise to maintain and protect the value of all Proprietary Assets of
      the
      Company and its Subsidiaries.
      Each
      employee, officer, director, consultant and contractor (not including
      contractors without access to confidential information of the Company) of the
      Company and its Subsidiaries (each, an “Employee”)
      has
      entered into and executed an agreement providing for (i) the assignment to
      the
      Company (or to any of its Subsidiaries) of personal rights or claims to
      Proprietary Assets for which such Employee’s personal rights or claims arose out
      of the scope of his/her employment or retainer by the Company or its
      Subsidiaries and (ii) the nondisclosure of confidential information acquired
      by
      the Employee with respect to the Proprietary Assets of the Company and its
      Subsidiaries or an employment or consulting agreement containing substantially
      similar terms.
      Except
      as
      set forth in the Company Disclosure, the Company and each Subsidiary has not
      (other than pursuant to license agreements identified in the Company Disclosure)
      disclosed or delivered to any person, or permitted the disclosure or delivery
      to
      any person of, (i) the source code, or any portion or aspect of the source
      code,
      of any Proprietary Asset of the Company or its Subsidiaries, (ii) the object
      code, or any portion or aspect of the object code, of any Proprietary Asset
      of
      the Company or its Subsidiaries or (iii) any patent applications (except as
      required by law).

     

    (c) (i)
      To
      the knowledge of the Company, none of the Proprietary Assets of the Company
      or
      its Subsidiaries necessary for the conduct of their businesses infringes or
      conflicts with any Proprietary Asset owned or used by any other Person, (ii)
      to
      the knowledge of the Company, the Company and each Subsidiary is not infringing,
      misappropriating or making any unlawful use of, and the Company and each
      Subsidiary has not at any time infringed, misappropriated or made any unlawful
      use of, or received any notice or other communication (in writing or otherwise)
      of any actual, alleged, possible or potential infringement, misappropriation
      or
      unlawful use of, any Proprietary Asset owned or used by any other person, and
      (iii) to the knowledge of the Company, no other person is infringing,
      misappropriating or making any unlawful use of, and no Proprietary Asset owned
      or used by any other person infringes or conflicts with, any Proprietary Asset
      of the Company or its Subsidiaries.

     

    (d) There
      has
      not been any claim by any customer or other person alleging that any Proprietary
      Asset of the Company or its Subsidiaries (including each version thereof that
      has ever been licensed or otherwise made available by the Company or its
      Subsidiaries to any person) does not conform in all material respects with
      any
      specification, documentation, performance standard, representation or statement
      made or provided by or on behalf of the Company or its Subsidiaries, and, to
      the
      knowledge of the Company, there is no basis for any such claim.

     

    
      
        
        

      

      
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    (e) The
      Company is not knowledgeable of any Proprietary Asset owned or used by any
      other
      person (except for any Proprietary Asset that is licensed to the Company or
      any
      Subsidiary under any third party license set forth in the Company Disclosure
      or
      would otherwise be commercially available) necessary to enable the Company
      and
      each Subsidiary to conduct its businesses in the manner in which such businesses
      have been and are being conducted or are expected to be conducted pursuant
      to
      the Company Disclosure.
      Neither
      the Company nor any Subsidiary has licensed, or agreed to license, any of its
      Proprietary Assets to any person on an exclusive, semi-exclusive or royalty-free
      basis.
      Neither
      the Company nor any Subsidiary has entered into any covenant not to compete
      or
      contract limiting its ability to exploit fully any of its Proprietary Assets
      or
      to transact business in any market or geographical area or with any
      person.
      Without
      limitation on the foregoing, except as set forth in the Company Disclosure,
      no
      officer, director or Stakeholder, either as an individual or through an
      affiliate, has any claim to own or any other rights to use any of the
      Proprietary Assets.

     

    (f) Except
      as
      set forth in the Company Disclosure, the Company is not aware that any Employee
      is obligated under any agreement (including licenses, covenants or commitments
      of any nature) or subject to any judgment, decree or order of any court or
      administrative agency, or any other restriction that would interfere with the
      use of his or her best efforts to carry out his or her duties for the Company
      and its Subsidiaries, as appropriate, or to promote the interests of the Company
      and its Subsidiaries, as appropriate, or that would conflict with the Company’s
      or its Subsidiaries’ business as proposed to be conducted.
      The
      Company does not believe it is or will be necessary to utilize any inventions
      of
      any Employees (or persons the Company or its Subsidiaries currently intend
      to
      hire) made prior to their employment or retainer by the Company or its
      Subsidiaries, as appropriate, which have not been assigned to the
      Company.
      To
      the
      Company’s knowledge, after due inquiry, at no time during the conception of, or
      reduction to practice, or development of, any of the Company’s or its
      Subsidiaries’ Proprietary Assets was any developer, inventor or other
      contributor to such Proprietary Assets operating under any grants from any
      governmental entity or agency or private source, performing research sponsored
      by any governmental entity or agency or private source or subject to any
      employment agreement or invention assignment or nondisclosure agreement or
      other
      obligation with any third party that could adversely affect the Company’s or its
      Subsidiaries’ rights in such Proprietary Assets.

     

    (g) The
      Company believes that the exceptions, qualifications and other disclosures
      relating to the Proprietary Assets set forth in the Company Disclosure shall
      not
      have a Material Adverse Effect in the aggregate.

     

    2.9 Company
      Disclosure.
      No
      representation or warranty of the Company herein, no exhibit or schedule hereto,
      and no information contained or referenced in the Company Disclosure, when
      read
      together, contains or will contain any untrue statement of a material fact
      or
      omits or will omit to state a material fact necessary in order to make the
      statements contained herein or therein, in light of the circumstances under
      which they were made, not misleading.

     

    
      
        
        

      

      
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    3. Representations
      and Warranties of the New Investors.
      Each
      New
      Investor represents and warrants to the Company as follows:

     

    3.1 Authorization.
      Such
      New
      Investor (i) has full power and authority to execute, deliver and perform this
      Agreement and the other Transaction Documents to which it is a party and to
      incur the obligations herein and therein and (ii) if applicable has been
      authorized by all necessary corporate or equivalent action to execute, deliver
      and perform this Agreement and the other Transaction Documents and to consummate
      the Contemplated Transactions.
      Each
      of
      this Agreement and the other Transaction Documents to which the New Investors
      are parties is a valid and binding obligation of such New Investor enforceable
      in accordance with its terms, except as limited by applicable bankruptcy,
      reorganization, insolvency, moratorium or similar laws affecting the enforcement
      of creditors’ rights and the availability of equitable remedies (regardless of
      whether such enforceability is considered in a proceeding at law or
      equity).

     

    3.2 Brokers
      and Finders.
      Such
      New
      Investor has not retained any investment banker, broker or finder in connection
      with the Contemplated Transactions.

     

    4. Securities
      Laws; Certain Covenants of New Investors.

     

    4.1 This
      Agreement is made with each New Investor in reliance upon such New Investor’s
      representation to the Company, which by such New Investor’s execution of this
      Agreement such New Investor hereby confirms, that the Notes to be received
      by
      such New Investor will be acquired for investment for such New Investor’s own
      account, not as a nominee or agent, and not with a view to the resale or
      distribution of any part thereof such that such New Investors would constitute
      an “underwriter” under the Securities Act.

     

    4.2 Each
      New
      Investor understands and acknowledges that the offering of the Notes pursuant
      to
      this Agreement will not be registered under the Securities Act or qualified
      under any state securities laws on the grounds that the offering and sale of
      the
      Notes are exempt from registration and qualification, respectively, under the
      Securities Act and the Blue Sky Laws.

     

    4.3 Each
      New
      Investor represents that (i) such New Investor is able to fend for itself in
      the
      Contemplated Transactions; (ii) such New Investor has such knowledge and
      experience in financial and business matters as to be capable of evaluating
      the
      merits and risks of such New Investor’s prospective investment in the Notes; and
      (iii) such New Investor has the ability to bear the economic risks of such
      New
      Investor’s prospective investment and can afford the complete loss of such
      investment.

     

    4.4 Each
      New
      Investor further represents by execution of this Agreement that such New
      Investor qualifies as an “accredited investor” as such term is defined under
      Rule 501 promulgated under the Securities Act.
      Any
      New
      Investor that is a corporation, a partnership, a limited liability company,
      a
      trust or other business entity further represents by execution of this Agreement
      that it has not been organized for the purpose of purchasing the
      Notes.

     

    
      
        
        

      

      
        -
          9 -

        
          

        

      

      
        
        

      

    

     

    4.5 Each
      New
      Investor agrees that the Notes and any shares of capital stock of the Company
      received in respect of the foregoing held by it may not be sold by such New
      Investor without registration under the Securities Act or an exemption
      therefrom, and therefore such New Investor may be required to hold such
      securities for an indeterminate period.

     

    4.6 Each
      New
      Investor agrees that the obligations under the Notes shall be subject to the
      Security Agreement, Stockholder Pledge Agreement and Intercreditor Agreement,
      each as amended as contemplated herein, and further authorizes AIGH as such
      New
      Investor’s agent to enter into the Security Agreement Amendment, Stockholder
      Pledge Amendment, Intercreditor Agreement Amendment and Guaranty Amendment
      on
      such Investor’s behalf.
      AIGH
      shall have no duty to any New Investor arising out of its actions or failure
      to
      act under the Security Agreement, Stockholder Pledge Agreement, Intercreditor
      Agreement or Guaranties, each as amended as contemplated herein, provided that
      AIGH shall apply the same standard of care as it would use in determining
      whether to act under such agreements in its capacity as a New
      Investor.

     

    4.7 Each
      New
      Investor agrees to indemnify AIGH from and against any and all reasonable
      claims, losses, and liabilities (including, without limitation, reasonable
      attorney fees) arising out of or resulting from the Security Agreement,
      Stockholder Pledge Agreement, Intercreditor Agreement or Guaranties, each as
      amended as contemplated herein, except claims, losses, or liabilities resulting
      from the gross negligence or willful misconduct of AIGH.

     

    4.8 Each
      New
      Investor will upon demand pay the amount of any and all reasonable expenses,
      including, without limitation, the reasonable fees and expenses of counsel
      and
      of any experts and agents, which AIGH may incur in connection with (i) the
      preparation and administration of the Security Agreement, Stockholder Pledge
      Agreement, Intercreditor Agreement or Guaranties, each as amended as
      contemplated herein; (ii) the exercise or enforcement of any of the rights
      of
      AIGH or the New Investors thereunder; or (iii) the failure by any New Investor
      to perform or observe any of the provisions hereof or thereof.

     

    5. Additional
      Covenants of the Company.

     

    5.1 Reports
      and Information.
      Until
      the
      sooner of repayment or conversion of all the Notes, the Company shall deliver
      to
      such New Investor (or the successor or assign of such New Investor),
      contemporaneously with delivery to Petrus or its affiliates, a copy of each
      report of the Company delivered to any such person.

     

    5.2 Form
      D.
      As
      soon
      as is practicable following the Closing, the Company shall prepare and file
      with
      the SEC a Form D concerning the sale of the Notes.

     

    5.3 Financial
      Reports and Tax Returns.
      Until
      the
      Company is a public company required to file financial reports with the
      U.S.
      Securities
      and Exchange Commission, the Company will furnish or will cause to be furnished
      to each New Investor:

     

    (a) within
      90
      days after the end of each fiscal quarter and fiscal year of the Company,
      respectively, financial statements (including income statement and balance
      sheet) in accordance with generally accepted accounting standards (except that
      interim financial statements need not contain footnotes or normal year-end
      adjustments); and

     

    
      
        
        

      

      
        -
          10 -

        
          

        

      

      
        
        

      

    

     

    (b) within
      90
      days after the end of each fiscal year of the Company, an independent certified
      audit of financial statements for such fiscal year.

     

    6. Miscellaneous.

     

    6.1 Entire
      Agreement; Successors and Assigns.
      This
      Agreement and the other Transaction Documents constitute the entire contract
      between the parties relative to the subject matter hereof and thereof, and
      no
      party shall be liable or bound to the other in any manner by any warranties,
      representations or covenants except as specifically set forth herein or
      therein.
      This
      Agreement and the other Transaction Documents supersede any previous agreement
      among the parties with respect to the Notes.
      The
      terms
      and conditions of this Agreement shall inure to the benefit of and be binding
      upon the respective executors, administrators, heirs, successors and assigns
      of
      the parties.
      Except
      as
      expressly provided herein, nothing in this Agreement, expressed or implied,
      is
      intended to confer upon any party, other than the parties hereto, any rights,
      remedies, obligations or liabilities under or by reason of this
      Agreement.

     

    6.2 Survival
      of Representations and Warranties.
      All
      representations and warranties of the Company shall survive the execution and
      delivery of this Agreement and the Closing hereunder and shall continue in
      full
      force and effect for one year after the Closing.
      The
      covenants of the Company set forth in Section 5 shall remain in effect as set
      forth therein.

     

    6.3 Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to principles of conflicts of law.
      Each
      party hereby irrevocably consents and submits to the jurisdiction of any New
      York State or United States Federal Court sitting in the State of New York,
      County of New York, over any action or proceeding arising out of or relating
      to
      this Agreement and irrevocably consents to the service of any and all process
      in
      any such action or proceeding by registered mail addressed to such party at
      its
      address specified in Section 6.6 (or as otherwise noticed to the other
      party).
      Each
      party further waives any objection to venue in New York and any objection to
      an
      action or proceeding in such state and county on the basis of forum non
      conveniens.
      Each
      party also waives any right to trial by jury.

     

    6.4 Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    6.5 Headings.
      The
      headings of the sections of this Agreement are for convenience and shall not
      by
      themselves determine the interpretation of this Agreement.

     

    6.6 Notices.
      Any
      notice required or permitted hereunder shall be given in writing and shall
      be
      deemed effectively
      given upon (i) personal delivery, (ii) delivery by fax (with answer back
      confirmed) or (iii) delivery by electronic mail (with reception confirmed),
      addressed to a party at its address or sent to the fax number or e-mail address
      shown below or at such other address, fax number or e-mail address as such
      party
      may designate by three days advance notice to the other party.

     

    
      
        
        

      

      
        -
          11 -

        
          

        

      

      
        
        

      

    

     

    Any
      notice to New Investors shall be sent to the addresses set forth on the
      signature pages hereof, with a copy to:

     

    Hahn
      & Hessen LLP

    488
      Madison Avenue

    New
      York,
      New York 10022 

    Attention:
      James Kardon, Esq. 

    Fax
      Number: (212) 478-7400 

    e-mail:
      jkardon@hahnhessen.com

     

    Any
      notice to the Company shall be sent to:

     

    Neonode,
      Inc.

    Biblioteksgatan
      11

    S111
      46
      Stockholm, Sweden 

    Attention:
      President

    Fax
      Number: 01146-8-678 18 51

     

    with
      a
      copy to:

     

    Reed
      Smith LLP

    435
      Sixth
      Avenue

    Pittsburgh,
      PA 15219

    Attention:
      Daniel Gallagher, Esq. 

    Fax
      Number: 412-288-3063

     

    6.7 Rights
      of Transferees.
      Any
      and
      all rights and obligations of the New Investor herein incident to the ownership
      of Notes shall pass successively to all subsequent transferees of such
      securities until extinguished pursuant to the terms hereof.

     

    6.8 Severability.
      Whenever
      possible, each provision of this Agreement shall be interpreted in such a manner
      as to be effective and valid under applicable law, but if any provision of
      this
      Agreement shall be deemed prohibited or invalid under such applicable law,
      such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      and such prohibition or invalidity shall not invalidate the remainder of such
      provision or any other provision of this Agreement.

     

    6.9 Expenses.
      Irrespective
      of whether the Closing is effected, the Company shall pay all costs and expenses
      that it incurs with respect to the negotiation, execution, delivery and
      performance of this Agreement.
      Each
      New
      Investor shall be responsible for all costs incurred by such New Investor in
      connection with the negotiation, execution, delivery and performance of this
      Agreement including, but not limited to, legal fees and expenses, except that,
      at the Closing, the Company shall pay legal fees and expenses to Hahn &
Hessen LLP, as counsel to the New Investors.

     

    
      
        
        

      

      
        -
          12 -

        
          

        

      

      
        
        

      

    

     

    6.10 Amendments
      and Waivers.
      Unless
      a
      particular provision or section of this Agreement requires otherwise explicitly
      in a particular instance, any provision of this Agreement may be amended and
      the
      observance of any provision of this Agreement may be waived (either generally
      or
      in a particular instance and either retroactively or prospectively), only with
      the written consent of the Company and the holders of a majority of the
      principal amount of the Notes.
      Any
      amendment or waiver effected in accordance with this Section 6.10 shall be
      binding upon each holder of any Notes at the time outstanding (including
      securities into which such Notes are convertible), each future holder of all
      such Notes, and the Company.

     

    [signature
      page follows]

    
      
        
        

      

      
        -
          13 -

        
          

        

      

      
        
        

      

    

    EXHIBITS

    TO
      THE
      NOTE PURCHASE AGREEMENT

     

    
      	
              Exhibit
                1:

            	
              Form
                of Notes

            
	
              Exhibit
                2:

            	
              Form
                of Security Agreement Amendment

            
	
              Exhibit
                3:

            	
              Form
                of Stockholder Pledge Amendment

            
	
              Exhibit
                4:

            	
              Form
                of Guaranty Amendment

            
	
              Exhibit
                5:

            	
              Form
                of Intercreditor Agreement Amendment

            
	
              Exhibit
                6:

            	
              Company
                Disclosure, including Capitalization Table, Financial Statements,
                etc.

            

    

     

    
      
        
        

      

      
        -
          14 -EXECUTION
        COPY

       

    

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

     

    SENIOR
      SECURED NOTE

     

    
      	
              $
                800,000.00

            	
              New
                York, New York

            
	 	
              November
                20, 2006

            

    

     

    FOR
      VALUE
      RECEIVED, the undersigned (sometimes referred to herein as the “Company”), a
      Delaware corporation having an address at Biblioteksgatan 11, S111 46 Stockholm,
      Sweden, hereby promises to pay to the order of AIGH Investment Partners, LLC,
      or
      assigns (“Lender”), at its offices located at 6006 Berkeley Avenue, Baltimore,
      MD 21209 or at such other place as the Lender may from time to time designate
      to
      the undersigned in writing, on August 28, 2007 subject to the conversion rights
      set forth herein, or such earlier date as required hereunder, the sum of EIGHT
      HUNDRED THOUSAND DOLLARS ($ 800,000.00) at a rate per annum equal to four
      percent (4%). In no event, however, shall interest hereunder be in excess of
      the
      maximum interest rate permitted by law.

     

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

     

    A. Prepayment;
      Conversion:

     

    
      	 	
              1.

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.

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

            

    

     

    
      	 	
              3.

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

            

    

     

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

    
       

      
        
          
          

        

        
          -
            2
            -

          
            

          

        

        
          
          

        

      

       

    

    
      	 	
              1.

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

            

    

     

    
      	 	
              2.

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

            

    

     

    
      	 	
              3.

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

            

    

     

    
      	 	
              4.

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

            

    

     

    
      	 	
              5.

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

            

    

     

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

     

    
      
        
        

      

      
        -
          3
          -

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      	 	
              1.

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

            

    

     

    
      
        
        

      

      
        -
          4
          -

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.

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

            

    

     

    G. Certain
      Representations and Covenants.

     

    
      	 	
              1.

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

            

    

     

    
      	 	
              2.

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

            

    

     

    
      	 	
              3.

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

            

    

     

    
      	 	
              4.

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

            

    

     

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

     

    [Signature
      page follows]

     

    
      
        
        

      

      
        -
          5
          -

        
          

        

      

      
        
        

      

    

    

      
        	
                NEONODE,
                  INC.

              
	 
	
                By:________________________________

              
	
                _________________,
                  Authorized Signatory

              

      

       

      
        
          
          

        

        
          -
            6
            -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]