EXHIBIT 10.20

                                 August 8, 2002

2150 Western Court Company, L.L.C.
c/o Pritchett Realty Corporation
Suite 23
2777 Finley Road
Downers Grove, IL 60515-1037
Attn: Michael F. Pritchett

Gentlemen:

         Reference is made to the obligation of NeoMedia  Technologies,  Inc., a
Delaware  corporation (the  "Company"),  in the aggregate amount of US$72,183.15
which amount is past due and payable as of July 31, 2002,  to 2150 Western Court
Company,  L.L.C (the  "Creditor"),  as successor to American  National  Bank and
Trust Company of Chicago as Trustee  under Trust  Agreement  Dated  September 6,
1985  and  known  as  Trust  No.   65453   pursuant  to  the  terms  of  certain
Office/Service Center Lease Agreement,  as amended, (the "Agreement"),  dated as
of February 25, 1997, between the Company and the Landlord (the "Obligation").

         Creditor hereby agrees to accept payment of 900,000 shares of the fully
paid and non-assessable  Common Stock, par value $0.01 per share, of the Company
(the  "Settlement  Shares),  along with cash  payments as outlined in Schedule A
below, in full discharge and satisfaction of the Obligation and in consideration
of the waiver and release set forth  herein.  Creditor also agrees to reduce the
monthly  rent per the  terms of the  Agreement  to  $3,000.00  per  month  for a
nine-month period beginning August 1, 2002 and ending March 31, 2003.

                                   SCHEDULE A
                       -----------------------------------
                             DATE                PAYMENT
                       -----------------------------------
                           8/1/2002             $4,812.21
                       -----------------------------------
                           9/1/2002             $4,812.21
                       -----------------------------------
                          10/1/2002             $4,812.21
                       -----------------------------------
                          11/1/2002             $4,812.21
                       -----------------------------------
                          12/1/2002             $4,812.21
                       -----------------------------------
                           1/1/2003             $4,812.21
                       -----------------------------------
                           2/1/2003             $4,812.21
                       -----------------------------------
                           3/1/2003             $4,812.21
                       -----------------------------------
                           4/1/2003             $4,812.21
                       -----------------------------------
                           5/1/2003             $4,812.21
                       -----------------------------------
                           6/1/2003             $4,812.21
                       -----------------------------------
                           7/1/2003             $4,812.21
                       -----------------------------------
                           8/1/2003             $4,812.21
                       -----------------------------------
                           9/1/2003             $4,812.21
                       -----------------------------------
                          10/1/2003             $4,812.21
                       -----------------------------------
                             Total             $72,183.15
                       -----------------------------------

         In connection with the issuance of the Settlement  Shares,  the Company
hereby represents and warrants to, and agrees with, the Creditor that:

         (1) The  Settlement  Shares will be  registered  in the next  available
registration  statement  filing  with the  Securities  and  Exchange  Commission
("SEC").

         In  connection  with such  acceptance  of the  Settlement  Shares,  the
Creditor hereby represents and warrants to, and agrees with, the Company that:

         (1) The Creditor is acquiring the Settlement Shares for its own account
(and not for the  account of others) for  investment  and not with a view to the
distribution or resale thereof;


                                    10.20-1
<PAGE>


         (2) The  Company  has made  available  to the  Creditor  the  Company's
current  10-Q and S-1  forms as filed  with  the  SEC,  in  connection  with the
Creditor's acceptance of Settlement Shares;

         (3)  The  Creditor  is  a  sophisticated  investor  and  an  accredited
investor,  as defined in Rule 501 under the  Securities  Act of 1933, as amended
(the  "Securities  Act"),  and is  aware  of the  risk  that  acceptance  of the
Settlement  Shares  involves,  including the risk of loss of the entire value of
the Settlement Shares;

         (4) The Creditor  understands that it may not sell or otherwise dispose
of the  Settlement  Shares in the  absence of either an  effective  registration
statement under the Securities Act and applicable  state  securities laws, or an
exemption from the registration  provisions of the Securities Act and applicable
state  securities  laws,  and that, at least ten calendar days prior to any such
disposition the Creditor will advise the Company, Attention:  President, of such
contemplated disposition; and

         (5) The certificates  representing the Settlement  Shares may contain a
legend to the effect of paragraph (4) above.

         (6) On any trading day,  Creditor  shall not,  directly or  indirectly,
offer to sell, show for sale,  grant an option for sale of, assign,  transfer or
otherwise  dispose  of more  than the  number of  shares  equal to  seventy-five
percent  (75%) of the thirty (30) day average  trading  volume of the  Company's
common stock immediately prior to the date of such offer or sale.


         The Creditor  also hereby  represents  and warrants to the Company that
(1) no debts or other  liabilities or obligations of the Company to the Creditor
have been sold, assigned, (except as security for Creditor's permanent financing
affecting  the real estate as to which the leased  premises  under the Agreement
are a part)  transferred  or otherwise  disposed of, and (2) to the knowledge of
the  Creditor,  upon  execution of this letter  agreement by the  Creditor,  the
Company  shall not be in  breach,  default  or  violation  of, or have any other
liabilities to the Creditor or any of its affiliates under, the Agreement or any
other agreement, document, instrument or arrangement with the Creditor or any of
its  affiliates  with respect to any time prior to the  Creditor's  execution of
this letter agreement.

         The Creditor  hereby  waives any and all  currently  known and existing
breaches or defaults of the Company under the Agreement or any other  agreement,
document,  instrument or arrangement between the Company and the Creditor or any
of its  affiliates  as of the date of the  Creditor's  execution  of this letter
agreement,   including,   without  limitation,  any  default  in  the  Company's
obligation  to timely  pay any  amount  comprising  the  Obligation,  and hereby
releases the Company and its past and present  officers,  directors,  employees,
agents,  representatives  and affiliates  from any claims,  causes of action and
liabilities  arising out of or in connection  with any breach or default  waived
hereby,  other than with respect to the remittance of the settlement  payment(s)
specifically  provided for in this letter agreement in accordance with the terms
hereof.

         The Company  represents  and warrants to the Creditor  that the 900,000
shares  of  Common  Stock  to  be  delivered   hereunder   are  fully  paid  and
non-assessable and impose no obligation upon Creditor.

         The Creditor's  costs in connection with NeoMedia's  lease defaults and
this letter  agreement  shall be satisfied  (in whole or in part as the case may
be) by the application of the Security Deposit  currently held by Creditor under
the Agreement.

         This letter agreement (1) shall be governed by the internal laws of the
State of New York, without regard to its conflicts of laws provisions, except as
to laws  governing the Agreement and all rights of Creditors  thereunder,  which
shall be  governed  by the laws of the State of  Illinois,  (2)  represents  the
entire  agreement  among the parties  hereto with respect to the subject  matter
hereof and supersedes all prior agreements or  understandings  among the parties
with respect to the subject matter hereof,  except for any  stipulation  entered
into and filed  with the court  sitting in  Illinois  with  jurisdiction  on the
Agreement,  (3) may be  executed  in one or more  counterparts,  and  each  such
counterpart  shall  be  deemed  to be  an  original  instrument,  but  all  such
counterparts  together shall  constitute  but one agreement,  and (4) may not be
modified or amended, nor any provision hereof waived,  without the prior written
consent of each of the parties hereto.


                                    10.20-2
<PAGE>


         Please execute this letter  agreement  where indicated below to confirm
the  Creditor's  acceptance  of  and  agreement  to the  terms  of  this  letter
agreement,  and to make the  representations  and  warranties to the Company set
forth,  in each case  effective  upon the  Creditor's  execution  of this letter
agreement.

         Best regards.

                                       NEOMEDIA TECHNOLOGIES, INC.


                                       By: /s/ Charles T. Jensen
                                           -------------------------------------
                                           Charles T. Jensen
                                           President and Chief Operating Officer


ACCEPTED AND AGREED TO AS OF

August 9, 2002:

2150 Western Court Company, L.L.C.,
an Illinois limited liability company


By: /s/ Michael F. Pritchett
   ----------------------------

Name: Michael F. Pritchett
      Its Manager












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