Document:

Exhibit
      10.2

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT
      (this
“Agreement”),
      dated
      as of March 27, 2007, by and among NEOMEDIA
      TECHNOLOGIES, INC.,
      a
      Delaware corporation (the “Company”),
      and
      the undersigned Buyers listed on Schedule I attached hereto (each, a
“Buyer”
and
      collectively, the “Buyers”).

     

    WHEREAS:

     

    A. In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the “Securities
      Purchase Agreement”),
      the
      Company has agreed, upon the terms and subject to the conditions of the
      Securities Purchase Agreement, to issue and sell to the Buyers (i) secured
      convertible debentures (the “Convertible
      Debentures”)
      which
      shall be convertible into shares of the Company’s common stock, par value $0.01
      per share (the “Common
      Stock,”
as
      converted, the “Conversion
      Shares”)
      in
      accordance with the terms of the Convertible Debentures, and (ii) warrants
      (the
“Warrants”),
      which
      will be exercisable to purchase shares of Common Stock (as exercised,
      collectively, the “Warrant
      Shares”).
      Capitalized terms not defined herein shall have the meaning ascribed to them
      in
      the Securities Purchase Agreement.

     

    B. To
      induce
      the Buyers to execute and deliver the Securities Purchase Agreement, the Company
      has agreed to provide certain registration rights under the Securities Act
      of
      1933, as amended, and the rules and regulations thereunder, or any similar
      successor statute (collectively, the “Securities
      Act”),
      and
      applicable state securities laws.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual covenants contained herein and
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the Company and the Buyers hereby agree as
      follows:

     

    DEFINITIONS.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    “Effectiveness
      Deadline”
means,
      with respect to the initial Registration Statement required to be filed
      hereunder, the 120th calendar day following the date the Buyer provides written
      notice to the Company to file a Registration Statement (the “Filing
      Notice”),
      and
      with respect to any Subsequent Registration Statements which may be required
      pursuant to Section 3(c), the 90th calendar day following the date on which
      the
      Company first knows, or reasonably should have known, that it is obligated
      to
      file such Subsequent Registration Statement; provided, however, in the event
      the
      Company is notified by the U.S. Securities and Exchange Commission
      (“SEC”)
      that
      one of the above Registration Statements will not be reviewed or is no longer
      subject to further review and comments, the Effectiveness Date as to such
      Registration Statement shall be the fifth Trading Day following the date on
      which the Company is so notified if such date precedes the dates required
      above.

     

    “Filing
      Deadline”
means,
      with respect to the initial Registration Statement required hereunder, the
      30th
      calendar day following the date the Buyer provides the Filing Notice (which
      Filing Notice shall not be provided by the Buyer for at least 90 days from
      the
      date hereof) and, with respect to any Subsequent Registration Statements which
      may be required pursuant to Section 3(c), the 30th day following the date on
      which the Company first knows, or reasonably should have known that it is
      obligated to file such Subsequent Registration Statement.

     

    “Initial
      Required Registration Amount”
means
      such number of shares of Common Stock issued or to be issued upon conversion
      of
      the Convertible Debentures or exercise of the series Warrants as set forth
      on a
      Filing Notice which number shall be no more than the maximum number of shares
      of
      Common Stock allowed under Rule 415 as interpreted by the SEC. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Person”
means
      a
      corporation, a limited liability company, an association, a partnership, an
      organization, a business, an individual, a governmental or political subdivision
      thereof or a governmental agency.

     

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    “Registrable
      Securities”
means
      all of (i) the Conversion Shares issuable upon conversion of the Convertible
      Debentures, (ii) the Warrant Shares issued or issuable upon exercise of the
      Warrants, (iii) any additional shares issuable in connection with any
      anti-dilution provisions in the Warrants or the Convertible Debentures (without
      giving effect to any limitations on exercise set forth in the Warrants or
      Convertible Debentures) and (iv) any shares of Common Stock issued or issuable
      with respect to the Conversion Shares, the Convertible Debentures, the Warrant
      Shares, or the Warrants as a result of any stock split, dividend or other
      distribution, recapitalization or similar event or otherwise, without regard
      to
      any limitations on the conversion of the Convertible Debentures or exercise
      of
      the Warrants.

     

    “Registration
      Statement”
means
      the registration statements required to be filed hereunder and any additional
      registration statements contemplated by Section 3(c), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

     

    “Rule
      415”
means
      Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule
      may
      be amended from time to time, or any similar rule or regulation hereafter
      adopted by the SEC having substantially the same purpose and effect as such
      Rule.

     

    REGISTRATION.

     

    On
      or
      prior to each Filing Deadline, the Company shall prepare and file with the
      SEC a
      Registration Statement on Form S-1 or SB-2 (or, if the Company is then eligible,
      on Form S-3) covering the resale of Registrable Securities. The initial
      Registration Statement prepared pursuant hereto shall register for resale at
      least the number of shares of Common Stock equal to the Initial Required
      Registration Amount. The Registration Statement shall contain the “Selling
      Stockholders”
and
      “Plan
      of Distribution”
      sections in substantially the form attached hereto as Exhibit
      A
      and
      contain all the required disclosures set forth on Exhibit
      B.
      The
      Company shall use its best efforts to have the Registration Statement declared
      effective by the SEC as soon as practicable, but in no event later than the
      Effectiveness Deadline. By 9:30 am on the date following the date of
      effectiveness, the Company shall file with the SEC in accordance with Rule
      424
      under the 1933 Act the final Prospectus to be used in connection with sales
      pursuant to such Registration Statement. The Company shall cause the
      Registration Statement to remain effective until all of the Registrable
      Securities have been sold or may be sold without volume restrictions pursuant
      to
      Rule 144(k), as determined by the counsel to the Company pursuant to a written
      opinion letter to such effect, addressed and acceptable to the Company’s
      transfer agent and the affected Holders (“Registration
      Period”).
      Prior
      to the filing of the Registration Statement with the SEC, the Company shall
      furnish a draft of the Registration Statement to the Buyers for their review
      and
      comment. The Buyers shall furnish comments on the Registration Statement to
      the
      Company within forty-eight (48) hours of the receipt thereof from the
      Company.

     

    Failure
      to File or Obtain Effectiveness of the Registration Statement.
      If: (i)
      a Registration Statement is not filed on or prior to its Filing Date (if the
      Company files a Registration Statement without affording the Holders the
      opportunity to review and comment on the same as required by Section 3(a),
      the
      Company shall not be deemed to have satisfied this clause (i)), or (ii) the
      Company fails to file with the SEC a request for acceleration in accordance
      with
      Rule 461 promulgated under the Securities Act, within five Trading Days of
      the
      date that the Company is notified (orally or in writing, whichever is earlier)
      by the SEC that a Registration Statement will not be “reviewed,” or not subject
      to further review, or (iii) a Registration Statement filed or required to be
      filed hereunder is not declared effective by the SEC by its Effectiveness
      Deadline, or (iv) after the effectiveness, a Registration Statement ceases
      for
      any reason to remain continuously effective as to all Registrable Securities
      for
      which it is required to be effective, or the Holders are otherwise not permitted
      to utilize the Prospectus therein to resell such Registrable Securities for
      more
      than 30 consecutive calendar days or more than an aggregate of 40 calendar
      days
      during any 12-month period (which need not be consecutive calendar days) (any
      such failure or breach being referred to as an “Event”),
      then
      in addition to any other rights the holders of the Convertible Debentures may
      have hereunder or under applicable law, on each such Event date and on each
      monthly anniversary of each such Event date (if the applicable Event shall
      not
      have been cured by such date) until the applicable Event is cured, the Company
      shall pay to each holder of Convertible Debentures an amount in cash, as partial
      liquidated damages (“Liquidated
      Damages”)
      and
      not as a penalty, equal to 2.0% of the aggregate purchase price paid by such
      holder pursuant to the Securities Purchase Agreement for any Convertible
      Debentures then held by such holder. The parties agree that (1) the Company
      shall not be liable for Liquidated Damages under this Agreement with respect
      to
      any Warrants or Warrant Shares and (2) the maximum aggregate Liquidated Damages
      payable to a holder of Convertible Debentures under this Agreement shall be
      twenty-four percent (24%) of the aggregate Purchase Price paid by such holder
      pursuant to the Securities Purchase Agreement. The partial Liquidated Damages
      pursuant to the terms hereof shall apply on a daily pro-rata basis for any
      portion of a month prior to the cure of an Event.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Liquidated
      Damages.
      The
      Company and the Buyer hereto acknowledge and agree that the sums payable under
      subsection 2(b) above shall constitute liquidated damages and not penalties
      and
      are in addition to all other rights of the Buyer, including the right to call
      a
      default. The parties further acknowledge that (i) the amount of loss or damages
      likely to be incurred is incapable or is difficult to precisely estimate, (ii)
      the amounts specified in such subsections bear a reasonable relationship to,
      and
      are not plainly or grossly disproportionate to, the probable loss likely to
      be
      incurred in connection with any failure by the Company to obtain or maintain
      the
      effectiveness of a Registration Statement, (iii) one of the reasons for the
      Company and the Buyer reaching an agreement as to such amounts was the
      uncertainty and cost of litigation regarding the question of actual damages,
      and
      (iv) the Company and the Buyer are sophisticated business parties and have
      been
      represented by sophisticated and able legal counsel and negotiated this
      Agreement at arm’s length. 

     

    RELATED
      OBLIGATIONS.

     

    The
      Company shall, not less than three (3) Trading Days prior to the filing of
      each
      Registration Statement and not less than one (1) Trading Day prior to the filing
      of any related amendments and supplements to all Registration Statements (except
      for annual reports on Form 10-K or Form 10-KSB), furnish to each Buyer copies
      of
      all such documents proposed to be filed, which documents (other than those
      incorporated or deemed to be incorporated by reference) will be subject to
      the
      reasonable and prompt review of such Buyers, The Company shall not file a
      Registration Statement or any such Prospectus or any amendments or supplements
      thereto to which the Buyers shall reasonably object in good faith; provided
      that,
      the Company is notified of such objection in writing no later than forty-eight
      (48) hours after the Buyers have been so furnished copies of a Registration
      Statement.

     

    The
      Company shall (i) prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to a Registration Statement and
      the
      Prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the Securities Act, as
      may
      be necessary to keep such Registration Statement effective at all times during
      the Registration Period, and prepare and file with the SEC such additional
      Registration Statements in order to register for resale under the Securities Act
      all of the Registrable Securities; (ii) cause the related Prospectus to be
      amended or supplemented by any required Prospectus supplement (subject to the
      terms of this Agreement), and as so supplemented or amended to be filed pursuant
      to Rule 424; (iii) respond as promptly as reasonably possible to any comments
      received from the SEC with respect to a Registration Statement or any amendment
      thereto and as promptly as reasonably possible provide the Buyers true and
      complete copies of all correspondence from and to the SEC relating to a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Buyer which has not executed a confidentiality agreement with the Company);
      and (iv) comply with the provisions of the Securities Act with respect to the
      disposition of all Registrable Securities of the Company covered by such
      Registration Statement until such time as all of such Registrable Securities
      shall have been disposed of in accordance with the intended methods of
      disposition by the seller or sellers thereof as set forth in such Registration
      Statement. In the case of amendments and supplements to a Registration Statement
      which are required to be filed pursuant to this Agreement (including pursuant
      to
      this Section 3(b)) by reason of the Company’s filing a report on Form 10-KSB,
      Form 10-QSB or Form 8-K or any analogous report under the Securities Exchange
      Act of 1934, as amended (the “Exchange
      Act”),
      the
      Company shall incorporate such report by reference into the Registration
      Statement, if applicable, or shall file such amendments or supplements with
      the
      SEC on the same day on which the Exchange Act report is filed which created
      the
      requirement for the Company to amend or supplement the Registration Statement.
      

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    To
      the
      extent that the Buyer holds any Registrable Securities that are prohibited
      from
      being included on the initial Registration Statement or any other Registration
      Statement (the “Non-Registered
      Shares”)
      under
      Rule 415, as interpreted by the SEC, then the Company shall become obligated
      to
      file an additional Registration Statement (each, a “Subsequent
      Registration Statement”)
      on the
      first day after such Subsequent Registration Statement may be filed without
      objection by the SEC under Rule 415 covering the resale by the Buyers of the
      maximum number of such Non-Registered Shares allowed under Rule 415 as
      interpreted by the SEC.

     

    The
      Company shall furnish to each Buyer whose Registrable Securities are included
      in
      any Registration Statement, without charge, (i) at least one (1) copy of such
      Registration Statement as declared effective by the SEC and any amendment(s)
      thereto, including financial statements and schedules, all documents
      incorporated therein by reference, all exhibits and each preliminary prospectus,
      (ii) ten (10) copies of the final prospectus included in such Registration
      Statement and all amendments and supplements thereto (or such other number
      of
      copies as such Buyer may reasonably request) and (iii) such other documents
      as
      such Buyer may reasonably request from time to time in order to facilitate
      the
      disposition of the Registrable Securities owned by such Buyer.

     

    The
      Company shall use its best efforts to (i) register and qualify the Registrable
      Securities covered by a Registration Statement under such other securities
      or
“blue sky” laws of such jurisdictions in the United States as any Buyer
      reasonably requests, (ii) prepare and file in those jurisdictions, such
      amendments (including post-effective amendments) and supplements to such
      registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such other
      actions as may be necessary to maintain such registrations and qualifications
      in
      effect at all times during the Registration Period, and (iv) take all other
      actions reasonably necessary or advisable to qualify the Registrable Securities
      for sale in such jurisdictions; provided, however, that the Company shall not
      be
      required in connection therewith or as a condition thereto to (w) make any
      change to its articles of incorporation or by-laws, (x) qualify to do business
      in any jurisdiction where it would not otherwise be required to qualify but
      for
      this Section 3(d), (y) subject itself to general taxation in any such
      jurisdiction, or (z) file a general consent to service of process in any such
      jurisdiction. The Company shall promptly notify each Buyer who holds Registrable
      Securities of the receipt by the Company of any notification with respect to
      the
      suspension of the registration or qualification of any of the Registrable
      Securities for sale under the securities or “blue sky” laws of any jurisdiction
      in the United States or its receipt of actual notice of the initiation or threat
      of any proceeding for such purpose.

     

    As
      promptly as practicable after becoming aware of such event or development,
      the
      Company shall notify each Buyer in writing of the happening of any event as
      a
      result of which the Prospectus included in a Registration Statement, as then
      in
      effect, includes an untrue statement of a material fact or omission to state
      a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading (provided that in no event shall such notice contain any material,
      nonpublic information), and promptly prepare a supplement or amendment to such
      Registration Statement to correct such untrue statement or omission, and deliver
      ten (10) copies of such supplement or amendment to each Buyer. The Company
      shall
      also promptly notify each Buyer in writing (i) when a Prospectus or any
      Prospectus supplement or post-effective amendment has been filed, and when
      a
      Registration Statement or any post-effective amendment has become effective
      (notification of such effectiveness shall be delivered to each Buyer by
      facsimile on the same day of such effectiveness), (ii) of any request by the
      SEC
      for amendments or supplements to a Registration Statement or related prospectus
      or related information, and (iii) of the Company’s reasonable determination
      that a post-effective amendment to a Registration Statement would be
      appropriate.

     

    The
      Company shall use its best efforts to prevent the issuance of any stop order
      or
      other suspension of effectiveness of a Registration Statement, or the suspension
      of the qualification of any of the Registrable Securities for sale in any
      jurisdiction within the United States of America and, if such an order or
      suspension is issued, to obtain the withdrawal of such order or suspension
      at
      the earliest possible moment and to notify each Buyer who holds Registrable
      Securities being sold of the issuance of such order and the resolution thereof
      or its receipt of actual notice of the initiation or threat of any proceeding
      for such purpose.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall furnish
      to such Buyer, on the date of the effectiveness of the Registration Statement
      and thereafter from time to time on such dates as a Buyer may reasonably request
      (i) a letter, dated such date, from the Company’s independent certified public
      accountants in form and substance as is customarily given by independent
      certified public accountants to underwriters in an underwritten public offering,
      and (ii) an opinion, dated as of such date, of counsel representing the Company
      for purposes of such Registration Statement, in form, scope and substance as
      is
      customarily given in an underwritten public offering, addressed to the
      Buyers.

     

    If,
      after
      the execution of this Agreement, a Buyer believes, after consultation with
      its
      legal counsel, that it could reasonably be deemed to be an underwriter of
      Registrable Securities, at the request of any Buyer, the Company shall make
      available for inspection by (i) any Buyer and (ii) one (1) firm of
      accountants or other agents retained by the Buyers (collectively, the
“Inspectors”)
      all
      pertinent financial and other records, and pertinent corporate documents and
      properties of the Company (collectively, the “Records”),
      as
      shall be reasonably deemed necessary by each Inspector, and cause the Company’s
      officers, directors and employees to supply all information which any Inspector
      may reasonably request; provided, however, that each Inspector shall agree,
      and
      each Buyer hereby agrees, to hold in strict confidence and shall not make any
      disclosure (except to a Buyer) or use any Record or other information which
      the
      Company determines in good faith to be confidential, and of which determination
      the Inspectors are so notified, unless (a) the disclosure of such Records is
      necessary to avoid or correct a misstatement or omission in any Registration
      Statement or is otherwise required under the Securities Act, (b) the release
      of
      such Records is ordered pursuant to a final, non-appealable subpoena or order
      from a court or government body of competent jurisdiction, or (c) the
      information in such Records has been made generally available to the public
      other than by disclosure in violation of this or any other agreement of which
      the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
      upon
      learning that disclosure of such Records is sought in or by a court or
      governmental body of competent jurisdiction or through other means, give prompt
      notice to the Company and allow the Company, at its expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, the Records deemed confidential.

     

    The
      Company shall hold in confidence and not make any disclosure of information
      concerning a Buyer provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws, (ii)
      the disclosure of such information is necessary to avoid or correct a
      misstatement or omission in any Registration Statement, (iii) the release of
      such information is ordered pursuant to a subpoena or other final,
      non-appealable order from a court or governmental body of competent
      jurisdiction, or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this Agreement or any other
      agreement. The Company agrees that it shall, upon learning that disclosure
      of
      such information concerning a Buyer is sought in or by a court or governmental
      body of competent jurisdiction or through other means, give prompt written
      notice to such Buyer and allow such Buyer, at the Buyer’s expense, to undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information.

     

    The
      Company shall use its best efforts either to cause all the Registrable
      Securities covered by a Registration Statement (i) to be listed on each
      securities exchange on which securities of the same class or series issued
      by
      the Company are then listed, if any, if the listing of such Registrable
      Securities is then permitted under the rules of such exchange or (ii) the
      inclusion for quotation on the National Association of Securities Dealers,
      Inc.
      OTC Bulletin Board for such Registrable Securities. The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

     

    The
      Company shall cooperate with each Buyer who holds Registrable Securities being
      offered and, to the extent applicable, to facilitate the timely preparation
      and
      delivery of certificates (not bearing any restrictive legend) representing
      the
      Registrable Securities to be offered pursuant to a Registration Statement and
      enable such certificates to be in such denominations or amounts, as the case
      may
      be, as the Buyers may reasonably request and registered in such names as the
      Buyers may request.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    The
      Company shall use its best efforts to cause the Registrable Securities covered
      by the applicable Registration Statement to be registered with or approved
      by
      such other governmental agencies or authorities as may be necessary to
      consummate the disposition of such Registrable Securities.

     

    The
      Company shall make generally available to its security holders as soon as
      practical, but not later than ninety (90) days after the close of the period
      covered thereby, an earnings statement (in form complying with the provisions
      of
      Rule 158 under the Securities Act) covering a twelve (12) month period beginning
      not later than the first day of the Company’s fiscal quarter next following the
      effective date of the Registration Statement.

     

    The
      Company shall otherwise use its best efforts to comply with all applicable
      rules
      and regulations of the SEC in connection with any registration
      hereunder.

     

    Within
      two (2) business days after a Registration Statement which covers Registrable
      Securities is declared effective by the SEC, the Company shall deliver, and
      shall cause legal counsel for the Company to deliver, to the transfer agent
      for
      such Registrable Securities (with copies to the Buyer whose Registrable
      Securities are included in such Registration Statement) confirmation that such
      Registration Statement has been declared effective by the SEC in the form
      attached hereto as Exhibit
      C.

     

    The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by each Buyer of Registrable Securities pursuant to
      a
      Registration Statement.

     

    OBLIGATIONS
      OF THE BUYERS.

     

    Each
      Buyer agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 3(f) or the first sentence of
      Section 3(e), such Buyer will immediately discontinue disposition of Registrable
      Securities pursuant to any Registration Statement covering such Registrable
      Securities until such Buyer’s receipt of the copies of the supplemented or
      amended prospectus contemplated by Section 3(f) or the first sentence of Section
      3(e) or receipt of notice that no supplement or amendment is required.
      Notwithstanding anything to the contrary, the Company shall cause its transfer
      agent to deliver unlegended certificates for shares of Common Stock to a
      transferee of a Buyer in accordance with the terms of the Securities Purchase
      Agreement in connection with any sale of Registrable Securities with respect
      to
      which a Buyer has entered into a contract for sale prior to the Buyer’s receipt
      of a notice from the Company of the happening of any event of the kind described
      in Section 3(f) or the first sentence of 3(e) and for which the Buyer has not
      yet settled.

     

    Each
      Buyer covenants and agrees that it will comply with the prospectus delivery
      requirements of the Securities Act as applicable to it or an exemption therefrom
      in connection with sales of Registrable
      Securities pursuant to the Registration Statement.

     

    EXPENSES
      OF REGISTRATION.

     

    All
      expenses incurred in connection with registrations, filings or qualifications
      pursuant to Sections 2 and 3, including, without limitation, all registration,
      listing and qualifications fees, printers, legal and accounting fees shall
      be
      paid by the Company. 

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    INDEMNIFICATION.

     

    With
      respect to Registrable Securities which are included in a Registration Statement
      under this Agreement:

     

    To
      the
      fullest extent permitted by law, the Company will, and hereby does, indemnify,
      hold harmless and defend each Buyer, the directors, officers, partners,
      employees, agents, representatives of, and each Person, if any, who controls
      any
      Buyer within the meaning of the Securities Act or the Exchange Act (each, an
      “Indemnified
      Person”),
      against any losses, claims, damages, liabilities, judgments, fines, penalties,
      charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
      expenses, joint or several (collectively, “Claims”)
      incurred in investigating, preparing or defending any action, claim, suit,
      inquiry, proceeding, investigation or appeal taken from the foregoing by or
      before any court or governmental, administrative or other regulatory agency,
      body or the SEC, whether pending or threatened, whether or not an indemnified
      party is or may be a party thereto (“Indemnified
      Damages”),
      to
      which any of them may become subject insofar as such Claims (or actions or
      proceedings, whether commenced or threatened, in respect thereof) arise out
      of
      or are based upon: (i) any untrue statement or alleged untrue statement of
      a
      material fact in a Registration Statement or any post-effective amendment
      thereto or in any filing made in connection with the qualification of the
      offering under the securities or other “blue sky” laws of any jurisdiction in
      which Registrable Securities are offered (“Blue
      Sky Filing”),
      or
      the omission or alleged omission to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading; (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      final prospectus (as amended or supplemented, if the Company files any amendment
      thereof or supplement thereto with the SEC) or the omission or alleged omission
      to state therein any material fact necessary to make the statements made
      therein, in light of the circumstances under which the statements therein were
      made, not misleading; or (iii) any violation or alleged violation by the Company
      of the Securities Act, the Exchange Act, any other law, including, without
      limitation, any state securities law, or any rule or regulation there under
      relating to the offer or sale of the Registrable Securities pursuant to a
      Registration Statement (the matters in the foregoing clauses (i) through (iii)
      being, collectively, “Violations”).
      The
      Company shall reimburse the Buyers and each such controlling person promptly
      as
      such expenses are incurred and are due and payable, for any legal fees or
      disbursements or other reasonable expenses incurred by them in connection with
      investigating or defending any such Claim. Notwithstanding anything to the
      contrary contained herein, the indemnification agreement contained in this
      Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
      out of or based upon a Violation which occurs in reliance upon and in conformity
      with information furnished in writing to the Company by such Indemnified Person
      expressly for use in connection with the preparation of the Registration
      Statement or any such amendment thereof or supplement thereto; (y) shall not
      be
      available to the extent such Claim is based on a failure of the Buyer to deliver
      or to cause to be delivered the prospectus made available by the Company, if
      such prospectus was timely made available by the Company pursuant to Section
      3(c); and (z) shall not apply to amounts paid in settlement of any Claim if
      such settlement is effected without the prior written consent of the Company,
      which consent shall not be unreasonably withheld. Such indemnity shall remain
      in
      full force and effect regardless of any investigation made by or on behalf
      of
      the Indemnified Person and shall survive the transfer of the Registrable
      Securities by the Buyers pursuant to Section 9 hereof.

     

    In
      connection with a Registration Statement, each Buyer agrees to severally and
      not
      jointly indemnify, hold harmless and defend, to the same extent and in the
      same
      manner as is set forth in Section 6(a), the Company, each of its directors,
      each
      of its officers, employees, representatives, or agents and each Person, if
      any,
      who controls the Company within the meaning of the Securities Act or the
      Exchange Act (each an “Indemnified
      Party”),
      against any Claim or Indemnified Damages to which any of them may become
      subject, under the Securities Act, the Exchange Act or otherwise, insofar as
      such Claim or Indemnified Damages arise out of or is based upon any Violation,
      in each case to the extent, and only to the extent, that such Violation occurs
      in reliance upon and in conformity with written information furnished to the
      Company by such Buyer expressly for use in connection with such Registration
      Statement; and, subject to Section 6(d), such Buyer will reimburse any legal
      or
      other expenses reasonably incurred by them in connection with investigating
      or
      defending any such Claim; provided, however, that the indemnity agreement
      contained in this Section 6(b) and the agreement with respect to contribution
      contained in Section 7 shall not apply to amounts paid in settlement of any
      Claim if such settlement is effected without the prior written consent of such
      Buyer, which consent shall not be unreasonably withheld; provided, further,
      however, that the Buyer shall be liable under this Section 6(b) for only that
      amount of a Claim or Indemnified Damages as does not exceed the net proceeds
      to
      such Buyer as a result of the sale of Registrable Securities pursuant to such
      Registration Statement. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the transfer of the Registrable Securities by the Buyers
      pursuant to Section 9. Notwithstanding anything to the contrary contained
      herein, the indemnification agreement contained in this Section 6(b) with
      respect to any prospectus shall not inure to the benefit of any Indemnified
      Party if the untrue statement or omission of material fact contained in the
      prospectus was corrected and such new prospectus was delivered to each Buyer
      prior to such Buyer’s use of the prospectus to which the Claim
      relates.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    Promptly
      after receipt by an Indemnified Person or Indemnified Party under this Section
      6
      of notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses of
      not
      more than one (1) counsel for such Indemnified Person or Indemnified Party
      to be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the indemnifying party, the representation by such counsel of the
      Indemnified Person or Indemnified Party and the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      Indemnified Person or Indemnified Party and any other party represented by
      such
      counsel in such proceeding. The Indemnified Party or Indemnified Person shall
      cooperate fully with the indemnifying party in connection with any negotiation
      or defense of any such action or claim by the indemnifying party and shall
      furnish to the indemnifying party all information reasonably available to the
      Indemnified Party or Indemnified Person which relates to such action or claim.
      The indemnifying party shall keep the Indemnified Party or Indemnified Person
      fully apprised at all times as to the status of the defense or any settlement
      negotiations with respect thereto. No indemnifying party shall be liable for
      any
      settlement of any action, claim or proceeding effected without its prior written
      consent; provided, however, that the indemnifying party shall not unreasonably
      withhold, delay or condition its consent. No indemnifying party shall, without
      the prior written consent of the Indemnified Party or Indemnified Person,
      consent to entry of any judgment or enter into any settlement or other
      compromise which does not include as an unconditional term thereof the giving
      by
      the claimant or plaintiff to such Indemnified Party or Indemnified Person of
      a
      release from all liability in respect to such claim or litigation. Following
      indemnification as provided for hereunder, the indemnifying party shall be
      subrogated to all rights of the Indemnified Party or Indemnified Person with
      respect to all third parties, firms or corporations relating to the matter
      for
      which indemnification has been made. The failure to deliver written notice
      to
      the indemnifying party within a reasonable time of the commencement of any
      such
      action shall not relieve such indemnifying party of any liability to the
      Indemnified Person or Indemnified Party under this Section 6, except to the
      extent that the indemnifying party is prejudiced in its ability to defend such
      action.

     

    The
      indemnification required by this Section 6 shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills are received or Indemnified Damages are incurred.

     

    The
      indemnity agreements contained herein shall be in addition to (i) any cause
      of action or similar right of the Indemnified Party or Indemnified Person
      against the indemnifying party or others, and (ii) any liabilities the
      indemnifying party may be subject to pursuant to the law.

     

    CONTRIBUTION.

     

    To
      the
      extent any indemnification by an indemnifying party is prohibited or limited
      by
      law, the indemnifying party agrees to make the maximum contribution with respect
      to any amounts for which it would otherwise be liable under Section 6 to the
      fullest extent permitted by law; provided, however, that: (i) no seller of
      Registrable Securities guilty of fraudulent misrepresentation (within the
      meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any seller of Registrable Securities who was not guilty of
      fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
      Securities shall be limited in amount to the net amount of proceeds received
      by
      such seller from the sale of such Registrable Securities.

     

    REPORTS
      UNDER THE EXCHANGE ACT.

     

    With
      a
      view to making available to the Buyers the benefits of Rule 144 promulgated
      under the Securities Act or any similar rule or regulation of the SEC that
      may
      at any time permit the Buyers to sell securities of the Company to the public
      without registration (“Rule
      144”)
      the
      Company agrees to:

     

    make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144;

     

    file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act so long as the Company
      remains subject to such requirements (it being understood that nothing herein
      shall limit the Company’s obligations under Section 4(c) of the Securities
      Purchase Agreement) and the filing of such reports and other documents as are
      required by the applicable provisions of Rule 144; and

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    furnish
      to each Buyer so long as such Buyer owns Registrable Securities, promptly upon
      request, (i) a written statement by the Company that it has complied with the
      reporting requirements of Rule 144, the Securities Act and the Exchange Act,
      (ii) a copy of the most recent annual or quarterly report of the Company and
      such other reports and documents so filed by the Company, and (iii) such other
      information as may be reasonably requested to permit the Buyers to sell such
      securities pursuant to Rule 144 without registration.

     

    AMENDMENT
      OF REGISTRATION RIGHTS.

     

    Provisions
      of this Agreement may be amended and the observance thereof may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively), only with the written consent of the Company and Buyers who
      then
      hold at least two-thirds (2/3) of the Registrable Securities. Any amendment
      or
      waiver effected in accordance with this Section 9 shall be binding upon
      each Buyer and the Company. No such amendment shall be effective to the extent
      that it applies to fewer than all of the holders of the Registrable Securities.
      No consideration shall be offered or paid to any Person to amend or consent
      to a
      waiver or modification of any provision of any of this Agreement unless the
      same
      consideration also is offered to all of the parties to this
      Agreement.

     

    MISCELLANEOUS.

     

    A
      Person
      is deemed to be a holder of Registrable Securities whenever such Person owns
      or
      is deemed to own of record such Registrable Securities or owns the right to
      receive the Registrable Securities. If the Company receives conflicting
      instructions, notices or elections from two (2) or more Persons with respect
      to
      the same Registrable Securities, the Company shall act upon the basis of
      instructions, notice or election received from the registered owner of such
      Registrable Securities.

     

    No
      Piggyback on Registrations.
      Except
      as set forth on Schedule
      10(b)
      attached
      hereto, neither the Company nor any of its security holders (other than the
      Buyers in such capacity pursuant hereto) may include securities of the Company
      in the initial Registration Statement other than the Registrable Securities.
      The
      Company shall not file any other registration statements until the initial
      Registration Statement required hereunder is declared effective by the SEC,
      provided that this Section 10(b) shall not prohibit the Company from filing
      amendments to registration statements already filed.

     

    Piggy-Back
      Registrations.
      If at
      any time during the Registration Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the SEC a registration statement relating
      to
      an offering for its own account or the account of others under the Securities
      Act of any of its equity securities, other than on Form S-4 or Form S-8 (each
      as
      promulgated under the Securities Act) or their then equivalents relating to
      equity securities to be issued solely in connection with any acquisition of
      any
      entity or business or equity securities issuable in connection with the stock
      option or other employee benefit plans, then the Company shall send to each
      Buyer a written notice of such determination and, if within fifteen (15) days
      after the date of such notice, any such Buyer shall so request in writing,
      the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Buyer requests to be registered; provided,
      however,
      that,
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 10(c) that are eligible for resale pursuant to Rule
      144(k) promulgated under the Securities Act or that are the subject of a then
      effective Registration Statement.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement 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) business 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.

            
	 	 	
              2201
                Second Street, Suite #600

            
	 	 	
              Fort
                Myers, FL 33901

            
	 	 	
              Attention:
                Charles T. Jensen, President

            
	 	 	
              Telephone: (239)
                337-3434

            
	 	 	
              Facsimile: (239)
                337-3668

            
	 	 	 
	
              With
                Copy to:

            	 	
              Kirkpatrick
                & Lockhart Preston Gates Ellis LLP

            
	 	 	
              201
                South Biscayne Boulevard - Suite 2000

            
	 	 	
              Miami,
                FL 33131-2399

            
	 	 	
              Attention: Clayton
                E. Parker, Esq.

            
	 	 	
              Telephone: (305)
                539-3300

            
	 	 	
              Facsimile: (305)
                358-7095

            

    

     

    If
      to an
      Buyer, to its address and facsimile number on the Schedule of Buyers attached
      hereto, with copies to such Buyer’s representatives as set forth on the Schedule
      of Buyers or to 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 five (5) days prior to the effectiveness of
      such change. Written confirmation of receipt (A) given by the recipient of
      such
      notice, consent, waiver or other communication, (B) 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 (C) provided by a courier or overnight courier 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.

     

    Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    The
      laws
      of the State of New Jersey shall govern all issues concerning the relative
      rights of the Company and the Buyers as its stockholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement shall be governed by the internal laws of the State of New Jersey,
      without giving effect to any choice of law or conflict of law provision or
      rule
      (whether of the State of New Jersey or any other jurisdiction) that would cause
      the application of the laws of any jurisdiction other than the State of New
      Jersey. Each party hereby irrevocably submits to the non-exclusive jurisdiction
      of the Superior Courts of the State of New Jersey, sitting in Hudson County,
      New
      Jersey and federal courts for the District of New Jersey sitting Newark, New
      Jersey, for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is brought in an inconvenient forum
      or that the venue of such suit, action or proceeding is improper. Each party
      hereby irrevocably waives personal service of process and consents to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address for such notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof. Nothing contained herein shall be deemed to limit in any way
      any
      right to serve process in any manner permitted by law. If any provision of
      this
      Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
      or unenforceability shall not affect the validity or enforceability of the
      remainder of this Agreement in that jurisdiction or the validity or
      enforceability of any provision of this Agreement in any other jurisdiction.
      EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT
      TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

     

    This
      Agreement shall inure to the benefit of and be binding upon the permitted
      successors and assigns of each of the parties hereto.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    This
      Agreement may be executed in identical counterparts, each of which shall be
      deemed an original but all of which shall constitute one and the same agreement.
      This Agreement, once executed by a party, may be delivered to the other party
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement.

     

    Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent and no rules of strict construction
      will
      be applied against any party.

     

    This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

    
      	 	 	 
	 	
              COMPANY:
                
                NEOMEDIA
                  TECHNOLOGIES,
                  INC.

              

            
	 
 	 
 	 
 
	
            	By:  	/s/
              David A. Dodge
	 	
              

              Name: David
                A. Dodge
                
                Title: CFO

              

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their signature page to this Registration
      Rights Agreement to be duly executed as of the date first above
      written.

    
      	 	 	 
	 	
              BUYER:
                
                CORNELL
                  CAPITAL PARTNERS,
                  L.P.

              

            
	 
 	 
 	 
 
	
            	By:  	Yorkville
              Advisors, LLC
	 	 	
              Its: Investment
                Manager

            
	 	 	
               

               

            
	 	
              By:

            	/s/
              Mark Angelo
	 	 	
              

              Name: Mark
                Angelo
                
                Title: Portfolio
                  Manager

              

            

    

     

    
      
         

      

      
        13Exhibit
      10.3

     

    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: March 27, 2007

            	
              Original
                Principal Amount: $7,458,651

            
	
              No.
                NEOM-4-1

            	 

    

    

    FOR
      VALUE RECEIVED,
      NEOMEDIA
      TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
      hereby promises to pay to the order of 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, whether upon the Maturity Date (as defined below), on any Installment
      Date
      with respect to the Installment Amount due on such Installment Date (each,
      as
      defined herein), 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, whether upon an Interest Date (as defined
      below), any Installment Date or the Maturity Date or 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
      issued pursuant to the Securities Purchase Agreement. Certain capitalized terms
      used herein are defined in Section 17.

     

    GENERAL
      TERMS

     

    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 March 27, 2009, 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 in section 3(a) or
      otherwise, or pursuant to the Securities Purchase Agreement or other Transaction
      Documents, the Company may not prepay or redeem any portion of the outstanding
      Principal without the prior written consent of the Holder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Interest.
      Interest shall accrue on the outstanding principal balance hereof at an annual
      rate equal to thirteen percent (13%) (“Interest
      Rate”).
      Interest shall be calculated on the basis of a 365-day year and the actual
      number of days elapsed, to the extent permitted by applicable law. Interest
      hereunder shall be paid 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, or, provided that the Equity Conditions are
      then
      satisfied converted into Common Stock at the applicable Conversion Price on
      the
      Trading Day immediately prior to the date paid.

     

    Security.
      The
      Debenture is
      secured by a continuing grant of a security interest in all of the assets of
      the
      Company and of certain of the Company's subsidiaries as evidenced by (i) the
      security agreement of even date herewith, (ii) the
      security agreement executed August 23, 2006, (iii) the UCC-1 initially filed
      with the Delaware Department of State the UCC Filing Section on August 25,
      2006
      Filing No. 62970861 later amended on November 14, 2006 Amendment No. 63963113,
      and (iv) the UCC-1 initially filed with the Florida Secured Transaction Registry
      on August 25, 2006 Filing No. 200603546313 later amended on November 14, 2006
      Filing No. 200604142828, (v) the Patent Security Agreement of even date herewith
      between the Holder, the Company, and certain of the Company’s subsidiaries
(collectively,
      the “Security
      Documents”).

     

    EVENTS
      OF DEFAULT. 

     

    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):

     

    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;

     

    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;

     

    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;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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”);

     

    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; 

     

    The
      Company shall fail to file the Underlying Shares Registration Statement with
      the
      Commission, or the Underlying Shares Registration Statement shall not have
      been
      declared effective by the Commission, in each case within thirty (30) days
      of
      the periods set forth in the Registration Rights Agreement
      (“Registration
      Rights Agreement”)
      dated March 27, 2007 among the Company and each Buyer listed on Schedule I
      attached thereto, or, while the Underlying Shares Registration Statement is
      required to be maintained effective pursuant to the terms of the Registration
      Rights Agreement, the effectiveness of the Underlying Shares Registration
      Statement lapses for any reason (including, without limitation, the issuance
      of
      a stop order) or is unavailable to the Holder for sale of all of the Holder’s
      Registrable Securities (as defined in the Investor Registration Rights
      Agreement) in accordance with the terms of the Registration Rights Agreement,
      and such lapse or unavailability continues for a period of more than ten (10)
      consecutive Trading Days or for more than an aggregate of twenty (20) days
      in
      any 365-day period (which need not be consecutive);

     

    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);

     

    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; 

     

    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 16) which
      is not cured within the time prescribed.

     

    any
      Event of Default (as defined in the Other Securities) occurs with respect to
      any
      Other Securities.

     

    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.
      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 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. 

     

    COMPANY
      REDEMPTION. 

     

    Company’s
      Additional Cash Redemption.
      The Company at its option shall have the right to redeem (“Optional
      Redemption”)
      a portion or all amounts outstanding under this Debenture prior to the Maturity
      Date provided that as of the date of the Holder’s receipt of a Redemption Notice
      (as defined herein) (i) the Closing Bid Price is less than the
      Fixed Conversion
      Price and (ii) no Event of Default has occurred. The Company shall pay an amount
      equal to the principal amount being redeemed plus a redemption premium
      (“Redemption
      Premium”)
      equal to fifteen percent (15%) 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 three (3) 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 fourth (4th) 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 three (3) Business Day
      period.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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.

     

    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.
      

     

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

     

    "Conversion
      Price"
      means, as of any Conversion Date (as defined below) or other date of
      determination the lesser of (a) $0.05 (the “Fixed
      Conversion Price”),
      subject to adjustment as provided herein, or (b) ninety percent (90%) of
      the lowest Volume Weighted Average Price during the thirty (30) Trading Days
      immediately preceding the Conversion Date (the “Market
      Conversion Price”).

     

    Mechanics
      of Conversion.

     

    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 the Securities Purchase Agreement 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 Section 2(g) of the Securities Purchase
      Agreement. 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. In the event of a partial conversion of this Debenture
      pursuant hereto, the principal amount converted shall be deducted from the
      Installment Amounts relating to the Installment Dates as set forth in the
      Conversion Notice.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    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.

     

    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.

     

    Limitations
      on Conversions.

     

    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.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Other
      Provisions.

     

    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.

     

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

     

    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.

     

    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. 

     

    Adjustments
      to Conversion Price

     

    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:

     

    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.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    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.

     

    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.

     

    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.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    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.

     

    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.

     

    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.

     

    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.

     

    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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    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.

     

    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)
      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.

     

    REISSUANCE
      OF THIS DEBENTURE.

     

    Transfer.
      If this Debenture is to be transferred, the Holder shall surrender this
      Debenture to the Company, whereupon the Company will, subject to the
      satisfaction of the transfer provisions of the Securities Purchase Agreement,
      forthwith issue and deliver upon the order of the Holder a new Debenture (in
      accordance with Section 5(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 5(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.

     

    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 5(d))
      representing the outstanding Principal.

     

    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 5(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.

     

    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 5(a) or Section 5(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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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.

            
	 	 	
              2201
                Second Street, Suite #600

            
	 	 	
              Fort
                Myers, FL 33901

            
	 	 	
              Attention:
                Charles T. Jensen, President

            
	 	 	
              Telephone: (239)
                337-3434

            
	 	 	
              Facsimile: (239)
                337-3668

            
	 	 	 
	
              With
                a copy to: 

            	 	
              Kirkpatrick
                & Lockhart Preston Gates Ellis LLP

            
	 	 	
              201
                South Biscayne Boulevard - Suite 2000

            
	 	 	
              Miami,
                FL 33131-2399

            
	 	 	
              Attention: Clayton
                E. Parker, Esq.

            
	 	 	
              Telephone: (305)
                539-3300

            
	 	 	
              Facsimile: (305)
                358-7095

            

    

    

    
      	
              If
                to the Holder:

            	 	
              Cornell
                Capital Partners, 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.

     

    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. 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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.

     

    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.

     

    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.
      

     

    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.

     

    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.

     

    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.

     

    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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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.

     

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

     

    “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.

     

    "Bloomberg"
      means Bloomberg Financial Markets.

     

    “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.

     

    “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).

     

    “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.

     

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

     

    “Commission”
      means the Securities and Exchange Commission.

     

    “Common
      Stock”
      means the common stock, par value $.01, of the Company and stock of any other
      class into which such shares may hereafter be changed or
      reclassified.

     

    "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.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

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

     

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

     

    “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 of the
      Securities Purchase Agreement, provided that the terms of such right, option,
      obligation or security are not amended or otherwise modified on or after the
      date of the Securities Purchase Agreement, 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 of the
      Securities Purchase Agreement, (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.

     

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

     

    “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.

     

    “Other
      Securities”
      shall mean all other securities issued to the Holder by the Company including,
      without limitation, the follow: (i) the debentures (including all debentures
      issued in exchange, transfer or replacement thereof) issued pursuant to the
      securities purchase agreement between the Company and the Holder dated August
      24, 2006, (ii) the debentures (including all debentures issued in exchange,
      transfer or replacement thereof) issued pursuant to the securities purchase
      agreement between the Company and the Holder dated December 29, 2006, and (iii)
      the series C convertible preferred stock issued to the Holder pursuant to the
      investment agreement between the Holder and the Company dated February 17,
      2006
      and governed by the Certificate of Designations of the Series C Convertible
      Preferred Stock. 

     

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

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    “Securities
      Purchase Agreement”
      means the Securities Purchase Agreement dated March 27, 2007 by and among the
      Company and the Buyers listed on Schedule I attached thereto.

     

    “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.

     

    “Transaction
      Documents”
      means the Securities Purchase Agreement or any other agreement delivered in
      connection with the Securities Purchase Agreement, including, without
      limitation, the Security Documents, the Irrevocable Transfer Agent Instructions,
      and the Registration Rights Agreement.

     

    “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.

     

    “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.

     

    "Volume
      Weighted Average Price"
      means, for any security as of any date, the daily dollar volume-weighted average
      price for such security on the Primary Market as reported by Bloomberg through
      its “Historical Prices - Px Table with Average Daily Volume” functions, 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. 

     

    "Warrants"
      has the meaning ascribed to such term in the Securities Purchase Agreement,
      and
      shall include all warrants issued in exchange therefor or replacement
      thereof.

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    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/
              David A. Dodge
	 	
              

              Name: David
                A. Dodge 
                Title: CFO

              

            

    

    

    
      
        
        

      

      
        15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]