-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U3M1rDgIo8FYrrjN9ENGYHn3pJAGFIYZ6GI8MgnijSIXJBIa5Y4RUlhL5ntNbM27 5L8NItdtAwa+J16ApnmU3Q== 0001144204-06-006886.txt : 20060217 0001144204-06-006886.hdr.sgml : 20060217 20060217142412 ACCESSION NUMBER: 0001144204-06-006886 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20060216 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Other Events FILED AS OF DATE: 20060217 DATE AS OF CHANGE: 20060217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEOMEDIA TECHNOLOGIES INC CENTRAL INDEX KEY: 0001022701 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 363680347 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21743 FILM NUMBER: 06628571 BUSINESS ADDRESS: STREET 1: 2201 SECOND ST STE 600 STREET 2: STE 600 CITY: FORT MYERS STATE: FL ZIP: 33901 BUSINESS PHONE: 6303554404 MAIL ADDRESS: STREET 1: 2201 SECOND STREET STREET 2: SUITE 600 CITY: FORT MYERS STATE: FL ZIP: 33901 FORMER COMPANY: FORMER CONFORMED NAME: DEVSYS INC DATE OF NAME CHANGE: 19960911 8-K 1 v036106_8k.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): February 16, 2006 NEOMEDIA TECHNOLOGIES, INC. --------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 0-21743 36-3680347 - ---------------------------- ---------------- ------------------- (State or Other Jurisdiction (Commission File (IRS Employer Incorporation) Number) Identification No.) 2201 Second Street, Suite 600, Fort Myers, Florida 33901 - ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (239) - 337-3434 ---------------------------------------------------- (Registrant's Telephone Number, including Area Code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 8.01. OTHER EVENTS Letter of Intent to Acquire HipCricket On February 16, 2006, NeoMedia Technologies, Inc. ("NeoMedia) signed a non-binding letter of intent (the "LOI") to acquire HipCricket, Inc. ("HipCricket") of Essex, CT (www.hipcricket.com) in exchange for $500,000 cash and $4,000,000 of NeoMedia common stock. The LOI is subject to due diligence and signing of a mutually agreeable definitive purchase agreement by both parties. HipCricket is a leading mobile marketing firm that provides innovative, custom solutions to broadcasters and brand marketers. Today, HipCricket works with five of the top 10 radio groups in the U.S. as well as with some 40 major brand marketers. HipCricket combines senior marketing expertise with state-of-the-art mobile and event marketing technologies to offer clients unprecedented interactivity with their consumers, viewers, listeners or customers on a one-to-one personal level. The LOI is attached hereto as Exhibit 16.1. On February 17, 2006, NeoMedia issued a press release with respect to the LOI, attached hereto as Exhibit 16.2. ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT Promissory Note On February 16, 2006, NeoMedia loaned HipCricket the principal amount of $250,000 in the form of an unsecured promissory note (the "Note"). The Note accrues interest at a rate of 8% per annum. The Note will be applied toward the cash portion of the purchase price upon signing of a definitive purchase agreement for the acquisition of all of the outstanding shares of HipCricket by NeoMedia, as contemplated the LOI. In the event the acquisition is not consummated, the Note will become due 90 days after termination of the LOI. In the event the LOI is terminated and the Note is not repaid within 90 days of such cancellation, the Note will convert into shares of HipCricket common stock. The Note is attached hereto as Exhibit 16.3. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NeoMedia Technologies, Inc. ---------------------------------------- (Registrant) Date: February 16, 2006 By: /s/ Charles T. Jensen ----------------- ------------------------------------ Charles T. Jensen, President, Chief Executive Officer and Director 3 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 16.1 Letter of Intent between NeoMedia and HipCricket 16.2 Press release dated February 17, 2006 16.3 Promissory Note 4 EX-16.1 2 v036106_ex16-1.txt February 9, 2006 Jim Hood CEO Hip Cricket 151 River Road Essex, CT 06426 Re: Letter of Intent Dear Jim, NeoMedia Technologies, Inc. ("NEOM" or "Buyer") is pleased to provide you with this outline of terms ("Letter of Intent" or "LOI") to acquire all the outstanding shares of stock of Hip Cricket ("HC" or "Seller"). 1. Overview. This Letter of Intent is intended to be non-binding on both parties and, upon satisfactory completion of due diligence by both Buyer and Seller, the transaction described herein is subject to final Board approval by both NEOM and HC. However, both parties agree to enter into good faith negotiations and use their best efforts to execute a mutually agreeable, definitive agreement (the "Definitive Purchase Agreement") within ninety (90) days of the date last signed below, unless mutually extended in writing by both parties. a) This Letter of Intent outlines the general terms and conditions for the Buyer to purchase the Seller's business utilizing a combination of both cash and the common stock of the Buyer. It is our intention to combine the technology and personnel strengths of both companies to provide enhanced shareholder value to the combined entity. Additionally, it is the Buyer's intention to maintain the current employees of HC in an effort to expedite the advancement and the implementation of both technologies. b) It is also the Buyer's intention to include any executive management merged into the Buyer in its Management Incentive Program and HC employees, who become employees of the Buyer, in the Buyer's Employee Stock Option Plan. Employees of HC who become employees of the Buyer will be issued stock options upon completion of the merger with a three year vesting schedule and with 25% immediately vested upon issuance. c) The transaction will be structured as a merger that qualifies as a tax-free reorganization, except to the extent of the cash portion of the purchase price. The closing ("Closing") will be hereinafter defined as the date of the consummation of the merger contemplated by the Definitive Purchase Agreement. 2. Purchase Price. The Buyer agrees to purchase all of the outstanding shares of common stock from the Seller through the merger under the following terms: a) The Buyer agrees to purchase from Seller all shares of common stock, assets, patents and trademarks, licenses, the current accounts receivable and bank accounts, all computer software and hardware, customers, furniture, and fixtures related to its business as well as other assets and properties of the Seller which will be identified in the Definitive Purchase Agreement, for a total purchase price of $4,500,000 to be paid as follows: Hip Cricket February 16, 2006 Page 2 o A $500,000 cash loan wired to HC in two installments. $250,000 will be wired within twenty-four hours of both parties signing of the LOI. The remaining $250,000 will be wired thirty calendar days following the first wire. o The remainder of the purchase price will be in shares of NEOM common stock at the 10 day VWAP (Volume-Weighted Average Pricing) immediately preceding the signing of the Definitive Purchase Agreement. These shares will have piggyback registration rights where NEOM agrees to place the shares referenced as part of the purchase price in its next registration statement. o The Buyer agrees to guarantee to the Seller's shareholders the price of the common shares of the Buyer's stock utilized for the purchase through and until the date of registration of those shares. If, at the date of registration of the Buyer's common stock, the value of the Buyer's stock has declined in value from the value as of the signing of the Definitive Purchase Agreement such that the cash and current market value of the stock is less than $4.5 million, then the Buyer will make up any difference in cash within thirty calendar days from the date of registration. b) The Seller agrees that it will convert all applicable warrants, options and convertibles into shares of common stock prior to the signing of the Definitive Purchase Agreement. 3. Bridge Loan. The Buyer agrees to provide the seller a bridge loan, in two installments, in the amount of $500,000. The first installment of $250,000 will be wired within twenty-four hours of signing the Letter of Intent. The second installment will follow thirty days later. The Promissory Note, evidencing the terms of the bridge loan, is contained in Attachment A. (a) The bridge loan will be considered part of the total purchase price for HC. (b) In the event the Buyer terminates merger discussions, the bridge loan, plus an annualized interest payment of 8%, must be repaid by the Seller within 90 days from the termination of merger discussions. Discussions will be deemed to have been terminated by the Buyer upon written notification to the Seller. In the event that the bridge loan and interest is not repaid within this 90 day period, then the Buyer's bridge loan and interest will automatically convert into shares of the Seller's common stock. The conversion price will be based on a fully diluted valuation of $4.5 million for the Seller based on Seller's capitalization as of the date of this LOI. (c) In the event that the Seller terminates merger discussions, then the bridge loan, plus an annualized interest payment of 8%, will automatically convert into shares of the Seller's common stock. The conversion price will be based on a fully diluted valuation of $4.5 million for the Seller based on Seller's capitalization as of the date of this LOI. Discussions will be deemed to have been terminated by the Seller upon written notification to the Buyer. 4. Definitive Agreements. Both parties agree to use their best efforts to negotiate, execute and deliver a definitive agreement satisfactory to both Seller and Buyer. Following the execution of the Letter of Intent, Buyer's counsel will prepare the initial draft of the Definitive Purchase Agreement containing the terms contained in this LOI and other terms customary for transactions such as the proposed merger. Hip Cricket February 16, 2006 Page 3 5. Information and Audit. The Seller will afford, and will cause its accountants, counsel and other representatives to afford, to Buyer and its accountants, counsel, agents and other authorized representatives, and to financial institutions specified by Buyer, a reasonable opportunity to conduct due diligence investigations of the Seller and its business and affairs (subject to the Seller's satisfaction that all such parties are subject to confidentiality obligations at least as strict as those contained in Section 6. Buyer will require that the Company's financial statements for the previous two (2) fiscal years be audited in accordance with U.S. GAAP no more than sixty days following the signing of the Definitive Purchase Agreement. 6. Confidentiality. Buyer agrees to maintain in the strictest confidence and not disclose or permit the disclosure of any information supplied by Seller to Buyer as part of Buyer's due diligence and/or otherwise relating to the business activities of Seller. During the negotiation of a definitive agreement between Buyer and Seller and thereafter in the event that a definitive agreement is not reached and the transaction contemplated by this Letter of Intent is not completed for any reason, Buyer agrees to refrain from using any information gained by Buyer in connection with its due diligence and/or review of Sellers confidential information. 7. Brokers or Finders. The Buyer and Seller represent to each other that there are no other brokers or finders in this transaction and no other broker or finder fees will be paid to any party. 8. Expenses. The parties hereto will bear their respective expenses in connection with preparing for and consummating the transactions contemplated by this Letter of Intent, and in conducting any due diligence investigation contemplated hereunder. Neither the Company nor Seller will be liable to any other party for their expenses, damages or losses, if any, in the event that the Definitive Purchase Agreement is not executed for any reason. 9. Termination. Either party can terminate this Letter of Intent at any time for any reason whatsoever upon delivery of written notice to the other party. 10. Governing Law. Any dispute related to this Letter of Intent, the Definitive Purchase Agreement or related documents will be governed by the laws in the State of Florida. 11. Publicity. Neither party will issue a press release or initiate any publicity, or make or cause to be made any news release or other public announcement, relating to this Letter of Intent or the transactions contemplated hereby without the prior review and approval of the other party. This Letter of Intent will terminate on February 21, 2006, unless mutually extended, if not agreed to and accepted by the Seller before that date. If the foregoing is acceptable, please indicate the same by executing and returning the enclosed counterpart of this Letter of Intent. Regards, Approved this 16th day of February, 2006 /s/ Charles T. Jensen /s/ Jim Hood - -------------------------------- -------------------------------- Charles T. Jensen Jim Hood CEO CEO NeoMedia Technologies Hip Cricket EX-16.2 3 v036106_ex16-2.txt Exhibit 16.2 For Immediate Release Press Contacts: Charles T. Jensen David A. Kaminer NeoMedia Technologies, Inc. The Kaminer Group +(239) 337-3434 +(914) 684-1934 cjensen@neom.com dkaminer@kamgrp.com NeoMedia Signs LOI to Acquire Mobile Marketing Solution Provider HipCricket FORT MYERS, Fla., Feb. 17, 2006 - NeoMedia Technologies, Inc. (OTC BB: NEOM), an innovator in wireless services and patented technologies that provide automatic links to content on the Mobile Internet, has continued its growth strategy by signing a Letter of Intent to acquire HipCricket, Inc., a provider of custom mobile marketing solutions to broadcasters and brand marketers. Charles T. Jensen, president and CEO of NeoMedia, said the LOI is non-binding. Following due diligence, he said the transaction should close within 90 days at a total purchase price of $4.5 million in cash and shares of NeoMedia common stock, including interest-bearing bridge loans to HipCricket of $500,000. 'Rising Star' in Mobile Marketing Mr. Jensen called HipCricket "a rising star in mobile marketing." Founded in 2004 in Essex, Connecticut, HipCricket (www.HipCricket.com), has already worked with four national radio groups, TV networks, a top TV reality show, and more than two dozen major marketers. Within the past year HipCricket has worked with, AEG, BBDO, Catapult Marketing, Clear Channel(R) Communications, Cox(R) Radio, Walt Disney Parks & Resorts(R), Dunkin' Donuts(R), Fox(R) Sports Radio, FritoLay(R), Hershey's, Katz Radio Group, Maybelline(R), Miller Brewing(R), Nokia, Pernod Ricard(R), Ryan Partnership, the Official NASCAR(R) Membership Club, Susquehanna Communications(R) Inc. and TIMEX(R), among other clients whose names have not yet been announced. HipCricket licenses software to radio stations and networks, enabling interaction directly with listeners and watchers via SMS, MMS, IVR and e-mail, creating new or additional revenue streams while also potentially increasing ratings. HipCricket also develops and executes interactive marketing programs for brand marketing companies and their agencies, enabling a brand to interact directly with individual consumers in real time, with significantly greater response rates at lower cost than other marketing vehicles. The company also offers full wireless and event marketing capabilities with emphasis on the key growth target of young adult consumers. HipCricket also provides customers with a wide range of mobile media solutions including marketing and mobile strategy development, marketing plan integration, creative content development, program execution, tracking and analysis, and database development and maintenance. 'The Next Step in a Growth Plan' NeoMedia's Jensen called the proposed acquisition of HipCricket "the next step in a growth plan now well underway." Last week NeoMedia acquired Mobot(R), Inc., of Lexington, Mass., a pioneer in mobile visual recognition technology, for $10 million in cash and stock, and earlier this week announced the purchase of 12snap AG of Munich, Germany, an award-winning leader in marketing and entertainment applications and programs via cellular phones, for $22 million. "NeoMedia is putting the pieces into place in keeping with our strategic plan," he said. "The talents and successes of HipCricket fit well with the other companies now in our PaperClick(R) wireless business unit, as we move forward -- rapidly -- to lead and embrace mobile marketing in the U.S. and worldwide." Jim Hood, CEO of HipCricket, added, "We are pleased to be joining forces with NeoMedia. They have very exciting technologies which, in combination with our application, sales team and marketing expertise, should enable us to bring what we believe is the best and broadest array of wireless marketing opportunities to our current and future clients." Company with a Wealth of Experience "It's rare to find a team with HipCricket's wealth of experience and marketing smarts in the cellular space . . . and when you do, you have to act fast," said Martin Copus, NeoMedia's COO and chief executive of the company's PaperClick(R) wireless business unit. "HipCricket's senior management team comes from big agencies and the client side, and its team in Seattle brings depth of knowledge of the media industry - especially broadcast," he said. "They truly speak the language of their clients. "Now, with four synergistic mobile marketing offerings in the U.S. - PaperClick's direct-to-mobile-web connectivity, Mobot's visual recognition technology, 12snap's award-winning creativity and applications, and HipCricket's campaign management platform - I believe there's little doubt that NeoMedia has emerged as the 'go-to' company for commercial use of wireless," Mr. Copus said. About NeoMedia Technologies, Inc. NeoMedia Technologies, Inc. (www.neom.com), is a developer and international marketer of software and patented technologies, including the PaperClick (www.PaperClick.com) platform, PaperClick for Camera Phones(TM) and the PaperClick Mobile Go-Window(TM) which provide One Click To Content(TM) connectivity for products, print and physical objects to link directly to specific desired content on the mobile Internet. NeoMedia also offers a variety of mobile enterprise solutions, including expertise in homeland security and e-authentication applications, and its Systems Integration Group specializes in providing expert-based IT consulting, hardware, and software solutions. About HipCricket, Inc. HipCricket Inc. (www.hipcricket.com) is a leading mobile marketing firm that provides innovative, custom solutions to broadcasters and brand marketers. HipCricket combines senior marketing expertise with state-of-the-art mobile and event marketing technologies to offer clients unprecedented interactivity with their consumers, viewers, listeners or customers on a one-to-one personal level. This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. With the exception of historical information contained herein, the matters discussed in this press release involve risk and uncertainties. Actual results could differ materially from those expressed in any forward-looking statement. PaperClick is a registered trademark, and PaperClick For Camera Phones, PaperClick Mobile Go-Window and One Click to Content are trademarks of NeoMedia Technologies, Inc. Mobot is a registered trademark of Mobot, Inc. Other trademarks are properties of their respective owners. EX-16.3 4 v036106_ex16-3.txt PROMISSORY NOTE $250,000.00 February 16, 2006 FOR VALUE RECEIVED, the undersigned, Hip Cricket, Inc., a Delaware corporation (the "Company"), promises to pay NeoMedia Technologies, Inc., a Delaware corporation (the "Lender" and together with the Company, the "Parties" and each a "Party"), at 2201 Second Street, Suite 402, Fort Myers, Florida 33901 or at another address as the Lender shall specify in writing, the principal sum of Two Hundred Fifty Thousand Dollars ($250,000.00) plus interest at the annual rate of eight percent (8%) of the unpaid balance pursuant to the following terms: Contemporaneously with the execution and delivery of this Note, the Parties are entering into a Letter of Intent ("LOI") whereby the Parties agree that within ninety (90) days following the execution of the LOI the Parties shall execute a mutually agreeable, definitive agreement whereby the Lender shall acquire all of the outstanding shares of stock of the Company (the "Definitive Purchase Agreement"). 1. Maturity. The face amount of this Promissory Note (the "Note") plus any and all interest accrued hereon shall become payable and due within ten (10) business days from the date of execution of the Definitive Purchase Agreement (the "Closing") or ninety (90) days from the date the Parties terminate negotiations on the Definitive Purchase Agreement (the "Conversion Date"). For purposes of clarification, and without limiting the preceding sentence, the repayment of the Note is in no manner contingent on the signing of the Definitive Purchase Agreement. If the Note is not paid in full when due, including any remaining principal balance of the Note and any accrued and unpaid interest, then this Note shall immediately and automatically convert into the Conversion Shares (as defined below) convert in accordance with Section 7 herein. 2. Methods of Payment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being paid through the date of prepayment. (b) Any amount outstanding, including any remaining principal balance of the Note and any accrued and unpaid interest, shall then be deducted from the cash portion of the Purchase Price as such term is defined in the Definitive Purchase Agreement. 3. Waiver and Consent. To the fullest extent permitted by law and except as otherwise provided herein, the Company waives demand, presentment, protest, notice of dishonor, suit against or joinder of any other person, and all other requirements necessary to charge or hold the Company liable with respect to this Note. 4. Costs, Indemnities and Expenses. In the event of default as described herein, the Company agrees to pay all reasonable fees and costs incurred by the Lender in collecting or securing or attempting to collect or secure this Note, including reasonable attorneys' fees and expenses, whether or not involving litigation, collecting upon any judgments and/or appellate or bankruptcy proceedings. The Company agrees to pay any documentary stamp taxes, intangible taxes or other taxes which may now or hereafter apply to this Note or any payment made in respect of this Note, and the Company agrees to indemnify and hold the Lender harmless from and against any liability, costs, attorneys' fees, penalties, interest or expenses relating to any such taxes, as and when the same may be incurred. 5. Events of Default. Upon an Event of Default (as defined below), the entire principal balance and accrued interest outstanding under this Note, and all other obligations of the Company under this Note, shall be immediately due and payable without any action on the part of the Lender, and the Lender shall be entitled to seek and institute any and all remedies available to it. No remedy conferred under this Note upon the Lender is intended to be exclusive of any other remedy available to the Lender, pursuant to the terms of this Note or otherwise. No single or partial exercise by the Lender of any right, power or remedy hereunder shall preclude any other or further exercise thereof. The failure of the Lender to exercise any right or remedy under this Note or otherwise, or delay in exercising such right or remedy, shall not operate as a waiver thereof. An "Event of Default" shall be deemed to have occurred upon the occurrence of any of the following: (i) the Company should fail for any reason or for no reason to make payment of the outstanding principal balance plus accrued interest pursuant to this Note within the time prescribed herein or the Company fails to satisfy any other obligation or requirement of the Company under this Note; or (ii) any proceedings under any bankruptcy laws of the United States of America or under any insolvency, not disclosed to the Lender, reorganization, receivership, readjustment of debt, dissolution, liquidation or any similar law or statute of any jurisdiction now or hereinafter in effect (whether in law or at equity) is filed by or against the Company or for all or any part of its property. 6. Maximum Interest Rate. In no event shall any agreed to or actual interest charged, reserved or taken by the Lender as consideration for this Note exceed the limits imposed by the laws of the State of Florida. In the event that the interest provisions of this Note shall result at any time or for any reason in an effective rate of interest that exceeds the maximum interest rate permitted by applicable law, then without further agreement or notice the obligation to be fulfilled shall be automatically reduced to such limit and all sums received by the Lender in excess of those lawfully collectible as interest shall be applied against the principal of this Note immediately upon the Lender's receipt thereof, with the same force and effect as though the Company had specifically designated such extra sums to be so applied to principal and the Lender had agreed to accept such extra payment(s) as a premium-free prepayment or prepayments. 7. Automatic of Conversion. (a) If the Company decides for any reason or no reason at all not to consummate the Definitive Purchase Agreement, or if the Note is not paid in full when the Note becomes due, then any amounts due under this Note, including any remaining principal balance of the Note and any accrued and unpaid interest, shall automatically convert into a number of fully-paid and non-assessable shares of the Company's common stock par value $______ per share ("Common Stock"), which shall be converted at a price per share based on a fully diluted valuation of the Company equal to $4.5 million based on the Company's capitalization as of the date hereof (the 2 "Conversion Shares"). No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of this Note. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of this Note, the Company shall pay to the Lender a cash adjustment in respect of such fraction. (b) In the event the automatic conversion of this Note occurs pursuant to Section 7(a), the Lender shall surrender the original Note representing the debt obligation being converted to the Company at its principal office and within three (3) business days after the Conversion Date, the Company shall issue and deliver to the Lender a certificate or certificates for the Conversion Shares. Such conversion shall be deemed to have been effective on the Conversion Date and the Lender shall be deemed to have become the holder of record of the Conversion Shares at such time. 8. Cancellation of Note. Upon the repayment by the Company of all of its obligations hereunder to the Lender, including, without limitation, the face amount of this Note, plus accrued but unpaid interest, the indebtedness evidenced hereby shall be deemed canceled and paid in full. Except as otherwise required by law or by the provisions of this Note, payments received by the Lender hereunder shall be applied first against expenses and indemnities, next against interest accrued on this Note, and next in reduction of the outstanding principal balance of this Note. 9. Severability. If any provision of this Note is, for any reason, invalid or unenforceable, the remaining provisions of this Note will nevertheless be valid and enforceable and will remain in full force and effect. Any provision of this Note that is held invalid or unenforceable by a court of competent jurisdiction will be deemed modified to the extent necessary to make it valid and enforceable and as so modified will remain in full force and effect. 10. Amendment and Waiver. This Note may be amended, or any provision of this Note may be waived, provided that any such amendment or waiver will be binding on a party hereto only if such amendment or waiver is set forth in a writing executed by the parties hereto. The waiver by any such party hereto of a breach of any provision of this Note shall not operate or be construed as a waiver of any other breach. 11. Successors. Except as otherwise provided herein, this Note shall bind and inure to the benefit of and be enforceable by the parties hereto and their permitted successors and assigns. 12. Assignment. This Note shall not be directly or indirectly assignable or delegable by the Company. The Lender may assign this Note as long as such assignment complies with the Securities Act of 1933, as amended. 13. No Strict Construction. The language used in this Note will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any party. 14. Further Assurances. Each party hereto will execute all documents and take such other actions as the other party may reasonably request in order to consummate the transactions provided for herein and to accomplish the purposes of this Note. 3 15. Notices, Consents, etc. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) trading day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: If to the Company: Hip Cricket 151 River Road Essex, CT 064426 Attention: Jim Hood Telephone: (866) 447-2745 Facsimile: (860) 767-7366 If to the Lender: Neomedia Technologies Inc. 2201 2nd Floor - Suite 402 Fort Myers, FL 33901 Attention: Charles T. Jensen Telephone: (239) 337-3434 Facsimile: (239) 337-3668 With a copy to: Kirkpatrick & Lockhart Nicholson Graham LLP 201 South Biscayne Blvd. - Suite 2000 Miami, FL 33131-2399 Attention: Clayton E. Parker, Esq. Telephone: (305) 539-3300 Facsimile: (305) 358-7095 or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) trading days prior to the effectiveness of such change. Written confirmation of receipt (a) given by the recipient of such notice, consent, waiver or other communication, (b) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (c) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (a), (b) or (c) above, respectively. 16. Remedies, Other Obligations, Breaches and Injunctive Relief. The Lender's remedies provided in this Note shall be cumulative and in addition to all other remedies available to the Lender under this Note, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy of the Lender contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit the Lender's right to pursue actual damages for any failure by the Company to comply with the terms of this Note. Every right and remedy of the Lender under any document executed in connection with this transaction may be exercised from time to time and as often as may be deemed expedient by the Lender. The Company 4 acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Lender and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Lender shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, and specific performance without the necessity of showing economic loss and without any bond or other security being required. 17. Governing Law; Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Florida. The Parties hereto (i) agree than any legal suit, action or proceeding arising out of or relating to this Note shall be instituted only in a Federal or state court in Miami-Dade County, Florida, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, including, without limitation, any objection based on the assertion that such venue is an inconvenient forum and (iii) irrevocably submit to the jurisdiction of such Federal or state court in Miami-Dade County, Florida in any such suit, action or proceeding. The Parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Note shall constitute personal service thereof. 18. No Inconsistent Agreements. None of the parties hereto will hereafter enter into any agreement, which is inconsistent with the rights granted to the parties in this Note. 19. Third Parties. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity, other than the parties to this Note and their respective permitted successor and assigns, any rights or remedies under or by reason of this Note. 20. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR THE LENDER TO LOAN TO THE COMPANY THE MONIES HEREUNDER, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS NOTE AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION. 21. Entire Agreement. This Note (including the recitals hereto) sets forth the entire understanding of the parties with respect to the subject matter hereof, and shall not be modified or affected by any offer, proposal, statement or representation, oral or written, made by or for any party in connection with the negotiation of the terms hereof, and may be modified only by instruments signed by all of the parties hereto. IN WITNESS WHEREOF, this Note is executed by the undersigned as of the date hereof. [Signature Page to Follow] 5 IN WITNESS WHEREOF, this Note is executed by the undersigned as of the date hereof. HIP CRICKET By: /s/ William W. Bray III ----------------------- Name: William W. Bray III Title: President & Chief Operating Officer 6 -----END PRIVACY-ENHANCED MESSAGE-----