NEITHER
        THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
        HAVE
        BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
        COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON
        AN
        EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
        (THE
“SECURITIES
        ACT”),
        AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
        EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
        SECURITIES LAWS.

       

      NEOMEDIA
        TECHNOLOGIES, INC.

       

      Secured
        Convertible Debenture

       

      
        	
                Issuance
                  Date: May 30, 2008

              	
                Original
                  Principal Amount: $790,000

              
	
                No.
                  NEO-2008-3

              	 


      

      


      FOR
        VALUE RECEIVED,
        NEOMEDIA
        TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
        hereby promises to pay to the order of YA GLOBAL INVESTMENTS, L.P f/k/a Cornell
        Capital Partners, L.P., or registered assigns (the "Holder")
        the
        amount set out above as the Original Principal Amount (as reduced pursuant
        to
        the terms hereof pursuant to redemption, conversion or otherwise, the
        "Principal")
        when
        due, upon the Maturity Date (as defined below), acceleration, redemption
        or
        otherwise (in each case in accordance with the terms hereof) and to pay interest
        ("Interest")
        on any
        outstanding Principal at the applicable Interest Rate from the date set out
        above as the Issuance Date (the "Issuance
        Date")
        until
        the same becomes due and payable as set forth below, or upon acceleration,
        conversion, redemption or otherwise (in each case in accordance with the
        terms
        hereof). This Secured Convertible Debenture (including all Secured Convertible
        Debentures issued in exchange, transfer or replacement hereof, this
        "Debenture")
        is one
        of an issue of Secured Convertible Debentures issued by the Company to the
        Holder (collectively, the "Debentures"
        and
        such other Convertible Debentures, the "Other
        Debentures").
        Certain capitalized terms used herein are defined in Section 17.

       

      (1) GENERAL
        TERMS

       

      (a) Payment
        of Principal.
        On the
        Maturity Date, the Company shall pay to the Holder an amount in cash
        representing all outstanding Principal, accrued and unpaid Interest. The
        "Maturity
        Date"
        shall
        be May 30, 2010, as may be extended at the option of the Holder (i) in the
        event
        that, and for so long as, an Event of Default (as defined below) shall have
        occurred and be continuing on the Maturity Date (as may be extended pursuant
        to
        this Section 1) or any event shall have occurred and be continuing on the
        Maturity Date (as may be extended pursuant to this Section 1) that with the
        passage of time and the failure to cure would result in an Event of Default.
        Other than as specifically permitted by this Debenture, the Company may not
        prepay or redeem any portion of the outstanding Principal without the prior
        written consent of the Holder.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      (b) Interest.
        Interest shall accrue on the outstanding principal balance hereof at an annual
        rate equal to fifteen percent (15%) (“Interest
        Rate”).
        Interest shall be calculated on the basis of a 360-day year and the actual
        number of days elapsed, to the extent permitted by applicable law. Interest
        hereunder shall be paid quarterly in arrears, beginning on July 1, 2008,
        and on
        the Maturity Date (or sooner as provided herein) to the Holder or its assignee
        in whose name this Debenture is registered on the records of the Company
        regarding registration and transfers of Debentures at the option of the Company
        in cash. 

       

      (c) Security.
        The
        Debenture is secured by (i) a security interest in all of the assets of the
        Company and of each of the Company's subsidiaries pursuant to the Security
        Agreement dated August 24, 2007 (the “Security
        Agreement”)
        and
        (ii) a security interest in all of the patents, trademarks and copyrights
        of the
        Company and of each of the Company's subsidiaries pursuant to the Patent
        Security Agreement dated as of August 24, 2007 (the “Patent
        Security Agreement”)
        (the
        Security Agreement and the Patent Security Agreement are collectively referred
        to as the “Security
        Documents”).

       

      (2) EVENTS
        OF DEFAULT. 

       

      (a) An
        “Event
        of Default”,
        wherever used herein, means any one of the following events (whatever the
        reason
        and whether it shall be voluntary or involuntary or effected by operation
        of law
        or pursuant to any judgment, decree or order of any court, or any order,
        rule or
        regulation of any administrative or governmental body):

       

      (i) the
        Company's failure to pay to the Holder any amount of Principal, Interest,
        or
        other amounts when and as due under this Debenture (including, without
        limitation, the Company's failure to pay any redemption payments or amounts
        hereunder) or any other Transaction Document;

       

      (ii) The
        Company or any subsidiary of the Company shall commence, or there shall be
        commenced against the Company or any subsidiary of the Company under any
        applicable bankruptcy or insolvency laws as now or hereafter in effect or
        any
        successor thereto, or the Company or any subsidiary of the Company commences
        any
        other proceeding under any reorganization, arrangement, adjustment of debt,
        relief of debtors, dissolution, insolvency or liquidation or similar law
        of any
        jurisdiction whether now or hereafter in effect relating to the Company or
        any
        subsidiary of the Company or there is commenced against the Company or any
        subsidiary of the Company any such bankruptcy, insolvency or other proceeding
        which remains undismissed for a period of 61 days; or the Company or any
        subsidiary of the Company is adjudicated insolvent or bankrupt; or any order
        of
        relief or other order approving any such case or proceeding is entered; or
        the
        Company or any subsidiary of the Company suffers any appointment of any
        custodian, private or court appointed receiver or the like for it or any
        substantial part of its property which continues undischarged or unstayed
        for a
        period of sixty one (61) days; or the Company or any subsidiary of the Company
        makes a general assignment for the benefit of creditors; or the Company or
        any
        subsidiary of the Company shall fail to pay, or shall state that it is unable
        to
        pay, or shall be unable to pay, its debts generally as they become due; or
        the
        Company or any subsidiary of the Company shall call a meeting of its creditors
        with a view to arranging a composition, adjustment or restructuring of its
        debts; or the Company or any subsidiary of the Company shall by any act or
        failure to act expressly indicate its consent to, approval of or acquiescence
        in
        any of the foregoing; or any corporate or other action is taken by the Company
        or any subsidiary of the Company for the purpose of effecting any of the
        foregoing;


      
        
          
          

        

        
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      (iii) The
        Company or any subsidiary of the Company shall default in any of its obligations
        under any other debenture or any mortgage, credit agreement or other facility,
        indenture agreement, factoring agreement or other instrument under which
        there
        may be issued, or by which there may be secured or evidenced any indebtedness
        for borrowed money or money due under any long term leasing or factoring
        arrangement of the Company or any subsidiary of the Company in an amount
        exceeding $100,000, whether such indebtedness now exists or shall hereafter
        be
        created and such default shall result in such indebtedness becoming or being
        declared due and payable prior to the date on which it would otherwise become
        due and payable;

       

      (iv) If
        the
        Common Stock is quoted or listed for trading on any of the following and
        it
        ceases to be so quoted or listed for trading and shall not again be quoted
        or
        listed for trading on any Primary Market within five (5) Trading Days of
        such
        delisting: (a) the American Stock Exchange, (b) New York Stock Exchange,
        (c) the
        Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC
        Bulletin Board (“OTCBB”) (each, a “Primary Market”);

       

      (v) The
        Company or any subsidiary of the Company shall be a party to any Change of
        Control Transaction (as defined in Section 6) unless in connection with such
        Change of Control Transaction this Debenture is retired; 

       

      (vi) (RESERVED)

       

      (vii) The
        Company's (A) failure to cure a Conversion Failure by delivery of the required
        number of shares of Common Stock within five (5) Business Days after the
        applicable Conversion Failure or (B) notice, written or oral, to any holder
        of
        the Debentures, including by way of public announcement, at any time, of
        its
        intention not to comply with a request for conversion of any Debentures into
        shares of Common Stock that is tendered in accordance with the provisions
        of the
        Debentures, other than pursuant to Section 4(c);

       

      (viii) The
        Company shall fail for any reason to deliver the payment in cash pursuant
        to a
        Buy-In (as defined herein) within three (3) Business Days after such payment
        is
        due; 

       

      (ix) The
        Company shall fail to observe or perform any other covenant, agreement or
        warranty contained in, or otherwise commit any breach or default of any
        provision of this Debenture (except as may be covered by Section 2(a)(i)
        through
        2(a)(vii) hereof) or any Transaction Document (as defined in Section 17)
        which
        is not cured within the time prescribed.


      
        
          
          

        

        
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      (x) any
        Event
        of Default (as defined in the Other Debentures) occurs with respect to any
        Other
        Debentures, or with respect to any other debentures issued by the Company
        to the
        Holder.

       

      (b) During
        the time that any portion of this Debenture is outstanding, if any Event
        of
        Default has occurred, the full unpaid Principal amount of this Debenture,
        together with interest and other amounts owing in respect thereof, to the
        date
        of acceleration shall become at the Holder's election, immediately due and
        payable in cash; provided however, the Holder may request (but shall have
        no
        obligation to request) payment of such amounts in Common Stock of the Company.
        If an Event of Default (after giving effect to any specified cure period)
        occurs
        and for so long as such Event of Default remains uncured, the Interest Rate
        on
        this Debenture shall immediately become twenty-four percent (24%) per annum
        and
        shall remain at such increased interest rate until the applicable Event of
        Default is cured. Furthermore, in addition to any other remedies, the Holder
        shall have the right (but not the obligation) to convert this Debenture at
        any
        time after (x) an Event of Default or (y) the Maturity Date at the lower
        of the
        Conversion Price or the Company Conversion Price. The Holder need not provide
        and the Company hereby waives any presentment, demand, protest or other notice
        of any kind, (other than required notice of conversion) and the Holder may
        immediately and without expiration of any grace period enforce any and all
        of
        its rights and remedies hereunder and all other remedies available to it
        under
        applicable law. Such declaration may be rescinded and annulled by Holder
        at any
        time prior to payment hereunder. No such rescission or annulment shall affect
        any subsequent Event of Default or impair any right consequent thereon.


       

      (3) COMPANY
        REDEMPTIONS 

       

      The
        Company shall be permitted to prepay this Debenture, in whole or in part,
        at any
        time. In order to make a redemption pursuant to this Section, the Company
        shall
        first provide written notice to the Holder of its intention to make a redemption
        (the “Redemption
        Notice”)
        setting forth the amount of Principal it desires to redeem (the “Redemption
        Amount”).
        The
        Company shall pay an amount equal to the principal amount being redeemed
        plus a
        redemption premium (“Redemption
        Premium”)
        equal
        to twenty percent (20%) of the Principal amount being redeemed, and accrued
        Interest, (collectively referred to as the “Company
        Additional Redemption
        Amount”).
        In
        order to make a redemption pursuant to this Section, the Company shall first
        provide written notice to the Holder of its intention to make a redemption
        (the
“Redemption
        Notice”)
        setting forth the amount of Principal it desires to redeem. After receipt
        of the
        Redemption Notice the Holder shall have five (5) Business Days to elect to
        convert all or any portion of this Debenture, subject to the limitations
        set
        forth in Section 4(b). On the sixth (6th) Business Day after the Redemption
        Notice, the Company shall deliver to the Holder the Company Additional
        Redemption Amount with respect to the Principal amount redeemed after giving
        effect to conversions effected during the five (5) Business Day
        period.

       

      (4) CONVERSION
        OF DEBENTURE. This
        Debenture shall be convertible into shares of the Company's Common Stock,
        on the
        terms and conditions set forth in this Section 4.


      
        
          
          

        

        
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      (a) Conversion
        Right.
        Subject
        to the provisions of Section 4(c), at any time or times on or after the Issuance
        Date, the Holder shall be entitled to convert any portion of the outstanding
        and
        unpaid Conversion Amount (as defined below) into fully paid and nonassessable
        shares of Common Stock in accordance with Section 4(b), at the Conversion
        Rate
        (as defined below). The number of shares of Common Stock issuable upon
        conversion of any Conversion Amount pursuant to this Section 4(a) shall be
        determined by dividing (x) such Conversion Amount by (y) the Conversion Price
        (the "Conversion
        Rate").
        The
        Company shall not issue any fraction of a share of Common Stock upon any
        conversion. If the issuance would result in the issuance of a fraction of
        a
        share of Common Stock, the Company shall round such fraction of a share of
        Common Stock up to the nearest whole share. The Company shall pay any and
        all
        transfer, stamp and similar taxes that may be payable with respect to the
        issuance and delivery of Common Stock upon conversion of any Conversion Amount.
        

       

      (i) "Conversion
        Amount"
        means
        the portion of the Principal and accrued Interest to be converted, redeemed
        or
        otherwise with respect to which this determination is being made.

       

      (ii) "Conversion
        Price"
        means,
        as of any Conversion Date (as defined below) or other date of determination,
        the
        lesser of (a) $0.01 (the “Fixed
        Conversion Price”),
        subject to adjustment as provided herein, or (b) eighty percent (80%) of
        the lowest Volume Weighted Average Price during the ten (10) Trading Days
        immediately preceding the Conversion Date (the “Market
        Conversion Price”).

       

      (b) Mechanics
        of Conversion.

       

      (i) Optional
        Conversion.
        To
        convert any Conversion Amount into shares of Common Stock on any date (a
        "Conversion
        Date"),
        the
        Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
        on or
        prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice
        of conversion in the form attached hereto as Exhibit
        I
        (the
        "Conversion
        Notice")
        to the
        Company and (B) if required by Section 4(b)(iv), surrender this Debenture
        to a
        nationally recognized overnight delivery service for delivery to the Company
        (or
        an indemnification undertaking reasonably satisfactory to the Company with
        respect to this Debenture in the case of its loss, theft or destruction).
        On or
        before the third Business Day following the date of receipt of a Conversion
        Notice (the "Share
        Delivery Date"),
        the
        Company shall (X) if legends are not required to be placed on certificates
        of
        Common Stock pursuant to any agreements between the Company and the Holder
        and
        provided that the Transfer Agent is participating in the Depository Trust
        Company's ("DTC")
        Fast
        Automated Securities Transfer Program, credit such aggregate number of shares
        of
        Common Stock to which the Holder shall be entitled to the Holder's or its
        designee's balance account with DTC through its Deposit Withdrawal Agent
        Commission system or (Y) if the Transfer Agent is not participating in the
        DTC
        Fast Automated Securities Transfer Program, issue and deliver to the address
        as
        specified in the Conversion Notice, a certificate, registered in the name
        of the
        Holder or its designee, for the number of shares of Common Stock to which
        the
        Holder shall be entitled which certificates shall not bear any restrictive
        legends unless required pursuant to any agreement between the Company and
        the
        Holder. If this Debenture is physically surrendered for conversion and the
        outstanding Principal of this Debenture is greater than the Principal portion
        of
        the Conversion Amount being converted, then the Company shall as soon as
        practicable and in no event later than three (3) Business Days after receipt
        of
        this Debenture and at its own expense, issue and deliver to the holder a
        new
        Debenture representing the outstanding Principal not converted. The Person
        or
        Persons entitled to receive the shares of Common Stock issuable upon a
        conversion of this Debenture shall be treated for all purposes as the record
        holder or holders of such shares of Common Stock upon the transmission of
        a
        Conversion Notice. 

       

      
        
          
          

        

        
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      (ii) Company's
        Failure to Timely Convert.
        If
        within three (3) Trading Days after the Company's receipt of the facsimile
        copy
        of a Conversion Notice the Company shall fail to issue and deliver a certificate
        to the Holder or credit the Holder's balance account with DTC for the number
        of
        shares of Common Stock to which the Holder is entitled upon such holder's
        conversion of any Conversion Amount (a "Conversion
        Failure"),
        and
        if on or after such Trading Day the Holder purchases (in an open market
        transaction or otherwise) Common Stock to deliver in satisfaction of a sale
        by
        the Holder of Common Stock issuable upon such conversion that the Holder
        anticipated receiving from the Company (a "Buy-In"),
        then
        the Company shall, within three (3) Business Days after the Holder's request
        and
        in the Holder's discretion, either (i) pay cash to the Holder in an amount
        equal
        to the Holder's total purchase price (including brokerage commissions and
        other
        out of pocket expenses, if any) for the shares of Common Stock so purchased
        (the
"Buy-In
        Price"),
        at
        which point the Company's obligation to deliver such certificate (and to
        issue
        such Common Stock) shall terminate, or (ii) promptly honor its obligation
        to
        deliver to the Holder a certificate or certificates representing such Common
        Stock and pay cash to the Holder in an amount equal to the excess (if any)
        of
        the Buy-In Price over the product of (A) such number of shares of Common
        Stock,
        times (B) the Closing Bid Price on the Conversion Date.

       

      (iii) Book-Entry.
        Notwithstanding anything to the contrary set forth herein, upon conversion
        of
        any portion of this Debenture in accordance with the terms hereof, the Holder
        shall not be required to physically surrender this Debenture to the Company
        unless (A) the full Conversion Amount represented by this Debenture is being
        converted or (B) the Holder has provided the Company with prior written notice
        (which notice may be included in a Conversion Notice) requesting reissuance
        of
        this Debenture upon physical surrender of this Debenture. The Holder and
        the
        Company shall maintain records showing the Principal and Interest converted
        and
        the dates of such conversions or shall use such other method, reasonably
        satisfactory to the Holder and the Company, so as not to require physical
        surrender of this Debenture upon conversion.

       

      (c) Limitations
        on Conversions.

       

      (i) Beneficial
        Ownership.
        The
        Company shall not effect any conversions of this Debenture and the Holder
        shall
        not have the right to convert any portion of this Debenture or receive shares
        of
        Common Stock as payment of interest hereunder to the extent that after giving
        effect to such conversion or receipt of such interest payment, the Holder,
        together with any affiliate thereof, would beneficially own (as determined
        in
        accordance with Section 13(d) of the Exchange Act and the rules promulgated
        thereunder) in excess of 4.99% of the number of shares of Common Stock
        outstanding immediately after giving effect to such conversion or receipt
        of
        shares as payment of interest. Since the Holder will not be obligated to
        report
        to the Company the number of shares of Common Stock it may hold at the time
        of a
        conversion hereunder, unless the conversion at issue would result in the
        issuance of shares of Common Stock in excess of 4.99% of the then outstanding
        shares of Common Stock without regard to any other shares which may be
        beneficially owned by the Holder or an affiliate thereof, the Holder shall
        have
        the authority and obligation to determine whether the restriction contained
        in
        this Section will limit any particular conversion hereunder and to the extent
        that the Holder determines that the limitation contained in this Section
        applies, the determination of which portion of the principal amount of this
        Debenture is convertible shall be the responsibility and obligation of the
        Holder. If the Holder has delivered a Conversion Notice for a principal amount
        of this Debenture that, without regard to any other shares that the Holder
        or
        its affiliates may beneficially own, would result in the issuance in excess
        of
        the permitted amount hereunder, the Company shall notify the Holder of this
        fact
        and shall honor the conversion for the maximum principal amount permitted
        to be
        converted on such Conversion Date in accordance with Section 4(a) and, any
        principal amount tendered for conversion in excess of the permitted amount
        hereunder shall remain outstanding under this Debenture. The provisions of
        this
        Section may be waived by a Holder (but only as to itself and not to any other
        Holder) upon not less than 65 days prior notice to the Company. Other Holders
        shall be unaffected by any such waiver.


      
        
          
          

        

        
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      (d) Other
        Provisions.

       

      (i) The
        Company shall at all times reserve and keep available out of its authorized
        Common Stock the full number of shares of Common Stock issuable upon conversion
        of all outstanding amounts under this Debenture; and within three (3) Business
        Days following the receipt by the Company of a Holder's notice that such
        minimum
        number of Underlying Shares is not so reserved, the Company shall promptly
        reserve a sufficient number of shares of Common Stock to comply with such
        requirement.

       

      (ii) All
        calculations under this Section 4 shall be rounded to the nearest $0.0001
        or
        whole share.

       

      (iii) The
        Company covenants that it will at all times reserve and keep available out
        of
        its authorized and unissued shares of Common Stock solely for the purpose
        of
        issuance upon conversion of this Debenture and payment of interest on this
        Debenture, each as herein provided, free from preemptive rights or any other
        actual contingent purchase rights of persons other than the Holder, not less
        than such number of shares of the Common Stock as shall (subject to any
        additional requirements of the Company as to reservation of such shares set
        forth in this Debenture or in the Transaction Documents) be issuable (taking
        into account the adjustments and restrictions set forth herein) upon the
        conversion of the outstanding principal amount of this Debenture and payment
        of
        interest hereunder. The Company covenants that all shares of Common Stock
        that
        shall be so issuable shall, upon issue, be duly and validly authorized, issued
        and fully paid, nonassessable and, if the Underlying Shares Registration
        Statement has been declared effective under the Securities Act, registered
        for
        public sale in accordance with such Underlying Shares Registration
        Statement.

       

      (iv) Nothing
        herein shall limit a Holder's right to pursue actual damages or declare an
        Event
        of Default pursuant to Section 2 herein for the Company 's failure to deliver
        certificates representing shares of Common Stock upon conversion within the
        period specified herein and such Holder shall have the right to pursue all
        remedies available to it at law or in equity including, without limitation,
        a
        decree of specific performance and/or injunctive relief, in each case without
        the need to post a bond or provide other security. The exercise of any such
        rights shall not prohibit the Holder from seeking to enforce damages pursuant
        to
        any other Section hereof or under applicable law. 


      
        
          
          

        

        
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      (5) Adjustments
        to Conversion Price

       

      (a) Adjustment
        of Conversion Price upon Issuance of Common Stock.
        If the
        Company, at any time while this Debenture is outstanding, issues or sells,
        or in
        accordance with this Section 5(a) is deemed to have issued or sold, any shares
        of Common Stock, excluding shares of Common Stock deemed to have been issued
        or
        sold by the Company in connection with any Excluded Securities, for a
        consideration per share (the “New
        Issuance Price”)
        less
        than a price equal to the Conversion Price in effect immediately prior to
        such
        issue or sale (such price the "Applicable
        Price")
        (the
        foregoing a "Dilutive
        Issuance"),
        then
        immediately after such Dilutive Issuance the Conversion Price then in effect
        shall be reduced to an amount equal to the New Issuance Price. For purposes
        of
        determining the adjusted Conversion Price under this Section 5(a), the following
        shall be applicable:

       

      (i) Issuance
        of Options.
        If the
        Company in any manner grants or sells any Options and the lowest price per
        share
        for which one share of Common Stock is issuable upon the exercise of any
        such
        Option or upon conversion or exchange or exercise of any Convertible Securities
        issuable upon exercise of such Option is less than the Applicable Price,
        then
        such share of Common Stock shall be deemed to be outstanding and to have
        been
        issued and sold by the Company at the time of the granting or sale of such
        Option for such price per share. For purposes of this Section, the "lowest
        price
        per share for which one share of Common Stock is issuable upon the exercise
        of
        any such Option or upon conversion or exchange or exercise of any Convertible
        Securities issuable upon exercise of such Option" shall be equal to the sum
        of
        the lowest amounts of consideration (if any) received or receivable by the
        Company with respect to any one share of Common Stock upon granting or sale
        of
        the Option, upon exercise of the Option and upon conversion or exchange or
        exercise of any Convertible Security issuable upon exercise of such Option.
        No
        further adjustment of the Conversion Price shall be made upon the actual
        issuance of such share of Common Stock or of such Convertible Securities
        upon
        the exercise of such Options or upon the actual issuance of such Common Stock
        upon conversion or exchange or exercise of such Convertible
        Securities.

       

      (ii) Issuance
        of Convertible Securities.
        If the
        Company in any manner issues or sells any Convertible Securities and the
        lowest
        price per share for which one share of Common Stock is issuable upon such
        conversion or exchange or exercise thereof is less than the Applicable Price,
        then such share of Common Stock shall be deemed to be outstanding and to
        have
        been issued and sold by the Company at the time of the issuance or sale of
        such
        Convertible Securities for such price per share. For the purposes of this
        Section, the "lowest price per share for which one share of Common Stock
        is
        issuable upon such conversion or exchange or exercise" shall be equal to
        the sum
        of the lowest amounts of consideration (if any) received or receivable by
        the
        Company with respect to any one share of Common Stock upon the issuance or
        sale
        of the Convertible Security and upon the conversion or exchange or exercise
        of
        such Convertible Security. No further adjustment of the Conversion Price
        shall
        be made upon the actual issuance of such share of Common Stock upon conversion
        or exchange or exercise of such Convertible Securities, and if any such issue or
        sale of such Convertible Securities is made upon exercise of any Options
        for
        which adjustment of the Conversion Price had been or are to be made pursuant
        to
        other provisions of this Section, no further adjustment of the Conversion
        Price
        shall be made by reason of such issue or sale.

       

      
        
          
          

        

        
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      (iii) Change
        in Option Price or Rate of Conversion.
        If the
        purchase price provided for in any Options, the additional consideration,
        if
        any, payable upon the issue, conversion, exchange or exercise of any Convertible
        Securities, or the rate at which any Convertible Securities are convertible
        into
        or exchangeable or exercisable for Common Stock changes at any time, the
        Conversion Price in effect at the time of such change shall be adjusted to
        the
        Conversion Price which would have been in effect at such time had such Options
        or Convertible Securities provided for such changed purchase price, additional
        consideration or changed conversion rate, as the case may be, at the time
        initially granted, issued or sold. For purposes of this Section, if the terms
        of
        any Option or Convertible Security that was outstanding as of the Issuance
        Date
        are changed in the manner described in the immediately preceding sentence,
        then
        such Option or Convertible Security and the Common Stock deemed issuable
        upon
        exercise, conversion or exchange thereof shall be deemed to have been issued
        as
        of the date of such change. No adjustment shall be made if such adjustment
        would
        result in an increase of the Conversion Price then in effect.

       

      (iv) Calculation
        of Consideration Received.
        In case
        any Option is issued in connection with the issue or sale of other securities
        of
        the Company, together comprising one integrated transaction in which no specific
        consideration is allocated to such Options by the parties thereto, the Options
        will be deemed to have been issued for the difference of (x) the aggregate
        fair
        market value of such Options and other securities issued or sold in such
        integrated transaction, less (y) the fair market value of the securities
        other
        than such Option, issued or sold in such transaction and the other securities
        issued or sold in such integrated transaction will be deemed to have been
        issued
        or sold for the balance of the consideration received by the Company. If
        any
        Common Stock, Options or Convertible Securities are issued or sold or deemed
        to
        have been issued or sold for cash, the consideration received therefor will
        be
        deemed to be the gross amount raised by the Company; provided, however, that
        such gross amount is not greater than 110% of the net amount received by
        the
        Company therefor. If any Common Stock, Options or Convertible Securities
        are
        issued or sold for a consideration other than cash, the amount of the
        consideration other than cash received by the Company will be the fair value
        of
        such consideration, except where such consideration consists of securities,
        in
        which case the amount of consideration received by the Company will be the
        Closing Bid Price of such securities on the date of receipt. If any Common
        Stock, Options or Convertible Securities are issued to the owners of the
        non-surviving entity in connection with any merger in which the Company is
        the
        surviving entity, the amount of consideration therefor will be deemed to
        be the
        fair value of such portion of the net assets and business of the non-surviving
        entity as is attributable to such Common Stock, Options or Convertible
        Securities, as the case may be. The fair value of any consideration other
        than
        cash or securities will be determined jointly by the Company and the Holder.
        If
        such parties are unable to reach agreement within ten (10) days after the
        occurrence of an event requiring valuation (the "Valuation
        Event"),
        the
        fair value of such consideration will be determined within five (5) Business
        Days after the tenth (10th)
        day
        following the Valuation Event by an independent, reputable appraiser jointly
        selected by the Company and the Holder. The determination of such appraiser
        shall be deemed binding upon all parties absent manifest error and the fees
        and
        expenses of such appraiser shall be borne by the Company.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      


      (v) Record
        Date.
        If the
        Company takes a record of the holders of Common Stock for the purpose of
        entitling them (A) to receive a dividend or other distribution payable in
        Common
        Stock, Options or in Convertible Securities or (B) to subscribe for or purchase
        Common Stock, Options or Convertible Securities, then such record date will
        be
        deemed to be the date of the issue or sale of the Common Stock deemed to
        have
        been issued or sold upon the declaration of such dividend or the making of
        such
        other distribution or the date of the granting of such right of subscription
        or
        purchase, as the case may be.

       

      (b) Adjustment
        of Conversion Price upon Subdivision or Combination of Common
        Stock.
        If the
        Company, at any time while this Debenture is outstanding, shall (a) pay a
        stock dividend or otherwise make a distribution or distributions on shares
        of
        its Common Stock or any other equity or equity equivalent securities payable
        in
        shares of Common Stock, (b) subdivide outstanding shares of Common Stock
        into a
        larger number of shares, (c) combine (including by way of reverse stock split)
        outstanding shares of Common Stock into a smaller number of shares, or (d)
        issue
        by reclassification of shares of the Common Stock any shares of capital stock
        of
        the Company, then the Conversion Price shall be multiplied by a fraction
        of
        which the numerator shall be the number of shares of Common Stock (excluding
        treasury shares, if any) outstanding before such event and of which the
        denominator shall be the number of shares of Common Stock outstanding after
        such
        event. Any adjustment made pursuant to this Section shall become effective
        immediately after the record date for the determination of stockholders entitled
        to receive such dividend or distribution and shall become effective immediately
        after the effective date in the case of a subdivision, combination or
        re-classification.

       

      (c) Purchase
        Rights.
        If at
        any time the Company grants, issues or sells any Options, Convertible Securities
        or rights to purchase stock, warrants, securities or other property pro rata
        to
        the record holders of any class of Common Stock (the "Purchase
        Rights"),
        then
        the Holder will be entitled to acquire, upon the terms applicable to such
        Purchase Rights, the aggregate Purchase Rights which the Holder could have
        acquired if the Holder had held the number of shares of Common Stock acquirable
        upon complete conversion of this Debenture (without taking into account any
        limitations or restrictions on the convertibility of this Debenture) immediately
        before the date on which a record is taken for the grant, issuance or sale
        of
        such Purchase Rights, or, if no such record is taken, the date as of which
        the
        record holders of Common Stock are to be determined for the grant, issue
        or sale
        of such Purchase Rights.

       

      (d) Other
        Events.
        If any
        event occurs of the type contemplated by the provisions of this Section 4
        but
        not expressly provided for by such provisions (including, without limitation,
        the granting of stock appreciation rights, phantom stock rights or other
        rights
        with equity features), then the Company's Board of Directors will make an
        appropriate adjustment in the Conversion Price so as to protect the rights
        of
        the Holder under this Debenture; provided that no such adjustment will increase
        the Conversion Price as otherwise determined pursuant to this Section
        5.


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      


      (e) Other
        Corporate Events.
        In
        addition to and not in substitution for any other rights hereunder, prior
        to the
        consummation of any Fundamental Transaction pursuant to which holders of
        shares
        of Common Stock are entitled to receive securities or other assets with respect
        to or in exchange for shares of Common Stock (a "Corporate
        Event"),
        the
        Company shall make appropriate provision to insure that the Holder will
        thereafter have the right to receive upon a conversion of this Debenture,
        at the
        Holder's option, (i) in addition to the shares of Common Stock receivable
        upon
        such conversion, such securities or other assets to which the Holder would
        have
        been entitled with respect to such shares of Common Stock had such shares
        of
        Common Stock been held by the Holder upon the consummation of such Corporate
        Event (without taking into account any limitations or restrictions on the
        convertibility of this Debenture) or (ii) in lieu of the shares of Common
        Stock
        otherwise receivable upon such conversion, such securities or other assets
        received by the holders of shares of Common Stock in connection with the
        consummation of such Corporate Event in such amounts as the Holder would
        have
        been entitled to receive had this Debenture initially been issued with
        conversion rights for the form of such consideration (as opposed to shares
        of
        Common Stock) at a conversion rate for such consideration commensurate with
        the
        Conversion Rate. Provision made pursuant to the preceding sentence shall
        be in a
        form and substance satisfactory to the Required Holders. The provisions of
        this
        Section shall apply similarly and equally to successive Corporate Events
        and
        shall be applied without regard to any limitations on the conversion or
        redemption of this Debenture.

       

      (f) Whenever
        the Conversion Price is adjusted pursuant to Section 5 hereof, the Company
        shall
        promptly mail to the Holder a notice setting forth the Conversion Price after
        such adjustment and setting forth a brief statement of the facts requiring
        such
        adjustment.

       

      (g) In
        case
        of any (1) merger or consolidation of the Company or any subsidiary of the
        Company with or into another Person, or (2) sale by the Company or any
        subsidiary of the Company of more than one-half of the assets of the Company
        in
        one or a series of related transactions, a Holder shall have the right to
        (A)
        declare the entire amount due and owing under the Debenture (A) exercise
        any
        rights under Section 2(b), (B) convert the aggregate amount of this Debenture
        then outstanding into the shares of stock and other securities, cash and
        property receivable upon or deemed to be held by holders of Common Stock
        following such merger, consolidation or sale, and such Holder shall be entitled
        upon such event or series of related events to receive such amount of
        securities, cash and property as the shares of Common Stock into which such
        aggregate principal amount of this Debenture could have been converted
        immediately prior to such merger, consolidation or sales would have been
        entitled, or (C) in the case of a merger or consolidation, require the surviving
        entity to issue to the Holder a convertible Debenture with a principal amount
        equal to the aggregate principal amount of this Debenture then held by such
        Holder, plus all accrued and unpaid interest and other amounts owing thereon,
        which such newly issued convertible Debenture shall have terms identical
        (including with respect to conversion) to the terms of this Debenture, and
        shall
        be entitled to all of the rights and privileges of the Holder of this Debenture
        set forth herein and the agreements pursuant to which this Debentures were
        issued. In the case of clause (C), the conversion price applicable for the
        newly
        issued shares of convertible preferred stock or convertible Debentures shall
        be
        based upon the amount of securities, cash and property that each share of
        Common
        Stock would receive in such transaction and the Conversion Price in effect
        immediately prior to the effectiveness or closing date for such transaction.
        The
        terms of any such merger, sale or consolidation shall include such terms
        so as
        to continue to give the Holder the right to receive the securities, cash
        and
        property set forth in this Section upon any conversion or redemption following
        such event. This provision shall similarly apply to successive such
        events.


      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      


      (6) REISSUANCE
        OF THIS DEBENTURE.

       

      (a) Transfer.
        If this
        Debenture is to be transferred, the Holder shall surrender this Debenture
        to the
        Company, whereupon the Company will forthwith issue and deliver upon the
        order
        of the Holder a new Debenture (in accordance with Section 6(d)), registered
        in
        the name of the registered transferee or assignee, representing the outstanding
        Principal being transferred by the Holder and, if less then the entire
        outstanding Principal is being transferred, a new Debenture (in accordance
        with
        Section 6(d)) to the Holder representing the outstanding Principal not being
        transferred. The Holder and any assignee, by acceptance of this Debenture,
        acknowledge and agree that, by reason of the provisions of Section 4(b)(iii)
        following conversion or redemption of any portion of this Debenture, the
        outstanding Principal represented by this Debenture may be less than the
        Principal stated on the face of this Debenture.

       

      (b) Lost,
        Stolen or Mutilated Debenture.
        Upon
        receipt by the Company of evidence reasonably satisfactory to the Company
        of the
        loss, theft, destruction or mutilation of this Debenture, and, in the case
        of
        loss, theft or destruction, of any indemnification undertaking by the Holder
        to
        the Company in customary form and, in the case of mutilation, upon surrender
        and
        cancellation of this Debenture, the Company shall execute and deliver to
        the
        Holder a new Debenture (in accordance with Section 6(d)) representing the
        outstanding Principal.

       

      (c) Debenture
        Exchangeable for Different Denominations.
        This
        Debenture is exchangeable, upon the surrender hereof by the Holder at the
        principal office of the Company, for a new Debenture or Debentures (in
        accordance with Section 6(d)) representing in the aggregate the outstanding
        Principal of this Debenture, and each such new Debenture will represent such
        portion of such outstanding Principal as is designated by the Holder at the
        time
        of such surrender.

       

      (d) Issuance
        of New Debentures.
        Whenever the Company is required to issue a new Debenture pursuant to the
        terms
        of this Debenture, such new Debenture (i) shall be of like tenor with this
        Debenture, (ii) shall represent, as indicated on the face of such new Debenture,
        the Principal remaining outstanding (or in the case of a new Debenture being
        issued pursuant to Section 6(a) or Section 6(c), the Principal designated
        by the
        Holder which, when added to the principal represented by the other new
        Debentures issued in connection with such issuance, does not exceed the
        Principal remaining outstanding under this Debenture immediately prior to
        such
        issuance of new Debentures), (iii) shall have an issuance date, as indicated
        on
        the face of such new Debenture, which is the same as the Issuance Date of
        this
        Debenture, (iv) shall have the same rights and conditions as this Debenture,
        and
        (v) shall represent accrued and unpaid Interest from the Issuance
        Date.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      (7) NOTICES. Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms hereof must be in writing and will be deemed to have
        been
        delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
        when
        sent by facsimile (provided confirmation of transmission is mechanically
        or
        electronically generated and kept on file by the sending party); or (iii)
        one
        (1) Trading Day after deposit with a nationally recognized overnight delivery
        service, in each case properly addressed to the party to receive the same.
        The
        addresses and facsimile numbers for such communications shall be:

      


      
        	
                If
                  to the Company, to:

              	
                Neomedia
                  Technologies, Inc.

              
	 	
                Two
                  Concourse Parkway, Suite 500

              
	 	
                Atlanta,
                  GA 30328

              
	 	
                Attention:

              	
                Frank
                  Pazera

              
	 	
                Telephone:

              	
                (678)
                  638-0460

              
	 	
                Facsimile:

              	
                (678)
                  638-0467

              
	 	 
	
                With
                  a copy to: 

              	
                Kirkpatrick
                  & Lockhart Preston Gates Ellis LLP

              
	 	
                200
                  South Biscayne Boulevard – Suite 3900

              
	 	
                Miami,
                  FL 33131-2399

              
	 	
                Attention:

              	
                Clayton
                  E. Parker, Esq.

              
	 	
                Telephone:

              	
                (305)
                  539-3300

              
	 	
                Facsimile:

              	
                (305)
                  358-7095

              
	 	 	 
	
                If
                  to the Holder:

              	
                YA
                  Global Investments, LP

              
	 	
                101
                  Hudson Street, Suite 3700

              
	 	
                Jersey
                  City, NJ 07303

              
	 	
                Attention:

              	
                Mark
                  Angelo

              
	 	
                Telephone:

              	
                (201)
                  985-8300

              
	 	 
	
                With
                  a copy to:

              	
                David
                  Gonzalez, Esq. 

              
	 	
                101
                  Hudson Street – Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Telephone:

              	
                (201)
                  985-8300

              
	 	
                Facsimile:

              	
                (201)
                  985-8266

              


      

      


      or
        at
        such other address and/or facsimile number and/or to the attention of such
        other
        person as the recipient party has specified by written notice given to each
        other party three (3) Business Days prior to the effectiveness of such change.
        Written confirmation of receipt (i) given by the recipient of such notice,
        consent, waiver or other communication, (ii) mechanically or electronically
        generated by the sender's facsimile machine containing the time, date, recipient
        facsimile number and an image of the first page of such transmission or (iii)
        provided by a nationally recognized overnight delivery service, shall be
        rebuttable evidence of personal service, receipt by facsimile or receipt
        from a
        nationally recognized overnight delivery service in accordance with clause
        (i),
        (ii) or (iii) above, respectively.


      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      


      (8) Except
        as
        expressly provided herein, no provision of this Debenture shall alter or
        impair
        the obligations of the Company, which are absolute and unconditional, to
        pay the
        principal of, interest and other charges (if any) on, this Debenture at the
        time, place, and rate, and in the coin or currency, herein prescribed. This
        Debenture is a direct obligation of the Company. As long as this Debenture
        is
        outstanding, the Company shall not and shall cause their subsidiaries not
        to,
        without the consent of the Holder, (i) amend its certificate of incorporation,
        bylaws or other charter documents so as to adversely affect any rights of
        the
        Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise
        acquire shares of its Common Stock or other equity securities other than
        as to
        the Underlying Shares to the extent permitted or required under the Transaction
        Documents; or (iii) enter into any agreement with respect to any of the
        foregoing. 

       

      (9) This
        Debenture shall not entitle the Holder to any of the rights of a stockholder
        of
        the Company, including without limitation, the right to vote, to receive
        dividends and other distributions, or to receive any notice of, or to attend,
        meetings of stockholders or any other proceedings of the Company, unless
        and to
        the extent converted into shares of Common Stock in accordance with the terms
        hereof.

       

      (10) No
        indebtedness of the Company is senior to this Debenture in right of payment,
        whether with respect to interest, damages or upon liquidation or dissolution
        or
        otherwise. Without the Holder’s consent, the Company will not and will not
        permit any of their subsidiaries to, directly or indirectly, enter into,
        create,
        incur, assume or suffer to exist any indebtedness 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 there from that is senior in any
        respect to the obligations of the Company under this Debenture.

       

      (11) This
        Debenture shall be governed by and construed in accordance with the laws
        of the
        State of New Jersey, without giving effect to conflicts of laws thereof.
        Each of
        the parties consents to the jurisdiction of the Superior Courts of the State
        of
        New Jersey sitting in Hudson County, New Jersey and the U.S. District Court
        for the District of New Jersey sitting in Newark, New Jersey in connection
        with
        any dispute arising under this Debenture and hereby waives, to the maximum
        extent permitted by law, any objection, including any objection based on
        forum
        non conveniens to the bringing of any such proceeding in such jurisdictions.
        

       

      (12) If
        the
        Company fails to strictly comply with the terms of this Debenture, then the
        Company shall reimburse the Holder promptly for all fees, costs and expenses,
        including, without limitation, attorneys’ fees and expenses incurred by the
        Holder in any action in connection with this Debenture, including, without
        limitation, those incurred: (i) during any workout, attempted workout, and/or
        in
        connection with the rendering of legal advice as to the Holder’s rights,
        remedies and obligations, (ii) collecting any sums which become due to the
        Holder, (iii) defending or prosecuting any proceeding or any counterclaim
        to any
        proceeding or appeal; or (iv) the protection, preservation or enforcement
        of any
        rights or remedies of the Holder.

       

      (13) Any
        waiver by the Holder of a breach of any provision of this Debenture shall
        not
        operate as or be construed to be a waiver of any other breach of such provision
        or of any breach of any other provision of this Debenture. The failure of
        the
        Holder to insist upon strict adherence to any term of this Debenture on one
        or
        more occasions shall not be considered a waiver or deprive that party of
        the
        right thereafter to insist upon strict adherence to that term or any other
        term
        of this Debenture. Any waiver must be in writing.


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      


      (14) If
        any
        provision of this Debenture is invalid, illegal or unenforceable, the balance
        of
        this Debenture shall remain in effect, and if any provision is inapplicable
        to
        any person or circumstance, it shall nevertheless remain applicable to all
        other
        persons and circumstances. If it shall be found that any interest or other
        amount deemed interest due hereunder shall violate applicable laws governing
        usury, the applicable rate of interest due hereunder shall automatically
        be
        lowered to equal the maximum permitted rate of interest. The Company covenants
        (to the extent that it may lawfully do so) that it shall not at any time
        insist
        upon, plead, or in any manner whatsoever claim or take the benefit or advantage
        of, any stay, extension or usury law or other law which would prohibit or
        forgive the Company from paying all or any portion of the principal of or
        interest on this Debenture as contemplated herein, wherever enacted, now
        or at
        any time hereafter in force, or which may affect the covenants or the
        performance of this indenture, and the Company (to the extent it may lawfully
        do
        so) hereby expressly waives all benefits or advantage of any such law, and
        covenants that it will not, by resort to any such law, hinder, delay or impeded
        the execution of any power herein granted to the Holder, but will suffer
        and
        permit the execution of every such as though no such law has been
        enacted.

       

      (15) Whenever
        any payment or other obligation hereunder shall be due on a day other than
        a
        Business Day, such payment shall be made on the next succeeding Business
        Day.

       

      (16) THE
        PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY
        OF
        THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
        OR
        ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
        DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
        VERBAL
        OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
        FOR
        THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

       

      (17) CERTAIN
        DEFINITIONS  For
        purposes of this Debenture, the following terms shall have the following
        meanings:

       

      (a) “Approved
        Stock Plan”
means
        a
        stock option plan that has been approved by the Board of Directors of the
        Company, pursuant to which the Company’s securities may be issued only to any
        employee, officer, or director for services provided to the
        Company.

       

      (b) "Bloomberg"
        means
        Bloomberg Financial Markets.

       

      (c) “Business
        Day”
means
        any day except Saturday, Sunday and any day which shall be a federal legal
        holiday in the United States or a day on which banking institutions are
        authorized or required by law or other government action to close.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      


      (d) “Change
        of Control Transaction”
means
        the occurrence of (a) an acquisition after the date hereof by an individual
        or
        legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
        Exchange Act) of effective control (whether through legal or beneficial
        ownership of capital stock of the Company, by contract or otherwise) of in
        excess of fifty percent (50%) of the voting securities of the Company (except
        that the acquisition of voting securities by the Holder or any other current
        holder of convertible securities of the Company shall not constitute a Change
        of
        Control Transaction for purposes hereof), (b) a replacement at one time or
        over
        time of more than one-half of the members of the board of directors of the
        Company which is not approved by a majority of those individuals who are
        members
        of the board of directors on the date hereof (or by those individuals who
        are
        serving as members of the board of directors on any date whose nomination
        to the
        board of directors was approved by a majority of the members of the board
        of
        directors who are members on the date hereof), (c) the merger, consolidation
        or
        sale of fifty percent (50%) or more of the assets of the Company or any
        subsidiary of the Company in one or a series of related transactions with
        or
        into another entity, or (d) the execution by the Company of an agreement
        to
        which the Company is a party or by which it is bound, providing for any of
        the
        events set forth above in (a), (b) or (c).

       

      (e) “Closing
        Bid Price”
means
        the price per share in the last reported trade of the Common Stock on a Primary
        Market or on the exchange which the Common Stock is then listed as quoted
        by
        Bloomberg.

       

      (f) “Convertible
        Securities”
means
        any stock or securities (other than Options) directly or indirectly convertible
        into or exercisable or exchangeable for Common Stock.

       

      (g) “Commission”
means
        the Securities and Exchange Commission.

       

      (h) “Common
        Stock”
means
        the common stock, par value $.001, of the Company and stock of any other
        class
        into which such shares may hereafter be changed or reclassified.

       

      (i) "Company
        Conversion Price"
        means,
        the lower of (i) the applicable Conversion Price and (ii) that price which
        shall
        be computed as fifty percent (50%) of the lowest daily Volume Weighted Average
        Price of the Common Stock during the ten (10) consecutive Trading Days
        immediately preceding the applicable Installment Date. All such determinations
        to be appropriately adjusted for any stock split, stock dividend, stock
        combination or other similar transaction.


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      


      (j) "Equity
        Conditions"
        means
        that each of the following conditions is satisfied: (i) on each day during
        the
        period beginning two (2) weeks prior to the applicable date of determination
        and
        ending on and including the applicable date of determination (the "Equity
        Conditions Measuring Period"), either (x) the Underlying Shares Registration
        Statement filed pursuant to the Registration Rights Agreement shall be effective
        and available for the resale of all applicable shares of Common Stock to
        be
        issued in connection with the event requiring determination or (y) all
        applicable shares of Common Stock to be issued in connection with the event
        requiring determination shall be eligible for sale without restriction and
        without the need for registration under any applicable federal or state
        securities laws; (ii) on each day during the Equity Conditions Measuring
        Period,
        the Common Stock is designated for quotation on the Principal Market and
        shall
        not have been suspended from trading on such exchange or market nor shall
        delisting or suspension by such exchange or market been threatened or pending
        either (A) in writing by such exchange or market or (B) by falling below
        the
        then effective minimum listing maintenance requirements of such exchange
        or
        market; (iii) during the Equity Conditions Measuring Period, the Company
        shall
        have delivered Conversion Shares upon conversion of the Debentures to the
        Holder
        on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable
        shares of Common Stock to be issued in connection with the event requiring
        determination may be issued in full without violating Section 4(c) hereof
        and
        the rules or regulations of the Primary Market; (v) during the Equity Conditions
        Measuring Period, there shall not have occurred either (A) an Event of Default
        or (B) an event that with the passage of time or giving of notice would
        constitute an Event of Default; and (vii) the Company shall have no knowledge
        of
        any fact that would cause (x) the Registration Statements required pursuant
        to
        the Registration Rights Agreement not to be effective and available for the
        resale of all applicable shares of Common Stock to be issued in connection
        with
        the event requiring determination or (y) any applicable shares of Common
        Stock
        to be issued in connection with the event requiring determination not to
        be
        eligible for sale without restriction and without the need for registration
        under any applicable federal or state securities laws.

       

      (k) "Equity
        Conditions Failure"
        means
        that on any applicable date the Equity Conditions have not been satisfied
        (or
        waived in writing by the Holder).

       

      (l) “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended.

       

      (m) “Excluded
        Securities”
means,
        (a) shares issued or deemed to have been issued by the Company pursuant to
        an
        Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued
        by
        the Company upon the conversion, exchange or exercise of any right, option,
        obligation or security outstanding on the date prior to date hereof, provided
        that the terms of such right, option, obligation or security are not amended
        or
        otherwise modified on or after the date hereof, and provided that the conversion
        price, exchange price, exercise price or other purchase price is not reduced,
        adjusted or otherwise modified and the number of shares of Common Stock issued
        or issuable is not increased (whether by operation of, or in accordance with,
        the relevant governing documents or otherwise) on or after the date hereof,
        (c)
        shares issued in connection with any acquisition by the Company, whether
        through
        an acquisition of stock or a merger of any business, assets or technologies,
        leasing arrangement or any other transaction the primary purpose of which
        is not
        to raise equity capital, and (d) the shares of Common Stock issued or
        deemed to be issued by the Company upon conversion of this
        Debenture.

       

      (n) “Options”
means
        any rights, warrants or options to subscribe for or purchase shares of Common
        Stock or Convertible Securities.

       

      (o) “Original
        Issue Date”
means
        the date of the first issuance of this Debenture regardless of the number
        of
        transfers and regardless of the number of instruments, which may be issued
        to
        evidence such Debenture.


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      


      (p) “Person”
means
        a
        corporation, an association, a partnership, organization, a business, an
        individual, a government or political subdivision thereof or a governmental
        agency.

       

      (q) “Securities
        Act”
means
        the Securities Act of 1933, as amended, and the rules and regulations
        promulgated thereunder.

       

      (r) “Trading
        Day”
means
        a
        day on which the shares of Common Stock are quoted on the OTCBB or quoted
        or
        traded on such Primary Market on which the shares of Common Stock are then
        quoted or listed; provided, that in the event that the shares of Common Stock
        are not listed or quoted, then Trading Day shall mean a Business
        Day.

       

      (s) “Transaction
        Documents”
means
        the Securities Purchase Agreements between the Company and the Holder, and
        all
        agreements made or delivered in connection therewith, including, without
        limitation, the Security Documents, the Irrevocable Transfer Agent Instructions,
        and the Registration Rights Agreement (as those terms are defined in the
        various
        Securities Purchase Agreements).

       

      (t) “Underlying
        Shares”
means
        the shares of Common Stock issuable upon conversion of this Debenture or
        as
        payment of interest in accordance with the terms hereof.

       

      (u) “Underlying
        Shares Registration Statement”
means
        a
        registration statement meeting the requirements set forth in the Registration
        Rights Agreement, covering among other things the resale of the Underlying
        Shares and naming the Holder as a “selling stockholder” thereunder.

       

      (v) "Volume
        Weighted Average Price"
        means,
        for any security as of any date, the daily dollar volume-weighted average
        price
        for such security as reported by Bloomberg through its “Historical Price Table
        Screen (HP)” with “Market: Weighted Ave” function selected, or, if no dollar
        volume-weighted average price is reported for such security by Bloomberg,
        the
        average of the highest closing bid price and the lowest closing ask price
        of any
        of the market makers for such security as reported in the "pink sheets" by
        Pink
        Sheets LLC. 

       

      (w) "Warrants"
        has the
        meaning ascribed to such term in the Securities Purchase Agreements between
        the
        Company and the Holder, and shall include all warrants issued in exchange
        therefor or replacement thereof.

       

      [Signature
        Page Follows]


      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      


      IN
        WITNESS WHEREOF,
        the
        Company has caused this Secured Convertible Debenture to be duly executed
        by a
        duly authorized officer as of the date set forth above.

      


      
        	 	
                COMPANY:

              
	 	
                NEOMEDIA
                  TECHNOLOGIES, INC.

              
	 	 
	 	
                By:

              	
                /s/
                  Scott Womble

              
	 	
                Name:  
                  Scott Womble

              
	 	
                Title:    
                  Chief Financial Officer

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        I

      CONVERSION
        NOTICE

       

      (To
        be executed by the Holder in order to Convert the
        Debenture)

       

      TO:
        

       

      The
        undersigned hereby irrevocably elects to convert $__________________________
        of
        the
        principal amount of Debenture No. NEO-2008-3 into Shares of Common Stock
        of
NEOMEDIA
        TECHNOLOGIES, INC.,
        according to the conditions stated therein, as of the Conversion Date written
        below.

       

      
        	
                Conversion
                  Date:

              	 	 
	 	 	 
	
                Conversion
                  Amount to be converted:

              	 	
                $

              
	 	 	 
	
                Conversion
                  Price:

              	 	
                $

              
	 	 	 
	
                Number
                  of shares of Common Stock to be issued:

              	 	 
	 	 	 
	
                Amount
                  of Debenture Unconverted:

              	 	
                $

              
	 	 	 
	
                Please
                  issue the shares of Common Stock in the following name and to the
                  following address:

              
	 
	
                Issue
                  to:

              	 	 
	 	 	 
	
                Authorized
                  Signature:

              	 	 
	 	 	 
	
                Name:

              	 	 
	 	 	 
	
                Title:

              	 	 
	 	 	 
	
                Broker
                  DTC Participant Code:

              	 	 
	 	 	 
	
                Account
                  Number: