Document:

ASSIGNMENT AGREEMENT

      KNOW ALL MEN BY THESE PRESENTS,  that on this 17th day of February,  2006,
CORNELL  CAPITAL  PARTNERS,  LP.  (the  "Assignor")  does  hereby  agree  to the
following for and in consideration  of the sum of  $1,611,231.78  and other good
and  valuable  consideration  received  from the  persons  listed on Exhibit "A"
hereto (the "Assignee"):

      1.    NOTES.  Assignor is the legal and beneficial  owner of those certain
Promissory  Notes set forth on Exhibit A (the  "Notes"),  delivered  by Pick Ups
Plus,  Inc. (the  "Company") to the Assignor.  The Assignor  hereby  absolutely,
irrevocably  and  unconditionally  sells,  assigns,  conveys,   contributes  and
transfers  to the  Assignee  for ONE  MILLION SIX HUNDRED  ELEVEN  THOUSAND  TWO
HUNDRED THIRTY ONE AND 78/100 DOLLARS  ($1,611,231.78)  the Notes and all of its
rights  thereunder,  including without  limitation the right to collect from the
Company the  principal  amounts  outstanding  plus  accrued but unpaid  interest
thereunder  as of the date  hereof  as set  forth  opposite  Assignee's  name on
Exhibit  "A." This  assignment  is made  free and  clear of any and all  claims,
liens,  demands,  restrictions  or  encumbrances  of any  kind  whatsoever.  The
Assignor  shall  hereby  provide the  original  Notes to the  Assignee  upon the
execution of this Agreement.

      2.    REPRESENTATIONS  AND WARRANTIES.  The Assignor hereby represents and
warrants to and covenants with the Assignee that the Assignor has full right and
authority to enter into and perform their obligations under this Assignment.

      3.    ADDITIONAL  DOCUMENTS.  The  Assignor  agrees to execute any and all
other  documents  which are,  in the  opinion of the  Assignee  or its  counsel,
necessary to carry out the terms and conditions of this Assignment.

      4.    EFFECTIVE DATE AND COUNTERPART SIGNATURE.  This Assignment Agreement
shall  be  effective  as of  the  date  first  written  above.  This  Assignment
Agreement,  and acceptance of same, may be executed in one or more counterparts,
each of which  shall be  deemed an  original,  but all of which  together  shall
constitute one and the same instrument. Confirmation of execution by telex or by
telecopy or telefax of a  facsimile  signature  page shall be binding  upon that
party so confirming.

      IN WITNESS WHEREOF, the Assignor has executed this Assignment Agreement on
the day and year first above written.

                     [SIGNATURE PAGE TO IMMEDIATELY FOLLOW]

<PAGE>

                                          THE ASSIGNOR:
                                          CORNELL CAPITAL PARTNERS, LP.

                                          By:  Yorkville Advisors, LLC
                                          Its: General Partner

                                          By: /s/ Mark Angelo
                                             -----------------------------------
                                             Name: Mark Angelo
                                             Its:  Portfolio Manager

                            ACCEPTANCE OF ASSIGNMENT

      The  undersigned,   being  the  Assignee  set  forth  above,  does  hereby
acknowledge  and accept the  foregoing  Assignment on this 17th day of February,
2006.

                                          ASSIGNEE:

                                          NEOMEDIA TECHNOLOGIES, INC.

                                          By: /s/ David A. Dodge
                                            ------------------------------------
                                            Name: David A. Dodge
                                            Its:  Chief Financial Officer

<PAGE>

                                     CONSENT

      Pick Ups Plus,  Inc.  hereby  consents to the assignment of the Debentures
from the Assignor to the Assignee.

                                          Pick Ups Plus, Inc.

                                          By:
                                            ------------------------------------
                                            Name:
                                            Its:

<PAGE>

                                  -EXHIBIT "A"

<TABLE>
<CAPTION>
                                                 OUTSTANDING PRINCIPAL        INTEREST
     ASSIGNEE NAME:         PROMISSORY NOTE             AMOUNT:              RECEIVABLE          PURCHASE PRICE:
    ---------------        ------------------    ---------------------       ----------          --------------
<S>                        <C>                   <C>                         <C>                 <C>
    Cornell Capital        September 30, 2003        $   290,000             $146,064.66         $  436,064.66
      Partners, LP
    Cornell Capital         October 15, 2004         $   250,000             $ 42,369.86         $  292,369.86
      Partners, LP
    Cornell Capital           June 6, 2005           $   225,000             $ 18,936.99         $  243,936.99
      Partners, LP
    Cornell Capital          August 4, 2005          $   600,000             $ 38,860.27         $  638,860.27
      Partners, LP

         TOTAL                                       $ 1,365,000             $246,231.78         $1,611,231.78

</TABLE>ASSIGNMENT OF COMMON STOCK

      THIS  ASSIGNMENT  made  this  17th day of  February,  2005 by and  between
CORNELL CAPITAL PARTNERS,  LP, with an office at 101 Hudson Street - Suite 3700,
Jersey City, NJ 07302 (the "Assignor"), and NEOMEDIA TECHNOLOGIES, INC., with an
office at 2201 Second Street, Suite 600, Ft. Myers, FL 33901 (the "Assignee").

                                   WITNESSETH

      WHEREAS,  PICK  UPS  PLUS,  INC.  (herein  the  "Company")  issued  to the
Assignor, on _______,  TWENTY MILLION (20,000,000) shares of the Common Stock of
the Company (herein referred to as the "Common Stock");

      WHEREAS,  Assignor desires to assign such Common Stock to Assignee as well
as and all rights and benefits  conferred  therein and the  Assignee  desires to
purchase such Common Stock and all rights and benefits  conferred  therein for a
total  purchase price of THREE HUNDRED EIGHTY EIGHT THOUSAND SEVEN HUNDRED SIXTY
EIGHT AND TWENTY TWO CENTS ($388,768.22) (the "Purchase Price").

      NOW, THEREFORE, for and in consideration of the Purchase Price, receipt of
which  is  hereby  acknowledged,  and in  further  consideration  of the  mutual
covenants hereinafter set forth, the parties hereby agree as follows:

      1.    Assignor does hereby assign,  transfer and set over to Assignee, its
successors and assigns, all of its rights, benefits conferred, title, interests,
and obligations pursuant to the Common Stock;

      2.    The Assignor warrants, represents and covenants that:

            (a) the  copy of the  Common  Stock  attached  hereto  is a true and
correct copy of the original Common Stock;

            (b)  Assignor is the sole and  absolute  owner of the Common  Stock,
free of all claims, encumbrances and security interests of every nature;

            (c)  Assignor  has not  heretofore  assigned,  sold,  or pledged the
Common Stock, or any interest therein;

      3.    The Assignee hereby assumes all rights,  benefits conferred,  title,
interests, and obligations, representations,  warranties, and covenants pursuant
to the Common Stock;

      4.    The Assignee does hereby assume all of rights,  benefits  conferred,
title, interests, as the holder, in and to the Common Stock;

      5.    Notices  hereunder  shall  be  given  in  writing  by  certified  or
registered mail,  return receipt  requested,  addressed to such addresses as the
parties may designate.

<PAGE>

      6.    This  assignment is binding upon the  successors  and assigns of the
parties hereto.

      7.    This  assignment  shall be  effective  as of the date first  written
above.  This  assignment  and  acceptance of same may be executed in one or more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument. Confirmation of execution
by telex or by  telecopy  or  telefax  of a  facsimile  signature  page shall be
binding upon that party so confirming.

      IN WITNESS  WHEREOF,  the parties hereto have executed this instrument the
day and year first above written.

                                          THE ASSIGNOR:
                                          CORNELL CAPITAL PARTNERS, LP
                                          By:  Yorkville Advisors, LLC
                                          Its: General Partner

                                          By: /s/ Mark Angelo
                                             -----------------------------------
                                             Name: Mark Angelo
                                             Its:  Portfolio Manager & President

<PAGE>

                            ACCEPTANCE OF ASSIGNMENT

      The  undersigned,  being the  Assignees  set for the  above,  does  hereby
acknowledge  and accept the  foregoing  Assignment on this 17th day of February,
2005.

                                          ASSIGNEES:

                                          NEOMEDIA TECHNOLOGIES, INC..

                                          By: /s/ David A. Dodge
                                             -----------------------------------
                                             Name: David A. Dodge
                                             Its:  Chief Financial OfficerCERTIFICATE OF DESIGNATION
                                     OF THE
                      SERIES C CONVERTIBLE PREFERRED STOCK
                           (PAR VALUE $0.01 PER SHARE)

                                       OF

                           NEOMEDIA TECHNOLOGIES INC.

      The undersigned,  a duly authorized officer of Neomedia Technologies Inc.,
a  corporation  organized  and existing  under the laws of the State of Delaware
(the  "Company"),  in  accordance  with the  provisions  of  Section  151 of the
Delaware  General  Corporation  Act,  DOES  HEREBY  CERTIFY  that the  following
resolution was duly adopted by the Board of Directors (the "Board") by unanimous
written consent pursuant to Section 151 of the Delaware General  Corporation Act
on February 17, 2006.

      RESOLVED,  that the Board has determined  that it is in the best interests
of the  Company to provide  for the  designation  of 30,000 of certain  Series C
Convertible  Preferred Shares par value $0.01 per share (the "Series C Preferred
Shares") and an issuance,  to consist of TWENTY SEVEN THOUSAND  (27,000) shares,
and  hereby  fixes  the  powers,   designations,   preferences,   and  relative,
participating,  optional and other special rights of the shares of such Series C
Preferred Shares, as follows:

                                   SECTION 1

                              DESIGNATION AND RANK

      1.1.  Designation.  This  resolution  shall provide for a single series of
Preferred Shares, the designation of which shall be "Series C Preferred Shares",
par value $0.01 per share.  The number of  authorized  shares  constituting  the
Series C Preferred Shares is Thirty Thousand  (30,000) and an issuance of Twenty
Seven Thousand (27,000) shares as provided in the Investment Agreement dated the
date hereof. The Series C Preferred Shares will have a liquidation preference as
determined in Section 3.1 below.

      1.2.   Rank.   With  respect  to  the  payment  of  dividends   and  other
distributions on the capital stock of the Company, including distribution of the
assets of the Company upon  liquidation,  the Series C Preferred Shares shall be
senior to the common stock of the  Company,  no par value per share (the "Common
Stock"),  and  senior  to all other  series of  Preferred  Shares  (the  "Junior
Stock").

                                    SECTION 2

                                 DIVIDEND RIGHTS

<PAGE>

      2.1. Dividends or Distributions.  The Holders of Series C Preferred Shares
shall be  entitled to receive  dividends  or  distributions  on a pro rata basis
according to their  holdings of shares of Series C Preferred  Shares when and if
declared by the Board of  Directors of the Company in the amount of eight (8.0%)
percent  per year.  Dividends  shall be paid in cash or  shares of Common  Stock
determined  at the  then  current  Conversion  Price  (provided  such  stock  is
registered  for resale by the Holder),  as determined by the Comapny.  Dividends
shall be  cumulative.  No cash dividends or  distributions  shall be declared or
paid or set apart for payment on the Common  Stock in any  calendar  year unless
cash  dividends  or  distributions  on the  Series C  Preferred  Stock  for such
calendar  year are  likewise  declared  and paid or set  apart for  payment.  No
declared and unpaid dividends shall bear or accrue interest.

                                   SECTION 3

                               LIQUIDATION RIGHTS

      3.1. Liquidation Preference. Upon any liquidation, dissolution, or winding
up  of  the  Company,   whether  voluntary  or  involuntary   (collectively,   a
"Liquidation"),  before any  distribution or payment shall be made to any of the
holders of Common Stock or any series of Preferred Shares, the holders of Series
C  Preferred  Shares  shall be  entitled  to  receive  out of the  assets of the
Company,  whether such assets are capital,  surplus or earnings, an amount equal
to One Thousnad  Dollars  ($1,000)  per share of Series C Preferred  Shares (the
"Liquidation  Amount") plus all declared and unpaid dividends thereon,  for each
share of Series C Preferred Shares held by them.

      3.2. Pro Rata  Distribution.  If, upon any Liquidation,  the assets of the
Company  shall be  insufficient  to pay the  Liquidation  Amount,  together with
declared  and  unpaid  dividends  thereon,  in full to all  holders  of Series C
Preferred  Shares,  then the  entire  net  assets  of the  Corporation  shall be
distributed  among the  holders of the  Series C  Preferred  Shares,  ratably in
proportion  to the full amounts to which they would  otherwise  be  respectively
entitled and such  distributions may be made in cash or in property taken at its
fair value (as determined in good faith by the Company's Board of Directors), or
both, at the election of the Company's Board of Directors.

      3.3. Merger, Consolidation or Reorganization. For purposes of this Section
3, a  Liquidation  shall not be deemed to be  occasioned  by or to  include  the
merger,  consolidation  or  reorganization  of the Company  into or with another
entity through one or a series of related transactions, or the sale, transfer or
lease of all or substantially all of the assets of the Company.

                                   SECTION 4

                      REGISTRATION RIGHTS/CONVERSION RIGHTS

      4.1.  Registration  Rights.  The  Series C  Preferred  Shares  shall  have
registration  rights pursuant to the Investor's  Registration  Rights  Agreement
dated the February 17, 2006.

      4.2. Conversion.  The Holders of Series C Preferred Shares shall have sole
right and in their  discretion to elect  conversion  pursuant to the  conversion
rights as follow (the "Conversion Rights"):

                                     - 2 -
<PAGE>

            (a) Each share of Series C Preferred Shares shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of such
share (subject to Section 4.3 hereof),  at the office of the Company's  transfer
agent,  pursuant to the Irrevocable  Transfer Agent  Instructions dated the date
hereof,  for the Series C  Preferred  Stock  into such  number of fully paid and
non-assessable  shares of Common Stock equal to the quotient of the  Liquidation
Amount divided by the Conversion  Price. The Conversion Price shall be equal to,
at the option of the Holders the lesser of (i) Fifty Cents  ($0.50)  (the "Fixed
Conversion  Price") or (ii) ninety seven percent (97%) of the lowest closing bid
price of the Common Stock for the thirty (30) trading days immediately preceding
the  date of  conversion,  as  quoted  Bloomberg  LP (the  "Floating  Conversion
Price").  The Fixed  Conversion  Price  and the  Floating  Conversion  Price are
collectively referred to as the "Conversion Price."

            (b) At the Option of the Holders,  if there are outstanding Series C
Preferred  Shares on February 17, 2009,  each share of Series C Preferred  Stock
shall convert into shares of Common Stock at the Conversion Price then in effect
on February 17, 2009.

      4.3. Adjustments. The Conversion Price of the Series C Preferred Shares as
described in Section 4.2 above shall be adjusted from time to time as follows:

            (a) In the  event of any  reclassification  of the  Common  Stock or
recapitalization involving Common Stock (excluding a subdivision, or combination
of shares or any  other  event  described  in this  Sections  4.3(a) or (b)) the
holders of the  Series C  Preferred  Shares  shall  thereafter  be  entitled  to
receive,  and provision shall be made therefor in any agreement  relating to the
reclassification or recapitalization,  upon conversion of the Series C Preferred
Shares,  the kind and number of shares of Common  Stock or other  securities  or
property  (including  cash) to which such  holders of Series C Preferred  Shares
would have been  entitled if they had held the number of shares of Common  Stock
into which the Series C Preferred  Shares was convertible  immediately  prior to
such  reclassification  or  recapitalization;  and in any such case  appropriate
adjustment  shall be made in the application of the provisions  herein set forth
with respect to the rights and interests thereafter of the holders of the Series
C  Preferred  Shares,  to the end that the  provisions  set forth  herein  shall
thereafter be  applicable,  as nearly as  reasonably  may be, in relation to any
shares, other securities,  or property thereafter  receivable upon conversion of
the Series C Preferred  Shares. An adjustment made pursuant to this subparagraph
(a)  shall  become  effective  at the time at  which  such  reclassification  or
recapitalization becomes effective.

            (b) In the event the Company shall declare a distribution payable in
securities of other entities or persons, evidences of indebtedness issued by the
Company or other  entities or persons,  assets  (excluding  cash  dividends)  or
options or rights not referred to in Sections  4.3(d) above,  the holders of the
Series C Preferred Shares shall be entitled to a proportionate share of any such
distribution  as though  they were the holders of the number of shares of Common
Stock of the Company  into which their  shares of Series C Preferred  Shares are
convertible as of the record date fixed for the  determination of the holders of
shares of Common Stock of the Company  entitled to receive such  distribution or
if no such record date is fixed, as of the date such distribution is made.

                                     - 3 -
<PAGE>

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

            (d) If the Company  shall issue  rights,  options or warrants to all
holders of Common Stock  entitling  them to subscribe for or purchase  shares of
Common  Stock at a price per share less than the Closing Bid Price at the record
date mentioned  below,  then the Fixed Conversion Price shall be multiplied by a
fraction,  of which the denominator  shall be the number of shares of the Common
Stock (excluding treasury shares, if any) outstanding on the date of issuance of
such rights or warrants  (plus the number of  additional  shares of Common Stock
offered for  subscription or purchase),  and of which the numerator shall be the
number  of  shares of the  Common  Stock  (excluding  treasury  shares,  if any)
outstanding on the date of issuance of such rights or warrants,  plus the number
of shares which the  aggregate  offering  price of the total number of shares so
offered would purchase at such Closing Bid Price.  Such adjustment shall be made
whenever  such  rights  or  warrants  are  issued,  and shall  become  effective
immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants. However, upon the expiration of any
such  right,  option or  warrant  to  purchase  shares of the  Common  Stock the
issuance  of which  resulted  in an  adjustment  in the Fixed  Conversion  Price
pursuant to this Section,  if any such right, option or warrant shall expire and
shall not have been exercised, the Fixed Conversion Price shall immediately upon
such expiration be recomputed and effective  immediately upon such expiration be
increased  to the  price  which it would  have been  (but  reflecting  any other
adjustments  in the Fixed  Conversion  Price made pursuant to the  provisions of
this Section after the issuance of such rights or warrants)  had the  adjustment
of the Fixed Conversion Price made upon the issuance of such rights,  options or
warrants  been made on the basis of offering for  subscription  or purchase only
that number of shares of the Common Stock  actually  purchased upon the exercise
of such rights, options or warrants actually exercised.

            (e) If the Company or any subsidiary thereof, as applicable,  at any
time,  other than in  connection  with the  following:  (a) any  issuance by the
Company of  securities  in connection  with a strategic  partnership  or a joint
venture (the primary purpose of which is not to raise equity  capital),  (b) any
issuance  by  the  Company  of  securities  as  consideration  for a  merger  or
consolidation or an acquisition of a business, product, license, or other assets
of another  person or entity (c)  options to  purchase  shares of Common  Stock,
provided  the  exercise  price of such  options is not less than the Closing Bid
Price of the Common  Stock on the date of issuance of such  option,  shall issue
shares of Common Stock or rights, warrants,  options or other securities or debt
that are convertible  into or exchangeable for shares of Common Stock other than

                                     - 4 -
<PAGE>

in  connection  with  an  acquisition  approved  by the  Board,  ("Common  Stock
Equivalents") entitling any Person to acquire shares of Common Stock, at a price
per share  less than the Fixed  Conversion  Price (if the  holder of the  Common
Stock or Common  Stock  Equivalent  so  issued  shall at any  time,  whether  by
operation of purchase price adjustments, reset provisions,  floating conversion,
exercise or exchange prices or otherwise, or due to warrants,  options or rights
per share  which is issued in  connection  with such  issuance,  be  entitled to
receive shares of Common Stock at a price per share which is less than the Fixed
Conversion  Price,  such issuance shall be deemed to have occurred for less than
the  Conversion  Price),  then,  at the sole  option  of the  Holder,  the Fixed
Conversion  Price  shall be  adjusted  to mirror  the  conversion,  exchange  or
purchase price for such Common Stock or Common Stock Equivalents  (including any
reset provisions  thereof) at issue. Such adjustment shall be made whenever such
Common Stock or Common Stock  Equivalents  are issued.  The Company shall notify
the Holder in writing, no later than one (1) business day following the issuance
of any  Common  Stock  or  Common  Stock  Equivalent  subject  to this  Section,
indicating therein the applicable  issuance price, or of applicable reset price,
exchange price,  conversion  price and other pricing terms. No adjustment  under
this Section  shall be made as a result of issuances and exercises of options to
purchase shares of Common Stock issued for compensatory purposes pursuant to any
of the Obligor's stock option or stock purchase plans.

            (f) If the Company  shall  distribute to all holders of Common Stock
(and not to the Holder)  evidences  of its  indebtedness  or assets or rights or
warrants to subscribe for or purchase any  security,  then in each such case the
Fixed  Conversion Price at which this Series C Preferred Shares shall thereafter
be convertible  shall be determined by multiplying the Fixed Conversion Price in
effect  immediately  prior  to  the  record  date  fixed  for  determination  of
stockholders  entitled to receive such  distribution  by a fraction of which the
denominator  shall be the  Closing  Bid Price  determined  as of the record date
mentioned  above,  and of which the numerator shall be such Closing Bid Price on
such  record  date less the then fair  market  value at such  record date of the
portion of such assets or evidence of indebtedness so distributed  applicable to
one  outstanding  share  of the  Common  Stock  as  determined  by the  Board of
Directors in good faith. In either case the adjustments  shall be described in a
statement  provided  to the  Holder of the  portion  of assets or  evidences  of
indebtedness so distributed or such subscription  rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution is
made and shall  become  effective  immediately  after the record date  mentioned
above.

            (g) In case  of any  reclassification  of the  Common  Stock  or any
compulsory  share exchange  pursuant to which the Common Stock is converted into
other securities,  cash or property,  the Holder shall have the right thereafter
to, at its option, (A) convert the Series C Preferred Shares,  together with all
accrued but unpaid dividends and any other amounts then owing hereunder into the
shares of stock and  other  securities,  cash and  property  receivable  upon or
deemed to be held by holders of the Common Stock following such reclassification
or share exchange,  the Holder shall be entitled upon such event to receive such
amount of securities,  cash or property as the shares of the Common Stock of the
Company into which the then outstanding Series C Preferred Shares, together with
all accrued but unpaid  dividends  and any other  amounts then owing  thereunder
could have been converted  immediately prior to such  reclassification  or share
exchange  would have been  entitled,  or (B)  require  the Company to prepay the
Series C Preferred Shares,  plus all dividends and other amounts due and payable
thereon. The entire prepayment price shall be paid in cash. This provision shall
similarly apply to successive reclassifications or share exchanges.

                                     - 5 -
<PAGE>

            (h) All calculations under this Section 4 shall be rounded up to the
nearest $0.001 of a share.

            (i) Whenever the Fixed Conversion Price is adjusted pursuant to this
section,  the Company shall  promptly mail to the Holder a notice  setting forth
the Fixed  Conversion  Price after such  adjustment  and  setting  forth a brief
statement of the facts requiring such adjustment.

            (j) If (A) the  Company  shall  declare  a  dividend  (or any  other
distribution)  on the Common  Stock;  (B) the  Company  shall  declare a special
nonrecurring  cash  dividend on or a  redemption  of the Common  Stock;  (C) the
Company  shall  authorize the granting to all holders of the Common Stock rights
or warrants to  subscribe  for or  purchase  any shares of capital  stock of any
class or of any  rights;  (D) the  approval of any  stockholders  of the Company
shall be required in connection with any  reclassification  of the Common Stock,
any  consolidation  or  merger  to which  the  Company  is a party,  any sale or
transfer  of all or  substantially  all of the  assets  of the  Company,  of any
compulsory  share  exchange  whereby the Common  Stock is  converted  into other
securities,  cash or property;  or (E) the Company shall authorize the voluntary
or  involuntary  dissolution,  liquidation  or winding up of the  affairs of the
Company;  then, in each case, the Company shall cause to be filed at each office
or agency  maintained  for the purpose of  conversion  of the Series C Preferred
Shares,  and shall  cause to be mailed to the  Holder at its last  address as it
shall appear upon the stock books of the Company,  at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter  specified,  a
notice  stating (x) the date on which a record is to be taken for the purpose of
such dividend,  distribution,  redemption, rights or warrants, or if a record is
not to be taken,  the date as of which the holders of the Common Stock of record
to be entitled to such dividend,  distributions,  redemption, rights or warrants
are  to  be  determined  or  (y)  the  date  on  which  such   reclassification,
consolidation,  merger,  sale,  transfer or share exchange is expected to become
effective or close,  and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange  their shares of the Common
Stock  for   securities,   cash  or  other   property   deliverable   upon  such
reclassification,  consolidation,  merger,  sale,  transfer  or share  exchange,
provided,  that the failure to mail such notice or any defect  therein or in the
mailing  thereof shall not affect the validity of the corporate  action required
to be specified in such notice. The Holders of the Series C Preferred Shares are
entitled to convert  their Series C Preferred  Shares during the twenty (20) day
calendar period  commencing the date of such notice to the effective date of the
event triggering such notice.

            (k) In case of any (1) merger or consolidation of the Company or any
subsidiary  of the  Company  with or into  another  Person,  or (2)  sale by the
Company or any  subsidiary of the Company of more than one-half of the assets of
the Company in one or a series of related  transactions,  the Holder  shall have
the right to (A) exercise any rights hereunder, (B) convert the aggregate amount
of the Series C Preferred  Shares then  outstanding into the shares of stock and
other  securities,  cash and  property  receivable  upon or deemed to be held by
holders of Common Stock  following such merger,  consolidation  or sale, and the
Holders shall be entitled upon such event or series of related events to receive
such amount of securities,  cash and property as the shares of Common Stock into
which such  aggregate  principal  amount of the Series C Preferred  Shares could

                                     - 6 -
<PAGE>

have been converted  immediately  prior to such merger,  consolidation  or sales
would  have  been  entitled,  or (C) in the case of a merger  or  consolidation,
require  the  surviving  entity  to  issue  to  the  Holders   Preferred  Shares
convertible  into the principal  amount owed under the Series C Preferred Shares
then held by the  Holders,  plus all  accrued  and  unpaid  dividends  and other
amounts owing thereon,  which such newly issued Series C Preferred  Shares shall
have terms identical (including with respect to conversion) to the terms of this
Series C  Preferred  Shares,  and shall be  entitled  to all of the  rights  and
privileges of the Holders set forth herein and the agreements  pursuant to which
this  Series C  Preferred  Shares were  issued.  In the case of clause (C),  the
conversion price applicable for the newly issued shares of convertible Preferred
Shares shall be based upon the amount of securities, cash and property that each
share of Common Stock would receive in such transaction and the Conversion Price
in  effect  immediately  prior to the  effectiveness  or  closing  date for such
transaction.  The terms of any such merger,  sale or consolidation shall include
such  terms so as to  continue  to give the  Holders  the right to  receive  the
securities,  cash and property set forth in this Section upon any  conversion or
redemption  following  such  event.  This  provision  shall  similarly  apply to
successive such events.

      4.4. Procedures for Conversion.

            (a) In order to exercise  conversion  rights pursuant to Section 4.2
above, the holder of the Series C Preferred Shares to be converted shall deliver
an irrevocable  written notice of such exercise to the Company's  transfer agent
pursuant to the Irrevocable  Transfer Agent  Instructions dated the date hereof,
along with a copy to the Company. The Holder of any shares of Series C Preferred
Shares  shall,  upon  any  conversion  of such  Series  C  Preferred  Shares  in
accordance with Section 4.2,  surrender  certificates  representing the Series C
Preferred Shares to the Company's  transfer agent, and specify the name or names
in which such holder wishes the certificate or certificates for shares of Common
Stock to be issued. In case such holder shall specify a name or names other than
that of such holder, such notice shall be accompanied by payment of all transfer
taxes (if  transfer  is to a person or entity  other  than the  holder  thereof)
payable upon the  issuance of shares of Common  Stock in such name or names.  As
promptly as practicable, and, if applicable, after payment of all transfer taxes
(if  transfer  is to a person or entity  other  than the  holder  thereof),  the
Company  shall  cause its  transfer  agent to deliver  or cause to be  delivered
certificates   representing  the  number  of  validly  issued,  fully  paid  and
nonassessable  shares  of  Common  Stock to which  the  holder  of the  Series C
Preferred Shares so converted shall be entitled. Such conversion,  to the extent
permitted  by law,  shall be  deemed  to have  been  effected  as of the date of
receipt by the Company of any notice of conversion  pursuant to Section  4.2(a),
or, in the case of a  conversion  pursuant  to Section  4.2(c)  above,  upon the
occurrence  of any event  specified  therein.  Upon  conversion of any shares of
Series C Preferred  Shares,  such shares  shall  cease to  constitute  shares of
Series C Preferred  Shares and shall represent shares of common stock into which
they have been converted.

            (b) In  connection  with the  conversion  of any  shares of Series C
Preferred  Shares,  no fractions of shares of Common Stock shall be issued,  but
the  Company  shall pay cash in lieu of such  fractional  interest  in an amount
equal to the product of the Conversion Price and such fractional interest.

                                     - 7 -
<PAGE>

            (c) The Company shall at all times reserve and keep available out of
its  authorized  Common  Stock the full number of shares of Common  Stock of the
Company  issuable  upon the  conversion  of all  outstanding  shares of Series C
Preferred  Shares.  In the event  that the  Company  does not have a  sufficient
number of shares of authorized  and unissued  Common Stock  necessary to satisfy
the full conversion of the shares of Series C Preferred Shares, then the Company
shall call and hold a meeting of the  shareholders  within  thirty (30) calendar
days of such  occurrence  for the sole  purpose  of  increasing  the  number  of
authorized  shares of Common  Stock.  The  Company's  Board of  Directors  shall
recommend to  shareholders  a vote in favor of such  proposal and shall vote all
shares held by them,  in proxy or  otherwise,  in favor of such  proposal.  This
remedy is not  intended to limit the  remedies  available  to the holders of the
Series C  Preferred  Shares,  but is  intended  to be in  addition  to any other
remedies, whether in contract, at law or in equity.

      4.5.  Notices of Record Date.  In the event that the Company shall propose
at any time:  (a) to declare  any  dividend  or  distribution  upon any class or
series of capital stock, whether in cash,  property,  stock or other securities;
(b) to effect any  reclassification  or  recapitalization  of its  Common  Stock
outstanding  involving  a  change  in the  Common  Stock;  or (c)  to  merge  or
consolidate with or into any other corporation,  or to sell, lease or convey all
or substantially all of its property or business,  or to liquidate,  dissolve or
wind up; then,  in  connection  with each such event,  the Company shall mail to
each holder of Series C Preferred Shares:

            (a) at least twenty (20) days' prior  written  notice of the date on
which a record shall be taken for such dividend or distribution  (and specifying
the date on which the holders of the affected  class or series of capital  stock
shall be entitled  thereto) or for  determining  the rights to vote,  if any, in
respect of the matters referred to in Sections 4.3 (b) and (c) ; and

            (b) in the case of the  matters  referred  to in Section 4.3 (b) and
(c) above,  written notice of such impending  transaction  not later than twenty
(20) days prior to the shareholders' meeting called to approve such transaction,
or twenty  (20) days prior to the  closing  of such  transaction,  whichever  is
earlier,  and shall also notify such holder in writing of the final  approval of
such  transaction.  The first of such notices shall  describe the material terms
and conditions of the impending  transaction  (and specify the date on which the
holders of shares of Common  Stock shall be entitled  to exchange  their  Common
Stock for securities or other property  deliverable  upon the occurrence of such
event) and the Company shall  thereafter  give such holders prompt notice of any
material  changes.  The  transaction  shall in no event take place  sooner  than
twenty  (20) days after the  Company  has given the first  notice  provided  for
herein or sooner than ten (10) days after the  Company  has given  notice of any
material changes provided for herein.

      4.6. Limitations of Conversion.

            (a) Subject to the  Termination  Rights  specified in Section 4.6(b)
hereof, the Conversion Rights specified herein shall be subject to the following
limitations:

                  (i) No holder of the shares of Series C Preferred Shares shall
be entitled to convert the Series C Preferred Shares to the extent,  but only to
the extent,  that such conversion  would, upon giving effect to such conversion,
cause the aggregate number of shares of Common Stock  beneficially owned by such

                                     - 8 -
<PAGE>

holder to exceed 4.99% of the outstanding  shares of Common Stock following such
conversion  (which provision may be waived by such Holder by written notice from
such holder to the Company,  which notice shall be effective sixty one (61) days
after the date of such notice).  Notwithstanding  the foregoing in the event the
Holder of the Series C Preferred  Shares has  converted  or is in the process of
converting  Series C  Preferred  Shares that has or shall,  cause the  aggregate
number  of shares of Common  Stock  beneficially  owned by such  Holder to equal
4.99% of the outstanding  shares of Common Stock following such conversion,  the
Holder  shall upon  written  notification  to the Company that such Common Stock
acquired  or to be  acquired  pursuant  to such  conversion  has been  sold,  be
entitled to immediately  effectuate a conversion that would,  upon giving effect
to such  conversion,  cause the  aggregate  number  of  shares  of Common  Stock
beneficially  owned by such Holder to equal 4.99% of the  outstanding  shares of
Common Stock  following such conversion even if such notice is given on the same
day of a conversion.

            (b) The  limitations on the Conversion  Rights  specified in Section
4.6 hereof shall  terminate (the  "Termination  Rights") if there is an Event of
Default or if there a Change in Control of the Company (as defined  below) after
written  notice from the Holder to the Company,  which notice shall be effective
sixty one (61) days after the date of such notice.  For the purpose of hereof, a
"Change in Control" of the Company has occurred  when:  (i) any person  (defined
herein to mean any person within the meaning of Section 13(d) of the  Securities
Exchange  Act of 1934 (the  "Exchange  Act")),  other  than the  Company,  or an
employee  benefit  plan  established  by the Board of  Directors of the Company,
acquires,  directly or indirectly,  the beneficial  ownership  (determined under
Rule  13d-3  of the  regulations  promulgated  by the  Securities  and  Exchange
Commission under Section 13(d) of the Exchange Act) of securities  issued by the
Company  having  forty  percent  (40%) or more of the voting power of all of the
voting  securities  issued by the Company in the  election of  directors  at the
meeting of the holders of voting securities to be held for such purpose; or (ii)
a majority  of the  directors  elected at any  meeting of the  holders of voting
securities  of the Company are persons who were not  nominated for such election
by the Board of Directors of the Company or a duly constituted  committee of the
Board of Directors of the Company having authority in such matters; or (iii) the
Company merges or consolidates with or transfers substantially all of its assets
to another person;  (iv) a change in the Chief Executive  Officer of the Company
from that person that serves in such position on the date hereof.

                                   SECTION 5

                                EVENTS OF DEFAULT

      5.1. Events of Default.

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

                  (i) The Company shall fail to observe or perform any covenant,
agreement or warranty contained in, or otherwise commit any breach or default of
any provision contained herein or in any Transaction Document (as defined in the
Investment  Agreement  of even  date  herewith)  which is not cured  within  any
applicable cure period;

                                     - 9 -
<PAGE>

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

                  (iii) The  Company  or any  subsidiary  of the  Company  shall
default in any of its  obligations  under any other  obligation or any mortgage,
credit agreement or other facility, indenture agreement,  factoring agreement or
other  instrument  under  which  there may be issued,  or by which  there may be
secured or evidenced any  indebtedness for borrowed money or money due under any
long term leasing or factoring  arrangement  of the Company or any subsidiary of
the Company in an amount  exceeding  One Hundred  Thousand  Dollars  ($100,000),
whether  such  indebtedness  now exists or shall  hereafter  be created and such
default  shall result in such  indebtedness  becoming or being  declared due and
payable  prior to the date on which it would  otherwise  become due and payable;
(iv) The Common Stock shall cease to be quoted for trading or listed for trading
on the Nasdaq OTC Bulletin Board ("OTC"), Nasdaq SmallCap Market, New York Stock
Exchange or the Nasdaq National  Market (each, a "Subsequent  Market") and shall
not again be quoted or listed for trading  thereon  within five (5) Trading Days
of such delisting; or

                  (v) The  Company  shall fail for any reason to deliver  Common
Stock  certificates  to a Holder  prior to the fifth  (5th)  Trading Day after a
conversion or the Company shall provide  notice to the Holder,  including by way
of  public  announcement,  at any time,  of its  intention  not to  comply  with
requests for  conversions of the Series C Preferred Stock in accordance with the
terms hereof.

                                     - 10 -
<PAGE>

            (b) During the time that any portion of the Series C Preferred Stock
is  outstanding,  if any Event of Default has occurred,  all of the  outstanding
principal and dividends under the Series C Preferred Shares shall be immediately
due and payable notwithstanding any limitations contained in this Certificate of
Designations  or the  Transaction  Documents,  as this  term is  defined  in the
Investment Agreement.  Upon an event of default the Holders shall have the right
(but not the  obligation) to convert the entire amount of the Series C Preferred
Shares   outstanding  as  provided  for  herein.   Upon  an  Event  of  Default,
notwithstanding   any  other  provision  contained  herein  or  any  Transaction
Document,  the Holder shall have no  obligation  to comply with or adhere to any
limitations,  if any, except for the limitation  contained in Section 4.6(a)(i),
on the conversion or sale of the Series C Preferred Stock.

                                   SECTION 6

                                  VOTING RIGHTS

      6.1. General. The Series C Preferred Shares shall have voting rights on an
as converted basis together with the Common Stock  shareholders and as otherwise
provided under the laws of the State of Delaware.

                                    SECTION 7

                                  MISCELLANEOUS

      7.1. Headings of Subdivisions. The headings of the various Sections hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.

      7.2. Severability of Provisions. If any right, preference or limitation of
the Series C  Preferred  Shares  set forth  herein  (as this  resolution  may be
amended from time to time) is invalid,  unlawful or incapable of being  enforced
by reason of any rule of law or public policy, all other rights, preferences and
limitations  set forth in this  resolution  (as so  amended)  which can be given
effect  without the invalid,  unlawful or  unenforceable  right,  preference  or
limitation shall,  nevertheless,  remain in full force and effect, and no right,
preference or  limitation  herein set forth shall be deemed  dependent  upon any
other such right, preference or limitation unless so expressed herein.

                                     - 11 -
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
to be signed,  under penalties of perjury,  by Charles T. Jensen,  its President
and Chief Executive Officer.

DATED: FEBRUARY 17, 2006          NEOMEDIA TECHNOLOGIES, INC.

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

                                     - 12 -

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