NEOWARE SENIOR OFFICER BONUS PLAN

PURPOSE OF THE PLAN

         The Senior Officer Bonus Plan (the "Plan") of Neoware, Inc. ("Neoware",
or the "Company") is designed to motivate and reward the senior officers of the
Company for their contribution to the achievement of key business objectives by
Neoware and to support Neoware's efforts in attracting, retaining and rewarding
senior officers, while aligning the interests of the senior officers with
shareholder expectations.

ELIGIBILITY; PARTIAL YEAR PAYMENT

         The Chief Executive Officer and the Senior Officers (as defined below)
of Neoware ("Participants") are eligible to participate in the Plan. Employees
who are hired by Neoware or are promoted or reclassified as a Senior Officer
during a Plan year will be eligible for a pro-rated bonus. In order to be
eligible to receive a bonus, the individual must be employed by Neoware at the
time of payment. For purposes of the Plan, a Senior Officer is defined as any
employee who is deemed by the Board of Directors to be an "executive officer"
under Item 401(b) of Regulation S-K of the Securities Exchange Act of 1934, as
well as other senior officers determined by the Chief Executive Officer and
approved by the Compensation and Stock Option Committee of the Board of
Directors (the "Compensation Committee").

BONUS PERIOD

         The Plan will be effective from July 1, 2005 to June 30, 2006 and will
automatically renew upon the anniversary date of the Plan unless terminated by
the Compensation Committee or the Board of Directors of Neoware. Bonuses are
based upon Neoware's financial performance and employee individual performance,
as set forth herein, during the applicable bonus period.

EXECUTIVE BONUS PLAN PAYMENT

         Although every effort will be made to process payments on a timely
basis, there is no guaranteed payment date associated with this Plan. Payments
will be made only after financial results have been reported and recommendations
have been submitted to and approved by the Compensation Committee.

PERFORMANCE AND INDIVIDUAL TARGETS

         Participants will be eligible for an annual cash incentive bonus based
on the achievement of predetermined goals and also based upon individual
performance, as set forth below. For the achievement of predetermined goals,
participants will have an assigned target equal to a specific percentage of
salary earned during the Plan year. The annual target is based on the
Participant's position in the Company. The target percentages can be increased
or decreased at the discretion of the Compensation Committee based upon the
individual Participant's performance, as set forth herein. The achievement of
individual Participant achievement goals can result in the individual's target
percentage being increased or decreased, as discussed below.


FINANCIAL PERFORMANCE

         All bonuses will be measured upon the achievement of specific
performance targets based on one or more of the following criteria:

         o Revenues

         o Earnings per share

         o Operating income

         o Earnings before interest, taxes, depreciation and amortization

         o Net income

         o Working capital

         o Gross profit

         Financial results higher or lower than the performance targets will
result in an adjustment up or down of the performance target based on evaluation
by the Compensation Committee. The performance target is then multiplied by the
Participant's assigned target percentage to determine the eligible bonus
percentage.

INDIVIDUAL PARTICIPANT ACHIEVEMENT

         Once the target percentage has been assigned to a Participant, the
Compensation Committee will have discretion to adjust the bonus for individual
Participants up or down based upon job performance and achievement of
individual, functional area and departmental objectives.

APPROVALS

         The actual bonus payment for all participants will be reviewed and
approved by the Compensation Committee.

ADMINISTRATION OF THE PLAN

         Notwithstanding the above, the Compensation Committee may modify or
change this Plan or its implementation at any time, including, but not limited
to, revising performance targets, bonus multipliers, strategic goals and
objectives and actual bonus payments. The Compensation Committee shall have the
sole discretion to determine (i) whether performance targets have been achieved,
(ii) whether individual goals and objectives have been achieved, and (iii) the
amount of any adjustments to a Participant's assigned target percentage based on
items (i) and (ii) above and such other criteria deemed appropriate by the
Compensation Committee. As a condition to participation, each Participant will
acknowledge that he or she has reviewed and understood this Plan, that the
bonuses under the Plan are discretionary and that no bonus will be payable
unless and until the actual amount of the bonus payment is approved by the
Compensation Committee.