Document:

STANDBY EQUITY DISTRIBUTION AGREEMENT
                      -------------------------------------

         AGREEMENT  dated as of the ___ day of  October  2003 (the  "AGREEMENT")
between  CORNELL  CAPITAL  PARTNERS,  LP, a Delaware  limited  partnership  (the
"INVESTOR"),  and  NEOMEDIA  TECHNOLOGIES  INC.,  a  corporation  organized  and
existing under the laws of the State of Delaware (the "COMPANY").

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions  contained herein,  the Company shall issue and sell to the Investor,
from time to time as provided  herein,  and the Investor shall purchase from the
Company up to Twenty  Million  Dollars  ($20,000,000)  of the  Company's  common
stock, par value $0.01 per share (the "COMMON STOCK"); and

         WHEREAS,  such investments will be made in reliance upon the provisions
of Regulation D ("REGULATION D") of the Securities Act of 1933, as amended,  and
the regulations  promulgated thereunder (the "SECURITIES ACT"), and or upon such
other exemption from the registration  requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.

         WHEREAS, the Company has engaged Newbridge Securities  Corporation,  to
act as the Company's  exclusive  placement  agent in connection with the sale of
the Company's Common Stock to the Investor  hereunder  pursuant to the Placement
Agent  Agreement  dated the date hereof by and among the Company,  the Placement
Agent and the Investor (the "PLACEMENT AGENT AGREEMENT").

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I.
                               CERTAIN DEFINITIONS

         Section 1.1.  "ADVANCE" shall mean the portion of the Commitment Amount
requested by the Company in the Advance Notice.

         Section  1.2.  "ADVANCE  DATE" shall mean the date Butler  Gonzalez LLP
Escrow Account is in receipt of the funds from the Investor and Butler  Gonzalez
LLP, as the Investor's Counsel, is in possession of free trading shares from the
Company and  therefore an Advance by the Investor to the Company can be made and
Butler  Gonzalez LLP can release the free  trading  shares to the  Investor.  No
Advance  Date shall be less than six (6)  Trading  Days after an Advance  Notice
Date.

         Section  1.3.  "ADVANCE  NOTICE"  shall  mean a  written  notice to the
Investor  setting  forth the Advance  amount that the Company  requests from the
Investor and the Advance Date.

         Section  1.4.  "ADVANCE  NOTICE  DATE" shall mean each date the Company
delivers to the  Investor an Advance  Notice  requiring  the Investor to advance
funds to the Company,  subject to the terms of this Agreement. No Advance Notice

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Date shall be less than seven (7) Trading  Days after the prior  Advance  Notice
Date.

         Section 1.5. "BID PRICE" shall mean, on any date, the closing bid price
(as reported by Bloomberg  L.P.) of the Common Stock on the Principal  Market or
if the Common Stock is not traded on a Principal  Market,  the highest  reported
bid price for the Common  Stock,  as furnished by the  National  Association  of
Securities Dealers, Inc.

         Section 1.6. "CLOSING" shall mean one of the closings of a purchase and
sale of Common Stock pursuant to Section 2.3.

         Section 1.7.  "COMMITMENT AMOUNT" shall mean the aggregate amount of up
to Twenty Million Dollars ($20,000,000) which the Investor has agreed to provide
to the Company in order to purchase the Company's  Common Stock  pursuant to the
terms and conditions of this Agreement.

         Section 1.8.  "COMMITMENT  PERIOD" shall mean the period  commencing on
the earlier to occur of (i) the Effective Date, or (ii) such earlier date as the
Company and the  Investor  may  mutually  agree in writing,  and expiring on the
earliest to occur of (x) the date on which the Investor  shall have made payment
of Advances pursuant to this Agreement in the aggregate amount of Twenty Million
Dollars  ($20,000,000),  (y) the date this  Agreement is terminated  pursuant to
Section  2.5,  or (z) the date  occurring  twenty-four  (24)  months  after  the
Effective Date.

         Section 1.9.  "COMMON STOCK" shall mean the Company's common stock, par
value $0.01 per share.

         Section 1.10. "CONDITION  SATISFACTION DATE" shall have the meaning set
forth in Section 7.2.

         Section 1.11. "DAMAGES" shall mean any loss, claim, damage,  liability,
costs and expenses (including,  without limitation,  reasonable  attorney's fees
and disbursements and costs and expenses of expert witnesses and investigation).

         Section  1.12.  "EFFECTIVE  DATE"  shall mean the date on which the SEC
first declares effective a Registration  Statement registering the resale of the
Registrable Securities as set forth in Section 7.2(a).

         Section 1.13.  "ESCROW AGREEMENT" shall mean the escrow agreement among
the Company, the Investor, and Butler Gonzalez LLP dated the date hereof.

         Section 1.14. "EXCHANGE ACT" shall mean the Securities and Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.

         Section  1.15.  "MATERIAL  ADVERSE  EFFECT"  shall mean any  condition,
circumstance, or situation that would prohibit or otherwise materially interfere
with the ability of the Company to enter into and perform any of its obligations
under this  Agreement  or the  Registration  Rights  Agreement  in any  material
respect.

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         Section 1.16. "MARKET PRICE" shall mean the lowest closing Bid Price of
the Common Stock during the Pricing Period.

         Section 1.17.  "MAXIMUM  ADVANCE  AMOUNT"  shall be Two Hundred  Eighty
Thousand Dollars  ($280,000) per Advance Notice up to a maximum of Eight Hundred
Forty Thousand  Dollars  ($840,000),  in the aggregate,  in any thirty-day  (30)
calendar period..

         Section 1.18 "NASD" shall mean the National  Association  of Securities
Dealers, Inc.

         Section  1.19  "PERSON"  shall mean an  individual,  a  corporation,  a
partnership, an association, a trust or other entity or organization,  including
a government or political subdivision or an agency or instrumentality thereof.

         Section  1.20  "PLACEMENT   AGENT"  shall  mean  Newbridge   Securities
Corporation a registered broker-dealer.

         Section  1.21  "PRICING  PERIOD"  shall  mean the five (5)  consecutive
Trading Days after the Advance Notice Date.

         Section 1.22 "PRINCIPAL  MARKET" shall mean the Nasdaq National Market,
the Nasdaq SmallCap Market, the American Stock Exchange,  the OTC Bulletin Board
or the New York Stock Exchange,  whichever is at the time the principal  trading
exchange or market for the Common Stock.

         Section 1.23  "PURCHASE  PRICE"  shall be set at ninety  eight  percent
(98%) of the Market Price during the Pricing Period.

         Section 1.24  "REGISTRABLE  SECURITIES" shall mean the shares of Common
Stock to be issued hereunder (i) in respect of which the Registration  Statement
has not been declared  effective by the SEC, (ii) which have not been sold under
circumstances  meeting  all of the  applicable  conditions  of Rule  144 (or any
similar  provision then in force) under the Securities Act ("RULE 144") or (iii)
which have not been otherwise  transferred to a holder who may trade such shares
without  restriction  under the Securities  Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

         Section   1.25   "REGISTRATION   RIGHTS   AGREEMENT"   shall  mean  the
Registration Rights Agreement dated the date hereof, regarding the filing of the
Registration  Statement for the resale of the  Registrable  Securities,  entered
into between the Company and the Investor.

         Section  1.26  "REGISTRATION   STATEMENT"  shall  mean  a  registration
statement  on Form S-1 or SB-2  (if use of such  form is then  available  to the
Company  pursuant  to the  rules  of the SEC and,  if not,  on such  other  form
promulgated  by the SEC for which the Company then  qualifies  and which counsel
for the Company  shall deem  appropriate,  and which form shall be available for
the  resale  of the  Registrable  Securities  to be  registered  there  under in
accordance  with the  provisions of this Agreement and the  Registration  Rights
Agreement,  and in accordance  with the intended  method of distribution of such
securities),  for  the  registration  of  the  resale  by  the  Investor  of the
Registrable Securities under the Securities Act.

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         Section  1.27  "REGULATION  D" shall have the  meaning set forth in the
recitals of this Agreement.

         Section 1.28 "SEC" shall mean the Securities and Exchange Commission.

         Section 1.29  "SECURITIES  ACT" shall have the meaning set forth in the
recitals of this Agreement.

         Section 1.30 "SEC DOCUMENTS"  shall mean Annual Reports on Form 10-KSB,
Quarterly  Reports  on  Form  10-QSB,  Current  Reports  on Form  8-K and  Proxy
Statements  of the  Company as  supplemented  to the date  hereof,  filed by the
Company for a period of at least twelve (12) months  immediately  preceding  the
date  hereof or the  Advance  Date,  as the case may be,  until such time as the
Company  no  longer  has  an  obligation  to  maintain  the  effectiveness  of a
Registration Statement as set forth in the Registration Rights Agreement.

         Section 1.31 "TRADING DAY" shall mean any day during which the New York
Stock Exchange shall be open for business.

                                   ARTICLE II.
                                    ADVANCES

         Section 2.1.      INVESTMENTS.

                  (a) ADVANCES.  Upon the terms and  conditions set forth herein
(including,  without  limitation,  the provisions of Article VII hereof), on any
Advance  Notice Date the  Company may request an Advance by the  Investor by the
delivery  of an Advance  Notice.  The number of shares of Common  Stock that the
Investor  shall  receive for each Advance  shall be  determined  by dividing the
amount of the Advance by the  Purchase  Price.  No  fractional  shares  shall be
issued.  Fractional  shares  shall be rounded to the next higher whole number of
shares.  The aggregate maximum amount of all Advances that the Investor shall be
obligated to make under this Agreement shall not exceed the Commitment Amount.

         Section 2.2.      MECHANICS.

                  (a) ADVANCE NOTICE. At any time during the Commitment  Period,
the  Company  may  deliver an  Advance  Notice to the  Investor,  subject to the
conditions  set forth in Section  7.2;  provided,  however,  the amount for each
Advance as designated by the Company in the applicable Advance Notice, shall not
be more than the Maximum  Advance Amount.  The aggregate  amount of the Advances
pursuant to this Agreement shall not exceed the Commitment  Amount.  The Company
acknowledges  that the  Investor may sell shares of the  Company's  Common Stock
corresponding  with a particular Advance Notice on the day the Advance Notice is
received  by the  Investor.  There will be a minimum of seven (7)  Trading  Days
between each Advance Notice Date.

                  (b) DATE OF  DELIVERY  OF ADVANCE  NOTICE.  An Advance  Notice
shall be deemed  delivered on (i) the Trading Day it is received by facsimile or
otherwise by the Investor if such notice is received prior to 12:00 noon Eastern
Time,  or (ii) the  immediately  succeeding  Trading  Day if it is  received  by
facsimile or otherwise  after 12:00 noon Eastern Time on a Trading Day or at any

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time on a day  which is not a  Trading  Day.  No  Advance  Notice  may be deemed
delivered, on a day that is not a Trading Day.

                  (c)  PRE-CLOSING  SHARE  CREDIT.  Within two (2) business days
after the Advance  Notice Date, the Company shall credit shares of the Company's
Common Stock to the Investor's balance account with The Depository Trust Company
through its Deposit  Withdrawal At Custodian  system,  in an amount equal to the
amount  of the  requested  Advance  divided  by the  closing  Bid  Price  of the
Company's Common Stock as of the Advance Notice Date multiplied by one point one
(1.1).  Any  adjustments to the number of shares to be delivered to the Investor
at the  Closing  as a result of  fluctuations  in the  closing  Bid Price of the
Company's  Common Stock shall be made as of the date of the Closing.  Any excess
shares  shall be credited to the next  Advance.  In no event shall the number of
shares issuable to the Investor pursuant to an Advance cause the Investor to own
in excess of nine and 9/10 percent (9.9%) of the then  outstanding  Common Stock
of the Company.

                  (d)  HARDSHIP.  In the event the Investor  sells the Company's
Common Stock  pursuant to subsection  (c) above and the Company fails to perform
its obligations as mandated in Section 2.5 and 2.2 (c), and  specifically  fails
to  provide  the  Investor  with the shares of Common  Stock for the  applicable
Advance,  the Company  acknowledges  that the Investor  shall  suffer  financial
hardship  and  therefore  shall be liable for any and all  losses,  commissions,
fees, or financial hardship caused to the Investor.

         Section 2.3.  CLOSINGS.  On each Advance  Date,  which shall be six (6)
Trading Days after an Advance  Notice Date, (i) the Company shall deliver to the
Investor's Counsel,  as defined pursuant to the Escrow Agreement,  shares of the
Company's  Common Stock,  representing the amount of the Advance by the Investor
pursuant to Section 2.1 herein,  registered  in the name of the  Investor  which
shall be delivered to the Investor,  or otherwise in accordance  with the Escrow
Agreement  and (ii) the  Investor  shall  deliver  to Butler  Gonzalez  LLP (the
"ESCROW  AGENT") the amount of the Advance  specified  in the Advance  Notice by
wire  transfer of  immediately  available  funds which shall be delivered to the
Company, or otherwise in accordance with the Escrow Agreement.  In addition,  on
or prior to the Advance Date, each of the Company and the Investor shall deliver
to the other  through the  Investor's  Counsel all  documents,  instruments  and
writings  required to be delivered by either of them pursuant to this  Agreement
in order to implement and effect the transactions  contemplated herein.  Payment
of funds to the  Company  and  delivery  of the  Company's  Common  Stock to the
Investor shall occur in accordance with the conditions set forth above and those
contained in the Escrow  Agreement;  PROVIDED,  HOWEVER,  that to the extent the
Company has not paid the fees,  expenses,  and disbursements of the Investor the
Investor's  counsel or  Kirkpatrick  & Lockhart LLP in  accordance  with Section
12.4, the amount of such fees,  expenses,  and  disbursements may be deducted by
the Investor  (and shall be paid to the  relevant  party) from the amount of the
Advance with no reduction in the amount of shares of the Company's  Common Stock
to be delivered on such Advance Date.

         Section 2.4. TERMINATION OF INVESTMENT.  The obligation of the Investor
to make an Advance to the Company  pursuant to this  Agreement  shall  terminate
permanently  (including  with  respect  to an  Advance  Date  that  has  not yet
occurred)  in the event that (i) there shall occur any stop order or  suspension
of the  effectiveness  of the  Registration  Statement for an aggregate of fifty
(50)  Trading  Days,  other  than due to the acts of the  Investor,  during  the
Commitment  Period,  and (ii) the Company  shall at any time fail  materially to

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comply with the  requirements of Article VI and such failure is not cured within
thirty (30) days after receipt of written  notice from the  Investor,  PROVIDED,
HOWEVER,  that  this  termination  provision  shall  not  apply  to  any  period
commencing upon the filing of a  post-effective  amendment to such  Registration
Statement  and ending upon the date on which such post  effective  amendment  is
declared effective by the SEC..

         Section 2.5.      AGREEMENT TO ADVANCE FUNDS.

                  (a) The Investor agrees to advance the amount specified in the
Advance  Notice to the Company  after the  completion  of each of the  following
conditions and the other conditions set forth in this Agreement:

                           (i) the  execution  and delivery by the Company,  and
the Investor, of this Agreement, and the Exhibits hereto;

                           (ii)  Investor's  Counsel  shall  have  received  the
shares of Common  Stock  applicable  to the Advance in  accordance  with Section
2.2(c) hereof;

                           (iii)  the  Company's   Registration  Statement  with
respect to the resale of the Registrable Securities in accordance with the terms
of the Registration  Rights Agreement shall have been declared  effective by the
SEC;

                           (iv) the Company  shall have  obtained  all  material
permits and  qualifications  required by any applicable  state for the offer and
sale of the Registrable Securities, or shall have the availability of exemptions
therefrom.  The sale and issuance of the Registrable Securities shall be legally
permitted by all laws and regulations to which the Company is subject;

                           (v) the Company shall have filed with the  Commission
in a timely  manner all  reports,  notices  and other  documents  required  of a
"reporting   company"   under  the  Exchange  Act  and   applicable   Commission
regulations;

                           (vi) the  fees as set  forth in  Section  12.4  below
shall have been paid or can be withheld as provided in Section 2.3; and

                           (vii) the  conditions  set forth in Section 7.2 shall
have been satisfied.

                           (viii)  The  Company   shall  have  provided  to  the
Investor an  acknowledgement,  from  Stonefield  Josephson  as to its ability to
provide all  consents  required  in order to file a  registration  statement  in
connection with this transaction;

                           (ix)  The  Company's  transfer  agent  shall  be DWAC
eligible.

         Section 2.6.      LOCK UP PERIOD.

                           (i) During the Commitment  Period,  the Company shall
not, issue or sell (i) any Common Stock or Preferred Stock without consideration
or for a consideration per share less than the Bid Price on the date of issuance
or (ii) issue or sell any  warrant,  option,  right,  contract,  call,  or other
security or instrument  granting the holder  thereof the right to acquire Common

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Stock without  consideration or for a consideration  per share less than the Bid
Price on the date of issuance.

                           (ii) On the date  hereof,  the Company  shall  obtain
from each officer and director a lock-up  agreement,  as defined  below,  in the
form annexed hereto as Schedule  2.6(b) agreeing to only sell in compliance with
the volume limitation of Rule 144.

                                  ARTICLE III.
                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

         Investor  hereby  represents  and  warrants  to, and agrees  with,  the
Company  that the  following  are true and as of the date  hereof and as of each
Advance Date:

         Section  3.1.  ORGANIZATION  AND  AUTHORIZATION.  The  Investor is duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and has all  requisite  power and  authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the execution and delivery of this Agreement by such Investor,  the  performance
by such  Investor of its  obligations  hereunder  and the  consummation  by such
Investor of the transactions  contemplated  hereby have been duly authorized and
requires no other  proceedings on the part of the Investor.  The undersigned has
the right,  power and  authority to execute and deliver this  Agreement  and all
other  instruments  (including,  without  limitations,  the Registration  Rights
Agreement), on behalf of the Investor. This Agreement has been duly executed and
delivered by the Investor and,  assuming the  execution and delivery  hereof and
acceptance thereof by the Company,  will constitute the legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with
its terms.

         Section 3.2.  EVALUATION OF RISKS.  The Investor has such knowledge and
experience in financial tax and business  matters as to be capable of evaluating
the  merits  and risks of,  and  bearing  the  economic  risks  entailed  by, an
investment  in the Company and of protecting  its  interests in connection  with
this  transaction.  It recognizes that its investment in the Company  involves a
high degree of risk.

         Section  3.3.  NO  LEGAL   ADVICE  FROM  THE   COMPANY.   The  Investor
acknowledges  that it had the  opportunity  to  review  this  Agreement  and the
transactions  contemplated  by this  Agreement with his or its own legal counsel
and investment and tax advisors.  The Investor is relying solely on such counsel
and advisors and not on any statements or  representations of the Company or any
of its  representatives  or agents  for legal,  tax or  investment  advice  with
respect to this investment,  the transactions  contemplated by this Agreement or
the securities laws of any jurisdiction.

         Section 3.4. INVESTMENT PURPOSE.  The securities are being purchased by
the  Investor for its own account,  for  investment  and without any view to the
distribution, assignment or resale to others or fractionalization in whole or in
part.  The Investor  agrees not to assign or in any way transfer the  Investor's
rights to the  securities  or any  interest  therein and  acknowledges  that the
Company  will not  recognize  any  purported  assignment  or transfer  except in
accordance with applicable  Federal and state  securities  laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor  agrees not to sell,  hypothecate or otherwise  transfer the Investor's

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securities  unless the securities  are  registered  under Federal and applicable
state securities laws or unless,  in the opinion of counsel  satisfactory to the
Company, an exemption from such laws is available.

         Section  3.5.  ACCREDITED  INVESTOR.  The  Investor  is an  "ACCREDITED
INVESTOR"  as that term is  defined in Rule  501(a)(3)  of  Regulation  D of the
Securities Act.

         Section  3.6.  INFORMATION.  The  Investor  and its  advisors  (and its
counsel),  if any,  have  been  furnished  with all  materials  relating  to the
business,  finances  and  operations  of the Company and  information  it deemed
material  to  making an  informed  investment  decision.  The  Investor  and its
advisors,  if any,  have been afforded the  opportunity  to ask questions of the
Company and its  management.  Neither such inquiries nor any other due diligence
investigations  conducted  by such  Investor  or its  advisors,  if any,  or its
representatives  shall modify,  amend or affect the Investor's  right to rely on
the Company's  representations and warranties  contained in this Agreement.  The
Investor  understands  that its  investment  involves a high degree of risk. The
Investor is in a position  regarding the Company,  which, based upon employment,
family  relationship  or economic  bargaining  power,  enabled and enables  such
Investor to obtain  information from the Company in order to evaluate the merits
and risks of this investment. The Investor has sought such accounting, legal and
tax  advice,  as it has  considered  necessary  to make an  informed  investment
decision with respect to this transaction.

         Section  3.7.  RECEIPT OF  DOCUMENTS.  The Investor and its counsel has
received and read in their entirety: (i) this Agreement and the Exhibits annexed
hereto;  (ii) all due  diligence and other  information  necessary to verify the
accuracy and  completeness  of such  representations,  warranties and covenants;
(iii) the Company's  Form 10-KSB for the year ended year ended December 31, 2002
and Form 10-QSB for the periods  ended March 31, 2003 and June 30, 2003 and (iv)
answers to all  questions  the Investor  submitted  to the Company  regarding an
investment  in the  Company;  and the  Investor  has  relied on the  information
contained  therein and has not been furnished any other  documents,  literature,
memorandum or prospectus.

         Section 3.8.  REGISTRATION  RIGHTS AGREEMENT AND ESCROW AGREEMENT.  The
parties have  entered  into the  Registration  Rights  Agreement  and the Escrow
Agreement, each dated the date hereof.

         Section 3.9. NO GENERAL  SOLICITATION.  Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general  solicitation  or general  advertising  (within  the  meaning of
Regulation D under the Securities  Act) in connection  with the offer or sale of
the shares of Common Stock offered hereby.

         Section  3.10.  NOT AN  AFFILIATE.  The  Investor  is  not an  officer,
director  or  a  person  that  directly,  or  indirectly  through  one  or  more
intermediaries,  controls or is controlled  by, or is under common  control with
the Company or any  "AFFILIATE"  of the Company (as that term is defined in Rule
405 of the Securities Act).  Neither the Investor nor its Affiliates has an open
short position in the Common Stock of the Company,  and the Investor agrees that
it will not, and that it will cause its  Affiliates  not to, engage in any short
sales of or hedging transactions with respect to the Common Stock, provided that
the Company  acknowledges  and agrees that upon receipt of an Advance Notice the

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Investor  will sell the  Shares to be issued  to the  Investor  pursuant  to the
Advance Notice, even if the Shares have not been delivered to the Investor.

                                   ARTICLE IV.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as stated below, on the disclosure  schedules attached hereto or
in the SEC Documents (as defined  herein),  the Company  hereby  represents  and
warrants to, and  covenants  with,  the Investor that the following are true and
correct as of the date hereof:

         Section  4.1.  ORGANIZATION  AND  QUALIFICATION.  The  Company  is duly
incorporated  or  organized  and  validly  existing in the  jurisdiction  of its
incorporation  or  organization  and  has  all  requisite  power  and  authority
corporate  power to own its properties and to carry on its business as now being
conducted.  Each of the  Company and its  subsidiaries  is duly  qualified  as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the  business  conducted  by it makes such  qualification
necessary,  except to the extent  that the failure to be so  qualified  or be in
good standing  would not have a Material  Adverse  Effect on the Company and its
subsidiaries taken as a whole.

         Section  4.2.   AUTHORIZATION,   ENFORCEMENT,   COMPLIANCE  WITH  OTHER
INSTRUMENTS.  (i) The Company has the requisite corporate power and authority to
enter into and perform this Agreement,  the Registration  Rights Agreement,  the
Escrow Agreement,  the Placement Agent Agreement and any related agreements,  in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement,  the Registration  Rights Agreement,  the Escrow Agreement,  the
Placement  Agent  Agreement  and any related  agreements  by the Company and the
consummation by it of the  transactions  contemplated  hereby and thereby,  have
been duly  authorized by the Company's Board of Directors and no further consent
or  authorization  is required by the  Company,  its Board of  Directors  or its
stockholders,  (iii) this Agreement,  the  Registration  Rights  Agreement,  the
Escrow Agreement,  the Placement Agent Agreement and any related agreements have
been duly  executed  and  delivered  by the Company,  (iv) this  Agreement,  the
Registration  Rights  Agreement,  the  Escrow  Agreement,  the  Placement  Agent
Agreement and assuming the execution and delivery  thereof and acceptance by the
Investor and any related agreements constitute the valid and binding obligations
of the Company  enforceable  against the Company in accordance with their terms,
except as such  enforceability may be limited by general principles of equity or
applicable bankruptcy,  insolvency,  reorganization,  moratorium, liquidation or
similar laws relating to, or affecting generally,  the enforcement of creditors'
rights and remedies.

         Section  4.3.  CAPITALIZATION.  As of the date hereof,  the  authorized
capital stock of the Company consists of  1,000,000,000  shares of Common Stock,
par value  $0.01 per share and  25,000,000  shares of  Preferred  Stock of which
224,363,635  shares of Common Stock and no shares of Preferred Stock were issued
and outstanding. All of such outstanding shares have been validly issued and are
fully paid and  nonassessable.  Except as  disclosed  in the SEC  Documents,  no
shares of Common  Stock are subject to  preemptive  rights or any other  similar
rights or any liens or encumbrances suffered or permitted by the Company. Except
as  disclosed  in the SEC  Documents,  as of the date  hereof,  (i) there are no
outstanding  options,   warrants,  scrip,  rights  to  subscribe  to,  calls  or
commitments  of any  character  whatsoever  relating to, or securities or rights

                                       9
<PAGE>

convertible  into,  any  shares of  capital  stock of the  Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the  Company  or  any of  its  subsidiaries  is or may  become  bound  to  issue
additional  shares of capital stock of the Company or any of its subsidiaries or
options,  warrants,  scrip,  rights to subscribe to, calls or commitments of any
character  whatsoever relating to, or securities or rights convertible into, any
shares of capital  stock of the Company or any of its  subsidiaries,  (ii) there
are no outstanding debt securities  (iii) there are no outstanding  registration
statements other than on Form S-8 and one on SB-2 and (iv) except for agreements
with existing debt holders there are no agreements or  arrangements  under which
the Company or any of its  subsidiaries is obligated to register the sale of any
of  their   securities   under  the  Securities  Act  (except  pursuant  to  the
Registration   Rights  Agreement).   There  are  no  securities  or  instruments
containing  anti-dilution  or similar  provisions that will be triggered by this
Agreement  or any related  agreement  or the  consummation  of the  transactions
described herein or therein.  The Company has furnished to the Investor true and
correct copies of the Company's Certificate of Incorporation,  as amended and as
in effect on the date  hereof  (the  "CERTIFICATE  OF  INCORPORATION"),  and the
Company's  By-laws,  as in effect on the date  hereof (the  "BY-LAWS"),  and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.

                                       10
<PAGE>

         Section 4.4. NO CONFLICT.  The execution,  delivery and  performance of
this  Agreement  by the  Company  and the  consummation  by the  Company  of the
transactions  contemplated  hereby  will not (i)  result in a  violation  of the
Certificate of Incorporation, any certificate of designations of any outstanding
series of  preferred  stock of the Company or By-laws or (ii)  conflict  with or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its subsidiaries is a party, or result
in a  violation  of  any  law,  rule,  regulation,  order,  judgment  or  decree
(including  federal and state  securities laws and regulations and the rules and
regulations  of the  Principal  Market  on which  the  Common  Stock is  quoted)
applicable  to the Company or any of its  subsidiaries  or by which any material
property or asset of the Company or any of its subsidiaries is bound or affected
and which would cause a Material Adverse Effect.  Except as disclosed in the SEC
Documents,  neither the Company nor its subsidiaries is in violation of any term
of or in default  under its  Certificate  of  Incorporation  or By-laws or their
organizational  charter or  by-laws,  respectively,  or any  material  contract,
agreement, mortgage,  indebtedness,  indenture,  instrument, judgment, decree or
order or any  statute,  rule or  regulation  applicable  to the  Company  or its
subsidiaries.  The  business of the Company  and its  subsidiaries  is not being
conducted  in  violation  of any  material  law,  ordinance,  regulation  of any
governmental entity.  Except as specifically  contemplated by this Agreement and
as required under the Securities Act and any applicable  state  securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental  agency in order
for  it to  execute,  deliver  or  perform  any  of  its  obligations  under  or
contemplated  by  this  Agreement  or  the  Registration   Rights  Agreement  in
accordance  with the terms  hereof or  thereof.  All  consents,  authorizations,
orders,  filings  and  registrations  which the  Company is  required  to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date  hereof.  The Company and its  subsidiaries  are unaware of any fact or
circumstance which might give rise to any of the foregoing.

         Section 4.5. SEC DOCUMENTS;  FINANCIAL STATEMENTS. Since November 1996,
the  Company  has filed all  reports,  schedules,  forms,  statements  and other
documents required to be filed by it with the SEC under of the Exchange Act. The
Company has delivered to the Investor or its representatives,  or made available
through the SEC's website at http://www.sec.gov, true and complete copies of the
SEC Documents.  As of their respective  dates,  the financial  statements of the
Company disclosed in the SEC Documents (the "FINANCIAL  STATEMENTS") complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally  accepted  accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise  indicated in such financial  statements or the notes  thereto,  or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary  statements) and, fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  The Company  has  received  two  letters  relating to an informal
inquiry  by the SEC.  The  Company  is  responding  to the  SEC's  requests  for
information. No other information provided by or on behalf of the Company to the
Investor  which  is not  included  in the  SEC  Documents  contains  any  untrue
statement of a material  fact or omits to state any material  fact  necessary in

                                       11
<PAGE>

order to make the statements  therein,  in the light of the circumstances  under
which they were made, not misleading.

         Section  4.6.  10B-5.  The SEC  Documents  do not  include  any  untrue
statements  of  material  fact,  nor do they  omit to state  any  material  fact
required to be stated therein necessary to make the statements made, in light of
the circumstances under which they were made, not misleading.

         Section 4.7. NO DEFAULT. Except as disclosed in the SEC Documents,  the
Company is not in default  in the  performance  or  observance  of any  material
obligation,  agreement,  covenant  or  condition  contained  in  any  indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a party or by which it is or its  property is bound and  neither the  execution,
nor the  delivery  by the  Company,  nor the  performance  by the Company of its
obligations  under this Agreement or any of the exhibits or  attachments  hereto
will  conflict  with or result in the breach or violation of any of the terms or
provisions  of, or  constitute a default or result in the creation or imposition
of any lien or  charge on any  assets or  properties  of the  Company  under its
Certificate of Incorporation, By-Laws, any material indenture, mortgage, deed of
trust or other  material  agreement  applicable  to the Company or instrument to
which the  Company is a party or by which it is bound,  or any  statute,  or any
decree, judgment, order, rules or regulation of any court or governmental agency
or body having  jurisdiction  over the Company or its  properties,  in each case
which  default,  lien or charge is likely to cause a Material  Adverse Effect on
the Company's business or financial condition.

         Section 4.8. ABSENCE OF EVENTS OF DEFAULT. Except for matters described
in the SEC Documents and/or this Agreement,  no Event of Default,  as defined in
the  respective  agreement to which the Company is a party,  and no event which,
with the giving of notice or the passage of time or both,  would become an Event
of Default (as so defined),  has occurred and is continuing,  which would have a
Material  Adverse  Effect  on the  Company's  business,  properties,  prospects,
financial condition or results of operations.

         Section  4.9.   INTELLECTUAL  PROPERTY  RIGHTS.  The  Company  and  its
subsidiaries  own or possess  adequate  rights or licenses  to use all  material
trademarks,  trade names,  service marks,  service mark  registrations,  service
names, patents,  patent rights,  copyrights,  inventions,  licenses,  approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted.  The Company and its subsidiaries do not
have any knowledge of any  infringement  by the Company or its  subsidiaries  of
trademark,  trade name rights, patents, patent rights,  copyrights,  inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others,  and, to the knowledge of the Company,  there
is no claim,  action or  proceeding  being  made or brought  against,  or to the
Company's  knowledge,  being threatened against, the Company or its subsidiaries
regarding trademark,  trade name, patents, patent rights, invention,  copyright,
license, service names, service marks, service mark registrations,  trade secret
or other  infringement;  and the Company and its subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing.

         Section 4.10.  EMPLOYEE  RELATIONS.  Neither the Company nor any of its
subsidiaries  is involved in any labor  dispute  nor,  to the  knowledge  of the

                                       12
<PAGE>

Company or any of its subsidiaries,  is any such dispute threatened. None of the
Company's or its subsidiaries'  employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

         Section 4.11.  ENVIRONMENTAL LAWS. The Company and its subsidiaries are
(i) in compliance with any and all applicable material foreign,  federal,  state
and local laws and  regulations  relating to the  protection of human health and
safety,  the environment or hazardous or toxic substances or wastes,  pollutants
or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses
or other  approvals  required  of them under  applicable  Environmental  Laws to
conduct their  respective  businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.

         Section  4.12.  TITLE.  Except as set forth in the SEC  Documents,  the
Company has good and  marketable  title to its  properties  and material  assets
owned by it, free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable  interest other than such as are not material to the business
of the Company. Any real property and facilities held under lease by the Company
and its  subsidiaries  are held by them under valid,  subsisting and enforceable
leases with such  exceptions as are not material and do not  interfere  with the
use made and proposed to be made of such  property and  buildings by the Company
and its subsidiaries.

         Section 4.13.  INSURANCE.  The Company and each of its subsidiaries are
insured by insurers of recognized financial  responsibility  against such losses
and risks and in such  amounts  as  management  of the  Company  believes  to be
prudent  and  customary  in  the   businesses  in  which  the  Company  and  its
subsidiaries  are engaged.  Neither the Company nor any such subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such  subsidiary has any reason to believe that it will not be able to renew
its existing  insurance  coverage as and when such coverage expires or to obtain
similar  coverage  from  similar  insurers as may be  necessary  to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise,  or the earnings,  business or operations of the Company
and its subsidiaries, taken as a whole.

         Section  4.14.  REGULATORY  PERMITS.  The Company and its  subsidiaries
possess all  material  certificates,  authorizations  and permits  issued by the
appropriate  federal,  state or  foreign  regulatory  authorities  necessary  to
conduct  their  respective  businesses,  and  neither  the  Company nor any such
subsidiary has received any notice of proceedings  relating to the revocation or
modification of any such certificate, authorization or permit.

         Section 4.15. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries  maintain a system of internal  accounting  controls  sufficient to
provide  reasonable  assurance that (i)  transactions are executed in accordance
with  management's  general or specific  authorizations,  (ii)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with generally accepted  accounting  principles and to maintain asset
accountability,  (iii) access to assets is  permitted  only in  accordance  with
management's   general  or  specific   authorization   and  (iv)  the   recorded
accountability  for assets is compared  with the existing  assets at  reasonable
intervals and appropriate action is taken with respect to any differences.

                                       13
<PAGE>

         Section 4.16. NO MATERIAL ADVERSE BREACHES, ETC. Except as set forth in
the SEC Documents, neither the Company nor any of its subsidiaries is subject to
any charter,  corporate or other legal  restriction,  or any  judgment,  decree,
order, rule or regulation which in the judgment of the Company's officers has or
is expected  in the future to have a Material  Adverse  Effect on the  business,
properties,  operations, financial condition, results of operations or prospects
of the Company or its  subsidiaries.  Except as set forth in the SEC  Documents,
neither the Company nor any of its  subsidiaries is in breach of any contract or
agreement  which breach,  in the judgment of the Company's  officers,  has or is
expected  to  have  a  Material  Adverse  Effect  on the  business,  properties,
operations,  financial  condition,  results of  operations  or  prospects of the
Company or its subsidiaries.

         Section  4.17.  ABSENCE OF  LITIGATION.  Except as set forth in the SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board, government agency,  self-regulatory  organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions  contemplated hereby (ii)
adversely affect the validity or enforceability  of, or the authority or ability
of the Company to perform its  obligations  under,  this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents,  have  a  Material  Adverse  Effect  on  the  business,   operations,
properties,  financial  condition or results of operation of the Company and its
subsidiaries taken as a whole.

         Section 4.18.  SUBSIDIARIES.  Except as disclosed in the SEC Documents,
the Company  does not  presently  own or control,  directly or  indirectly,  any
interest in any other  corporation,  partnership,  association or other business
entity.

         Section 4.19. TAX STATUS.  The Company and each of its subsidiaries has
made or filed all federal and state  income and all other tax  returns,  reports
and declarations required by any jurisdiction to which it is subject and (unless
and only to the extent  that the Company  and each of its  subsidiaries  has set
aside on its books provisions  reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental  assessments and
charges  that are  material  in amount,  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and has set aside on its books provision  reasonably adequate for the payment of
all taxes for periods  subsequent to the periods to which such returns,  reports
or declarations  apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any  jurisdiction,  and the officers of the
Company know of no basis for any such claim.

         Section  4.20.  CERTAIN  TRANSACTIONS.  Except  as set forth in the SEC
Documents  none of the  officers,  directors,  or  employees  of the  Company is
presently a party to any  transaction  with the Company (other than for services
as employees,  officers and  directors),  including  any contract,  agreement or
other  arrangement  providing for the furnishing of services to or by, providing
for rental of real or  personal  property  to or from,  or  otherwise  requiring
payments to or from any officer,  director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer,  director,  or any such  employee has a  substantial  interest or is an
officer, director, trustee or partner.

                                       14
<PAGE>

         Section 4.21. FEES AND RIGHTS OF FIRST REFUSAL.  Except as set forth in
the SEC Documents,  the Company is not obligated to offer the securities offered
hereunder on a right of first  refusal  basis or otherwise to any third  parties
including,  but not limited to, current or former  shareholders  of the Company,
underwriters, brokers, agents or other third parties.

         Section  4.22.  USE OF PROCEEDS.  The Company  represents  that the net
proceeds  from  this  offering  will be used  for  general  corporate  purposes.
However,  in no event shall the net proceeds  from this  offering be used by the
Company for the  payment  (or loaned to any such person for the  payment) of any
judgment,  or other  liability,  incurred  by any  executive  officer,  officer,
director or  employee  of the  Company,  except for any  liability  owed to such
person for services rendered,  or if any judgment or other liability is incurred
by such person originating from services rendered to the Company, or the Company
has indemnified such person from liability.

         Section 4.23. FURTHER REPRESENTATION AND WARRANTIES OF THE COMPANY. For
so  long as any  securities  issuable  hereunder  held  by the  Investor  remain
outstanding, the Company acknowledges,  represents,  warrants and agrees that it
will maintain the listing of its Common Stock on the Principal Market

         Section  4.24.  OPINION OF COUNSEL.  Investor  shall receive an opinion
letter  from  Kirkpatrick  & Lockhart  LLP,  counsel to the  Company on the date
hereof.

         Section  4.25.  OPINION OF  COUNSEL.  The  Company  will obtain for the
Investor, at the Company's expense, any and all opinions of counsel which may be
reasonably  required in order to sell the securities  issuable hereunder without
restriction.

         Section  4.26.  DILUTION.  The Company is aware and  acknowledges  that
issuance  of shares of the  Company's  Common  Stock  could  cause  dilution  to
existing shareholders and could significantly increase the outstanding number of
shares of Common Stock.

                                   ARTICLE V.
                                 INDEMNIFICATION

         The Investor and the Company  represent to the other the following with
respect to itself:

         Section 5.1.      INDEMNIFICATION.

                  (a) In consideration of the Investor's  execution and delivery
of this  Agreement,  and in addition to all of the Company's  other  obligations
under this  Agreement,  the Company  shall defend,  protect,  indemnify and hold
harmless the Investor, and all of its officers,  directors,  partners, employees
and agents (including, without limitation, those retained in connection with the
transactions  contemplated  by  this  Agreement)  (collectively,  the  "INVESTOR
INDEMNITEES")  from and against any and all  actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith  (irrespective of whether any such Investor Indemnitee is a
party  to the  action  for  which  indemnification  hereunder  is  sought),  and
including  reasonable   attorneys'  fees  and  disbursements  (the  "INDEMNIFIED
LIABILITIES"),  incurred by the Investor  Indemnitees or any of them as a result
of, or arising out of, or relating to (a) any misrepresentation or breach of any
representation  or  warranty  made  by the  Company  in  this  Agreement  or the
Registration  Rights Agreement or any other certificate,  instrument or document
contemplated  hereby or thereby,  (b) any breach of any  covenant,  agreement or
obligation of the Company contained in this Agreement or the Registration Rights
Agreement or any other certificate,  instrument or document  contemplated hereby

                                       15
<PAGE>

or thereby,  or (c) any cause of action,  suit or claim  brought or made against
such  Investor  Indemnitee  not  arising  out of any  action or  inaction  of an
Investor  Indemnitee,  and  arising  out of or  resulting  from  the  execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement   executed  pursuant  hereto  by  any  of  the  Investor
Indemnitees.  To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and  satisfaction of each of the Indemnified  Liabilities,  which is
permissible under applicable law.

                  (b) In consideration  of the Company's  execution and delivery
of this Agreement,  and in addition to all of the Investor's  other  obligations
under this  Agreement,  the Investor shall defend,  protect,  indemnify and hold
harmless the Company and all of its officers, directors, shareholders, employees
and agents (including, without limitation, those retained in connection with the
transactions  contemplated  by  this  Agreement)  (collectively,   the  "COMPANY
INDEMNITEES") from and against any and all Indemnified  Liabilities  incurred by
the  Company  Indemnitees  or any of them as a result of, or arising  out of, or
relating  to (a)  any  misrepresentation  or  breach  of any  representation  or
warranty  made  by the  Investor  in this  Agreement,  the  Registration  Rights
Agreement, or any instrument or document contemplated hereby or thereby executed
by the Investor, (b) any breach of any covenant,  agreement or obligation of the
Investor(s)  contained in this Agreement,  the Registration  Rights Agreement or
any other  certificate,  instrument or document  contemplated  hereby or thereby
executed by the Investor,  or (c) any cause of action,  suit or claim brought or
made against such Company  Indemnitee  based on  misrepresentations  or due to a
breach by the  Investor  and arising  out of or  resulting  from the  execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement   executed   pursuant  hereto  by  any  of  the  Company
Indemnitees. To the extent that the foregoing undertaking by the Investor may be
unenforceable for any reason,  the Investor shall make the maximum  contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

                                   ARTICLE VI.
                            COVENANTS OF THE COMPANY

         Section  6.1.   REGISTRATION   RIGHTS.  The  Company  shall  cause  the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all material respects with the terms thereof.

         Section 6.2.  LISTING OF COMMON STOCK.  The Company shall  maintain the
Common  Stock's  authorization  for  quotation  on the National  Association  of
Securities Dealers Inc's Over the Counter Bulletin Board.

         Section  6.3.  EXCHANGE  ACT  REGISTRATION.  The Company will cause its
Common Stock to continue to be  registered  under  Section 12(g) of the Exchange
Act, will file in a timely manner all reports and other documents required of it
as a reporting  company  under the  Exchange Act and will not take any action or
file any  document  (whether  or not  permitted  by  Exchange  Act or the  rules

                                       16
<PAGE>

thereunder to terminate or suspend such  registration or to terminate or suspend
its reporting and filing obligations under said Exchange Act.

         Section  6.4.  TRANSFER  AGENT  INSTRUCTIONS.  Not  later  than two (2)
business  days after each Advance  Notice Date and prior to each Closing and the
effectiveness  of the  Registration  Statement and resale of the Common Stock by
the Investor,  the Company will deliver  instructions  to its transfer  agent to
issue shares of Common Stock free of restrictive legends.

         Section  6.5.  CORPORATE  EXISTENCE.  The  Company  will take all steps
necessary to preserve and continue the corporate existence of the Company.

         Section  6.6.   NOTICE  OF  CERTAIN  EVENTS   AFFECTING   REGISTRATION;
SUSPENSION OF RIGHT TO MAKE AN Advance.  The Company will immediately notify the
Investor  upon its  becoming  aware of the  occurrence  of any of the  following
events in respect of a registration  statement or related prospectus relating to
an offering of Registrable Securities: (i) receipt of any request for additional
information  by the SEC or any other  Federal  or state  governmental  authority
during the period of effectiveness of the Registration  Statement for amendments
or supplements to the  registration  statement or related  prospectus;  (ii) the
issuance by the SEC or any other Federal or state governmental  authority of any
stop order suspending the  effectiveness  of the  Registration  Statement or the
initiation  of  any  proceedings   for  that  purpose;   (iii)  receipt  of  any
notification  with respect to the suspension of the  qualification  or exemption
from  qualification  of  any of  the  Registrable  Securities  for  sale  in any
jurisdiction  or the  initiation  or  threatening  of any  proceeding  for  such
purpose;  (iv) the happening of any event that makes any  statement  made in the
Registration  Statement or related  prospectus of any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration  Statement,  related
prospectus or documents so that, in the case of the Registration  Statement,  it
will not contain any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact required to be stated  therein or necessary to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the  Registration  Statement would be appropriate;  and the Company
will promptly make available to the Investor any such supplement or amendment to
the related  prospectus.  The  Company  shall not  deliver to the  Investor  any
Advance Notice during the continuation of any of the foregoing events.

         Section 6.7.  EXPECTATIONS  REGARDING ADVANCE NOTICES.  Within ten (10)
days after the commencement of each calendar quarter occurring subsequent to the
commencement of the Commitment Period, the Company must notify the Investor,  in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise  during such  calendar  quarter,  if any,  through the issuance of Advance
Notices.  Such  notification  shall  constitute  only the  Company's  good faith
estimate and shall in no way  obligate the Company to raise such amount,  or any
amount,  or otherwise limit its ability to deliver Advance Notices.  The failure
by the  Company  to comply  with this  provision  can be cured by the  Company's
notifying  the  Investor,   in  writing,  at  any  time  as  to  its  reasonable
expectations with respect to the current calendar quarter.

                                       17
<PAGE>

         Section  6.8.   Restriction  on  Sale  of  Capital  Stock.  During  the
Commitment  Period,  the Company shall not issue or sell (i) any Common Stock or
Preferred Stock without consideration or for a consideration per share less than
the bid price of the Common Stock determined  immediately prior to its issuance,
(ii) issue or sell any Preferred Stock warrant,  option, right, contract,  call,
or other security or instrument granting the holder thereof the right to acquire
Common Stock without  consideration  or for a consideration  per share less than
such Common Stock's Bid Price determined  immediately prior to its issuance,  or
(iii) file any registration statement on Form S-8.

         Section 6.9. CONSOLIDATION;  MERGER. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with or
into,  or a transfer  of all or  substantially  all the assets of the Company to
another  entity (a  "CONSOLIDATION  EVENT")  unless the  resulting  successor or
acquiring  entity  (if  not the  Company)  assumes  by  written  instrument  the
obligation to deliver to the Investor such shares of stock and/or  securities as
the Investor is entitled to receive pursuant to this Agreement.

         Section 6.10.  ISSUANCE OF THE COMPANY'S  COMMON STOCK. The sale of the
shares of Common  Stock  shall be made in  accordance  with the  provisions  and
requirements of Regulation D and any applicable state securities law.

                                  ARTICLE VII.
                CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING

         Section 7.1.  CONDITIONS  PRECEDENT TO THE  OBLIGATIONS OF THE COMPANY.
The  obligation  hereunder of the Company to issue and sell the shares of Common
Stock to the Investor  incident to each Closing is subject to the  satisfaction,
or  waiver  by the  Company,  at or before  each  such  Closing,  of each of the
conditions set forth below.

                  (a) ACCURACY OF THE INVESTOR'S REPRESENTATIONS AND WARRANTIES.
The  representations and warranties of the Investor shall be true and correct in
all material respects.

                  (b)  PERFORMANCE  BY THE  INVESTOR.  The  Investor  shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions  required by this Agreement and the Registration Rights Agreement
to be performed,  satisfied or complied with by the Investor at or prior to such
Closing.

         Section  7.2.  CONDITIONS  PRECEDENT  TO THE  RIGHT OF THE  COMPANY  TO
DELIVER AN ADVANCE NOTICE AND THE OBLIGATION OF THE INVESTOR TO PURCHASE  SHARES
OF COMMON STOCK.  The right of the Company to deliver an Advance  Notice and the
obligation  of the  Investor  hereunder  to  acquire  and pay for  shares of the
Company's  Common Stock  incident to a Closing is subject to the  fulfillment by
the  Company,  on (i) the date of delivery of such  Advance  Notice and (ii) the
applicable Advance Date (each a "CONDITION  SATISFACTION  DATE"), of each of the
following conditions:

                  (a) REGISTRATION OF THE COMMON STOCK WITH THE SEC. The Company
shall have  filed  with the SEC a  Registration  Statement  with  respect to the
resale  of the  Registrable  Securities  in  accordance  with  the  terms of the
Registration  Rights  Agreement.   As  set  forth  in  the  Registration  Rights
Agreement, the Registration Statement shall have previously become effective and

                                       18
<PAGE>

shall remain effective on each Condition  Satisfaction  Date and (i) neither the
Company nor the Investor  shall have received  notice that the SEC has issued or
intends to issue a stop order with respect to the Registration Statement or that
the  SEC  otherwise  has  suspended  or  withdrawn  the   effectiveness  of  the
Registration  Statement,  either  temporarily or permanently,  or intends or has
threatened  to do so (unless  the SEC's  concerns  have been  addressed  and the
Investor  is  reasonably  satisfied  that the SEC no  longer is  considering  or
intends  to take  such  action),  and  (ii) no  other  suspension  of the use or
withdrawal  of  the  effectiveness  of the  Registration  Statement  or  related
prospectus  shall exist.  The  Registration  Statement  must have been  declared
effective by the SEC prior to the first Advance Notice Date.

                  (b) AUTHORITY. The Company shall have obtained all permits and
qualifications   required  by  any  applicable  state  in  accordance  with  the
Registration  Rights  Agreement  for the offer and sale of the  shares of Common
Stock,  or shall have the  availability  of exemptions  therefrom.  The sale and
issuance of the shares of Common  Stock shall be legally  permitted  by all laws
and regulations to which the Company is subject.

                  (c) FUNDAMENTAL CHANGES. There shall not exist any fundamental
changes to the information set forth in the  Registration  Statement which would
require  the  Company to file a  post-effective  amendment  to the  Registration
Statement.

                  (d)  PERFORMANCE  BY  THE  COMPANY.  The  Company  shall  have
performed,  satisfied and complied in all material  respects with all covenants,
agreements  and  conditions  required  by  this  Agreement  (including,  without
limitation, the conditions specified in Section 2.5 hereof) and the Registration
Rights  Agreement to be performed,  satisfied or complied with by the Company at
or prior to each Condition Satisfaction Date.

                  (e) NO INJUNCTION.  No statute,  rule,  regulation,  executive
order,  decree,   ruling  or  injunction  shall  have  been  enacted,   entered,
promulgated  or endorsed by any court or  governmental  authority  of  competent
jurisdiction  that  prohibits  or  directly  and  adversely  affects  any of the
transactions  contemplated by this Agreement,  and no proceeding shall have been
commenced that may have the effect of prohibiting or adversely  affecting any of
the transactions contemplated by this Agreement.

                  (f) NO  SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK.
The trading of the Common  Stock is not  suspended  by the SEC or the  Principal
Market (if the Common  Stock is traded on a Principal  Market).  The issuance of
shares of Common Stock with respect to the applicable Closing, if any, shall not
violate the shareholder  approval  requirements of the Principal  Market (if the
Common  Stock is traded  on a  Principal  Market).  The  Company  shall not have
received any notice threatening the continued listing of the Common Stock on the
Principal Market (if the Common Stock is traded on a Principal Market).

                  (g)  MAXIMUM  ADVANCE  AMOUNT.  The  amount of any  individual
Advance and the Advances  requested by the Company in any thirty (30) day period
shall not exceed the  Maximum  Advance  Amounts  set forth in Section  1.17.  In
addition,  in no event  shall  the  number of shares  issuable  to the  Investor
pursuant  to an  Advance  cause the  Investor  to own in excess of nine and 9/10
percent (9.9%) of the then outstanding Common Stock of the Company.

                                       19
<PAGE>

                  (h) NO  KNOWLEDGE.  The Company has no  knowledge of any event
which  would  be more  likely  than  not to have  the  effect  of  causing  such
Registration Statement to be suspended or otherwise ineffective.

                  (i) OTHER. On each Condition  Satisfaction  Date, the Investor
shall have received the certificate executed by an officer of the Company in the
form of EXHIBIT A attached hereto.

                                  ARTICLE VIII.
         DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION

         Section  8.1.  DUE  DILIGENCE  REVIEW.  Prior  to  the  filing  of  the
Registration  Statement the Company  shall make  available  for  inspection  and
review by the Investor,  advisors to and  representatives  of the Investor,  any
underwriter  participating  in any disposition of the Registrable  Securities on
behalf  of  the  Investor  pursuant  to the  Registration  Statement,  any  such
registration  statement or amendment or supplement thereto or any blue sky, NASD
or other filing,  all financial and other  records,  all SEC Documents and other
filings with the SEC, and all other  corporate  documents and  properties of the
Company as may be reasonably necessary for the purpose of such review, and cause
the Company's  officers,  directors and employees to supply all such information
reasonably  requested  by the  Investor or any such  representative,  advisor or
underwriter in connection with such Registration  Statement (including,  without
limitation,  in response to all questions and other inquiries reasonably made or
submitted  by any of them),  prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investor  and  such   representatives,   advisors  and  underwriters  and  their
respective  accountants  and  attorneys  to  conduct  initial  and  ongoing  due
diligence  with  respect to the  Company and the  accuracy  of the  Registration
Statement.

         Section 8.2.      NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

                  (a) The Company shall not disclose  non-public  information to
the Investor,  advisors to or  representatives  of the Investor  unless prior to
disclosure of such information the Company  identifies such information as being
non-public   information   and  provides  the   Investor,   such   advisors  and
representatives  with the  opportunity  to  accept  or  refuse  to  accept  such
non-public information for review. The Company may, as a condition to disclosing
any  non-public  information  hereunder,  require the  Investor's  advisors  and
representatives  to enter into a  confidentiality  agreement in form  reasonably
satisfactory to the Company and the Investor.

                  (b)  Nothing  herein  shall  require  the  Company to disclose
non-public  information to the Investor or its advisors or representatives,  and
the Company  represents that it does not disseminate  non-public  information to
any investors who purchase stock in the Company in a public  offering,  to money
managers or to securities  analysts,  provided,  however,  that  notwithstanding
anything  herein to the contrary,  the Company will,  as  hereinabove  provided,
immediately notify the advisors and representatives of the Investor and, if any,
underwriters,  of any event or the  existence of any  circumstance  (without any
obligation to disclose the specific event or  circumstance)  of which it becomes
aware,  constituting  non-public  information  (whether or not  requested of the
Company  specifically  or generally  during the course of due  diligence by such
persons or entities),  which, if not disclosed in the prospectus included in the
Registration  Statement  would  cause  such  prospectus  to  include a  material

                                       20
<PAGE>

misstatement  or to omit a material fact required to be stated  therein in order
to make the statements,  therein,  in light of the  circumstances  in which they
were made,  not  misleading.  Nothing  contained  in this  Section  8.2 shall be
construed to mean that such persons or entities other than the Investor (without
the written consent of the Investor prior to disclosure of such information) may
not obtain  non-public  information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein shall prevent any
such persons or entities from  notifying the Company of their opinion that based
on such due  diligence  by such  persons  or  entities,  that  the  Registration
Statement contains an untrue statement of material fact or omits a material fact
required to be stated in the  Registration  Statement  or  necessary to make the
statements  contained therein,  in light of the circumstances in which they were
made, not misleading.

                                   ARTICLE IX.
                           CHOICE OF LAW/JURISDICTION

         Section 9.1.  GOVERNING  LAW. This  Agreement  shall be governed by and
interpreted in accordance with the laws of the State of Delaware  without regard
to the principles of conflict of laws. The parties further agree that any action
between them shall be heard in Hudson County,  New Jersey, and expressly consent
to the  jurisdiction  and venue of the Superior Court of New Jersey,  sitting in
Hudson  County,  New Jersey and the United States  District Court of New Jersey,
sitting in Newark, New Jersey, for the adjudication of any civil action asserted
pursuant to this paragraph.

                                   ARTICLE X.
                             ASSIGNMENT; TERMINATION

         Section 10.1. ASSIGNMENT.  Neither this Agreement nor any rights of the
Company hereunder may be assigned to any other Person.

         Section  10.2.  TERMINATION.  The  obligations  of the Investor to make
Advances under Article II hereof shall terminate  twenty-four  (24) months after
the Effective Date.

                                   ARTICLE XI.
                                     NOTICES

         Section  11.1.  NOTICES.  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 a copy is mailed by U.S.  certified  mail,  return  receipt  requested;
(iii) three (3) days after being sent by U.S.  certified  mail,  return  receipt
requested,  or (iv)  one (1) 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:

                                       21
<PAGE>

If to the Company, to:                     Neomedia Technologies Inc.
                                           2201 2nd Street  - Suite 600
                                           Fort Myers, FL33901
                                           Attention:  Charles T. Jensen,
                                             Acting President and CEO
                                           Telephone:  (239) 337-3434
                                           Facsimile:  (239) 337-3668

With a copy to:                            Kirkpatrick & Lockhart 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 Investor(s):                     Cornell Capital Partners, LP
                                           101 Hudson Street -Suite 3606
                                           Jersey City, NJ 07302
                                           Attention:   Mark Angelo
                                                        Portfolio Manager
                                           Telephone:   (201) 985-8300
                                           Facsimile:   (201) 985-8266

With a Copy to:                            Butler Gonzalez LLP
                                           1000 Stuyvesant Avenue - Suite 6
                                           Union, NJ 07083
                                           Attention:  David Gonzalez, Esq.
                                           Telephone:  (908) 810-8588
                                           Facsimile:  (908) 810-0973

Each party shall provide five (5) days' prior written  notice to the other party
of any change in address or facsimile number.

                                  ARTICLE XII.
                                  MISCELLANEOUS

         Section 12.1.  COUNTERPARTS.  This  Agreement may be executed in two or
more identical  counterparts,  all of which shall be considered one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  delivered  to the other  party.  In the event any  signature  page is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered to the other party  within five (5) days of the  execution
and delivery hereof,  though failure to deliver such copies shall not affect the
validity of this Agreement.

         Section 12.2. ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement supersedes
all other prior oral or written  agreements  between the Investor,  the Company,
their  affiliates and persons acting on their behalf with respect to the matters
discussed  herein,  and this  Agreement and the  instruments  referenced  herein
contain  the entire  understanding  of the parties  with  respect to the matters

                                       22
<PAGE>

covered  herein and therein  and,  except as  specifically  set forth  herein or
therein,  neither  the  Company  nor  the  Investor  makes  any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

         Section  12.3.  REPORTING  ENTITY FOR THE COMMON  STOCK.  The reporting
entity relied upon for the  determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this  Agreement
shall be Bloomberg, L.P. or any successor thereto. The written mutual consent of
the  Investor  and the Company  shall be required to employ any other  reporting
entity.

         Section 12.4.  FEES AND EXPENSES.  The Company hereby agrees to pay the
following fees:

                  (a) LEGAL FEES. Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection  with this  Agreement and the  transactions
contemplated  hereby,  except  that upon the  execution  of this  Agreement  the
Company will pay Fifteen Thousand  Dollars  ($15,000) to Butler Gonzalez LLP for
legal,  administrative,  and  escrow  fees as well as the fees and  expenses  of
Kirkpatrick & Lockhart LLP.  Subsequently on each advance date, the Company will
pay Butler  Gonzalez  LLP,  the sum of Five  Hundred  Dollars  ($500) for legal,
administrative  and  escrow  fees  and any  outstanding  fees of  Kirkpatrick  &
Lockhart LLP directly out the proceeds of any Advances hereunder.

                  (b)      COMMITMENT FEES.

                           (i) On each Advance Date the Company shall pay to the
Investor,  directly from the gross  proceeds held in escrow,  an amount equal to
five percent (5%) of the amount of each Advance.  The Company hereby agrees that
if such  payment,  as is  described  above,  is not made by the  Company  on the
Advance  Date,  such  payment  will be made at the  direction of the Investor as
outlined and mandated by Section 2.3 of this Agreement.

                           (ii)  Furthermore  the  Company  shall  issue  to the
Investor a Warrant to purchase ten million  (10,000,000) shares of the Company's
Common Stock (the "INVESTOR'S  WARRANT").  The Investor's Warrant shall have and
exercise price of Five Cents ($0.05) and be exercisable for five (5) years.  The
Investor's Warrant shall be exercisable on a "cash" basis".

                           (iii) FULLY EARNED.  The Investor's  Warrant shall be
deemed fully earned as of the date hereof.

                           (iv) REGISTRATION RIGHTS. The shares of the Company's
Common  Stock   underlying  the  Investor's   Warrant  will  have   "piggy-back"
registration rights.

         Section 12.5. BROKERAGE.  Each of the parties hereto represents that it
has had no  dealings  in  connection  with this  transaction  with any finder or
broker who will demand  payment of any fee or  commission  from the other party.
The  Company on the one hand,  and the  Investor,  on the other  hand,  agree to
indemnify  the  other  against  and hold  the  other  harmless  from any and all
liabilities  to any person  claiming  brokerage  commissions or finder's fees on
account  of  services   purported  to  have  been  rendered  on  behalf  of  the

                                       23
<PAGE>

indemnifying  party  in  connection  with  this  Agreement  or the  transactions
contemplated hereby.

         Section  12.6.  CONFIDENTIALITY.  If for any  reason  the  transactions
contemplated by this Agreement are not  consummated,  each of the parties hereto
shall keep  confidential  any information  obtained from any other party (except
information  publicly  available  or in such  party's  domain  prior to the date
hereof,  and except as required by court order) and shall promptly return to the
other  parties  all  schedules,  documents,  instruments,  work  papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have caused this Standby Equity
Distribution  Agreement  to be  executed  by  the  undersigned,  thereunto  duly
authorized, as of the date first set forth above.

                                    COMPANY:
                                    NEOMEDIA TECHNOLOGIES INC.

                                    By: _____________________________
                                    Name:  Charles T. Jensen
                                    Title:   President, Chief Operating Officer,
                                    Acting Chief Executive
                                    Officer & Director

                                    INVESTOR:
                                    CORNELL CAPITAL PARTNERS, LP

                                    By:      Yorkville Advisors, LLC
                                    Its:     General Partner

                                    By: _____________________________
                                    Name:    Mark Angelo
                                    Title:   Portfolio Manager

                                       25
<PAGE>

                                    EXHIBIT A

                      ADVANCE NOTICE/COMPLIANCE CERTIFICATE

                           NEOMEDIA TECHNOLOGIES INC.

         The undersigned,  Charles T. Jensen hereby  certifies,  with respect to
the  sale of  shares  of  Common  Stock  of  Neomedia  Technologies  Inc.,  (the
"COMPANY"),  issuable in  connection  with this  Advance  Notice and  Compliance
Certificate dated ___________________ (the "NOTICE"),  delivered pursuant to the
Standby Equity Distribution Agreement (the "AGREEMENT"), as follows:

         1. The  undersigned is the duly elected  President and Chief  Executive
Officer of the Company.

         2. There are no fundamental changes to the information set forth in the
Registration  Statement which would require the Company to file a post effective
amendment to the Registration Statement.

         3. The Company has performed in all material respects all covenants and
agreements  to be  performed  by the  Company  on or prior to the  Advance  Date
related  to the  Notice  and has  complied  in all  material  respects  with all
obligations and conditions contained in the Agreement.

         4. The Advance requested is _____________________.

         The undersigned has executed this Certificate this ____ day of _______.

                              NEOMEDIA TECHNOLOGIES INC.

                              By:
                                 -----------------------------------------------
                              Name:  Charles T. Jensen
                              Title: Acting President & Chief Executive Officer

                                       26
<PAGE>

                                SCHEDULED 2.6(B)

                           NEOMEDIA TECHNOLOGIES INC.

         The undersigned  hereby agrees that for a period commencing on the date
hereof and expiring on the termination of the Agreement  dated  ________________
between  NEOMEDIA  TECHNOLOGIES  INC.,  (the  "COMPANY"),  and  Cornell  Capital
Partners,  LP, (the "INVESTOR") (the "LOCK-UP PERIOD"),  he, she or it will not,
directly or  indirectly,  without  the prior  written  consent of the  Investor,
issue,  offer, agree or offer to sell, sell, grant an option for the purchase or
sale of, transfer, pledge, assign, hypothecate, distribute or otherwise encumber
or dispose of except  pursuant to Rule 144 of the General Rules and  Regulations
under the  Securities  Act of 1933,  any  securities  of the Company,  including
common  stock or  options,  rights,  warrants  or other  securities  underlying,
convertible  into,  exchangeable  or exercisable  for or evidencing any right to
purchase or subscribe for any common stock (whether or not beneficially owned by
the  undersigned),  or  any  beneficial  interest  therein  (collectively,   the
"SECURITIES").

         In  order  to  enable  the  aforesaid  covenants  to be  enforced,  the
undersigned  hereby  consents  to the  placing of legends  and/or  stop-transfer
orders with the transfer agent of the Company's  securities  with respect to any
of the  Securities  registered in the name of the  undersigned  or  beneficially
owned by the undersigned,  and the undersigned hereby confirms the undersigned's
investment in the Company.

Dated: _______________, 2003

                                    Signature

                                    Address:
                                            -----------------------------------
                                    City, State, Zip Code:
                                                          ---------------------

                                    Print Social Security Number
                                    or Taxpayer I.D. NumberNEOMEDIA TECHNOLOGIES INC.
                            PLACEMENT AGENT AGREEMENT
                                                   Dated as of: October __, 2003

Newbridge Securities Corporation
1451 Cypress Creek Road, Suite 204
Fort Lauderdale, Florida 33309

Ladies and Gentlemen:

     The undersigned,  Neomedia  Technologies Inc., a Delaware  corporation (the
"Company"),  hereby agrees with Newbridge Securities Corporation (the "Placement
Agent") and Cornell Capital  Partners,  LP, a Delaware Limited  Partnership (the
"Investor"), as follows:

     1. Offering.  The Company hereby engages the Placement  Agent to act as its
exclusive  placement  agent in connection  with the Standby Equity  Distribution
Agreement dated the date hereof (the "Standby Equity  Distribution  Agreement"),
pursuant to which the Company shall issue and sell to the Investor, from time to
time, and the Investor  shall  purchase from the Company (the  "Offering") up to
Twenty  Million  Dollars  ($20,000,000)  of  the  Company's  common  stock  (the
"Commitment  Amount"),  par value $0.01 per share (the "Common Stock"), at price
per share equal to the  Purchase  Price,  as that term is defined in the Standby
Equity  Distribution  Agreement.  The Placement  Agent services shall consist of
reviewing the terms of the Standby  Equity  Distribution  Agreement and advising
the Company with respect to those terms.

     All  capitalized  terms used herein and not otherwise  defined herein shall
have the same  meaning  ascribed to them as in the Standby  Equity  Distribution
Agreement. The Investor will be granted certain registration rights with respect
to the Common Stock as more fully set forth in the Registration Rights Agreement
between the Company and the  Investor  dated the date hereof (the  "Registration
Rights  Agreement").  The  documents to be executed and  delivered in connection
with the Offering, including, but not limited, to the Company's latest Quarterly
Report on Form 10-QSB as filed with the United  States  Securities  and Exchange
Commission,  this  Agreement,  the Standby Equity  Distribution  Agreement,  the
Registration  Rights  Agreement,  and the Escrow Agreement dated the date hereof
(the "Escrow Agreement"),  are referred to sometimes hereinafter collectively as
the "Offering  Materials." The Company's  Common Stock purchased by the Investor
hereunder  is  sometimes  referred  to  hereinafter  as  the  "Securities."  The
Placement Agent shall not be obligated to sell any Securities.

     2. Compensation.

         A. Upon the execution of this Agreement, the Company shall issue to the
Placement  Agent or its  designee  shares of the  Company's  Common  Stock in an
amount equal to Ten Thousand Dollars  ($10,000) divided by the Closing Bid Price
of the  Company's  Common  Stock  on the date  hereof  (the  "Placement  Agent's
Shares").  The Placement  Agent shall be entitled to  "piggy-back"  registration
rights, which shall be triggered upon registration of any shares of Common Stock

<PAGE>

by the Investor with respect to the  Placement  Agent's  Shares  pursuant to the
Registration Rights Agreement dated the date hereof.

     3. Representations, Warranties and Covenants of the Placement Agent.

         A. The Placement Agent represents, warrants and covenants as follows:

          (i) The  Placement  Agent has the  necessary  power to enter into this
Agreement and to consummate the transactions contemplated hereby.

          (ii)  The  execution  and  delivery  by the  Placement  Agent  of this
Agreement and the consummation of the transactions  contemplated herein will not
result in any  violation  of, or be in conflict  with,  or  constitute a default
under, any agreement or instrument to which the Placement Agent is a party or by
which the Placement Agent or its properties are bound, or any judgment,  decree,
order or, to the Placement Agent's  knowledge,  any statute,  rule or regulation
applicable to the Placement Agent. This Agreement when executed and delivered by
the Placement Agent, will constitute the legal, valid and binding obligations of
the Placement  Agent,  enforceable in accordance  with their  respective  terms,
except  to the  extent  that (a) the  enforceability  hereof or  thereof  may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity,
or (c) the  indemnification  provisions  hereof or thereof  may be held to be in
violation of public policy.

          (iii) Upon receipt and  execution  of this  Agreement,  the  Placement
Agent will  promptly  forward  copies of this  Agreement  to the  Company or its
counsel and the Investor or its counsel.

          (iv) The Placement Agent will not  intentionally  take any action that
it reasonably believes would cause the Offering to violate the provisions of the
Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act
of 1934 (the "1934  Act"),  the  respective  rules and  regulations  promulgated
thereunder (the "Rules and  Regulations")  or applicable  "Blue Sky" laws of any
state or jurisdiction.

          (v) The  Placement  Agent is a member of the National  Association  of
Securities  Dealers,  Inc., and is a broker-dealer  registered as such under the
1934 Act and under the  securities  laws of the  states in which the  Securities
will be offered or sold by the  Placement  Agent  unless an  exemption  for such
state  registration is available to the Placement  Agent. The Placement Agent is
in  material  compliance  with  the  rules  and  regulations  applicable  to the
Placement Agent generally and applicable to the Placement Agent's  participation
in the Offering.

     4. Representations and Warranties of the Company.

         A. The Company represents and warrants as follows:

          (i) The execution, delivery and performance of each of this Agreement,
the  Standby  Equity  Distribution  Agreement,  the  Escrow  Agreement,  and the
Registration Rights Agreement has been or will be duly and validly authorized by

                                      -2-
<PAGE>

the  Company  and is, or with  respect to this  Agreement,  the  Standby  Equity
Distribution  Agreement,  the  Escrow  Agreement,  and the  Registration  Rights
Agreement will be, a valid and binding agreement of the Company,  enforceable in
accordance  with  its  respective  terms,  except  to the  extent  that  (a) the
enforceability  hereof or  thereof  may be limited  by  bankruptcy,  insolvency,
reorganization,  moratorium  or  similar  laws from  time to time in effect  and
affecting the rights of creditors  generally,  (b) the enforceability  hereof or
thereof is subject to general  principles  of equity or (c) the  indemnification
provisions  hereof or thereof may be held to be in violation  of public  policy.
The Securities to be issued  pursuant to the  transactions  contemplated by this
Agreement  and  the  Standby  Equity  Distribution   Agreement  have  been  duly
authorized and, when issued and paid for in accordance with this Agreement,  the
Equity Line of  Agreement  and the  certificates/instruments  representing  such
Securities, will be valid and binding obligations of the Company, enforceable in
accordance  with  their  respective  terms,  except to the  extent  that (1) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium  or similar laws from time to time in effect and affecting the rights
of creditors generally, and (2) the enforceability thereof is subject to general
principles  of  equity.  All  corporate  action  required  to be  taken  for the
authorization,  issuance  and sale of the  Securities  has been duly and validly
taken by the Company.

          (ii)  The  Company  has a  duly  authorized,  issued  and  outstanding
capitalization  as set  forth  herein  and in the  Standby  Equity  Distribution
Agreement.  The Company is not a party to or bound by any instrument,  agreement
or other  arrangement  providing  for it to issue  any  capital  stock,  rights,
warrants, options or other securities, except for this Agreement, the agreements
described herein and as described in the Standby Equity Distribution  Agreement,
dated the date  hereof  and the  agreements  described  therein.  All issued and
outstanding  securities of the Company,  have been duly  authorized  and validly
issued and are fully paid and non-assessable; the holders thereof have no rights
of rescission or preemptive  rights with respect  thereto and are not subject to
personal liability solely by reason of being security holders;  and none of such
securities  were issued in violation of the preemptive  rights of any holders of
any security of the Company.

          (iii) The Common Stock to be issued in accordance  with this Agreement
and the Standby Equity Distribution Agreement has been duly authorized and, when
issued and paid for in accordance  with this  Agreement  and the Standby  Equity
Distribution Agreement,  the  certificates/instruments  representing such Common
Stock will be validly issued, fully-paid and non-assessable; the holders thereof
will not be  subject  to  personal  liability  solely by  reason  of being  such
holders;  such  Securities  are not and will not be  subject  to the  preemptive
rights of any holder of any security of the Company.

          (iv) The  Company  has good and  marketable  title  to,  or valid  and
enforceable  leasehold  estates  in,  all  items of real and  personal  property
necessary to conduct its business  (including,  without limitation,  any real or
personal property stated in the Offering  Materials to be owned or leased by the
Company), free and clear of all liens, encumbrances,  claims, security interests
and defects of any material nature whatsoever, other than those set forth in the
Offering Materials and liens for taxes not yet due and payable.

                                      -3-
<PAGE>

          (v) Except as set forth in the Equity Distribution Agreement, there is
no  litigation  or  governmental  proceeding  pending  or,  to the  best  of the
Company's knowledge, threatened against, or involving the properties or business
of the Company, except as set forth in the Offering Materials.

          (vi) The Company has been duly organized and is validly  existing as a
corporation in good standing under the laws of the State of Delaware.  Except as
set  forth in the  Offering  Materials,  the  Company  does not own or  control,
directly  or  indirectly,  an interest  in any other  corporation,  partnership,
trust,  joint venture or other business entity. The Company is duly qualified or
licensed and in good standing as a foreign  corporation in each  jurisdiction in
which the character of its operations  requires such  qualification or licensing
and where  failure to so qualify  would  have a material  adverse  effect on the
Company.  The Company has all requisite  corporate power and authority,  and all
material and necessary authorizations, approvals, orders, licenses, certificates
and  permits  of and from  all  governmental  regulatory  officials  and  bodies
(domestic  and foreign) to conduct its  businesses  (and  proposed  business) as
described in the Offering  Materials.  Any disclosures in the Offering Materials
concerning the effects of foreign,  federal,  state and local  regulation on the
Company's  businesses as currently  conducted and as contemplated are correct in
all material  respects and do not omit to state a material fact. The Company has
all  corporate  power and  authority to enter into this  Agreement,  the Standby
Equity Distribution Agreement, the Registration Rights Agreement, and the Escrow
Agreement,  to carry out the provisions and conditions  hereof and thereof,  and
all  consents,  authorizations,  approvals  and orders  required  in  connection
herewith and therewith have been obtained.  No consent,  authorization  or order
of, and no filing with, any court,  government  agency or other body is required
by the Company for the issuance of the  Securities  or execution and delivery of
the Offering  Materials except for applicable federal and state securities laws.
The Company,  since its inception,  has not incurred any liability arising under
or as a result of the  application of any of the provisions of the 1933 Act, the
1934 Act or the Rules and Regulations.

          (vii) There has been no material  adverse  change in the  condition or
prospects of the Company,  financial or  otherwise,  from the latest dates as of
which such condition or prospects,  respectively,  are set forth in the Offering
Materials,  and the  outstanding  debt,  the  property  and the  business of the
Company conform in all material  respects to the descriptions  thereof contained
in the Offering Materials.

          (viii) Except as set forth in the Offering  Materials,  the Company is
not in breach of, or in default  under,  any term or  provision  of any material
indenture,  mortgage,  deed  of  trust,  lease,  note,  loan or  Standby  Equity
Distribution  Agreement or any other material agreement or instrument evidencing
an obligation for borrowed money, or any other material  agreement or instrument
to which it is a party or by which it or any of its  properties  may be bound or
affected.  The Company is not in  violation  of any  provision of its charter or
by-laws or in violation of any franchise,  license, permit, judgment,  decree or
order, or in violation of any material statute, rule or regulation.  Neither the
execution  and delivery of the Offering  Materials  nor the issuance and sale or
delivery of the  Securities,  nor the  consummation  of any of the  transactions
contemplated  in the Offering  Materials nor the  compliance by the Company with
the terms and provisions hereof or thereof, has conflicted with or will conflict
with,  or has  resulted  in or will  result in a breach of, any of the terms and
provisions  of, or has  constituted or will  constitute a default under,  or has
resulted in or will result in the creation or imposition of any lien,  charge or

                                      -4-
<PAGE>

encumbrance  upon any property or assets of the Company or pursuant to the terms
of any indenture,  mortgage, deed of trust, note, loan or any other agreement or
instrument  evidencing an obligation for borrowed  money, or any other agreement
or  instrument to which the Company may be bound or to which any of the property
or assets of the Company is subject except (a) where such default,  lien, charge
or encumbrance  would not have a material  adverse effect on the Company and (b)
as  described  in the  Offering  Materials;  nor will such action  result in any
violation  of the  provisions  of the  charter or the by-laws of the Company or,
assuming  the  due  performance  by  the  Placement  Agent  of  its  obligations
hereunder,  any  material  statute or any  material  order,  rule or  regulation
applicable  to the  Company of any court or of any  foreign,  federal,  state or
other regulatory authority or other government body having jurisdiction over the
Company.

          (ix)  Subsequent to the dates as of which  information is given in the
Offering  Materials,  and except as may  otherwise be indicated or  contemplated
herein or therein the Company has not (a) issued any  securities or incurred any
liability  or  obligation,  direct or  contingent,  for borrowed  money,  or (b)
entered into any transaction  other than in the ordinary course of business,  or
(c)  declared  or paid any  dividend  or made any  other  distribution  on or in
respect of its capital stock. Except as described in the Offering Materials, the
Company  has no  outstanding  obligations  to any  officer  or  director  of the
Company.

          (x) There are no claims for  services  in the nature of a finder's  or
origination  fee with  respect  to the  sale of the  Common  Stock or any  other
arrangements, agreements or understandings that may affect the Placement Agent's
compensation,  as determined by the National  Association of Securities Dealers,
Inc.

          (xi) The  Company  owns or  possesses,  free and clear of all liens or
encumbrances  and rights  thereto or therein  by third  parties,  the  requisite
licenses  or other  rights to use all  trademarks,  service  marks,  copyrights,
service names, trade names, patents,  patent applications and licenses necessary
to conduct its business  (including,  without  limitation,  any such licenses or
rights  described in the  Offering  Materials as being owned or possessed by the
Company) and, except as set forth in the Offering  Materials,  there is no claim
or action by any person  pertaining  to, or  proceeding,  pending or threatened,
which  challenges  the  exclusive  rights of the  Company  with  respect  to any
trademarks,  service marks,  copyrights,  service names,  trade names,  patents,
patent applications and licenses used in the conduct of the Company's businesses
(including,  without  limitation,  any such licenses or rights  described in the
Offering  Materials as being owned or possessed by the Company) except any claim
or action  that would not have a material  adverse  effect on the  Company;  the
Company's  current  products,  services or processes do not infringe or will not
infringe on the patents currently held by any third party.

          (xii) Except as described  in the Offering  Materials,  the Company is
not under any obligation to pay royalties or fees of any kind  whatsoever to any
third party with respect to any trademarks,  service marks, copyrights,  service
names, trade names, patents, patent applications,  licenses or technology it has
developed,  uses,  employs  or  intends  to use or  employ,  other than to their
respective licensors.

                                      -5-
<PAGE>

          (xiii)  Subject  to the  performance  by the  Placement  Agent  of its
obligations  hereunder the offer and sale of the Securities  complies,  and will
continue to comply,  in all material  respects with the requirements of Rule 506
of  Regulation D  promulgated  by the SEC pursuant to the 1933 Act and any other
applicable  federal and state laws,  rules,  regulations  and executive  orders.
Neither the Offering  Materials nor any amendment or supplement  thereto nor any
documents  prepared by the Company in connection  with the Offering will contain
any untrue  statement  of a  material  fact or omit to state any  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.  All
statements of material  facts in the Offering  Materials are true and correct as
of the date of the Offering Materials.

          (xiv) All  material  taxes which are due and payable  from the Company
have been paid in full or adequate provision has been made for such taxes on the
books of the  Company,  except  for those  taxes  disputed  in good faith by the
Company

          (xv) None of the Company nor any of its officers, directors, employees
or agents,  nor any other person acting on behalf of the Company,  has, directly
or indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any  governmental  agency or  instrumentality  of any  government
(domestic or foreign) or any political  party or candidate for office  (domestic
or foreign) or other person who is or may be in a position to help or hinder the
business of the Company (or assist it in connection  with any actual or proposed
transaction) which (A) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, or (B) if not given in
the past, might have had a materially adverse effect on the assets,  business or
operations  of the  Company  as  reflected  in any of the  financial  statements
contained  in the  Offering  Materials,  or (C) if not  continued in the future,
might  adversely  affect the assets,  business,  operations  or prospects of the
Company in the future.

     5. Representations, Warranties and Covenants of the Investor.

         A. The Investor represents, warrants and covenants as follows:

          (i) The Investor has the necessary  power to enter into this Agreement
and to consummate the transactions contemplated hereby.

          (ii) The execution and delivery by the Investor of this  Agreement and
the consummation of the transactions  contemplated herein will not result in any
violation  of, or be in  conflict  with,  or  constitute  a default  under,  any
agreement  or  instrument  to which  the  Investor  is a party  or by which  the
Investor or its properties are bound, or any judgment,  decree, order or, to the
Investor's  knowledge,  any  statute,  rule  or  regulation  applicable  to  the
Investor.  This  Agreement  when executed and  delivered by the  Investor,  will
constitute the legal, valid and binding obligations of the Investor, enforceable
in accordance  with their  respective  terms,  except to the extent that (a) the
enforceability  hereof or  thereof  may be limited  by  bankruptcy,  insolvency,
reorganization,  moratorium  or  similar  laws from  time to time in effect  and
affecting the rights of creditors  generally,  (b) the enforceability  hereof or

                                      -6-
<PAGE>

thereof is subject to general  principles of equity, or (c) the  indemnification
provisions hereof or thereof may be held to be in violation of public policy.

          (iii) The Investor  will  promptly  forward  copies of any and all due
diligence questionnaires compiled by the Investor to the Placement Agent.

          (iv) The Investor is an Accredited Investor (as defined under the 1933
Act).

          (v) The Investor is acquiring the  Securities  for the  Inventor's own
account as principal,  not as a nominee or agent, for investment  purposes only,
and not  with a view  to,  or for,  resale,  distribution  or  fractionalization
thereof  in  whole  or in part and no other  person  has a  direct  or  indirect
beneficial interest in such Securities.  Further, the Investor does not have any
contract,  undertaking,  agreement  or  arrangement  with  any  person  to sell,
transfer or grant  participations  to such person or to any third  person,  with
respect to any of the Securities.

          (vi) The Investor  acknowledges the Investor's  understanding that the
offering and sale of the  Securities is intended to be exempt from  registration
under the 1933 Act by virtue of Section 3(b) of the 1933 Act and the  provisions
of Regulation D promulgated thereunder ("Regulation D"). In furtherance thereof,
the Investor represents and warrants as follows:

               (a) The Investor has the  financial  ability to bear the economic
risk of the  Investor's  investment,  has adequate  means for  providing for the
Inventor's  current  needs  and  personal  contingencies  and  has no  need  for
liquidity with respect to the Investor's investment in the Company; and

               (b) The Investor has such  knowledge and  experience in financial
and business  matters as to be capable of evaluating the merits and risks of the
prospective  investment.  The Inventor also represents it has not been organized
for the purpose of acquiring the Securities.

          (vii) The  Investor  has been given the  opportunity  for a reasonable
time prior to the date hereof to ask questions of, and receive answers from, the
Company  or its  representatives  concerning  the  terms and  conditions  of the
Offering,  and other matters  pertaining to this investment,  and has been given
the  opportunity  for a reasonable  time prior to the date hereof to obtain such
additional  information in connection with the Company in order for the Investor
to evaluate  the merits and risks of purchase of the  Securities,  to the extent
the Company  possesses such  information or can acquire it without  unreasonable
effort or expense.  The Investor is not relying on the Placement Agent or any of
its  affiliates  with  respect to the accuracy or  completeness  of the Offering
Materials or for any economic considerations involved in this investment.

     6. Certain Covenants and Agreements of the Company.

     The Company  covenants and agrees at its expense and without any expense to
the Placement Agent as follows:

                                      -7-
<PAGE>

         A. To advise  the  Placement  Agent and the  Investor  of any  material
adverse change in the Company's financial condition, prospects or business or of
any  development  materially  affecting  the  Company  or  rendering  untrue  or
misleading  any material  statement in the Offering  Materials  occurring at any
time as soon as the Company is either informed or becomes aware thereof.

         B. To use its commercially reasonable efforts to cause the Common Stock
issuable in  connection  with the Standby  Equity  Distribution  Agreement to be
qualified or registered  for sale on terms  consistent  with those stated in the
Registration   Rights   Agreement  and  under  the   securities   laws  of  such
jurisdictions as the Placement Agent and the Investor shall reasonably  request.
Qualification,  registration and exemption charges and fees shall be at the sole
cost and expense of the Company.

         C. Upon  written  request,  to provide  and  continue  to  provide  the
Placement  Agent and the Investor copies of all quarterly  financial  statements
and audited annual financial statements prepared by or on behalf of the Company,
other reports prepared by or on behalf of the Company for public  disclosure and
all documents delivered to the Company's stockholders.

         D. To deliver,  during the  registration  period of the Standby  Equity
Distribution  Agreement,  to the Investor upon the  Investor's  request,  within
forty five (45) days, a statement of its income for each such quarterly  period,
and its balance sheet and a statement of changes in  stockholders'  equity as of
the end of such quarterly  period,  all in reasonable  detail,  certified by its
principal  financial or accounting  officer;  (ii) within ninety (90) days after
the close of each fiscal year,  its balance sheet as of the close of such fiscal
year,   together  with  a  statement  of  income,  a  statement  of  changes  in
stockholders'  equity and a statement  of cash flow for such fiscal  year,  such
balance sheet, statement of income, statement of changes in stockholders' equity
and statement of cash flow to be in reasonable  detail and accompanied by a copy
of the  certificate  or  report  thereon  of  independent  auditors  if  audited
financial  statements are prepared;  and (iii) a copy of all documents,  reports
and information  furnished to its  stockholders at the time that such documents,
reports and information are furnished to its stockholders.

         E. To comply with the terms of the Offering Materials.

         F. To ensure that any transactions between or among the Company, or any
of its officers, directors and affiliates be on terms and conditions that are no
less  favorable  to the  Company,  than the terms and  conditions  that would be
available in an "arm's length" transaction with an independent third party.

     7. Indemnification and Limitation of Liability.

         A.  The  Company  hereby  agrees  that it will  indemnify  and hold the
Placement   Agent  and  each  officer,   director,   shareholder,   employee  or
representative of the Placement Agent and each person controlling, controlled by
or under common  control with the Placement  Agent within the meaning of Section
15 of the  1933  Act or  Section  20 of the  1934  Act or the  SEC's  Rules  and
Regulations promulgated thereunder (the "Rules and Regulations"),  harmless from
and  against  any  and all  loss,  claim,  damage,  liability,  cost or  expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other  expenses and  disbursements  incurred in connection  with  investigating,

                                      -8-
<PAGE>

preparing to defend or defending any action,  suit or proceeding,  including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or in
appearing  or  preparing  for  appearance  as a witness in any  action,  suit or
proceeding,  including any inquiry, investigation or pretrial proceeding such as
a deposition)  to which the Placement  Agent or such  indemnified  person of the
Placement  Agent may become  subject under the 1933 Act, the 1934 Act, the Rules
and Regulations, or any other federal or state law or regulation,  common law or
otherwise,  arising  out of or based  upon (i) any untrue  statement  or alleged
untrue  statement  of a  material  fact  contained  in  (a)  Section  4 of  this
Agreement,  (b) the Offering Materials (except those written statements relating
to the Placement Agent given by the Placement Agent for inclusion therein),  (c)
any  application  or other  document  or written  communication  executed by the
Company or based upon written information  furnished by the Company filed in any
jurisdiction  in order to qualify  the Common  Stock under the  securities  laws
thereof,  or any state  securities  commission  or agency;  (ii) the omission or
alleged omission from documents  described in clauses (a), (b) or (c) above of a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading;  or (iii) the breach of any  representation,  warranty,
covenant or agreement made by the Company in this Agreement. The Company further
agrees that upon demand by an  indemnified  person,  at any time or from time to
time, it will promptly  reimburse such indemnified  person for any loss,  claim,
damage,  liability,  cost  or  expense  actually  and  reasonably  paid  by  the
indemnified  person as to which the Company has indemnified such person pursuant
hereto.  Notwithstanding  the foregoing  provisions of this Paragraph  7(A), any
such payment or reimbursement by the Company of fees,  expenses or disbursements
incurred by an indemnified person in any proceeding in which a final judgment by
a court of competent  jurisdiction  (after all appeals or the expiration of time
to appeal) is entered  against the Placement  Agent or such  indemnified  person
based upon specific finding of fact that the Placement Agent or such indemnified
person's gross negligence or willful  misfeasance will be promptly repaid to the
Company.

         B. The Placement  Agent hereby  agrees that it will  indemnify and hold
the Company and each officer, director, shareholder,  employee or representative
of the  Company,  and each person  controlling,  controlled  by or under  common
control  with the  Company  within the  meaning of Section 15 of the 1933 Act or
Section  20 of the 1934 Act or the  Rules  and  Regulations,  harmless  from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Company or such  indemnified  person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and  Regulations,  or
any other federal or state law or regulation,  common law or otherwise,  arising
out of or based upon (i) the material  breach of any  representation,  warranty,
covenant or agreement made by the Placement Agent in this Agreement, or (ii) any
false or misleading information provided to the Company in writing by one of the
Placement Agent's indemnified persons specifically for inclusion in the Offering
Materials.

                                      -9-
<PAGE>

         C. The  Investor  hereby  agrees  that it will  indemnify  and hold the
Placement   Agent  and  each  officer,   director,   shareholder,   employee  or
representative of the Placement Agent, and each person  controlling,  controlled
by or under  common  control  with the  Placement  Agent  within the  meaning of
Section  15 of the 1933 Act or  Section  20 of the  1934  Act or the  Rules  and
Regulations,  harmless  from  and  against  any and  all  loss,  claim,  damage,
liability,  cost or expense whatsoever  (including,  but not limited to, any and
all  reasonable  legal fees and other  expenses  and  disbursements  incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation,  commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action,  suit or  proceeding,  including  any inquiry,  investigation  or
pretrial  proceeding  such as a deposition) to which the Placement Agent or such
indemnified person of the Placement Agent may become subject under the 1933 Act,
the 1934 Act, the Rules and  Regulations,  or any other  federal or state law or
regulation,  common  law or  otherwise,  arising  out of or  based  upon (i) the
conduct of the Investor or its  officers,  employees or  representatives  in its
acting  as the  Investor  for the  Offering,  (ii) the  material  breach  of any
representation,  warranty,  covenant or  agreement  made by the  Investor in the
Offering Materials, or (iii) any false or misleading information provided to the
Placement Agent by one of the Investor's indemnified persons.

         D. The Placement  Agent hereby  agrees that it will  indemnify and hold
the Investor and each officer, director, shareholder, employee or representative
of the  Investor,  and each person  controlling,  controlled  by or under common
control  with the  Investor  within the meaning of Section 15 of the 1933 Act or
Section  20 of the 1934 Act or the  Rules  and  Regulations,  harmless  from and
against any and all loss, claim, damage,  liability,  cost or expense whatsoever
(including,  but not  limited  to, any and all  reasonable  legal fees and other
expenses and disbursements incurred in connection with investigating,  preparing
to defend or defending any action, suit or proceeding,  including any inquiry or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or preparing  for  appearance  as a witness in any action,  suit or  proceeding,
including  any  inquiry,   investigation  or  pretrial   proceeding  such  as  a
deposition) to which the Investor or such indemnified person of the Investor may
become subject under the 1933 Act, the 1934 Act, the Rules and  Regulations,  or
any other federal or state law or regulation,  common law or otherwise,  arising
out of or based  upon  the  material  breach  of any  representation,  warranty,
covenant or agreement made by the Placement Agent in this Agreement.

         E.  Promptly  after  receipt  by an  indemnified  party  of  notice  of
commencement  of any action covered by Section 7(A),  (B), (C) or (D), the party
to be indemnified shall,  within five (5) business days, notify the indemnifying
party of the commencement  thereof; the omission by one (1) indemnified party to
so notify the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other  indemnified  party that has given such notice
and shall not relieve the  indemnifying  party of any liability  outside of this
indemnification  if not  materially  prejudiced  thereby.  In the event that any
action is brought against the indemnified  party, the indemnifying party will be
entitled to participate  therein and, to the extent it may desire, to assume and
control  the  defense  thereof  with  counsel  chosen by it which is  reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such  indemnified  party of its election to so assume the defense  thereof,  the
indemnifying  party  will not be liable to such  indemnified  party  under  such
Section  7(A),  (B),  (C), or (D) for any legal or other  expenses  subsequently
incurred by such indemnified  party in connection with the defense thereof,  but

                                      -10-
<PAGE>

the  indemnified  party may, at its own expense,  participate in such defense by
counsel  chosen by it,  without,  however,  impairing the  indemnifying  party's
control  of  the  defense.   Subject  to  the  proviso  of  this   sentence  and
notwithstanding  any other  statement  to the  contrary  contained  herein,  the
indemnified  party or  parties  shall  have the right to choose its or their own
counsel  and  control  the  defense  of any  action,  all at the  expense of the
indemnifying  party  if (i) the  employment  of such  counsel  shall  have  been
authorized in writing by the  indemnifying  party in connection with the defense
of  such  action  at  the  expense  of  the  indemnifying  party,  or  (ii)  the
indemnifying  party shall not have employed counsel  reasonably  satisfactory to
such  indemnified  party to have charge of the  defense of such action  within a
reasonable  time  after  notice of  commencement  of the  action,  or (iii) such
indemnified  party or parties shall have reasonably  concluded that there may be
defenses available to it or them which are different from or additional to those
available  to one  or  all  of the  indemnifying  parties  (in  which  case  the
indemnifying  parties  shall not have the right to direct  the  defense  of such
action on behalf of the  indemnified  party or parties),  in any of which events
such  fees  and  expenses  of one  additional  counsel  shall  be  borne  by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection with any one action or separate but substantially  similar or related
actions in the same jurisdiction  arising out of the same general allegations or
circumstance,  be liable for the  reasonable  fees and expenses of more than one
separate  firm of attorneys  at any time for all such  indemnified  parties.  No
settlement of any action or  proceeding  against an  indemnified  party shall be
made without the consent of the indemnifying party.

         F.  In  order  to  provide  for  just  and  equitable  contribution  in
circumstances in which the indemnification  provided for in Section 7(A) or 7(B)
is due in accordance  with its terms but is for any reason held by a court to be
unavailable  on grounds of policy or  otherwise,  the Company and the  Placement
Agent shall contribute to the aggregate losses,  claims, damages and liabilities
(including  legal or other expenses  reasonably  incurred in connection with the
investigation  or defense of same) which the other may incur in such  proportion
so that the  Placement  Agent  shall be  responsible  for  such  percent  of the
aggregate of such losses,  claims,  damages and  liabilities  as shall equal the
percentage of the gross  proceeds  paid to the  Placement  Agent and the Company
shall be responsible for the balance;  provided,  however, that no person guilty
of fraudulent  misrepresentation within the meaning of Section 11(f) of the 1933
Act shall be entitled to contribution from any person who was not guilty of such
fraudulent  misrepresentation.  For  purposes of this Section  7(F),  any person
controlling,  controlled by or under common control with the Placement Agent, or
any partner,  director,  officer,  employee,  representative or any agent of any
thereof,  shall have the same rights to  contribution as the Placement Agent and
each person controlling,  controlled by or under common control with the Company
within  the  meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
and each officer of the Company and each  director of the Company shall have the
same rights to contribution  as the Company.  Any party entitled to contribution
will,  promptly after receipt of notice of commencement  of any action,  suit or
proceeding  against such party in respect of which a claim for  contribution may
be made against the other party under this Section 7(D),  notify such party from
whom contribution may be sought,  but the omission to so notify such party shall
not relieve the party from whom  contribution  may be sought from any obligation
they may have hereunder or otherwise if the party from whom  contribution may be
sought is not materially prejudiced thereby.

                                      -11-
<PAGE>

         G. The indemnity and contribution  agreements contained in this Section
7 shall  remain  operative  and in  full  force  and  effect  regardless  of any
investigation  made by or on behalf of any indemnified person or any termination
of this Agreement.

         H. The Company hereby waives,  to the fullest extent  permitted by law,
any right to or claim of any punitive, exemplary, incidental, indirect, special,
consequential or other damages (including,  without limitation, loss of profits)
against the Placement Agent and each officer, director, shareholder, employee or
representative of the placement agent and each person controlling, controlled by
or under common  control with the Placement  Agent within the meaning of Section
15 of the 1933 Act or  Section  20 of the 1934 Act or the Rules and  Regulations
arising out of any cause  whatsoever  (whether  such cause be based in contract,
negligence, strict liability, other tort or otherwise). Notwithstanding anything
to the contrary contained herein, the aggregate liability of the Placement Agent
and each  officer,  director,  shareholder,  employee or  representative  of the
Placement  Agent and each  person  controlling,  controlled  by or under  common
control  with the  Placement  Agent within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act or the Rules and Regulations  shall not exceed
the  compensation  received by the Placement Agent pursuant to Section 2 hereof.
This  limitation  of liability  shall apply  regardless  of the cause of action,
whether contract, tort (including, without limitation,  negligence) or breach of
statute or any other legal or equitable obligation.

     8. Payment of Expenses.

     The Company  hereby agrees to bear all of the expenses in  connection  with
the Offering, including, but not limited to the following: filing fees, printing
and duplicating costs, advertisements, postage and mailing expenses with respect
to the  transmission of Offering  Materials,  registrar and transfer agent fees,
escrow agent fees and expenses,  fees of the Company's  counsel and accountants,
issue and transfer taxes, if any.

     9. Conditions of Closing.

     The Closing  shall be held at the offices of the  Investor or its  counsel.
The  obligations  of the  Placement  Agent  hereunder  shall be  subject  to the
continuing accuracy of the representations and warranties of the Company and the
Investor  herein  as of the  date  hereof  and as of the  Date of  Closing  (the
"Closing Date") with respect to the Company or the Investor, as the case may be,
as if it had been made on and as of such Closing Date; the accuracy on and as of
the Closing Date of the  statements of the officers of the Company made pursuant
to the provisions hereof; and the performance by the Company and the Investor on
and as of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:

         A. Upon the  effectiveness  of a  registration  statement  covering the
Standby  Equity  Distribution  Agreement,  the Investor and the Placement  Agent
shall  receive  the  opinion  of Counsel  to the  Company,  dated as of the date
thereof, which opinion shall be in form and substance reasonably satisfactory to
the Investor, their counsel and the Placement Agent.

         B. At or prior to the Closing,  the Investor  and the  Placement  Agent
shall have been furnished such  documents,  certificates  and opinions as it may
reasonably  require for the purpose of enabling  them to review or pass upon the
matters referred to in this Agreement and the Offering Materials, or in order to
evidence   the   accuracy,   completeness   or   satisfaction   of  any  of  the
representations, warranties or conditions herein contained.

                                      -12-
<PAGE>

         C. At and prior to the  Closing,  (i) there shall have been no material
adverse change nor development  involving a prospective  change in the condition
or prospects or the business activities,  financial or otherwise, of the Company
from the latest  dates as of which such  condition  is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of business  which has not been  disclosed in the  Offering  Materials or to the
Placement Agent in writing; (iii) except as set forth in the Offering Materials,
the  Company  shall not be in  default  under any  provision  of any  instrument
relating to any outstanding indebtedness for which a waiver or extension has not
been otherwise received; (iv) except as set forth in the Offering Materials, the
Company shall not have issued any  securities  (other than those to be issued as
provided in the Offering Materials) or declared or paid any dividend or made any
distribution of its capital stock of any class and there shall not have been any
change in the indebtedness (long or short term) or liabilities or obligations of
the Company  (contingent  or otherwise)  and trade payable debt; (v) no material
amount of the assets of the Company shall have been pledged or mortgaged, except
as indicated in the Offering  Materials;  and (v) no action, suit or proceeding,
at law or in equity,  against the Company or affecting any of its  properties or
businesses  shall be pending or threatened  before or by any court or federal or
state commission,  board or other  administrative  agency,  domestic or foreign,
wherein an unfavorable  decision,  ruling or finding could materially  adversely
affect  the  businesses,  prospects  or  financial  condition  or  income of the
Company, except as set forth in the Offering Materials.

         D. If requested at Closing the Investor and the  Placement  Agent shall
receive a certificate  of the Company  signed by an executive  officer and chief
financial officer,  dated as of the applicable  Closing,  to the effect that the
conditions set forth in subparagraph  (C) above have been satisfied and that, as
of the applicable closing, the representations and warranties of the Company set
forth herein are true and correct.

         E. The Placement  Agent shall have no obligation to insure that (x) any
check,  note,  draft or other  means of  payment  for the  Common  Stock will be
honored,  paid or enforceable against the Investor in accordance with its terms,
or (y) subject to the performance of the Placement  Agent's  obligations and the
accuracy of the Placement Agent's representations and warranties hereunder,  (1)
the Offering is exempt from the registration requirements of the 1933 Act or any
applicable state "Blue Sky" law or (2) the Investor is an Accredited Investor.

     10. Termination.

     This Agreement shall be co-terminus with, and terminate upon the same terms
and conditions as those set forth in, the Standby Equity Distribution Agreement.
The  rights  of the  Investor  and the  obligations  of the  Company  under  the
Registration  Rights  Agreement,  and the rights of the Placement  Agent and the
obligations  of the Company  shall  survive the  termination  of this  Agreement
unabridged.

                                      -13-
<PAGE>

     11. Miscellaneous.

         A. This Agreement may be executed in any number of  counterparts,  each
of which shall be deemed to be an original,  but all which shall be deemed to be
one and the same instrument.

         B. Any notice  required or  permitted  to be given  hereunder  shall be
given in writing  and shall be deemed  effective  when  deposited  in the United
States mail, postage prepaid, or when received if personally  delivered or faxed
(upon  confirmation  of receipt  received by the sending  party),  addressed  as
follows to such other address of which written notice is given to the others):

If to Placement Agent, to:               Newbridge Securities Corporation
                                         1451 Cypress Creek Road, Suite 204
                                         Fort Lauderdale, Florida 33309
                                         Attention:        Doug Aguililla
                                         Telephone:        (954) 334-3450
                                         Facsimile:        (954) 229-9937

If to the Company, to:                   Neomedia Technologies Inc.
                                         2201 2nd Street  - Suite 600
                                         Fort Myers, FL33901
                                         Attention:   Charles T. Jensen
                                         Telephone:   (239) 337-3434
                                         Facsimile:   (239) 337-3668

With a copy to:                          Kirkpatrick & Lockhart, LLP
                                         Miami Center - 20th Floor
                                         201 South Biscayne Boulevard
                                         Miami, Florida 33131-2399
                                         Attention:     Clayton E. Parker, Esq.
                                         Telephone:     (305) 539-3306
                                         Facsimile:     (305) 358-7095

If to the Investor:                      Cornell Capital Partners, LP
                                         101 Hudson Street - Suite 3606
                                         Jersey City, New Jersey 07302
                                         Attention:        Mark A. Angelo
                                                           Portfolio Manager
                                         Telephone:        (201) 985-8300
                                         Facsimile:        (201) 985-8266

With Copies to:                          Butler Gonzalez LLP
                                         1000 Stuyvesant Avenue - Suite 6
                                         Union, New Jersey 07083
                                         Attention:     David Gonzalez, Esq.
                                         Facsimile:     (908) 810-0973
                                         Butler Gonzalez LLP

                                      -14-
<PAGE>

         C. This  Agreement  shall be governed by and  construed in all respects
under the laws of the State of  Delaware,  without  reference to its conflict of
laws rules or principles. Any suit, action, proceeding or litigation arising out
of or relating to this Agreement shall be brought and prosecuted in such federal
or state court or courts  located  within the State of New Jersey as provided by
law.  The  parties  hereby  irrevocably  and  unconditionally   consent  to  the
jurisdiction of each such court or courts located within the State of New Jersey
and to service of  process by  registered  or  certified  mail,  return  receipt
requested,  or by any other  manner  provided  by  applicable  law,  and  hereby
irrevocably and unconditionally  waive any right to claim that any suit, action,
proceeding  or litigation  so commenced  has been  commenced in an  inconvenient
forum.

         D. This Agreement and the other  agreements  referenced  herein contain
the entire  understanding  between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.

         E. If any  provision of this  Agreement  shall be held to be invalid or
unenforceable,  such invalidity or  unenforceability  shall not affect any other
provision of this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -15-
<PAGE>

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first written above.

                                    COMPANY:
                                    NEOMEDIA TECHNOLOGIES INC.

                                    By: _____________________________
                                    Name:  Charles T. Jensen
                                    Title:   President, Chief Operating Officer,
                                    Acting Chief Executive Officer & Director

                                    PLACEMENT AGENT:
                                    NEWBRIDGE SECURITIES CORPORATION

                                    By:
                                    Name:     Guy S. Amico
                                    Title:    President

                                    INVESTOR:
                                    CORNELL CAPITAL PARTNERS, LP

                                    By:      Yorkville Advisors, LLC
                                    Its:     General Partner

                                    By:_________________________________
                                    Name:    Mark A. Angelo
                                    Title:   Portfolio Manager

                                      -16-

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