-----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, PTGGP6buFifMbyKgVwJ+Xb9bYol7TsWojN8g4eQgKmzVu2ANec+BNg1YnztQ7Vs0 GPU4gCFUq0Goh6Mnty1+KQ== 0001144204-06-051581.txt : 20061207 0001144204-06-051581.hdr.sgml : 20061207 20061207101359 ACCESSION NUMBER: 0001144204-06-051581 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20061206 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061207 DATE AS OF CHANGE: 20061207 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: 061261493 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 v059730_8-k.htm

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): December 6, 2006

NEOMEDIA TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	0-21743	36-3680347
(State or Other Jurisdiction Incorporation)	(Commission File Number)	(IRS Employer 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 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

Disposition of Material Portion of Ownership in Mobot, Inc.

On February 17, 2006, NeoMedia Technologies, Inc. (“NeoMedia”) acquired all of the outstanding shares of Mobot, Inc. (“Mobot”) of Lexington, Massachusetts, in exchange for $3,500,000 cash and 16,931,493 shares of NeoMedia common stock, plus forgiveness of notes payable totaling $1,500,000 due from Mobot to NeoMedia. Pursuant to the terms of the merger agreement, the number of shares of NeoMedia common stock that were issued as stock consideration was calculated using a share price of $0.3839, which was the volume-weighted average closing price of NeoMedia common stock for the ten days up to and including February 8, 2006. The merger agreement between NeoMedia and Mobot also contained a provision that, in the event that NeoMedia’s stock price at the time the consideration shares become saleable is less than $0.3839, NeoMedia would be obligated to compensate Mobot shareholders in cash for the difference between the price at the time the shares become saleable and $0.3839. Assuming a stock price at the time the shares become saleable of $0.058, which was the last sale price on December 1, 2006, NeoMedia would have had a cash liability of $5.5 million resulting from this clause (the “Purchase Price Guarantee Obligation”).

On December 6, 2006, NeoMedia and FMS Group, Inc. (“FMS”), a group consisting of former shareholders of Mobot, completed a transaction pursuant to which NeoMedia divested of a material portion of its ownership interest in Mobot. The material terms of the transaction are as follows:

–

NeoMedia transferred 100% of its ownership interest in Mobot to FMS, and in return received 18% ownership in FMS, which will operate the Mobot business;

–

All obligations under the original merger agreement, including the Purchase Price Guarantee Obligation, were terminated;

–

NeoMedia contributed $67,000 cash to FMS at closing, and entered into a promissory note for an additional $200,000 payable to FMS at the earlier of the sale of NeoMedia’s Micro Paint Repair or December 31, 2006;

–

NeoMedia received 16,931 preference shares in FMS that can be redeemed to reacquire the 16,931,493 original consideration shares originally issued by NeoMedia to acquire Mobot. Each preference share can be redeemed for 1,000 shares of the NeoMedia common stock at NeoMedia’s discretion within 15 months of the closing of this transaction. After 15 months, the preference shares can be redeemed upon a liquidation event of FMS, for either 1,000 shares of NeoMedia common stock each, or for the current cash equivalent of the shares, at FMS’ discretion;

–

NeoMedia and FMS entered into a license agreement, pursuant to which NeoMedia received a license to use the Mobot image recognition service for barcode-related applications. The license is exclusive in the Americas, Europe and Australia, restricted in Japan, Korea, and Singapore, and non-exclusive in other areas of the world. The exclusivity is subject to NeoMedia meeting certain minimum transaction volume requirements or making minimum cash payments; and

–

NeoMedia entered into a mutual release with each of the former Mobot shareholders in which the parties released each other from the terms of the original Mobot merger agreement, and the former Mobot shareholders consented to the release of the pending legal action against NeoMedia.

The transaction documents are attached hereto as exhibits 16.1 through 16.5. On December 7, 2006, NeoMedia issued a press release with respect to the Agreement, attached hereto as Exhibit 16.6.

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ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS

Pro Forma Financial Information

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

1. Basis of Presentation

Current Transaction

Acquisition and Disposition of Mobot, Inc.

–

NeoMedia transferred 100% of its ownership interest in Mobot to FMS, and in return received 18% ownership in FMS, which will operate the Mobot business;

–

All obligations under the original merger agreement, including the Purchase Price Guarantee Obligation, were terminated;

–

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Other Material Acquisitions Since Last Fiscal Year-end

Acquisition and Disposition of Sponge Ltd.

On February 20, 2006, NeoMedia acquired all of the outstanding shares of Sponge Limited (“Sponge”) of London in exchange for (i) approximately $6 million cash, (ii) 33,097,135 shares of NeoMedia common stock with a fair market value at the time of acquisition of approximately $13.1 million, and (iii) approximately $4.4 million contingent consideration in the form of NeoMedia common stock if, during the two-year period beginning at closing, the Sponge business earned in excess of approximately $2.3 million in net profits. Pursuant to the terms of the original merger agreement, the number of shares of NeoMedia common stock to be issued as consideration was calculated using a share price of $0.384, which was the volume-weighted average closing price of NeoMedia common stock for the ten days up to and including February 8, 2006. The merger agreement stipulated that, in the event that NeoMedia’s stock price at the time the consideration shares became saleable was less than $0.384, NeoMedia would have been obligated to compensate Sponge shareholders in cash for the difference between the price at the time the shares became saleable and $0.384.

On November 14, 2006, NeoMedia and Sponge signed a definitive share purchase and settlement agreement, pursuant to which NeoMedia divested of a material portion of its ownership interest in Sponge. The material terms of the Agreement are as follows:

–

NeoMedia returned 92.5% of its ownership interest in Sponge, retaining 7.5% ownership of Sponge;

–

NeoMedia relinquished its Board of Directors positions at Sponge

–

The 33,097,135 shares of NeoMedia common stock that were issued as consideration to acquire Sponge were returned to NeoMedia and retired;

–

All obligations under the original merger agreement, including the purchase price guarantee obligation, were terminated; and

–

Sponge returned $100,000 cash (before attorney fees) to NeoMedia at closing and is obligated to return an additional $150,000 cash to NeoMedia on March 7, 2007.

Acquisition of Gavitec AG

On February 17, 2006, NeoMedia and Gavitec AG (“Gavitec”) of Wuerselen, Germany, signed a definitive sale and purchase agreement, subject to closing conditions, under which NeoMedia acquired all of the outstanding shares of Gavitec in exchange for $1,800,000 cash and 13,660,511 shares of NeoMedia common stock, calculated by dividing $5,400,000 by the volume-weighted average closing price of NeoMedia common stock for the ten days up to and including February 16, 2006. On February 23, 2006, NeoMedia and Gavitec completed the closing requirements and the acquisition became effective. In the event that NeoMedia’s stock price at the time the consideration shares are saleable is less than $0.389, NeoMedia is obligated to compensate Gavitec shareholders in cash for the difference between the price at the time the shares become saleable and $0.389.

Acquisition of 12Snap AG

On February 10, 2006, NeoMedia and 12Snap AG (“12Snap”) of Munich, Germany, signed a definitive sale and purchase agreement, subject to closing conditions, under which NeoMedia acquired all of the outstanding shares of 12Snap in exchange for $2,500,000 cash and 49,294,581 shares of NeoMedia common stock. On February 28, 2006, NeoMedia and 12Snap completed the closing requirements and the acquisition became effective. Pursuant to the terms of the merger agreement, the number of shares of NeoMedia common stock to be issued as consideration was calculated using a share price of $0.3956. In the event that NeoMedia’s stock price at the time the consideration shares are saleable is less than $0.3956, NeoMedia is obligated to compensate 12Snap shareholders in cash for the difference between the price at the time the shares become saleable and $0.3956.

Acquisition of BSD Software, Inc.

On March 21, 2006, NeoMedia acquired all of the outstanding common shares of BSD Software, Inc. (“BSD”) of Calgary, Canada. Pursuant to the terms of the merger, BSD was merged with and into NeoMedia Telecom Services, Inc., a wholly-owned subsidiary of NeoMedia. The separate corporate existence of BSD ceased as of the effective time of the merger, and NeoMedia Telecom Services, Inc. continues as the surviving corporation. In exchange for all of the outstanding shares of BSD, NeoMedia issued 7,123,698 shares of its common stock,

-4-

valued at $0.3467, which is the volume-weighted average closing price of NeoMedia stock for the five days prior to the effective time of the merger. Each BSD shareholder received approximately 0.2019 share of NeoMedia common stock for each share of BSD common stock held.

Audited financials statements for Mobot were included in amendment no. 1 to form 8-K filed with SEC on May 3, 2006. Audited financials statements for Sponge were included in amendment no. 2 to form 8-K filed with SEC on June 21, 2006. Audited financials statements for Gavitec were included in amendment no. 1 to form 8-K filed with SEC on May 8, 2006. Audited financials statements for 12Snap were included in amendment no. 1 to form 8-K filed with SEC on May 8, 2006. Audited financials statements for BSD were included in amendment no. 1 to form 8-K filed with SEC on June 2, 2006. The balance sheets of Mobot, Sponge, Gavitec, 12 Snap and BSD as of September 30, 2006 are included in NeoMedia’s condensed consolidated balance sheet as of September 30, 2006 as reported on form 10-Q. The results of operations of Mobot, Sponge, Gavitec, 12 Snap and BSD are included from the respective acquisition date of each company through September 30, 2006 in NeoMedia’s condensed consolidated results of operations for the nine months ended September 30, 2006 as reported on form 10-Q. Mobot and Sponge balance sheets as of September 30, 2006, and Mobot, Sponge, Gavitec, 12 Snap and BSD statements of operations for the nine months ended September 30, 2006 and the year ended December 31, 2005 are shown in this filing for pro forma purposes only.

Presentation

The unaudited pro forma condensed combined historical statement of operations for the year ended December 31, 2005 gives effect to the acquisitions of Gavitec, 12Snap, and BSD as if they had occurred as of January 1, 2005, combining the historical results of NeoMedia for the year ended December 31, 2005 with the historical results of each entity for the year ended December 31, 2005. The acquisition and disposition of Sponge and Mobot are assumed to have occurred on January 1, 2005, such that the net effect of the Sponge acquisition and disposition and the Mobot acquisition and disposition on the pro forma consolidated results of operations for the year ended December 31, 2005 is zero. Sponge and Mobot’s operations for the year ended December 31, 2005 are shown separately in the pro forma statement of operations for informational purposes only.

The unaudited pro forma condensed combined historical statement of operations for the nine months ended September 30, 2006 gives effect to the acquisitions of Gavitec, 12Snap, and BSD as if they had occurred as of January 1, 2006, combining the historical results of NeoMedia for the nine months ended September 30, 2006 with the historical results of each entity for the nine months ended September 30, 2006. The acquisition and disposition of Sponge and Mobot are assumed to have occurred on January 1, 2006, such that the net effect of the Sponge acquisition and disposition and the Mobot acquisition and disposition on the pro forma consolidated results of operations for the nine months ended September 30, 2006 is zero. Sponge and Mobot’s operations for the nine months ended September 30, 2006 are shown separately in the pro forma statement of operations for informational purposes only.

The unaudited pro forma condensed combined balance sheet as of September 30, 2006 gives effect to the acquisitions of Gavitec, 12Snap, and BSD as if they had occurred as of September 30, 2006. The acquisition and disposition of Sponge and Mobot are also assumed to have occurred on September 30, 2006, such that the net effect of the Sponge acquisition and disposition and the Mobot acquisition and disposition on the pro forma condensed combined balance sheet as of September 30, 2006 is zero.

The unaudited pro forma combined financial statements included in this filing have been prepared by the managements of NeoMedia, Mobot, Sponge, Gavitec, 12Snap, and BSD without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the managements of NeoMedia, Mobot, Sponge, Gavitec, 12Snap, and BSD believe that the disclosures are adequate to make the information not misleading.

-5-

The pro forma adjustments are based on currently available information and upon estimates and assumptions that we believe are reasonable under the circumstances. The unaudited pro forma financial data do not purport to represent what NeoMedia’s financial position or results of operations would actually have been if such transactions had occurred on those dates and are not necessarily representative of NeoMedia’s financial position or results of operations for any future period. The unaudited pro forma financial statements should be read in conjunction with the separate historical financial statements and footnotes of NeoMedia included in Form 10-KSB for the year ended December 31, 2005 and in Form 10-Q for the three and nine months ended September 30, 2006, with the separate historical financial statements and footnotes of Mobot for the years ended December 31, 2005 and 2004 (included in Form 8-K/A filed with the SEC on May 3, 2006), with the separate historical financial statements and footnotes of Sponge for the years ended September 30, 2005 and 2004 (included in Form 8-K/A filed with the SEC on June 21, 2006), with the separate historical financial statements and footnotes of Gavitec for the years ended December 31, 2005 and 2004 (in Form 8-K/A filed with the SEC on May 8, 2006), with the separate historical financial statements and footnotes of 12Snap for the years ended December 31, 2005 and 2004 (included in Form 8-K/A filed with the SEC on May 8, 2006), and with the separate historical financial statements and footnotes of BSD for the years ended December 31, 2005 and 2004 (included in Form 8-K/A filed with the SEC on June 2, 2006).

2. Preliminary Price Allocation

A final determination of the allocation of the sale of the assets and liabilities of Sponge and Mobot have not been made. The allocation reflected in the unaudited pro forma combined financial statements is based on management’s best judgment and estimate of the accounting treatment of the transaction, and should be considered preliminary. The final allocation could differ materially from the pro forma allocation included herein.

3. Pro forma Net Loss Per Share

The pro forma basic and dilutive net loss per share are based on the pro forma weighted average number of shares of NeoMedia's common stock as if the shares issued to acquire Mobot, Gavitec, 12Snap, and BSD had been issued at the beginning of the period shown, and as if Sponge shares were issued and retired at the beginning of the period shown. Dilutive shares are not included in the computation of pro forma dilutive net loss per share as their effect would be anti-dilutive.

-6-

NeoMedia Technologies, Inc.

Unaudited Pro-forma Condensed Combined Balance Sheet

September 30, 2006

(In thousands of US Dollars)

				Pro-forma			Pro-forma
				Adjustments			Adjustments
	(A)			Disposition			Disposition				Pro-forma
ASSETS	NeoMedia			of Sponge (F)			of Mobot (G)				Consolidated
Current assets:	(unaudited)			(unaudited)			(unaudited)				(unaudited)
Cash and cash equivalents	$	3,133		$	(206	)	$	(225	)	(E)	$	2,702
Trade accounts receivable, net		6,097			(785	)		(46	)			5,266
Inventories, net		53			—			—				53
Investment in marketable securities		255			—			—				255
Prepaid expenses and other current assets		753			111			(34	)	(E)		830
Assets held for sale from Micro Paint Repair business unit;		3,451			—			—				3,451
Total current assets		13,742			(880	)		(305	)			12,557

Property and equipment, net		564			(43	)		(28	)			493
Capitalized patents, net		2,922			—			(8	)			2,914
Customer contracts and relationships		2,239			(352	)		(386	)	(C)		1,501
Capitalized software platform		13,655			(1,188	)		(3,839	)	(C)		8,628
Other intangible assets		2,589			(796	)		(82	)	(C)		1,711
Goodwill		50,082			(16,799	)		(6,778	)	(C)		26,505
Long Term investment in Sponge and Mobot		0			1,456			2,105		(D)		3,561
Cash surrender value of life insurance policy		797			—			—				797
Other long-term assets		1,232			—			(7	)			1,225

Total assets	$	87,822		$	(18,602	)	$	(9,328	)		$	59,892

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	5,550		$	(96	)	$	—			$	5,454
Accrued expenses		4,771			(809	)		(6	)			3,956
Amounts payable under settlement agreements		97			—			—				97
Taxes payable		1,178			(29	)		—				1,149
Deferred revenues and other		1,925			(75	)		(258	)			1,592
Liabilities in excess of assets of discontinued business unit		676			—			—				676
Notes and loans payable		2,340			—			200		(H)		2,540
Liabilities held for sale from Micro Paint Repair business unit		750			—			—				750
Derivative financial instruments		26,677			—			—				26,677
Total current liabilities		43,964			(1,009	)		(64	)			42,891

Long-term debt and convertible debentures		73			—			—				73

Shareholders’ deficit:
Preferred stock		2,931			—			—				2,931
Common stock (B)		6,552			(331	)		—		(B)		6,221
Preferred stock of Mobot owned by NeoMedia		—			—			(9,264	)	(I)		(9,264	)
Additional paid-in capital		155,359			(17,262	)		—		(B)		138,097
Accumulated other comprehensive income (loss)		(660	)		—			—				(660	)
Retained earnings (accumulated deficit)		(119,618	)		—			—				(119,618	)
Treasury stock		(779	)		—			—				(779	)
Total shareholders’ deficit		43,785			(17,593	)		(9,264	)			16,928
Total liabilities and shareholders’ deficit	$	87,822		$	(18,602	)	$	(9,328	)		$	59,892

-7-

Pro-forma Adjustments

(A) - NeoMedia consolidated balance sheet as of September 30, 2006 includes Sponge and Mobot balances.

(B) - Adjustment to retire 33,097,135 shares of common stock returned from Sponge to NeoMedia pursuant to the terms of the disposition agreement. As of September 30, 2006, NeoMedia’s $0.01 par value common stock consists of 5,000,000,000 authorized shares, 656,853,390 historical shares and 623,756,255 pro forma shares issued; and 655,211,964 historical shares and 622,114,829 pro forma shares outstanding.

(D) - Adjustments to establish 7.5% remaining ownership of Sponge, based on actual fair value paid by NeoMedia for Sponge of $19.4 million, and 18.0% remaining ownership of Mobot, based on actual fair value paid by NeoMedia for Mobot of $11.7 million.

(E) - Adjustment to reflect $36,000 cash being returned from Sponge, $150,000 note receivable due to NeoMedia from Sponge, and $100,000 cash paid by NeoMedia to Mobot, net of $125,000 and $242,000 of cash for Mobot and Sponge respectively already included in NeoMedia’s reported numbers in item (A) above.

(F) - This column reflects Sponge balance sheet amounts included in NeoMedia’s consolidated balance sheet as of September 30, 2006.

(G) - This column reflects Mobot balance sheet amounts included in NeoMedia’s consolidated balance sheet as of September 30, 2006.

(H) - Adjustment to reflect the $200,000 cash payable from NeoMedia to Mobot per the disposition agreement.

( I ) - Adjustment to reflect the convertible preferred stock of Mobot to be held by NeoMedia. NeoMedia expects to redeem this convertible preferred stock to reacquire the 16,931,493 original consideration shares issued by NeoMedia to acquire Mobot.

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NeoMedia Technologies, Inc.

Unaudited Pro-forma Combined Condensed Statement of Operations

For the Nine Months Ended September 30, 2006

(In thousands of US Dollars, except per share data)

																								(F) Pro			(C) Pro					Pro
				Acquisition			Acquisition			Acquisition			Acquisition			Acquisition		Disposition			Disposition			Forma			Forma					Forma
	Neo-			(A)			(A)			(A)			(A)			(A)		(B)			(B)			Adjust-			Adjust-					Consol-
	Media			Mobot			Sponge			Gavitec			12Snap			BSD		Sponge			Mobot			ments			ments					idated
	(unaudited)*			(unaudited)*			(unaudited)*			(unaudited)*			(unaudited)*			(unaudited)*		(unaudited)*			(unaudited)*			(unaudited)			(unaudited)					(unaudited)
Net sales	$	14,129		$	344		$	1,488		$	953		$	8,457		$	8,479	$	(1,488	)	$	(344	)	$	(1,292	)	$	(12,585	)			$	18,141

Cost of sales		8,887			83			410			325			3,023			6,918		(410	)		(83	)		(310	)		(7,449	)	(D	)		11,394
Gross profit		5,242			261			1,078			628			5,434			1,561		(1,078	)		(261	)		(982	)		(5,135	)				6,748

Selling, general and administrative expenses		13,471			837			1,536			660			4,388			1,113		(1,536	)		(837	)		(1,874	)		(4,714	)	(D	)		13,044
Stock based compensation expense		4,948			—			—			—			—			—		—			—			—			—					4,948
Research and development costs		2,309			431			—			451			932			—		—			(431	)		(396	)		(1,131	)				2,165

Income (loss) from operations		(15,486	)		(1,007	)		(458	)		(483	)		114			448		458			1,007			1,288			709					(13,410	)
Loss on extinguishment of debt, net		(1,858	)		—			—			55			—			—		—			—			—			—					(1,803	)
Other income (loss)		—			—			—			—			—			—		—			—			—			—					0
Write off of deferred eqity financing costs		(13,256	)		—			—			—			—			—		—			—			—			—					(13,256	)
Change in fair value from revaluation of warrants and embedded conversion features		6,523			—			—			—			—			—		—			—			—			—					6,523
Interest income (expense), net		(191	)		—			—			—			(165	)		26		—			—			—			124					(206	)

Income before provision for income taxes		(24,268	)		(1,007	)		(458	)		(428	)		(51	)		474		458			1,007			1,288			833					(22,152	)
Provision for income taxes		—			—			—			—			—			—					—			—			—					—
Income (loss) from continuing operations		(24,268	)		(1,007	)		(458	)		(428	)		(51	)		474		458			1,007			1,288			833					(22,152	)

Discontinued operations
Loss from discontinued Micro Paint Repair business unit		(2,826	)		—			—			—			—			—		—			—			—			—					(2,826	)
Net income (loss)	$	(27,094	)	$	(1,007	)	$	(458	)	$	(428	)	$	(51	)	$	474	$	458		$	1,007		$	1,288		$	833				$	(24,978	)

NET INCOME (LOSS) PER
SHARE--BASIC AND DILUTED	$	(0.04	)																													$	(0.03	)

Weighted average number
of common shares-basic and diluted		602,132,555																										46,461,692		(E	)		648,594,247

* - Derived from unaudited interim financial statements for the nine months ended September 30, 2006

(A) - Results of Mobot, Sponge, Gavitec, 12Snap, and BSD were included in NeoMedia's consolidated results for the nine months ended September 30, 2006 as follows: Mobot (February 18 - September 30), Sponge (February 24 - September 30), Gavitec (February 24 - September 30), 12Snap (March 1 - September 30), and BSD (March 22 - September 30). These columns reflect the results of operations of each acquired entity for the entire nine month period, as if these entities were acquired on January 1, 2006.

(B) - For pro forma purposes, the Sponge and Mobot acquisition and disposition are both assumed to have occurred on January 1, 2006, so there is no net effect on the pro forma consolidated statement of operations resulting from the Sponge and Mobot acquisitions and dispositions. Sponge and Mobot results are shown separately for presentation purposes only.

(C) - Adjustments to exclude portion of Gavitec, 12Snap, and BSD operations that were included in NeoMedia's consolidated operations for the nine months ended September 30, 2006, and proforma columns identified in (A) above.

(D) - Adjustments to reflect amortization of acquired intangible assets for the full nine months ended September 30, 2006, as if the acquisitions and dispositions had occurred on January 1, 2006. Proforma amortization allocated to cost of sales and selling, general and administrative expenses would have been $1,554,000 and $554,000, respectively for the nine months ended September 30, 2006 to reflect the acquisitions of Mobot, Sponge, Gavitec, 12 Snap and BSD. Additionally, proforma amortization allocated to cost of sales and selling, general and administrative expenses would be offset by adjustments of $589,000 and $228,000 respectively to reflect the divestitures of Mobot and Sponge, and $482,000 and $171,000 respectively to adjust the actual amortization included in NeoMedia’s consolidated results to proforma amounts.

(E) - Adjustment to increase the number of shares included in NeoMedia's actual weighted average shares outstanding for the nine months ended September 30, 2006 to the weighted average number of shares that would have been outstanding for pro forma purposes if the acquisitions and Sponge disposition had occurred on January 1, 2006, based on the stock price around January 1, 2006. For pro forma purposes, the Sponge and Mobot acquisitions and Sponge disposition are assumed to have occurred on January 1, 2006.

(F) - Adjustment to remove results of operations for Sponge and Mobot included in NeoMedia's results of operations for the nine months ended September 30, 2006.

-9-

NeoMedia Technologies, Inc.

Unaudited Pro-forma Combined Condensed Statement of Operations

For the Year Ended December 31, 2005

(In thousands of US Dollars, except per share data)

																									Pro					Pro
																									Forma					Forma
	(E)			(A)			(A)			(A)			(A)			(A)			(B)			(B)			Adjust-					Consol-
	NeoMedia			Mobot			Sponge			Gavitec			12Snap			BSD			Sponge			Mobot			ments					idated
	(unaudited)			*			(unaudited)**			*			*			(unaudited)***			(unaudited)**			(unaudited)			(unaudited)					(unaudited)
Net sales	$	877		$	300		$	2,248		$	772		$	7,396		$	8,437		$	(2,248	)	$	(300	)	$	—				$	17,482

Cost of sales		582			—			1,296			722			—			6,973			(1,296	)		—			1,286		(C	)		9,563

Gross profit		295			300			952			50			7,396			1,464			(952	)		(300	)		(1,286	)				7,919

Selling, general and administrative expenses		5,613			1,180			796			972			7,147			1,184			(796	)		(1,180	)		615		(C	)		15,531
Impairment charge		335			—			—			—			—			—			—			—			—					335
Research and development costs		592			552			—			503			1,515			—			—			(552	)		—					2,610

Income (loss) from operations		(6,245	)		(1,432	)		156			(1,425	)		(1,266	)		280			(156	)		1,432			(1,901	)				(10,557	)
Loss on extinguishment of debt, net		172			—			—			—			—			—			—			—			—					172
Other income (loss)		—			—			57			296			230			—			(57	)		—			—					526
Impairment charge on investments		(780	)		—			—			—			—			—			—			—			—					(780	)
Interest income (expense), net		(293	)		(42	)		18			—			(515	)		(150	)		(18	)		42			—					(958	)

Income before provision for income taxes		(7,146	)		(1,474	)		231			(1,129	)		(1,551	)		130			(231	)		1,474			(1,901	)				(11,597	)
Provision for income taxes		—			—			(60	)		—			—			—			60			—			—					—
Income (loss) from continuing operations	$	(7,146	)	$	(1,474	)	$	171		$	(1,129	)	$	(1,551	)	$	130		$	(171	)	$	1,474		$	(1,901	)			$	(11,597	)

Discontinued operatioins
Loss from discontinued Micro Paint Repair business unit		(2,001	)		—			—			—			—			—			—			—			—					(2,001	)
Net income (loss)		(9,147	)		(1,474	)		171			(1,129	)		(1,551	)		130			(171	)		1,474			(1,901	)				(13,598	)

NET INCOME (LOSS) PER
SHARE--BASIC AND DILUTED	$	(0.02	)																											$	(0.02	)

Weighted average number
of common shares-basic and diluted		451,857,851																								129,039,321		(D	)		580,897,172

* - Derived from audited financial statements

** - Sponge fiscal year end is September 30. Results shown are for the year ended December 31, 2005, compiled from Sponge’s audited financial statements for the year ended September 30, 2005 and interim financial statements for the three months ended December 31, 2005 and 2004.

*** - BSD fiscal year end is July 31. Results shown are for the year ended January 31, 2006, compiled from BSD’s audited financial statements for the year ended July 31, 2005 and interim financial statements for the six months ended January 31, 2006 and 2005

(A) - For pro forma presentation purposes, Gavitec and 12Snap results are converted from Euros to US Dollars at a rate of 0.80844 Euro/US Dollar, which was the average exchange rate for the period January 1, 2005 - December 31, 2005.

(B) - For pro forma purposes, the Sponge and Mobot acquisitions and dispositions are both assumed to have occurred on January 1, 2005, so there is no net effect on the pro forma consolidated statement of operations resulting from the Sponge and Mobot acquisitions and dispositions. Sponge and Mobot results are shown separately for presentation purposes only.

(C) - Adjustment to reflect amortization of acquired intangible assets for the year ended December 31, 2005, as if the acquisitions had occurred on January 1, 2005, of $1.9 million for Cost of sales and $0.7 million for Selling, general and administrative expenses.

(D) - Adjustment to reflect the number of shares that would have been outstanding for pro forma purposes if the acquisitions had occurred on January 1, 2005. For pro forma purposes, the Sponge and Mobot acquisitions and Sponge disposition are assumed to have occurred on January 1, 2005.

(E) - NeoMedia results of operations as reported on form 10-K for the 12 months ended December 31, 2005, adjusted to reclassify the results of the Micro Paint Repair business unit into discontinued operations due to the pending sale of the Micro Paint Repair business unit disclosed on form 8-K filed August 31, 2006.

-10-

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: December 7, 2006

By: /s/ Charles T. Jensen

Charles T. Jensen, President,

Chief Executive Officer and Director

-11-

EXHIBIT INDEX

Exhibit No.		Description
16.1		Agreement between NeoMedia and FMS
16.2		Escrow agreement amongst NeoMedia, Mobot, FMS, and Kirkpatrick and Lockhart Nicholson Graham
16.3		Description of Special Preference Stock
16.4		Promissory note payable from NeoMedia to FMS
16.5		License agreement between NeoMedia and Mobot
16.6		Press release dated December 7, 2006

-12-

EX-16.1 2 v059730_ex16-1.htm

Exhibit 16.1

AGREEMENT

AGREEMENT entered into as of December 5, 2006 by and between FMS Group, Inc., a Delaware corporation (“Newco”) and NeoMedia Technologies, a Delaware corporation “NeoMedia”). NeoMedia and Newco are referred to collectively herein as the “Parties.”

RECITALS:

A. NeoMedia owns all of the issued and outstanding shares of capital stock of Mobot, Inc., a Delaware corporation (formerly known as Mobot Acquisition, Inc.) (“Mobot”).

B. Contemporaneously with the execution and delivery of this Agreement, the Former Mobot Shareholders (as defined below) have contributed to Newco 16,931,493 shares of common stock, $.01 par value, of NeoMedia and certain rights of such persons against NeoMedia under the Merger Agreement described below, in exchange for which Newco has issued to such persons an aggregate of 82,000 shares of common stock, $0.01 par value per share, of Newco.

C. Subject to the terms and conditions hereof, NeoMedia desires to contribute to Newco all of the shares of capital stock of Mobot held by NeoMedia in return for an interest in Newco and discharge of such rights, and Newco desires to acquire such shares for the consideration specified herein.

AGREEMENT:

NOW, THEREFORE, in order to consummate said transaction and in consideration of the mutual agreements set forth herein, the parties hereto agree as follows:

SECTION 1.

DEFINITIONS.

“Accredited Investor” has the meaning set forth in Regulation D promulgated under the Securities Act.

“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

“Affiliated Group” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local or foreign law.

“Applicable Rate” means the corporate base rate of interest publicly announced from time to time by Bank of America plus 1% per annum.

“Base Date” means February 17, 2006, being the date that NeoMedia acquired Mobot in the Prior Transaction; provided that with respect to the activities of Mobot Acquisition, Inc. prior to its merger with Mobot, Inc., “Base Date” means the date of incorporation of Mobot Acquisition, Inc.

“Basis” means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence.

“Books and Records” means all business records, financial and other books and accounts, tax returns, corporate records and books, copies of agreements and contracts and other written materials relating to Mobot’s assets, business and operations in the possession or under the direct or indirect control of NeoMedia, including without limitation all due diligence and other materials delivered by Mobot (or its predecessors) to NeoMedia in connection with the acquisition of Mobot by NeoMedia.

“Cash Payment” means $66,739.32 to be paid by NeoMedia to Mobot pursuant to Section 7.1.

“Claim Period” means, with respect to any claim based in whole or in part upon a breach of any representation or warranty contained in this Agreement, the period following the Closing that such representation or warranty survives pursuant to Section 8.1, and with respect to any other claim, a period of one (1) year following the Closing.

“Closing” has the meaning set forth in Section 2.3 below.

“Closing Date” has the meaning set forth in Section 2.3 below.

“Code” means the Internal Revenue Code of 1986, as amended.

“Deferred Revenue Amount” has the meaning set forth in Section 4(i)(i).

“Disclosure Schedule” has the meaning set forth in Section 4 below.

“Escrow Agent” means Kirkpatrick & Lockhart Nicholson Graham LLP

“Escrow Agreement” means the Escrow Agreement among NeoMedia, Newco, Mobot and the Escrow Agent in the form of Exhibit A to this Agreement which shall be entered into by such parties in accordance with the terms of this Agreement.

“Escrow Shares” means 12,000 shares of Newco Nonvoting Common Stock (subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification of shares or other similar event).

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

“Financial Statement” has the meaning set forth in Section 4(g) below.

“Former Mobot Shareholders” means the shareholders of Old Mobot immediately prior to its merger with Mobot Acquisition, Inc. pursuant to the Merger Agreement.

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

“Indemnified Party” has the meaning set forth in Section 8.4(a) below.

“Indemnifying Party” has the meaning set forth in Section 8.4(a) below.

“Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium).

“Key Employees” means Russell Gocht, Kevin Wells, Mark Bees, Lauren Bigelow, Thai Tjen, Eric Hedman and any other person working for Mobot who entered into an employment agreement with or is otherwise employed by NeoMedia.

“Knowledge” means actual knowledge after reasonable investigation.

“Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

“Merger Agreement” means the Merger Agreement dated as of February 9, 2006 by and among NeoMedia, Mobot Acquisition, Inc. and Mobot, Inc.

“Mobot Shares” means all of the issued and outstanding shares of capital stock of Mobot held by NeoMedia.

“Mobot Management” means Russell Gocht.

“Most Recent Balance Sheet” means the balance sheet contained within the Financial Statements.

“Most Recent Fiscal Month End” has the meaning set forth in Section 4(g) below.

“NeoMedia Held Common Shares” means all shares of Newco Nonvoting Common Stock issued by Newco to NeoMedia pursuant to this Agreement, and any shares received in respect thereof in connection with any stock split, stock dividend, recapitalization, reorganization or other similar event.

“NeoMedia Held Newco Shares” means all shares of capital stock of Newco held by or on behalf of NeoMedia, whether presently held or hereafter acquired, including without limitation the shares of Newco Nonvoting Common Stock issued by Newco to NeoMedia pursuant to this Agreement, the shares of Newco Special Preference Stock issued by Newco to NeoMedia pursuant to this Agreement, and any shares received in respect thereof in connection with any stock split, stock dividend, recapitalization, reorganization or other similar event.

“NeoMedia Shares” means 16,931,493 shares of common stock, $.01 par value per share, of NeoMedia held by Newco, as such number of shares may be equitably adjusted by any stock split, stock dividend, combination, recapitalization, reorganization or other similar event, which shares have not been registered under the Securities Act.

“Newco Common Stock” means shares of common stock, $0.01 par value per share, of Newco.

“Newco Nonvoting Common Stock” means shares of nonvoting common stock, $0.01 par value per share, of Newco.

“Newco Preferred Stock” means shares of preferred stock, $0.01 par value per share, of Newco, which may be issued in one or more series as determined by the Board of Directors of Newco.

“Newco Special Preference Stock” means shares of special preference stock, $0.01 par value per share, of Newco, which class of stock has the rights, rights, preferences, privileges and restrictions set forth in Exhibit B to this Agreement, including a liquidation preference per share equal to $54.00.

“Note” means the promissory note of NeoMedia in favor of Mobot in the original principal amount of Two Hundred Thousand Dollars ($200,000) in the form of Exhibit C to this Agreement, to be delivered by NeoMedia to Mobot pursuant to Section 7.6.

“Old Mobot” means Mobot, Inc., a Delaware corporation, which merger with and into Mobot Acquisition, Inc. pursuant to the Merger Agreement.

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“Party” has the meaning set forth in the preface above.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).

“Purchase Price Guaranty Obligation” means the obligation of NeoMedia under Section 1.2.4 of the Merger Agreement to compensate the Former Mobot Shareholders in cash for the difference between the price at the time the shares issued to such Former Mobot Shareholders under the Merger Agreement became saleable and $0.3839.

“Prior Transaction” means the acquisition of Mobot by NeoMedia by way of the merger of Mobot, Inc. into Mobot Acquisition, Inc. pursuant to the Merger Agreement.

“Securities Act” means the Securities Act of 1933, as amended.

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

“Security Interest” means any mortgage, pledge, lien, encumbrance, charge, or other security interest.

“Subsidiary” means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors.

“Tax” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Third Party Claim” has the meaning set forth in Section 8.4(a) below.

SECTION 2.

CONTRIBUTION OF MOBOT SHARES.

2.1 Contribution of Mobot Shares. Subject to the provisions of this Agreement, at the Closing NeoMedia agrees to contribute, transfer, assign and deliver to Newco and Newco agrees to acquire all of the Mobot Shares.

2.2 Consideration. In consideration for the contribution of the Mobot Shares pursuant to this Agreement, Newco shall (a) issue to NeoMedia (i) 18,000 shares of Newco Nonvoting Common Stock (12,000 shares of which shall be held in escrow as described in Section 2.5 below), and (ii) 16,931 shares of Newco Special Preference Stock, and (b) discharge NeoMedia from the Purchase Price Guaranty Obligation pursuant to Section 6.8 of this agreement.

2.3 Time and Place of Closing. The closing of the transaction provided for in this Agreement (herein called the “Closing”) shall be held at the offices of Van Wert, Zimmer & Conlin, P.C., 245 Winter Street, Waltham, Massachusetts, contemporaneously with the execution and delivery of this Agreement by Newco and NeoMedia. Such date for the Closing is referred to as the “Closing Date”.

2.4 Deliveries at the Closing. At the Closing, (i) NeoMedia will deliver to Newco a stock certificate representing all of the Mobot Shares, endorsed in blank or accompanied by duly executed assignment documents and in proper form for transfer to Newco, (ii) Newco will deliver to NeoMedia a certificate representing 6,000 shares of Newco Nonvoting Common Stock registered in the name of NeoMedia, (iii) Newco will deliver to the Escrow Agent a certificate representing 12,000 shares of Newco Nonvoting Common Stock registered in the name of NeoMedia, (iv) Newco will deliver to NeoMedia a certificate representing 16,931 shares of Newco Special Preference Stock registered in the name of NeoMedia, and (v) NeoMedia and Newco will deliver to each other the various certificates, instruments, and documents referred to in Section 7 below. If NeoMedia is not able to deliver the certificate representing all of the Mobot Shares as described in clause (i) above contemporaneously with the delivery of the other items described in this Section 2.4, the Closing shall not occur and this Agreement shall not be of any force or effect unless and until such certificate is delivered to Newco as described in clause (i) above.

2.5 Escrow. The Escrow Shares shall be held in escrow by the Escrow Agent pursuant to the Escrow Agreement for the purpose of securing the obligations of NeoMedia under the Note. Pursuant to the terms of the Note, NeoMedia has pledged to Mobot and granted Mobot a security interest in all of the Escrow Shares. The Escrow Shares shall be held under the Escrow Agreement as a trust fund and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any party, and shall be held and disbursed solely for the purposes and in accordance with the terms of the Escrow Agreement. At the option of Mobot, upon default by NeoMedia of any of its obligations under the Note, Mobot shall have the right to direct that such Escrow Shares be transferred to Newco (and NeoMedia shall forfeit all rights thereto) as liquidated damages as provided in the Note, and in such circumstances the Escrow Agent shall deliver the Escrow Shares to Newco as provided in the Escrow Agreement.

SECTION 3.

REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.

3.1 Representations and Warranties of NeoMedia. NeoMedia represents and warrants to Newco that the statements contained in this Section 3.1 are correct and complete.

(a) Organization. NeoMedia is a corporation duly organized, validly existing, and in good standing under the laws of Delaware.

(b) Authorization of Transaction. NeoMedia has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of NeoMedia, enforceable in accordance with its terms and conditions. NeoMedia need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or other third party in order to consummate the transactions contemplated by this Agreement.

(c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which NeoMedia is subject or any provision of its charter or bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, give rise to any penalty or other payment obligation, or require any notice, filing, authorization, consent or approval under any agreement, contract, lease, license, instrument, or other arrangement to which NeoMedia is a party or by which it is bound or to which any of its assets is subject.

(d) Brokers’ Fees. NeoMedia has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Newco or Mobot could become liable or obligated.

(e) Investment. NeoMedia (i) understands that NeoMedia Held Newco Shares have not been, and will not be, registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (ii) is acquiring NeoMedia Held Newco Shares solely for its own account for investment purposes, and not with a view to the distribution thereof, (iii) is a sophisticated investor with knowledge and experience in business and financial matters, (iv) has received certain information concerning Newco and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the NeoMedia Held Newco Shares, (v) is able to bear the economic risk and lack of liquidity inherent in holding the NeoMedia Held Newco Shares, and (vi) is an Accredited Investor.

(f) Dilution. NeoMedia acknowledges that Newco has advised it that Newco will need to raise capital to implement its business plan, that it intends to do so through the sale of shares of capital stock or other securities that may be converted into or exchanged for shares of capital stock, that it intends to issue restricted stock and stock options to persons who become employed by or associated with the Company, and that the sale of such shares of capital stock or other securities and the issuance of such restricted stock and stock options will dilute NeoMedia’s position in Newco. NeoMedia further understands that it has no right to acquire additional shares of capital stock or other securities of Newco.

(g) Mobot Shares. NeoMedia holds of record and owns beneficially 100 Mobot Shares, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), Taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. NeoMedia is not a party to any option, warrant, purchase right, or other contract or commitment that could require NeoMedia to sell, transfer, or otherwise dispose of any capital stock of Mobot (other than this Agreement). NeoMedia is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of Mobot.

(h) Fairness of Transaction. The directors of NeoMedia have carefully considered the transactions contemplated by this Agreement and their impact on NeoMedia and its shareholders and creditors, have consulted with advisors to NeoMedia with respect to the transactions contemplated by this Agreement and considered the opinions of such advisors, and have determined that the transactions contemplated by this Agreement are in the best interest of NeoMedia and its stockholders and creditors and that the consideration to be received by NeoMedia in connection therewith is fair from a financial point of view to NeoMedia and to its stockholders and creditors.

3.2 Representations and Warranties of Newco. Newco represents and warrants to NeoMedia that the statements contained in this Section 3.2 are correct and complete.

(a) Organization of Newco. Newco is a corporation duly organized, validly existing, and in good standing under the laws of Delaware.

(b) Authorization of Transaction. Newco has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Newco, enforceable in accordance with its terms and conditions. Newco need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or other third party in order to consummate the transactions contemplated by this Agreement.

(c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Newco is subject or any provision of its charter or bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, give rise to any penalty or other payment obligation, or require any notice, filing, authorization, consent or approval under any agreement, contract, lease, license, instrument, or other arrangement to which Newco is a party or by which it is bound or to which any of its assets is subject.

(d) Capitalization. Immediately after giving effect to the transactions contemplated by this Agreement, the entire authorized capital stock of Newco will consist of (i) 1,000,000 shares of Newco Common Stock, of which 82,000 shares are issued and outstanding; (ii) 18,000 shares of Newco Nonvoting Common Stock, all of which are issued and outstanding and are held of record by NeoMedia (provided that the Escrow Shares are subject to the terms of the Escrow Agreement); (iii) 500,000 shares of Newco Preferred Stock, no series of which is designated and no shares of which are issued or outstanding; and (d) 16,931 shares of Newco Special Preference Stock, all of which are issued and outstanding and are held of record by NeoMedia. All of the shares of Newco Nonvoting Common Stock and Newco Special Preference Stock issued to NeoMedia under this Agreement have been duly authorized, are validly issued, fully paid, and nonassessable. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Newco to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Newco. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of Newco except as set forth in this Agreement.

(e) Assignment of Rights. The Former Mobot Shareholders have contributed and assigned to Newco all of the rights of the Former Mobot Shareholders against NeoMedia in connection with the Purchase Price Guaranty Obligation, and Newco has not further assigned or transferred such rights in any manner and holds such rights as of the date hereof.

(f) Brokers’ Fees. Newco has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which NeoMedia could become liable or obligated.

SECTION 4.

REPRESENTATIONS AND WARRANTIES CONCERNING MOBOT.

NeoMedia represent and warrant to Newco that the statements contained in this Section 4 are correct and complete, except as set forth in the disclosure schedule delivered by NeoMedia to Newco on the date hereof and initialed by the Parties (the “Disclosure Schedule”). Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, however, unless the Disclosure Schedule identifies the exception with particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 4.

(a) Organization, Qualification, and Corporate Power. Mobot is a corporation duly organized, validly existing, and in good standing under the laws of Delaware. Mobot is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required. Mobot has full corporate power and authority and all licenses, permits, and authorizations necessary to carry on the businesses in which it is engaged and in which it presently proposes to engage and to own and use the properties owned and used by it. Section 4(a) of the Disclosure Schedule lists the directors and officers of Mobot. NeoMedia has delivered to Newco correct and complete copies of the charter and bylaws of Mobot (as amended to date). The minute books (containing the records of meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books of Mobot are correct and complete. Mobot is not in default under or in violation of any provision of its charter or bylaws.

(b) Capitalization. The entire authorized capital stock of Mobot consists of 100 shares of common stock, $0.001 par value per share, all of which shares are issued and outstanding and are held of record by NeoMedia. The Mobot Shares represent all of the issued and outstanding shares of capital stock of Mobot. All of the Mobot Shares have been duly authorized, are validly issued, fully paid, and nonassessable. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Mobot to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Mobot. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of Mobot.

(c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Mobot is subject or any provision of the charter or bylaws of Mobot or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, give rise to any penalty or other payment obligation, or require any notice, filing, authorization, consent or approval under any agreement, contract, lease, license, instrument, or other arrangement to which Mobot is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets). Mobot need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or other third party in order for the Parties to consummate the transactions contemplated by this Agreement.

(d) Brokers’ Fees. Mobot has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement or with respect to the Prior Transaction.

(e) Title to Assets. Mobot has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Security Interests, except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet.

(f) Subsidiaries. Mobot neither controls directly or indirectly nor has any direct or indirect equity participation in any corporation, limited liability company, partnership, trust, or other business association.

(g) Financial Statements; Net Worth. Included with the Disclosure Schedule are the unaudited balance sheet and statement of income, changes in stockholders’ equity, and cash flow (the “Financial Statements”) as of and for the ten months ended October, 2006 (the “Most Recent Fiscal Month End”) for Mobot. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, present fairly the financial condition of Mobot as of such date and the results of operations of Mobot for such period, are correct and complete, and are consistent with the books and records of Mobot (which books and records are correct and complete); provided, however, that the Financial Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack footnotes and other presentation items.

(h) Events Subsequent to NeoMedia’s Acquisition of Mobot. Since the Base Date, there has not been any material adverse change in the business, financial condition, operations, results of operations, or future prospects of Mobot. Without limiting the generality of the foregoing, since the Base Date, except for matters that have been expressly approved by Mobot Management (or in the case of item (xiv) below, as to which Mobot Management has Knowledge):

(i) Mobot has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;

(ii) Mobot has not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) either involving more than $1,000 or outside the Ordinary Course of Business;

(iii) no party (including Mobot) has accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $1,000 to which Mobot is a party or by which it is bound;

(iv) Mobot has not imposed any Security Interest upon any of its assets, tangible or intangible;

(v) Mobot has not made any capital expenditure (or series of related capital expenditures) either involving more than $1,000 or outside the Ordinary Course of Business;

(vi) Mobot has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) either involving more than $1,000 or outside the Ordinary Course of Business;

(vii) Mobot has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation;

(viii) Mobot has not delayed or postponed the payment of accounts payable and other Liabilities outside the Ordinary Course of Business;

(ix) Mobot has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) either involving more than $1,000 or outside the Ordinary Course of Business;

(x) Mobot has not granted any license or sublicense of any rights under or with respect to any Intellectual Property;

(xi) there has been no change made or authorized in the charter or bylaws of Mobot;

(xii) Mobot has not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock, and there has been no transfer of any of the capital stock of Mobot;

(xiii) Mobot has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;

(xiv) Mobot has not experienced any damage, destruction, or loss (whether or not covered by insurance) to its property;

(xv) Mobot has not made any loan to, or entered into any other transaction with, any of employees outside the Ordinary Course of Business or with any of its officers or directors, whether within or outside of the Ordinary Course of Business;

(xvi) Mobot has not entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement;

(xvii) Mobot has not granted any increase in the base compensation of any of its employees outside the Ordinary Course of Business or paid any compensation to any of its officers or directors, whether within or outside of the Ordinary Course of Business;

(xviii) Mobot has not adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);

(xix) Mobot has not made any other change in employment terms for any of its employees outside the Ordinary Course of Business or for any of its officers or directors, whether within or outside of the Ordinary Course of Business;

(xx) Mobot has not made or pledged to make any charitable or other capital contribution except as reflected on the face of the Financial Statements;

(xxi) there has not been any other material occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business involving Mobot; and

(xxii) Mobot has not committed to any of the foregoing.

(i) Financial Condition.

(i) As of the date hereof, Mobot has deferred revenue that will be recognized as revenue after the date hereof in the amount of $244,000 (the “Deferred Revenue Amount”). As of the date hereof, but without giving effect to the Cash Payment and the Note, and assuming for this purpose that the Deferred Revenue Amount were a current asset, Mobot’s assets exceed its liabilities and its current assets exceed its current liabilities. After giving effect to the Cash Payment and the Note, and assuming for this purpose that the Deferred Revenue Amount were a current asset, Mobot’s assets exceed its liabilities and its current assets exceed its current liabilities, in each case by at least the sum of (x) the amount of the Cash Payment, plus (y) $200,000.

(ii) All accounts receivable of Mobot shown on the Most Recent Balance Sheet or arising in the Ordinary Course of Business since the date of the Most Recent Balance Sheet are valid and collectible (except to the extent that such accounts receivable cause the current assets of Mobot to exceed its current liabilities as of the date hereof, without giving effect to the Cash Payment and the Note).

(iii) All accounts payable of Mobot arising on or before November 30, 2006 have been paid in full.

(iv) Mobot has no Liability (and there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against it giving rise to any Liability) with respect to any matter, cause or thing arising or occurring from or after the Base Date, except for (A) Liabilities set forth on the face of the Most Recent Balance Sheet and (B) Liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any borrowing of money, breach of contract, breach of warranty, tort, infringement, or violation of law).

(j) Legal Compliance. Since the Base Date, Mobot has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against it alleging any failure so to comply.

(k) Tax Matters.

(i) Mobot has filed all Tax Returns that it was required to file since the Base Date. All such Tax Returns were correct and complete in all respects. All Taxes owed by Mobot (whether or not shown on any Tax Return) have been paid. Mobot currently is not the beneficiary of any extension of time within which to file any Tax Return. No claim has been made since the Base Date by an authority in a jurisdiction where Mobot does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Security Interests on any assets of Mobot that arose in connection with any failure (or alleged failure) to pay any Tax.

(ii) Mobot has withheld and paid all Taxes required to have been withheld and paid since the Base Date in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

(iii) There is no dispute or claim concerning any Tax Liability of Mobot either (A) claimed or raised by any authority in writing since the Base Date or (B) as to which any of NeoMedia and the directors and officers (other than Mobot Management) of Mobot has Knowledge based upon personal contact with any agent of such authority. NeoMedia has delivered to Newco correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Mobot since the Base Date.

(iv) Since the Base Date, Mobot has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

(v) Mobot is not a party to any Tax allocation or sharing agreement. Mobot has not been a member of an Affiliated Group filing a consolidated federal income Tax Return, and in particular Mobot has not been a member of an Affiliated Group filing a consolidated federal income Tax Return the common parent of which is NeoMedia.

(vi) Section 4(k) of the Disclosure Schedule sets forth the following information with respect to Mobot as of the most recent practicable date (as well as on an estimated pro forma basis as of the Closing giving effect to the consummation of the transactions contemplated hereby): (A) the basis of Mobot in its assets; and (B) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess charitable contribution allocable to Mobot.

(vii) The unpaid Taxes of Mobot (A) did not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Mobot in filing its Tax Returns.

(viii) Mobot has no liability for the Taxes of any Person other than Mobot (A) under Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign law), (B) as a transferee or successor, (C) by contract, or (D) otherwise.

(l) Real Property. Mobot owns no real property.

(m) Intellectual Property.

(i) Mobot owns or has the right to use pursuant to license, sublicense, agreement, or permission all Intellectual Property necessary for the operation of the businesses of Mobot as presently conducted and as presently proposed to be conducted. Each item of Intellectual Property owned or used by Mobot immediately prior to the Closing hereunder will be owned or available for use by Mobot on identical terms and conditions immediately subsequent to the Closing hereunder. Since the Base Date, Mobot has not assigned, transferred or licensed any of its Intellectual Property, except pursuant to agreements executed on behalf of Mobot by Mobot Management. Since the Base Date, Mobot has taken all necessary action to maintain and protect each item of Intellectual Property that it owns or uses.

(ii) Mobot has not interfered with, infringed upon, or otherwise come into conflict with, and continued use by Mobot of its Intellectual Property in the businesses of Mobot as presently conducted and as presently proposed to be conducted does not and will not interfere with, infringe upon, or otherwise conflict with, any Intellectual Property rights of NeoMedia or any other Subsidiary or Affiliate of NeoMedia.

(iii) Neither NeoMedia nor any of the directors and officers (and employees with responsibility for Intellectual Property matters) of NeoMedia and its Subsidiaries and Affiliates (other than Mobot Management) has ever received any charge, complaint, claim, demand, or notice alleging that Mobot has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of any third party (including any claim that Mobot must license or refrain from using any Intellectual Property rights of any third party).

(p) Contracts. Except as disclosed on Section 4(p) of the Disclosure Schedule, since the Base Date, Mobot has not entered into any contract or other agreement, except for contracts or agreements executed on behalf of Mobot by Mobot Management. NeoMedia has delivered to Newco a correct and complete copy of each written agreement listed in Section 4(p) of the Disclosure Schedule (as amended to date). With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect; (B) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (D) no party has repudiated any provision of the agreement.

(q) Powers of Attorney. There are no outstanding powers of attorney executed on behalf of Mobot.

(r) Litigation. Section 4(r) of the Disclosure Schedule sets forth each instance in which Mobot (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of NeoMedia or any of the directors and officers of Mobot (other than Mobot Management), is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator. None of the actions, suits, proceedings, hearings, and investigations set forth in Section 4(r) of the Disclosure Schedule could result in any material adverse change in the business, financial condition, operations, results of operations, or future prospects of Mobot.

(s) Employee Benefits. All premiums or other payments for all periods from the Base Date until the Closing Date have been paid with respect to each Employee Benefit Plan that Mobot maintains or to which Mobot contributes, or under or with respect to which Mobot could have any Liability. Mobot has no Liability under any Employee Benefit Plan.

(t) Guaranties. Mobot is not a guarantor or otherwise is liable for any Liability or obligation (including indebtedness) of any other Person.

(u) Certain Business Relationships with Mobot. Since the Base Date, and except as disclosed on Section 4(u) of the Disclosure Schedule, none of NeoMedia and its Subsidiaries and Affiliates has been involved in any business arrangement or relationship with Mobot, and none of NeoMedia and its Subsidiaries and Affiliates owns or controls any asset, tangible or intangible, which is used in the business of Mobot.

(v) Disclosure. The representations and warranties contained in this Section 4 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 4 not misleading.

SECTION 5.

RESTRICTIONS APPLICABLE TO NEOMEDIA HELD MOBOT SHARES

5.1 Restrictions on Transfer. NeoMedia may not sell, assign, transfer, exchange or otherwise dispose of any NeoMedia Held Newco Shares or any interest therein now held or hereafter acquired by it, except as expressly approved in writing by Newco, and any attempt by NeoMedia to do so without such approval shall be void and of no effect. In addition to any other legal or equitable remedies which Newco may have in the event of such an attempted transfer, Newco may enforce its rights by action for specific performance (to the extent permitted by law) and may refuse to recognize any transferee as one of Newco’s stockholders for any purpose.

5.2 Improper Transfers.

(a) Transfers in Violation of Agreement. If any transfer of NeoMedia Held Newco Shares is made or attempted contrary to the provisions of this Agreement, Newco shall have the right to purchase all of the NeoMedia Held Newco Shares from NeoMedia or its purported transferee at any time before or after any transfer or attempted transfer, at the price and on the terms hereinafter provided.

(b) Transfers by Operation of Law. In the event that NeoMedia either (i) files a voluntary petition under any bankruptcy or insolvency law, or a petition for the appointment of a receiver or makes an assignment for the benefit or creditors, or (ii) is subjected involuntarily to such a petition or assignment or to an attachment or other legal or equitable interest with respect to NeoMedia Held Newco Shares, and such involuntary petition or assignment or attachment is not discharged within ninety (90) days after its date, or (c) is subject to a transfer of NeoMedia Held Newco Shares by operation of law, Newco shall have the right to purchase all of the NeoMedia Held Newco Shares from NeoMedia, at the price and on the terms hereinafter provided.

(c) Purchase Price of Stock. The purchase price per share of NeoMedia Held Newco Shares that Newco purchases under this Section 5.2 shall be equal to $0.01 per share (subject to equitable adjustment in the event of any stock split, stock dividend, combination, recapitalization, reorganization or other similar event).

(d) Tenders. All NeoMedia Held Newco Shares that Newco elects to purchase under this Section 5.2 shall be tendered to Newco (or to one or more substitute purchasers designated by it) at the principal office of Newco at a reasonable date and time specified by Newco, by delivery of the certificate or certificates representing such shares, endorsed in blank and in proper form for transfer against payment of the purchase price in cash or by check. In the event NeoMedia shall for any reason fail to tender such certificate or certificates, Newco may, upon delivery to NeoMedia of the full purchase price for the NeoMedia Held Newco Shares represented by such certificate or certificates, cancel such certificate or certificates, whereupon NeoMedia shall cease to be the owner of the shares represented by such certificate or certificates for all purposes.

5.3 Voting. With respect to all matters relative to Newco as to which NeoMedia shall have a right to vote under Delaware law or otherwise (notwithstanding that the NeoMedia Held Newco Shares are non-voting), whether at a meeting of stockholders or by written consent of stockholders in lieu of a meeting or otherwise, NeoMedia shall vote all securities of Newco over which NeoMedia has voting control (including without limitation the NeoMedia Held Newco Shares to the extent that they are entitled to vote) in the manner directed by the board of directors of Newco, and NeoMedia shall take all other reasonably necessary or desirable actions within its control (including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), to vote all such securities in such manner.

5.4 Repurchase Right of NeoMedia Held Common Shares.

(a) At any time and from time to time, Newco, at its sole election, shall have the right to purchase from NeoMedia (and NeoMedia shall have the obligation to sell to Newco), all of any part of the NeoMedia Held Common Shares as specified by Newco, on the terms and conditions described in this Section 5.4. Newco shall deliver written notice of such election to NeoMedia specifying the number of NeoMedia Held Common Shares that Newco so elects to purchase.

(b) The purchase price of any NeoMedia Held Common Shares which Newco elects to purchase under this Section 5.4 shall be the fair market value of such NeoMedia Held Common Shares. The determination of the Board of Directors of Newco as to such purchase price under this Section 5.4 shall be conclusive and binding on all persons unless objected to in writing by NeoMedia within fifteen (15) days after notice to NeoMedia of such determination. In the event such objection is duly made, or if the Board of Directors fails to make a determination within thirty (30) days after an election to purchase is made by Newco, such purchase price shall be determined by arbitration as hereinafter provided. Within thirty (30) days after the date of the making of such objection or the expiration of such 30-day period without the making of a determination by the Board of Directors, Newco and NeoMedia shall each appoint an appraiser, and the two appraisers so appointed shall appoint a third appraiser, or failing action within such period by any party or the appraisers, any unappointed appraiser or appraisers shall be appointed by the American Arbitration Association, Boston, Massachusetts, upon application of any party or appraiser. The appraisers shall proceed by majority vote to determine the value of the NeoMedia Held Common Shares so elected to be purchased by Newco as of a convenient date selected by them, and such determination shall be final and binding upon all interested persons. Newco shall promptly furnish to the appraisers such information concerning its financial condition, earnings, capitalization, business prospects and sales of its capital stock as they may reasonably request. The appraisers shall promptly notify in writing Newco and NeoMedia of the appraisers’ final determination of value. Newco and NeoMedia shall each bear the fees and expenses of the appraiser appointed by or for each of them, and the fees and expenses of the third appraiser shall be borne one-half by each of them. Newco may revoke its election to purchase in whole or in part within fifteen (15) days after its receipt of the arbitrators’ final determination of value.

(c) All NeoMedia Held Common Shares that Newco elects to purchase under this Section 5.4 shall be tendered to Newco (or to one or more substitute purchasers designated by it) at the principal office of Newco at a reasonable date and time specified by Newco (in any event within sixty (60) days after the arbitrators’ final determination of value), by delivery of the certificate or certificates representing such shares, endorsed in blank and in proper form for transfer against payment of the purchase price in cash or by check. In the event NeoMedia shall for any reason fail to tender such certificate or certificates, Newco may, upon delivery to NeoMedia of the full purchase price for the NeoMedia Held Common Shares represented by such certificate or certificates, cancel such certificate or certificates, whereupon NeoMedia shall cease to be the owner of the shares represented by such certificate or certificates for all purposes.

5.5 Legend on Certificates. Each certificate of NeoMedia Held Newco Shares shall bear on its face the following legends (in addition to any other legends customarily appearing on certificates representing shares of Newco capital stock):

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold, transferred or otherwise disposed of in the absence of an effective registration statement under such Act or an opinion of counsel satisfactory to the corporation to the effect that such registration is not required.”

“The shares represented by this certificate are subject to restrictions on transfer and agreements with respect to repurchase and voting, a copy of which will be furnished by the Company to the holder of this certificate upon written request and without charge.”

SECTION 6.

OTHER AGREEMENTS.

6.1 Public Announcements. Neither of the Parties shall make any press release or other disclosure of this Agreement or the transactions contemplated hereby without the prior written consent of the other Parties, except as may be required by law. To the extent that any such disclosure is required by law, the Party required to make such disclosure shall provide written notice thereof (together with a copy of the disclosure it proposes to make) to the other Party at least twenty-four (24) hours prior to such disclosure, shall permit the other Party to comment upon such proposed disclosure, and shall make any corrections or changes to such disclosure reasonably requested by such other Party provided such corrections or changes are true and accurate and may be made consistent with the disclosing Party’s legal obligations.

6.2 Further Assurances. The Parties shall deliver any and all other instruments or documents required to be delivered pursuant to, or necessary or proper in order to give effect to, the provisions of this Agreement, including, without limitation, all necessary stock powers and such other instruments of transfer as may be necessary or desirable to transfer ownership of Mobot Shares to Newco and to consummate the transactions contemplated by this Agreement.

6.3 Confidentiality.

(a) NeoMedia agrees and acknowledges that, by reason of NeoMedia’s former ownership of Mobot prior to the date hereof and NeoMedia’s ownership interest in Newco from and after the date hereof, NeoMedia had or will have or may have access to and become informed of confidential and secret information which is a competitive asset of Newco or Mobot (“Newco/Mobot Confidential Information”), including, without limitation, information with respect to technology, lists of customers, financial information and statistics, research data, strategic plans, marketing and operation plans and other trade secrets of Newco and/or Mobot. NeoMedia agrees faithfully to keep in strict confidence, and not, either directly or indirectly, to make known, divulge, reveal, furnish or make available any such Newco/Mobot Confidential Information. Also, NeoMedia shall not itself use or permit any of its Subsidiaries or Affiliates or any third party to use any such Newco/Mobot Confidential Information. NeoMedia acknowledges that all manuals, instruction books, price lists, information and records and other information and aids relating to Newco’s and/or Mobot’s business, and any and all other documents containing Newco/Mobot Confidential Information furnished to or in the possession of NeoMedia by Newco and/or Mobot or otherwise acquired or developed by NeoMedia, shall at all times be the property of Newco and/or Mobot. The obligations of NeoMedia under this Section are in addition to, and not in limitation or preemption of, all other obligations of confidentiality and non-use of information which NeoMedia may have to Newco and/or Mobot under general legal or equitable principles. Notwithstanding the above, however, Newco and/or Mobot acknowledges that NeoMedia may have experience in the general industry in which Newco and/or Mobot operate, and these restrictions are not intended to prevent NeoMedia from using its knowledge of the industry. These restrictions apply to Newco/Mobot Confidential Information which is owned by Newco and/or Mobot, or was learned by NeoMedia as a shareholder of Mobot (prior to the date hereof) or of Newco (from and after the date hereof).

(b) Newco agrees and acknowledges that, by reason of Mobot’s former ownership by NeoMedia prior to the date hereof, representatives of Mobot who are now associated with Newco had access to and became informed of confidential and secret information which is a competitive asset of NeoMedia (other than confidential and secret information which is a competitive asset of Mobot) (“NeoMedia Confidential Information”), including, without limitation, information with respect to technology, lists of customers, financial information and statistics, research data, strategic plans, marketing and operation plans and other trade secrets of NeoMedia. Newco agrees faithfully to keep in strict confidence, and not, either directly or indirectly, to make known, divulge, reveal, furnish or make available any such NeoMedia Confidential Information. Also, Newco shall not itself use or permit any of its Subsidiaries or Affiliates or any third party to use any such NeoMedia Confidential Information. Newco acknowledges that all manuals, instruction books, price lists, information and records and other information and aids containing NeoMedia Confidential Information furnished to or in the possession of Newco by NeoMedia or otherwise acquired or developed by Newco, shall at all times be the property of NeoMedia. The obligations of Newco under this Section are in addition to, and not in limitation or preemption of, all other obligations of confidentiality and non-use of information which Newco may have to NeoMedia under general legal or equitable principles. Notwithstanding the above, however, NeoMedia acknowledges that Newco may have experience in the general industry in which NeoMedia operates, and these restrictions are not intended to prevent Newco from using its knowledge of the industry.

6.4 Release of Claims By NeoMedia. Except for any obligations arising out of this Agreement, NeoMedia, acting on behalf of itself and all of its Subsidiaries and Affiliates and its and their respective successors, predecessors, assigns, agents, advisors, legal representatives, partners and all persons acting by, through or under it or them, hereby releases Mobot and each of its successors, predecessors, assigns, agents, advisors, officers, directors, employees, legal representatives, partners and all persons acting by, through or under Mobot, from any and all claims, obligations, causes of action, actions, suits, contracts, controversies, agreements, promises, damages, demands, costs, attorneys’ fees and liabilities of any nature whatsoever from the beginning of time up to and including the Closing Date, in law or at equity, whether known now or on the Closing Date, anticipated or unanticipated, suspected or claimed, fixed or contingent, liquidated or unliquidated, arising out of, in connection with or relating to any matter, cause or thing whatsoever. NeoMedia shall not, and shall ensure that its Subsidiaries and Affiliates and any of such persons acting by, through or under it or them shall not, bring any claim in connection with any such matter and NeoMedia shall indemnify and hold harmless Mobot and each of its successors, predecessors, assigns, agents, advisors, officers, directors, employees, legal representatives, partners and all persons acting by, through or under Mobot against any Adverse Consequences in connection with any such claim.

6.5 Nonsolicitation. NeoMedia agrees that, during the period of two (2) years following the date of this Agreement, neither it not any of its Subsidiaries or Affiliates shall, directly or indirectly, employ or solicit or encourage any employee of Newco or Mobot or any of their respective Affiliates to become employed by or associated with NeoMedia or any of its Subsidiaries or Affiliates or any business or entity with which any of them are affiliated as an owner, investor, lender or in any other capacity, or solicit or encourage any such person to terminate his or her employment by Newco or Mobot or any of their respective Affiliates, or interfere in any way with the employment of any such person by Newco or Mobot or any of their respective Affiliates. Similarly, Newco agrees that, during the period of two (2) years following the date of this Agreement, neither it not any of its Subsidiaries or Affiliates shall, directly or indirectly, employ or solicit or encourage any employee of NeoMedia or any of its Affiliates to become employed by or associated with Newco or any of its Subsidiaries or Affiliates or any business or entity with which any of them are affiliated as an owner, investor, lender or in any other capacity, or solicit or encourage any such person to terminate his or her employment by NeoMedia or any of its Affiliates, or interfere in any way with the employment of any such person by NeoMedia or any of its Affiliates.

6.6 Assignment of Rights to Employee Inventions. NeoMedia hereby assigns and transfers to Mobot all rights NeoMedia has or may have in any and all designs, specifications, improvements, inventions, discoveries, works of authorship, formulas, ideas, processes, techniques, know-how and data, whether or not patentable, which were authored, devised, developed, made, conceived, reduced to practice or learned or obtained by the Key Employees, in whole or in part, either alone or jointly with others, during the period from the Base Date until the date hereof, all of which shall be the sole property of Mobot and its assigns, and Mobot and its assigns shall be the sole owner of all patents, copyrights, trade secrets and other rights in connection therewith.

6.7 Joint Venture Transaction. NeoMedia agrees that the proposed joint venture transaction initially contemplated among NeoMedia, Mobot and a third party with respect to the CPG market, which transaction was described in a letter of intent among such parties entered into in March 2006 and was subsequently negotiated by such parties using a proposed name for the joint venture entity of “Ilumena,” is a business opportunity of Mobot and not of NeoMedia. NeoMedia agrees that during the period of two (2) years following the date of this Agreement it will not solicit such third party with respect to any similar transaction and will not interfere in any way with efforts by Mobot to enter into such transaction with such third party.

6.8 Discharge of Purchase Price Guaranty Obligation. Newco hereby fully and completely discharges NeoMedia of all of its Purchase Price Guaranty Obligation to the Former Mobot Shareholders (or to Newco as the assignee of the Former Mobot Shareholders), and Newco, acting on behalf of itself and all of its Subsidiaries and Affiliates and its and their respective successors, predecessors, assigns, agents, advisors, legal representatives, partners and all persons acting by, through or under it or them, hereby releases NeoMedia and each of its successors, predecessors, assigns, agents, advisors, officers, directors, employees, legal representatives, partners and all persons acting by, through or under NeoMedia, from any and all claims, obligations, causes of action, actions, suits, contracts, controversies, agreements, promises, damages, demands, costs, attorneys’ fees and liabilities of any nature whatsoever arising with respect to the Purchase Price Guaranty Obligation.

6.9 Lock-Up of NeoMedia Shares. Newco agrees that during the period of fifteen (15) months following the date hereof, without the prior written consent of NeoMedia, Newco will not sell, assign, transfer or otherwise dispose of any of the NeoMedia Shares (other than a distribution or transfer of NeoMedia Shares to any holder of shares of Newco Special Preference Stock upon liquidation or redemption in accordance with the terms of the Newco Special Preference Stock contained in Newco’s Certificate of Incorporation). Notwithstanding the foregoing, if prior to the conclusion of such fifteen (15) month period NeoMedia either (i) files a voluntary petition under any bankruptcy or insolvency law, or a petition for the appointment of a receiver or makes an assignment for the benefit or creditors, or (ii) is subjected involuntarily to such a petition or assignment or to an attachment or other legal or equitable interest with respect to any NeoMedia Held Newco Shares, and such involuntary petition or assignment or attachment is not discharged within ninety (90) days after its date, or (c) is subject to a transfer of any of such NeoMedia Held Newco Shares by operation of law, then the restrictions contained in this Section 6.9 shall cease to apply as of the date of the occurrence of such event.

6.10 Registration of Transfer of NeoMedia Shares. NeoMedia agrees that it will register on its books the transfer of the NeoMedia Shares from the Former Mobot Shareholders to Newco upon delivery to NeoMedia or its transfer agent of certificates for such NeoMedia Shares duly endorsed in blank or accompanied by duly executed assignment documents, and promptly following delivery of such certificates will issue to Newco a new certificate representing the NeoMedia Shares registered in the name of Newco.

SECTION 7.

DELIVERABLES IN CONNECTION WITH THE CLOSING.

7.1 Cash Payment and Note. Immediately prior to the Closing, NeoMedia shall pay the Cash Payment to Mobot and shall issue the Note to Mobot.

7.2 NeoMedia License Agreement. At the Closing, Mobot and NeoMedia shall enter into a License Agreement substantially in the form of Exhibit D to this Agreement.

7.3 Proxy to Mobot. At the Closing, NeoMedia shall deliver to Newco a proxy executed by NeoMedia with respect to the NeoMedia Held Newco Shares substantially in the form of Exhibit E to this Agreement.

7.4 Resignation of Directors and Officers of Mobot. At the Closing, NeoMedia shall deliver to Newco the resignations, effective as of the Closing, of each director and officer of Mobot. Each such director and officer shall confirm and agree in such resignation that neither he or she nor his or her assigns, legal representatives, or any persons acting by, through or under such director or officer has any claim against Mobot or any of its successors, predecessors, assigns, agents, advisors, officers, directors, employees, legal representatives, partners or any persons acting by, through or under any of them, as of the Closing.

7.5 Release of Employment Agreements. At or prior to the Closing, NeoMedia shall release each of the Key Employees from the terms of any Employment Agreement, Noncompetition, Noninterference and Confidentiality Agreement or other similar agreement executed by such Key Employees in favor of NeoMedia or any of its Subsidiaries or Affiliates.

7.6 Books and Records. Promptly following the Closing, NeoMedia shall deliver to Newco all of the Books and Records of Mobot.

7.7 Third Party Consents. At or prior to the Closing, NeoMedia shall deliver to Newco copies of all authorizations, consents and approvals obtained by NeoMedia from third parties whose authorization, consent or approval is required in connection with the consummation by NeoMedia of the transactions contemplated by this agreement, including without limitation the consent of Cornell Capital Partners, LP, all of which shall be reasonably acceptable to Newco.

SECTION 8.

REMEDIES FOR BREACHES OF THIS AGREEMENT.

8.1 Survival of Representations and Warranties. All of the representations and warranties of NeoMedia in Section 4(d)-(j) and Section 4(l)-(v) above shall survive the Closing hereunder and continue in full force and effect for a period of one (1) year thereafter; provided that if within such one (1) year period NeoMedia shall file a voluntary petition under any bankruptcy or insolvency law, or a petition for the appointment of a receiver or makes an assignment for the benefit or creditors, or shall be subjected involuntarily to such a petition or assignment or to an attachment or other legal or equitable interest with respect to NeoMedia Held Newco Shares, and such involuntary petition or assignment or attachment is not discharged within ninety (90) days after its date, then all such representations and warranties of NeoMedia shall continue in full force and effect until the conclusion of all legal proceedings relating to such petition or assignment or attachment. All of the other representations and warranties of the Parties contained in this Agreement (including the representations and warranties of NeoMedia contained in Section 4(a)-(c) and Section 4(k) above) shall survive the Closing and continue in full force and effect forever thereafter (subject to any applicable statutes of limitations).

8.2 Indemnification Provisions for Benefit of Newco. In the event NeoMedia breaches (or in the event any third party alleges facts that, if true, would mean NeoMedia has breached) any of its representations, warranties, and covenants contained herein, then NeoMedia agrees to indemnify Newco from and against the entirety of any Adverse Consequences Newco may suffer through and after the date of the claim for indemnification (including any Adverse Consequences Newco may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach).

8.3 Indemnification Provisions for Benefit of NeoMedia. In the event Newco breaches (or in the event any third party alleges facts that, if true, would mean Newco has breached) any of its representations, warranties, and covenants contained herein, then Newco agrees to indemnify NeoMedia from and against the entirety of any Adverse Consequences NeoMedia may suffer through and after the date of the claim for indemnification (including any Adverse Consequences NeoMedia may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach).

8.4 Matters Involving Third Parties.

(a) If any third party shall notify either Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) which may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 8, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced.

(b) The Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder, (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently.

(c) So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 8.4(b) above, (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; provided, however, that if the named parties to the action or proceeding include both the Indemnifying Party and the Indemnified Party and the Indemnified Party is advised that representation of both parties by the same counsel would be inappropriate under applicable standards of professional conduct, the Indemnified Party may engage separate counsel at the expense of the Indemnifying Party, (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably).

(d) In the event any of the conditions in Section 8.4(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith), (ii) the Indemnifying Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys’ fees and expenses), and (iii) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Section 8.

8.5 Determination of Adverse Consequences. The Parties shall take into account the time cost of money (using the Applicable Rate as the discount rate) in determining Adverse Consequences for purposes of this Section 8.

8.6 Limitations. Notwithstanding anything contained in this Agreement to the contrary, the indemnification obligations of the Parties under this Section 8 shall be subject to the limitations described in this Section 8.6.

(a) Time Limitation. No Party shall have any obligation to indemnify the other Party from and against any Adverse Consequences unless such other Party shall have provided the Party against whom it is seeking indemnification with written notice containing a reasonable description of the claim, action or circumstances giving rise to such Adverse Consequences within the Claim Period.

(b) Basket. No Party shall have any obligation to indemnify the other Party from and against any Adverse Consequences except to the extent that such other Party has suffered Adverse Consequences in an aggregate amount that exceeds Twenty-Five Thousand Dollars ($25,000); provided that this Section 8.6(b) shall not limit in any respect indemnity claims: (i) based upon fraud or intentional breach or intentional misrepresentation; (ii) arising from a breach by NeoMedia of any covenant contained in this Agreement; (iii) arising from a breach by NeoMedia of any representation or warranty contained in Section 3 hereof; or (iv) related to any Tax or Tax Liability of Mobot for periods prior to the Closing Date.

8.7 Other Indemnification Provisions. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable, or common law remedy any Party may have with respect to Mobot or the transactions contemplated by this Agreement. NeoMedia hereby agrees that it will not make, and will ensure that no person who served or is serving as an officer, director, employee or agent of NeoMedia will make, any claim for indemnification against Mobot by reason of the fact that it or he or she was a stockholder, director, officer, employee, or agent of Mobot or was serving at the request of Mobot as a partner, trustee, director, officer, employee, or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement, or otherwise) with respect to any action, suit, proceeding, complaint, claim, or demand brought by Newco or Mobot against NeoMedia (whether such action, suit, proceeding, complaint, claim, or demand is pursuant to this Agreement, applicable law, or otherwise).

SECTION 9.

TAX MATTERS.

9.1 Taxes of Other Persons. NeoMedia agrees to indemnify Newco from and against the entirety of any Adverse Consequences Newco or Mobot may suffer resulting from, arising out of, relating to, in the nature of, or caused by any Liability of Mobot for Taxes of any Person other than Mobot (a) under Reg. Section 1. 1502-6 (or any similar provision of state, local or foreign law), (ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.

9.2 Returns for Periods Through the Closing Date. Mobot shall file a Federal income Tax Return for 2006 on a stand-alone basis. NeoMedia shall not include Mobot as a member of an Affiliated Group filing a consolidated federal income Tax Return the common parent of which is NeoMedia.

9.3 Certain Taxes. All transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement shall be paid by NeoMedia when due, and NeoMedia will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes and fees, and, if required by applicable law, Newco will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation.

SECTION 10.

MISCELLANEOUS.

10.1 No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and Mobot and their respective successors and permitted assigns.

10.2 Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof.

10.3 Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; provided, however, that Newco may assign any or all of its rights, interests and obligations hereunder to one or more of its Affiliates or to any successor to all or any substantial part of its assets and business.

10.4 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

10.5 Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

10.6 Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

	If to NeoMedia:	NeoMedia Technologies, Inc.
		2201 Second Street, Suite 600
		Fort Myers, FL 33901
		Attn: Charles T. Jensen

	Copy to:	Kirkpatrick & Lockhart Nicholson Graham LLP
		201 South Biscayne Blvd.
		Suite 2000, Miami Center
		Miami, FL 33131
		Attn: Clayton E. Parker, Esq.

	If to Newco:	FMS Group, Inc.
		49 Waltham Street
		Lexington, MA 02421
		Attn: Russell Gocht

	Copy to:	Van Wert, Zimmer & Conlin, P.C.
		245 Winter Street
		Waltham, MA 02451
		Attn: Stephen R. Conlin, Esq.

Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.

10.7 Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the Commonwealth of Massachusetts without giving effect to any choice or conflict of law provision or rule (whether of the Commonwealth of Massachusetts or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the Commonwealth of Massachusetts.

10.8 Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by NeoMedia and Newco. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

10.9 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

10.10 Expenses. Each of the Parties will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. NeoMedia agrees that Mobot has not borne and will not bear any of NeoMedia’s costs and expenses (including any of its legal fees and expenses) in connection with this Agreement or any of the transactions contemplated hereby.

10.11 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation. The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant.

10.12 Incorporation of Exhibits, Annexes, and Schedules. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

10.13 Specific Performance. Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter (subject to the provisions set forth in Section 10.14 below), in addition to any other remedy to which they may be entitled, at law or in equity.

10.14 Submission to Jurisdiction. Each of the Parties submits to the jurisdiction of any state or federal court sitting in Boston, Massachusetts, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto. Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 10.6 above. Nothing in this Section 10.14, however, shall affect the right of any Party to bring any action or proceeding arising out of or relating to this Agreement in any other court or to serve legal process in any other manner permitted by law or at equity. Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity.

*****

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


	NEOMEDIA TECHNOLOGIES, INC.

	By:	/s/ David A. Dodge
		Title: Chief Financial Officer


	FMS GROUP, INC.

	By:	/s/ Russell Gocht
		Title: CEO

EX-16.2 3 v059730_ex16-2.htm

Exhibit 16.2

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Escrow Agreement”) is entered into as of this 5^th day of December, 2006, by and among NeoMedia Technologies, Inc., a Delaware corporation (“NeoMedia”), FMS Group, Inc., a Delaware corporation (“Newco”), Mobot, Inc., a Delaware corporation (“Mobot”) and Kirkpatrick & Lockhart Nicholson Graham LLP (the “Escrow Agent”). All capitalized terms not defined herein shall have those meanings ascribed thereto in that certain Agreement dated of even date herewith by and between NeoMedia and Newco (the “Agreement”).

RECITALS:

A. Pursuant to the Agreement, NeoMedia shall transfer to Newco all of the Mobot Shares in exchange for the issuance by Newco to NeoMedia of certain shares of capital stock of Newco, including 12,000 shares of nonvoting common stock, $0.01 par value per share, of Newco (subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification of shares or other similar event) which are to be held in escrow pursuant to the terms of this Escrow Agreement (the “Escrow Shares”).

B. Pursuant to Section 2.5 of the Agreement, the Escrow Shares are being held by the Escrow Agent as security for the obligations of NeoMedia to Mobot under the Note.

C. Pursuant to the Note, at the option of Mobot, upon the occurrence of an Event of Default (as defined in the Note) by NeoMedia under the Note, Mobot shall have the right to direct that the Escrow Shares be transferred to Newco (and NeoMedia shall forfeit all rights thereto) as liquidated damages.

D. The Escrow Agent has agreed to hold the Escrow Shares as Escrow Agent pursuant to the terms of this Escrow Agreement.

AGREEMENT:

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, each intending to be legally bound, hereby agree as follows:

1. Recitals. The above recitals are true and correct and are hereby incorporated, in their entirety, by this reference.

2. Appointment. NeoMedia and Newco hereby appoint the Escrow Agent, and the Escrow Agent hereby accepts appointment as the Escrow Agent under the terms and subject to the conditions of this Agreement.

3. Term. The term (the “Term”) of this Agreement commences on the date of its execution and continues until such time as the Escrow Agent disburses the Escrow Shares in accordance with the provisions of Section 6 hereof or upon the earlier resignation of the Escrow Agent pursuant to Section 7(d) hereof.

4. The Escrow Shares. On the date hereof, Newco shall deliver to the Escrow Agent a stock certificate representing the Escrow Shares.

5. Notices.

(a) In the event that NeoMedia shall claim that it has satisfied all of its obligations under the Note, NeoMedia shall deliver to the Escrow Agent and Mobot a written notification (a “Payment Notice”) which contains a description of the date and amount of payment made by NeoMedia under the Note. In the event that Mobot objects to such claim and asserts that NeoMedia has not satisfied all of its obligations under the Note, Mobot shall deliver to the Escrow Agent and NeoMedia a written notification (a “Payment Objection Notice”) which contains a description of the basis for such objection.

(b) In the event that Mobot shall claim that an Event of Default (as defined in the Note) shall have occurred under the Note and in connection therewith shall elect to direct that the Escrow Shares be transferred to Newco as liquidated damages, Mobot shall deliver to the Escrow Agent and NeoMedia a written notification (a “Claim Notice”) which contains a description of the basis for such claim. In the event that NeoMedia objects to such claim and asserts that an Event of Default has not occurred, NeoMedia shall deliver to the Escrow Agent and Mobot a written notification (a “Claim Objection Notice”) which contains a description of the basis for such objection.

6. Disbursements.

(a) General Rule for Disbursement. The Escrow agent shall release the Escrow Shares only in accordance with (i) a written instrument delivered to the Escrow Agent that is executed by both NeoMedia and Mobot and that instructs the Escrow Agent as to the distribution of some or all of the Escrow Shares, (ii) an order of a court of competent jurisdiction, a copy of which is delivered to the Escrow Agent by either NeoMedia or Mobot, that instructs the Escrow Agent as to the distribution of some or all of the Escrow Shares, or (iii) the provisions of Section 6(b), (c), (d) or (e) below.

(b) Release Based Upon Payment Notice. The Escrow Agent shall release the Escrow Shares to NeoMedia at the end of a period of twenty (20) days following its receipt of a Payment Notice unless within such twenty (20) day period the Escrow Agent receives a Payment Objection Notice from Mobot.

(c) Release Based Upon Claim Notice. The Escrow Agent shall release the Escrow Shares to Newco at the end of a period of twenty (20) days following its receipt of a Claim Notice unless within such twenty (20) day period the Escrow Agent receives a Claim Objection Notice from NeoMedia.

(d) Release On Release Date. The Escrow Agent shall release the Escrow Shares to NeoMedia on January 15, 2007 (the “Release Date”), provided that if Mobot has previously delivered to the Escrow Agent a copy of a Claim Notice and the Escrow Agent has not received written notice executed by both NeoMedia and Mobot of the resolution of the claim covered thereby (an “Open Claim”), the Escrow Agent shall retain all of the Escrow Shares in escrow after the Release Date. The Escrow Agent shall release such retained Escrow Shares only in accordance with clauses (i) or (ii) of Section 6(a).

(e) Release Upon Court Order. If the Escrow Agent retains the Escrow Shares after the Release Date pursuant to Section 6(d), and the Escrow Agent thereafter releases to Newco a portion of such Escrow Shares upon an order of a court of competent jurisdiction that has resolved such Open Claim, then the Escrow Agent shall thereupon release to NeoMedia the remaining Escrow Shares (unless there is one or more other Open Claims, in which case the Escrow Agent shall retain the remaining Escrow Shares in escrow and shall release them only in accordance with clauses (i) or (ii) of Section 6(a)).

(f) Cancellation of Certificates. Upon any release of the Escrow Shares to Newco pursuant to the terms of this Agreement, NeoMedia shall forfeit all rights in such Escrow Shares and Newco shall be authorized to cancel the certificate or certificates representing such Escrow Shares registered in the name of NeoMedia (whereupon NeoMedia shall cease to be the owner of the shares represented by such certificate or certificates for all purposes) and issue a new certificate or certificates representing such Escrow Shares registered in the name of Newco.

7. Escrow Agent.

(a) Duties. The Escrow Agent’s duties and obligations under this Escrow Agreement are entirely nondiscretionary and ministerial in nature. The Escrow Agent shall be required to act in respect of the Escrow Shares only as specifically provided hereunder. This Agreement sets forth all of the duties and obligations of the Escrow Agent with respect to any and all matters relating to the Escrow Shares as contemplated hereunder, and no additional obligations of the Escrow Agent shall be implied from the terms of this Agreement or any other agreements, including, without limitation, the Agreement. The Escrow Agent, in its actions pursuant to this Agreement, shall be fully protected in every reasonable exercise of its discretion.

(b) Resolution of Doubt. If the Escrow Agent is in doubt as to its duties and liabilities under this Agreement, then the Escrow Agent may, in its sole discretion, continue to hold the Escrow Shares until all parties concerned mutually agree to the release thereof, or until a judgment of a court of competent jurisdiction determines the rights of the parties with respect to the Escrow Shares, or may deposit the Escrow Shares then held under this Agreement with the Clerk of the Court having jurisdiction over any disputes and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall fully cease and terminate.

(c) Reliance on Documents. The Escrow Agent may act in good faith reasonable reliance upon (i) any document, instrument or signature, including any statement or assertion made in any such document or instrument and (ii) any notice or instructions that the Escrow Agent reasonably believes to be authorized under this Agreement. In the event that the Escrow Agent acts in good faith reasonable reliance upon any document, instrument, signature, statement or assertion made in any such document or instrument, or any notice or instructions that it reasonably believes to be authorized under this Agreement, the Escrow Agent shall not be liable for the sufficiency, accuracy or authenticity of such document or instrument and its duties shall be limited to those set forth in this Agreement.

(d) Resignation. The Escrow Agent may resign at any time upon giving NeoMedia and Mobot ten (10) days’ prior written notice. In such event, the Escrow Agent shall deliver the Escrow Shares in its possession to a successor escrow agent which shall be selected by Mobot, and approved by NeoMedia. If no successor is appointed and acting hereunder within ten (10) days after such resignation notice is given, the Escrow Agent may pay and deliver the Escrow Shares to a court of competent jurisdiction. Upon its resignation and delivery of the Escrow Shares as set forth in this Section 8(d), the Escrow Agent shall be discharged of and from any and all further obligations or liabilities arising in connection with or under this Agreement.

(e) Fees and Expenses. Notwithstanding anything to the contrary contained herein, and without limiting the generality of any other provision contained herein, NeoMedia shall be liable for the payment of all reasonable fees and expenses of the Escrow Agent (including, without limitation, reasonable attorneys’ fees and expenses) for its actions hereunder.

(f) Liabilities and Indemnification. Notwithstanding anything to the contrary contained herein, and without limiting the generality of any other provision contained herein, the Escrow Agent shall not be liable for any damages, or have any obligations other than the duties prescribed herein in carrying out or executing the purposes and intent of this Agreement. The Escrow Agent shall not be liable to any party hereto or to any third party as a result of any action or omission taken or made by the Escrow Agent in good faith. Mobot and NeoMedia, jointly and severally, covenant and agree that they shall reimburse the Escrow Agent upon receipt of written demand for, and shall indemnify and hold the Escrow Agent harmless from, against and with respect to, any and all loss, liability, damage, or expense (including, without limitation, attorneys’ fees and costs) that the Escrow Agent may suffer or incur in connection with this Agreement and the performance of the Escrow Agent’s obligations hereunder or otherwise in connection herewith, except where any such loss, liability, damage or expense is the result of the Escrow Agent’s gross negligence or willful misconduct.

(g) No Warranties. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner and execution, or validity of any instrument deposited with the Escrow Agent, nor as to the identity, authority, or right of any person executing the same.

8. Distribution and Voting Rights. Until Escrow Shares are released to NeoMedia in accordance with the terms of this Agreement, NeoMedia shall not be entitled to receive any dividends or distributions paid with respect to the Escrow Shares and shall not have any voting rights incident to the Escrow Shares.

9. Miscellaneous Provisions.

(a) Entire Agreement. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof, and supersedes and revokes any and all prior or existing agreements, written or oral, relating to the subject matter hereof, and this Agreement shall be solely determinative of the subject matter hereof.

(b) Amendments. This Agreement may not be amended, modified, superseded, canceled, or terminated, except by a written instrument executed by the parties hereto.

(c) Counterparts. This Agreement may be executed in one or more counterparts, and any such counterpart shall, for all purposes, be deemed an original, but all such counterparts together shall constitute but one and the same instrument. All parties acknowledge that a facsimile copy of this Agreement may be executed and shall have the same binding force and effect, and in such case each party agrees to execute the appropriate original agreement thereafter if requested.

(d) Severability. The invalidity or unenforceability of any provision hereunder (or any portion of such a provision) shall not affect the validity or enforceability of the remaining provisions (or remaining portions of such provisions) of this Agreement.

(e) Waiver. Neither party may, at any time or times, waive (in whole or in part) any rights or privileges to which he or it may be entitled hereunder. However, no waiver by any party of any condition or of the breach of any term contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further continuing waiver of any other condition or of any breach of any other terms contained in this Agreement, and no waiver shall be effective unless it is in writing and signed by the waiving party and to the extent required, any other prerequisites to a waiver under this Agreement are satisfied.

(f) Binding Effect and Agreement. This Agreement shall be binding upon the parties hereto and their respective heirs, personal or other legal representatives, successors, and permitted assigns.

(g) Governing Law; Jurisdiction; Venue; Consent to Service. The validity and effect of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Florida, without regard to principles of conflicts of laws thereof. Any dispute, controversy or question of interpretation arising under, out of, in connection with or in relation to this Agreement or any amendments hereof, or any breach or default hereunder, shall be litigated in the state or federal courts in the State of Florida. Each of the parties hereby irrevocably submits to the jurisdiction of any state or federal court sitting in the State of Florida. Each party hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of any such action in the State of Florida.

(h) Enforcement Costs. If any legal action or other proceedings is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees, court costs and all expenses incurred in that action or proceeding, in addition to any other relief to which such party may be entitled.

(i) Notice. All notices, requests, consents and other communications required or permitted under this Agreement shall be in writing and shall be (as elected by the person giving such notice) hand delivered by messenger or nationally recognized courier service, addressed to the address set forth below:

	If to NeoMedia:	NeoMedia Technologies, Inc.
		2201 Second Street, Suite 600
		Fort Myers, FL 33901
		Attn: Charles T. Jensen

	Copy to:	Kirkpatrick & Lockhart Nicholson Graham LLP
		201 South Biscayne Blvd.
		Suite 2000, Miami Center
		Miami, FL 33131
		Attn: Clayton E. Parker, Esq.

	If to Newco:	FMS Group, Inc.
		49 Waltham Street
		Lexington, MA 02421
		Attn: Russell Gocht

	If to Mobot:	Mobot, Inc.
		49 Waltham Street
		Lexington, MA 02421
		Attn: Russell Gocht

	Copy to:	Van Wert, Zimmer & Conlin, P.C.
		245 Winter Street
		Waltham, MA 02451
		Attn: Stephen R. Conlin, Esq.

	If to Escrow Agent:	Kirkpatrick & Lockhart Nicholson Graham LLP
		201 South Biscayne Blvd.
		Suite 2000, Miami Center
		Miami, FL 33131
		Attn: Clayton E. Parker, Esq.

or to such other address as may be designated by notice complying with the terms of this Section. Each such notice shall be deemed delivered: (a) on the date delivered if by personal delivery; or (b) one (1) business day after being sent, if delivered by a nationally recognized courier (i.e., Federal Express, United Parcel Service, DHL).

(j) Waiver of Jury Trial. AS AN INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AGREEMENT, EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THE RIGHT EACH MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY LITIGATION OR ACTION BASED HEREON, ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY TO THIS AGREEMENT OR ANY AGREEMENTS EXECUTED IN CONNECTION HEREWITH.

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


	NEOMEDIA TECHNOLOGIES, INC.

	By:	/s/ David A. Dodge
		Title: Chief Financial Officer


	FMS GROUP, INC.

	By:	/s/ Russell Gocht
		Title: CEO


	MOBOT, INC.

	By:	/s/ David A. Dodge
		Title: Secretary and Treasurer


	KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP

	By:	/s/ Ronald Haligman
		Title: Partner

EX-16.3 4 v059730_ex16-3.htm

Exhibit 16.3

SPECIAL PREFERENCE STOCK

1. Voting Rights. The shares of Special Preference Stock shall have no right to vote.

2. Dividends. The shares of Special Preference Stock shall not be entitled to any dividends or other distributions (other than upon liquidation, dissolution or winding up of the Corporation in accordance with Section 3 below).

3. Liquidation.

(a) Subject to Section 6, upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payments of any preferential amounts on liquidation shall have been made to the holders of any stock ranking on liquidation senior to the Special Preference Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of such holders so as to be available for such payments, and before any payment shall be made to the holders of the Common Stock, the Nonvoting Common Stock and any other class of stock ranking on liquidation junior to the Special Preference Stock, the holders of the shares of Special Preference Stock, if then outstanding, shall be entitled to receive, out of the assets of the Corporation available for distribution to stockholders, an amount per share equal to $54.00 (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving the Special Preference Stock) (the “Special Liquidation Amount”), and shall not be entitled to receive any other assets of the Corporation available for distribution to stockholders.

(b) Distributions Other than Cash. Whenever the distribution provided for in this Section 3 shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board of Directors of the Corporation (subject to Section 6).

(c) Merger as Liquidation, etc. The merger or consolidation of the Corporation into or with another corporation (other than a merger with or into (i) a wholly-owned subsidiary of the Corporation or (ii) another corporation or entity in connection with which the holders of the capital stock of the Corporation immediately prior to such merger continue to hold at least a majority of the voting power of the capital stock of the surviving corporation immediately after such merger) shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 3, unless the Board of Directors of the Corporation determines otherwise and, if the Corporation is the surviving corporation in such merger, the shares of Special Preference Stock remain outstanding with the same rights, preferences, privileges and restrictions as existed immediately prior to such merger, or if the Corporation is not the surviving corporation in such merger, the shares of Special Preference Stock are exchanged in such merger for shares of capital stock of the surviving corporation having the same rights, preferences, privileges and restrictions as the shares of Special Preference Stock immediately prior to such merger. The amount deemed distributed to the holders of shares of Special Preference Stock upon any such merger or consolidation shall be the cash or the value of the property, rights or securities distributed to such holder by the acquiring person, firm or other entity (subject to Section 6). The value of such property, rights or other securities shall be determined in good faith by the Board of Directors of the Corporation.

4. Redemption at the Election of Holder of Special Preference Stock. At the sole election of a holder of shares of Special Preference Stock (the “Redeeming Holder”) made in writing at any time and from time to time prior to the date that is fifteen (15) months following the date of the original issuance of the shares of Special Preference Stock, the Redeeming Holder shall have the right to require the Corporation to redeem some or all of the shares of Special Preference stock held by such Redeeming Holder upon the terms set forth in this Section 4. The number of shares of Special Preference Stock to be so redeemed shall be specified by the Redeeming Holder in its written election. Such redemption shall occur on a date specified by the Redeeming holder in its written election, which date shall not be more than 30 days following the date of the redemption election. On such redemption date, and as a condition of such redemption, the Redeeming Holder shall (i) surrender the certificate for the number of shares of Special Preference Stock to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached, and pay to the Corporation in cash or certified check or by wire transfer of immediately available funds an amount equal to (x) the fair market value on such redemption date of 1,000 shares of common stock, $0.01 par value per share, of NeoMedia Technologies, Inc. (“NeoMedia Common Stock”) (subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification of shares or other similar event), as reasonably determined by the board of directors of the Corporation, multiplied by (y) 0.4, at the offices of the Corporation, against tender by the Corporation of the consideration for such shares of Special Preference Stock to be so redeemed. In consideration of the redemption of shares of Special Preference Stock at the election of a Redeeming Holder pursuant to this Section 4, the Corporation shall transfer to the Redeeming Holder 1,000 shares of NeoMedia Common Stock (subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification of shares or other similar event) for each share of Special Preference stock so redeemed.

5. Redemption at the Election of the Corporation.

(a) At the sole election of the Corporation made in writing at any time and from time to time after the Trigger Date (as defined below), the Corporation shall have the right to redeem (and a holder of shares of Special Preference Stock shall have the obligation to sell to the Corporation) some or all of the outstanding shares of Special Preference Stock upon the terms set forth in this Section 5. The number of shares of Special Preference Stock to be so redeemed shall be specified by the Corporation in its written election. Such redemption shall occur on a date specified by the Corporation in its written election, which date shall not be more than 180 days following the date of the redemption election. On such redemption date, the holder of shares of Special Preference Stock to be so redeemed shall surrender the certificate for such shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached, at the offices of the Corporation, against tender by the Corporation of the Redemption Consideration (as defined below). The “Trigger Date” shall mean the date that is fifteen (15) months following the date of the original issuance of the shares of Special Preference Stock, provided that if prior to such date a holder of shares of Special Preference Stock either (i) files a voluntary petition under any bankruptcy or insolvency law, or a petition for the appointment of a receiver or makes an assignment for the benefit or creditors, or (ii) is subjected involuntarily to such a petition or assignment or to an attachment or other legal or equitable interest with respect to any shares of Special Preference Stock, and such involuntary petition or assignment or attachment is not discharged within ninety (90) days after its date, or (c) is subject to a transfer of any of such shares of Special Preference Stock by operation of law, then the Trigger Date shall mean the date of the occurrence of such event.

(b) In consideration of the redemption of each share of Special Preference Stock to be redeemed by the Corporation, the Corporation shall pay to the holder of such share of Special Preference Stock a redemption price per share equal to the Special Liquidation Amount (the “Redemption Consideration”), subject to Section 6.

(c) If, on or before the redemption date, the Redemption Consideration necessary for such redemption shall have been either tendered by the Corporation to the holder of shares of Special Preference Stock that have been called for redemption or set aside by the Corporation and deposited with a bank or trust company, in trust for the benefit of the holder of the shares of Special Preference Stock that have been called for redemption, then, notwithstanding that the certificate for such shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such redemption date, and all rights of the holder of such shares so called for redemption shall forthwith, after such redemption date, cease and terminate with respect to such shares, excepting only the right to receive the Redemption Consideration therefor to which such holder is entitled. In case the holder of the shares of Special Preference Stock which shall have been called for redemption shall not, within one year after the redemption date, claim the Redemption Consideration so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof.

6. Distribution or Transfer of NeoMedia Shares.

(a) Notwithstanding anything contained herein to the contrary, the Corporation, at its sole election, may satisfy all of the preferential rights of the holders of shares of Special Preference Stock upon liquidation under Section 3 (including without limitation the right to receive the Special Liquidation Amount) or the right of any holder of the shares of Special Preference Stock called for redemption at the election of the Corporation under Section 5 to receive the Redemption Consideration upon redemption under Section 5 (as the case may be, the “Applicable Consideration”), by distributing or transferring to such holder of the shares of Special Preference Stock 1,000 shares of NeoMedia Common Stock (subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification of shares or other similar event) for each such share of Special Preference Stock entitled to such preference upon liquidation under Section 3 or so redeemed under Section 5, as the case may be (such shares of Special Preference Stock, the “Affected Shares”), subject to Section 6(b) below.

(b) If the Corporation elects to satisfy the Applicable Consideration in whole or in part through the distribution or transfer of shares of NeoMedia Common Stock upon liquidation under Section 3 (or a transaction deemed to be a liquidation under Section 3(c)) or redemption under section 5, the holder of the Affected Shares of Special Preference Stock shall be responsible for paying to the Corporation an amount equal to (x) the fair market value on the date of such distribution or redemption, as the case may be, of 1,000 shares of NeoMedia Common Stock (subject to equitable adjustment in the event of any stock dividend, stock split, combination, reclassification of shares or other similar event), as reasonably determined by the board of directors of the Corporation, multiplied by (y) 0.4, multiplied by (z) the number of Affected Shares held by such holder (such amount, the “Required Payment”), and the Corporation may require such holder to pay to the Corporation such Required Payment prior to and as a condition of making such distribution or transfer. If such holder fails for any reason to pay such Required Payment to the Corporation prior to such distribution or transfer, instead of distributing or transferring such shares of NeoMedia Common Stock to such holder, the Corporation may instead deliver to such holder a written undertaking to deliver such shares of NeoMedia Common Stock to such holder upon receipt by the Corporation from such holder of the Required Payment, and in such circumstances the delivery of such written undertaking by the Corporation to such holder shall constitute payment by the Corporation of the full Applicable Consideration. Alternatively, if such holder fails for any reason to pay such Required Payment to the Corporation prior to such distribution or transfer, the Corporation shall be permitted to retain a portion of the shares of NeoMedia Common Stock which it otherwise would distribute or transfer to such holder having a fair market value, as determined in good faith by the board of directors of the Corporation, equal to the amount of such Required Payment, and in such circumstances the distribution or transfer to such holder of the remaining portion of the shares of NeoMedia Common Stock which it otherwise would distribute or transfer to such holder shall constitute payment by the Corporation of the full Applicable Consideration.

7. Restriction on Transfer. The holders of shares of Special Preference Stock may not sell, assign, transfer, exchange or otherwise dispose of such shares or any interest therein, except as expressly approved in writing by the Corporation, and any attempt by any such holder to do so without such approval shall be void and of no effect. In addition to any other legal or equitable remedies which the Corporation may have in the event of such an attempted transfer, the Corporation may enforce its rights by action for specific performance (to the extent permitted by law) and may refuse to recognize any transferee as one of the Corporation’s stockholders for any purpose.

8. No Reissuance of Special Preference Stock. No share of Special Preference Stock acquired by the Corporation by reason of redemption, purchase or otherwise shall be reissued, and such share shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.

9. Residual Rights. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein shall be vested in shares of capital stock of the Corporation other than the Special Preference Stock.

10. Waiver. Any of the rights of the holder of any shares of Special Preference Stock set forth herein may be waived by consent of such holder.

EX-16.4 5 v059730_ex16-4.htm

Exhibit 16.4

PROMISSORY NOTE

$200,000.00

December 5, 2006
Waltham, Massachusetts

FOR VALUE RECEIVED, the undersigned, NeoMedia Technologies, Inc., a Delaware corporation (“NeoMedia”), HEREBY PROMISES TO PAY to the order of Mobot, Inc., a Delaware corporation (“Mobot”), the principal sum of Two Hundred Thousand Dollars ($200,000/00), together with interest (computed on the basis of a 360-day year and the number of days actually elapsed) on the unpaid principal amount from time to time outstanding at the rate of ten percent (10%) per annum, compounded annually.

The entire outstanding principal amount of this note, and all interest accrued thereon, shall be due and payable upon the earlier of (i) five (5) business days following the closing of the sale by NeoMedia of all of any substantial part of the assets of its micropaint business, or (ii) December 31, 2006.

Principal, interest and all other amounts due under this note shall be payable, in immediately available funds, at the offices of Mobot, 49 Waltham Street, Lexington, MA 02421-5411, or at such other address as the holder of this note may from time to time designate in writing to NeoMedia.

NeoMedia shall have the right, at any time, to prepay all or any part of the outstanding principal amount hereof without premium or penalty.

This note has been made by NeoMedia in connection with an Agreement dated of even date herewith (the “Agreement”) between NeoMedia and FMS Group, Inc. (“Newco”). Pursuant to the Agreement, certain Escrow Shares (as defined in the Agreement) are being held under an Escrow Agreement dated of even date herewith among NeoMedia, Newco, Mobot and the Escrow Agent to secure Mobot’s rights under this note.

At the option of Mobot, this note shall become immediately due and payable without notice or demand in the event (an “Event of Default”) (a) NeoMedia shall fail to pay any sum due under this note when due, (b) NeoMedia or any of its subsidiaries is involved in any financial difficulty, as evidenced by (i) an assignment, composition or similar device for the benefit of creditors, or (ii) an attachment or receivership of assets not dissolved within thirty (30) days, or (iii) the filing by NeoMedia or any of its subsidiaries of a petition under any chapter of the Federal Bankruptcy Code, or the institution of any other proceeding under any law relating to bankruptcy, bankruptcy reorganization, insolvency or relief of debtors with respect to NeoMedia or any of its subsidiaries, (c) NeoMedia violates all or part of any of the covenants, representations or undertakings given in this note or in the Agreement, and such violation shall continue for a period of ten (10) days.

Upon the occurrence of an Event of Default, Mobot shall have then, or at any time thereafter, all of the rights and remedies afforded by the Uniform Commercial Code as from time to time in effect in The Commonwealth of Massachusetts or afforded by other applicable law. At the option of Mobot, in lieu of exercising such rights and remedies, Mobot shall have the right to direct that the Escrow Shares be transferred to Newco (and NeoMedia shall forfeit all rights thereto) as liquidated damages.

To secure NeoMedia’s obligations under this note, NeoMedia hereby pledges to Mobot and grants Mobot a security interest in all of the Escrow Shares.

Whenever there is an Event of Default, then the rate of interest due and payable hereunder shall, from and after such Event of Default, be equal to the rate of interest stated above plus five percent (5%) per annum.

NeoMedia hereby waives presentment, demand, notice, protest and other demands and notices in connection with the delivery, acceptance or enforcement of this note.

No course of dealing between NeoMedia and Mobot or any delay or omission on the part of the holder of this note in exercising any right hereunder shall operate as a waiver of such right or of any other right under this note, and a waiver, delay or omission on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion.

None of the terms or provisions of this note may be amended, modified or waived except by a written instrument duly executed on behalf of the holder of this note expressly referring hereto and setting forth the provision so amended, modified or waived, and, in the case of any amendments or modifications of this note, NeoMedia.

NeoMedia agrees to pay on demand all costs of collection, including reasonable attorneys’ fees, incurred by the holder in enforcing the obligations created by this note.

This note shall be binding upon the successors, assigns, executors and administrators of NeoMedia, and shall inure to the benefit of the successors, assigns, executors and administrators of Mobot.

This note shall be deemed to be under seal, and all rights and obligations hereunder shall be governed by the laws of The Commonwealth of Massachusetts.


	NEOMEDIA TECHNOLOGIES, INC.

	By:	/s/ David A. Dodge
		Title: Chief Financial Officer

EX-16.5 6 v059730_ex16-5.htm

Exhibit 16.5

EXCLUSIVE LICENSE AGREEMENT

by and between

MOBOT, INC., as Licensor

and

NEOMEDIA TECHNOLOGIES, INC., as Licensee

December 5, 2006

CONTENTS

1	.	Definitions		1
2	.	License		3
		2.1	Grant of License	3
		2.2	Limitations on Rights	3
		2.3	Modifications	4
3	.	Exclusive Dealings and Restrictions		4
		3.1	Exclusivity	4
		3.2	Termination of Exclusivity	4
		3.3	Restrictions	4
4	.	Responsibilities of Mobot		4
5	.	Responsibilities of Licensee		5
6	.	Fees and Royalties		6
		6.1	Fees	6
		6.2	Payment Terms	6
7	.	Promotion		6
		7.1	Licensee Web Site	6
		7.2	Reference by Mobot	6
		7.3	Branding on Mobile Camera Devices	7
8	.	Proprietary Rights and Confidentiality		7
		8.1	Proprietary Rights of Mobot	7
		8.2	Proprietary Rights of Licensee	7
		8.3	Confidentiality of Mobot Technology	7
		8.4	Mobot Trademarks	8
		8.5	Confidentiality of Licensee Technology	8
		8.6	Licensee Trademarks	9
		8.7	Competitive Technology	9
9	.	Warranties and Liability		10

-i-

	9.1	Intellectual Property Warranty and Indemnity by Mobot	10
	9.2	Intellectual Property Warranty and Indemnity by Licensee	11
	9.3	Exclusion of Warranties	12
	9.4	Limitation of Liability	12
10.	Term and Termination		12
	10.1	Term	12
	10.2	Termination by Mobot	13
	10.3	Termination by Licensee for Cause	13
	10.4	Termination by Licensee Without Cause	13
	10.5	Rights and Obligations on Termination	13
11.	General		14
	11.1	Payments	14
	11.2	Taxes	14
	11.3	Notices	14
	11.4	Severability	14
	11.5	Entire Agreement	14
	11.6	Effect of Waiver	14
	11.7	Force Majeure	15
	11.8	Assignment	15
	11.9	Headings	15
	11.10	Independent Contractors	15
	11.11	Disputes	15
	11.12	Governing Law	16
	11.13	Export Regulation	16
	11.14	Execution	16
	11.15	Public Announcements	16

-ii-

EXCLUSIVE LICENSE AGREEMENT

This Exclusive License Agreement (the “Agreement”) dated as of December 5, 2006 (the “Effective Date”), is entered into by and between Mobot, Inc. (“Mobot”), a Delaware corporation having its principal place of business at 49 Waltham Street, Lexington, MA 02421, and NeoMedia Technologies, Inc. (“Licensee”), a Delaware corporation having its principal place of business at 2201 Second Street, Suite #600, Fort Myers, FL 33901. Mobot or Licensee will be referred to herein as a “Party,” together as the “Parties.”

Mobot provides a proprietary image processing and recognition service and related wireless communications services for Mobile Camera Device applications (the “Mobot Service”). Licensee markets services and devices in connection with Mobile Camera Device applications (the “Licensee Service”). Licensee desires to acquire a license to use the Mobot Service in connection with Licensee’s provision of Licensee Services, as more particularly described herein.

In consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Definitions. The following capitalized terms shall have the meanings herein as set forth below:

(a) “Affiliate” shall mean, with respect to any Party, any company or other legal entity which directly or indirectly controls, or is controlled by, or is under common control with, such Party. For the purposes of this definition, “control” means the ability to direct the policy or operations of an entity, directly or indirectly, and shall be presumed in the case of the possession of more than fifty percent (50%) of the voting stock of the controlled entity or the possession of the maximum ownership permitted by operation of local laws or regulations governing such entity;

(b) “Barcode” shall mean one or more of: barcodes, 2D codes (such as QR code), smartcodes, and other symbols generated expressly for optical machine reading.

(c) “Competitive Business” means products and services which provide image matching technology for the purposes of retrieving information, or participating in merchandising or marketing solutions and services, expressly for users of mobile camera phones or similar mobile devices.

(d) “Customers” shall mean Licensee’s business customers, whether software or hardware manufacturers, service providers or brand owners, with respect to the Mobot-Enabled Licensee Services.

(e) “End Users” shall mean individual consumers who own or use camera-equipped cell phones and camera-equipped PDAs.

1 of 17

(f) “Exclusive Territory” shall mean the territory within which Licensee has exclusive rights under Section 3.1 (subject to the termination of such exclusivity under Section 3.2), as defined in Schedule 2 hereto.

(g) “Exclusivity Term” shall mean the period during the Term during which Licensee sustains continuous Minimum Levels

(h) “Extended Period” shall have the meaning set forth in Schedule 1 hereto.

(i) “Hosting Services” shall mean the hosting and maintenance of the Mobot Site and Mobot Test Site by Mobot as provided in this Agreement, according to the service level standards set forth in Schedule 3 hereto

(j) “Initial Term” shall have the meaning set forth in Schedule 1 hereto.

(k) “Licensee Service” shall mean Licensee’s mobile marketing service for Mobile Camera Device applications using the Licensee Technology.

(l) “Licensee Technology” shall mean Licensee’s proprietary technology for Barcode reading marketed as of the date hereof under the brand name “Qode,” (as the name under which such proprietary technology may be marketed may change from time to time), including, without limitation, all related software, source code, object code, specifications, algorithms, and documentation.

(m) “Licensee Materials” shall have the meaning set forth in Schedule 4 hereto.

(n) “Minimum Levels” shall mean the amounts set forth in Schedule 1 hereto.

(o) “Mobot-Enabled Licensee Services” shall mean the Licensee Service provided by or on behalf of Licensee on a Special Basis with the Mobot Service.

(p) “Mobile Camera Devices” shall mean camera-equipped cell phones and camera-equipped PDAs used by End Users.

(q) “Mobot Service” shall mean Mobot’s proprietary image processing and recognition service for Mobile Camera Device applications using the Mobot Technology, high level functional specification for which is described in Schedule 4. This service is accessed through the Mobot Site.

(r) “Mobot Site” shall mean the uniform resource locator (“URL”) designated by Mobot as the URL(s) at which Licensee shall be able to access and use the Mobot Service for commercial purposes.

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(s) “Mobot Technology” shall mean all technology and associated documentation which Mobot owns or is permitted to use including, without limitation, all software, source code, object code, specifications, algorithms, and any related documentation.

(t) “Mobot Test Site” shall mean the uniform resource locator (“URL”) designated by Mobot as the URL(s) at which Licensee shall be able to access and use the Mobot Service for development, testing, demonstration, and other pre-sales purposes only.

(u) “Non-exclusive Territory” shall mean the territory within which Licensee has non-exclusive rights under the License, as defined in Schedule 2 hereto.

(v) “Other Companies” shall have the meaning set forth in Schedule 2 hereto.

(w) “Restricted Territory” shall mean the territory within which Licensee has no right or license to use the Mobot Service, as defined in Schedule 2 hereto.

(x) “Special Basis” shall have the meaning set forth in Schedule 4 hereto.

(y) “Territory” shall mean the Exclusive Territory and the Non-exclusive Territory. When the phrase “in the Territory” is used in connection with the provision of the Mobot Service, the Licensee Service or Mobot-Enables Licensee Services, it shall mean the provision of such services to or use of such services by End Users residing within the geographic confines of the Territory.

2. License.

2.1 Grant of License. Subject to the terms and conditions of this Agreement, Mobot hereby grants to Licensee a license (the “License”) to access and use the Mobot Service via the Mobot Sites and Mobot Test Sites solely for purposes of providing and supporting Mobot-Enabled Licensee Services in the Territory to and for the benefit of Customers and applicable End Users. The License shall not be transferable.

2.2 Limitations on Rights. Licensee shall not be permitted to use the Mobot Service except as expressly permitted under Section 2.1. Licensee shall not sublicense, resell or rent the Mobot Service to, or otherwise permit the use of the Mobot Service by, any third party. Licensee shall have no right to have access to Mobot Technology, and Licensee shall not access or attempt to access or alter any of the Mobot Technology. To the extent that the Mobot Technology is incorporated into software or electronic files used to operate the Mobot Sites and Mobot Test Sites, Licensee may not use (except to the extent that its receipt of Mobot Services under this Agreement is deemed to constitute an indirect use of the Mobot Technology), copy, distribute, sublicense or otherwise permit any third party to use such software or electronic files, except for the purposes of providing the Mobot-Enabled Licensee Services to Customers and applicable End Users. Licensee will not reverse assemble or reverse engineer any of the Mobot Technology. Licensee will not use the Mobot Service or the Mobot Technology in order to build a competitive product or service, build a product or service using similar ideas, features, functions of the Mobot Technology, or copy any ideas, features, or functions of the Mobot Technology. Licensee will not interfere with or disrupt the integrity of the Mobot Sites, the Mobot Test Sites, or the data contained therein. Licensee will not attempt to, and will not, access or use any portion of the Mobot Sites, the Mobot Test Sites, or any systems or servers owned or controlled by Mobot except for access and use expressly permitted in this Agreement. All rights not expressly granted to Licensee in this Agreement are reserved by Mobot.

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2.3 Modifications. Mobot may, from time to time, make modifications to the Mobot Service and the Mobot Technology (“Modifications”), all of which shall be the sole property of Mobot, provided that no such Modifications shall remove any material functionality of the Mobot Service as it exists as of the date of this Agreement as is more particularly defined in Schedule 4 unless such Modifications are approved in advance, in writing by Licensee. Mobot will deliver to Licensee reasonable advance notice of any material Modifications affecting delivery of the Mobot Service.

3. Exclusive Dealings and Restrictions.

3.1 Exclusivity. Subject to Section 3.2, during the Term, Mobot will not (i) license the Mobot Service for use on a Special Basis with any other Barcode reading application used on Mobile Camera Devices in the Exclusive Territory, or (ii) license the Mobot Service to any of the Other Companies (except to the extent Mobot has done so pursuant to agreements entered into prior to the date hereof).

3.2 Termination of Exclusivity. Licensee’s exclusive rights under Section 3.1 shall automatically terminate if Licensee shall fail to met the Minimum Levels as described in Schedule 2.

3.3 Restrictions. Notwithstanding any other provision of this Agreement, Licensee may not sell, offer, access or use the Mobot Service to provide Mobot-Enabled Licensee Services in the Restricted Territory. Licensee shall not be responsible if an End User in the Territory transports a Mobile Camera Device into the Restricted Territory and seeks to access the Mobot Service from within the Restricted Territory provided that Licensee takes any measures that are reasonably available to it to prevent such use.

4. Responsibilities of Mobot. During the Term, Mobot shall host or have hosted the Mobot Site and the Mobot Test Site so that the Mobot Service shall generally be accessible to Licensee via the Internet twenty-four (24) hours a day, seven (7) days a week. Mobot shall set up, and Licensee shall use, the Mobot Site only for providing Mobot Services on a commercial basis to third parties, and the Mobot Test Site only for testing. In addition, Mobot shall provide the following services for no additional consideration, except as noted:

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(a) Mobot shall be responsible for maintenance and management of the servers that host the Mobot Sites and Mobot Test Sites and shall provide the Hosting Services and other services described on Schedule 3 hereto. In the event that additional dedicated hardware and/or software (“Dedicated Resources”) are requested by Licensee, Mobot shall provide such Dedicated Resources for reasonable additional fees to be paid solely by Licensee;

(b) Mobot shall provide technology that supports communication between the Licensee Service and Mobot’s Sites and Mobot Test Sites and servers, as currently configured, for purposes of allowing Licensee to provide Mobot-Enabled Licensee Services. After initial implementation, additional programming required to adapt such technology to any changes in the Licensee Service (including hardware and software under its control) shall be provided on a time and materials basis only, at Licensee’s sole cost and expense, as generally approved in advance by the Licensee; and

(c) Mobot shall cooperate with Licensee in developing client software code, in all cases for use on Mobile Camera Devices (together, the “Developed Handset Technology”) that will facilitate the use of Licensee Technology via Mobile Camera Devices. In developing the Developed Handset Technology, each Party shall bear its own expenses. To the extent that Mobot assists Licensee in Licensee’s development of Developed Handset Technology and such Developed Handset Technology is not owned by Licensee, Mobot agrees to, and hereby does, grant Licensee a permanent, irrevocable, royalty-free, unlimited license to use such Developed Handset Technology as part of, and in connection with, the Licensee Technology. Upon request from time to time, Mobot shall provide Developed Handset Technology source code to Licensee.

5. Responsibilities of Licensee.

(a) Licensee shall be responsible for all development and management of the Mobile Camera Device development platform in connection with Mobot-Enabled Licensee Services, and for any and all maintenance and support requested and/or furnished to Licensee’s Customers or End Users of Mobot-Enabled Licensee Services. Mobot shall have no responsibility to deal directly with Customers with respect to such matters or any problems experienced by Licensee’s Customers or End Users of Mobot-Enabled Licensee Services and Licensee shall not refer any of its Customers or such users to Mobot for resolution of any inquiry or complaint.

(b) Licensee shall cooperate with Mobot in developing the Developed Handset Technology to facilitate the use of Mobot Technology via Mobile Camera Devices. To the extent that such Developed Handset Technology is not owned by Mobot, Licensee agrees to, and hereby does, grant Mobot a permanent, irrevocable, royalty-free, unlimited license to use the Developed Handset Technology as part of, and in connection with, the Mobot Technology. Upon request from time to time, Licensee shall provide Developed Handset Technology source code to Mobot.

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6. Fees and Royalties.

6.1 Fees. In consideration of the License granted under this Agreement and Licensee’s access and use of the Mobot Service, Licensee shall pay Mobot the fees set forth on Schedule 1 hereto (the “Fees”).

6.2 Payment Terms.

(a) Mobot shall send quarterly invoices to Licensee stating the Fees incurred in the quarter-year covered by the applicable invoice. Licensee shall pay such invoices within forty-five (45) days after delivery of such invoice to Licensee. All invoices will be sent to Licensee by email to the email address provided to Mobot from time to time by the Licensee. Any fees due and unpaid shall accrue interest at the rate of one percent (1%) per month until paid. In addition, License shall pay Mobot for Mobot’s reasonable attorney’s fees and costs incurred in collection efforts for any unpaid amounts due Mobot hereunder. Mobot shall, upon reasonable request by the Licensee, provide copies of its records of the basis for the Fees in sufficient detail for the Licensee to verify such Fees.

(b) In the event that Licensee disputes a portion of an invoice from Mobot, Licensee may: (i) pay the full undisputed amount to Mobot, (ii) send a Dispute Document to Mobot as provided in Section 11.11, and (iii) remit the full disputed amount to Van Wert, Zimmer & Conlin, P.C., Mobot’s attorneys (or to other attorneys designated by Mobot in writing), to be held by such attorneys in escrow pending joint written instruction from the Parties or appropriate order of a court of competent jurisdiction. Provided Licensee has completed all of the three (3) enumerated steps in the prior sentence before the due date of the invoice at issue, Licensee shall not be in breach of this Agreement for non-payment of the sums properly placed in escrow.

7. Promotion.

7.1 Licensee Web Site. Licensee shall display Mobot’s logo and trade name and a link to Mobot’s web site, as provided by Mobot, in the “Technology” and/or “Partners” section of Licensee’s corporate website. Such display shall be at least equal in size and placement prominence to other similar technology partners listed therein. In addition, Licensee shall include a description of the Mobot Service and Licensee’s use thereof in the “Technology” section of Licensee’s corporate website. The content of such description shall be subject to the prior review and approval of Mobot. Any of the foregoing placements shall be removed upon written request of Mobot. Mobot hereby grants to Licensee a limited license to use and display such logos and trade name on Licensee’s corporate website solely as set forth above during the Term (or the earlier written request by Mobot pursuant to the previous sentence).

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7.2 Reference by Mobot. Mobot shall have the right to identify Licensee and its use of the Mobot Service in Mobot’s advertising and promotional materials (including on its web site), and to use Licensee’s logo and trade name in connection therewith, as examples of services and applications developed using the Mobot Service and/or the Mobot Technology, provided that the Mobot shall inform Licensee of such materials prior to their use by Mobot. If any such material contains any inaccuracy involving Licensee, Mobot shall correct such inaccuracy upon being made aware of the same by Licensee in writing. Licensee hereby grants to Mobot a limited license to use and display such logos and trade name in such advertising and promotional materials solely as set forth above during the Term. Mobot shall have no right to use any other logo, trade name or other name used by, licensed to or proprietary to the Licensee without the prior permission of Licensee.

7.3 Branding on Mobile Camera Devices. In branding the Mobot-Enabled Licensee Services, Licensee shall display Mobot Trademarks (defined below) with equal prominence with those of “Qode” or other Licensee Affiliates. Full “white-branding” is permitted so long as the source for all mobile imaging technology is not identified on the applicable Mobile Camera Device.

8. Proprietary Rights and Confidentiality.

8.1 Proprietary Rights of Mobot. The Mobot Technology and all copies thereof, and any and all copyrights, patents, trade secret rights or other intellectual property rights under any jurisdiction with respect thereto, shall be and remain at all times the property of Mobot (or its licensors), and neither Licensee nor any of its Customers or users of Mobot-Enabled Licensee Service shall have any right, title or interest therein (other than the right to receive Mobot-Enabled Licensee Services as provided in this Agreement).

8.2 Proprietary Rights of Licensee. Licensee Technology, Licensee Materials, all copies thereof, and any and all copyrights, patents, trade secret rights or other intellectual property rights under any jurisdiction with respect thereto, shall be and remain at all times the property of Licensee (or its licensors), and neither Mobot nor any of its partners or users of the Mobot Service shall have any right, title or interest therein. In addition to the foregoing, Mobot shall maintain the Licensee Materials in the format in which they ware provided to Mobot, which Licensee Materials shall be available for return to Licensee as provided in Section 10.5(d), below.

8.3 Confidentiality of Mobot Technology. Licensee understands and acknowledges that the Mobot Technology (including for purposes of this Section 8, all information related thereto provided by Mobot to Licensee or otherwise coming into the possession of Licensee) comprises a trade secret of Mobot, that the Mobot Technology is of great commercial value to Mobot, and that the value of the Mobot Technology would be significantly impaired by its unauthorized distribution or disclosure. Licensee shall keep confidential, and shall protect from unauthorized disclosure by its employees, agents and customers, the Mobot Technology and any and all copies or physical embodiments thereof that may come into its possession notwithstanding the limitations of Section 2.2, and Licensee shall secure and protect the Mobot Technology and any and all copies or physical embodiments thereof that may so come into its possession in a manner consistent with the maintenance of Mobot’s rights and interest therein. Promptly upon discovery that Licensee or any other person has acquired possession, use or knowledge of any portion of the Mobot Technology, Licensee shall notify Mobot of such fact and the surrounding circumstances. The obligations of this Section 8.3 of this Agreement shall survive any termination of this Agreement for any reason.

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8.4 Mobot Trademarks. Subject to Section 7.1 and 7.3, Licensee shall not have any right to use Mobot’s trade name other than in the form and stylization approved from time to time by Mobot and according to such standards for use as shall be set from time to time by Mobot, and shall not have the right to use any other trademark, service mark or trade name of Mobot except as may be otherwise permitted by Mobot in writing. Licensee shall not have the right to assign or sublicense to any person any of the rights granted to it with respect to use of Mobot’s trade name under this Agreement. The Licensee acknowledges that the Mobot trade name and other trademarks, service marks and trade names of Mobot (collectively, “Mobot Trademarks”) and all rights and goodwill pertaining thereto belong exclusively to Mobot. Without limiting the generality of the foregoing, any rights that arise by virtue of the use of the Mobot Trademarks in the Territory, whether by the Licensee, Mobot or any third party, shall belong exclusively to Mobot. To the extent any rights in and to any Mobot Trademarks are deemed to accrue to Licensee, Licensee hereby assigns any and all such rights, at such time as they may be deemed to accrue, including the related goodwill, to Mobot. Licensee shall never challenge the validity, or Mobot’s ownership of, any trademark or other rights in or to any Mobot Trademarks or any application for registration thereof, or any trademark registration thereof, and will never contest the fact that Licensee’s rights under this Agreement are solely those of a licensee, and terminate upon expiration or termination of this Agreement, or earlier as provided below. In the event that Mobot determines at any time in its sole discretion that the continued use by Licensee of Mobot’s trade name in the manner permitted under this Agreement (or the use by Licensee of any other Mobot Trademark that Mobot may permit Licensee to use hereafter) impairs or is likely to impair the positioning, prestige, goodwill or reputation of Mobot or its trade name or other Mobot Trademarks, Mobot may terminate Licensee’s right to use Mobot’s trade name (or such other Mobot Trademark) upon written notice to Licensee, whereupon Licensee shall discontinue all further use thereof. Licensee shall not use (except for use of Mobot’s trade name in accordance with the terms and conditions of this Agreement) or register or attempt to register any Mobot Trademark or any trade name or trademark which Mobot reasonably deems to be confusingly similar to the Mobot trade name or any other Mobot Trademark.

8.5 Confidentiality of Licensee Technology. Mobot understands and acknowledges that the Licensee Technology (including for purposes of this Section 8, all information related thereto provided by the Licensee to Mobot or otherwise coming into the possession of Mobot) comprises a trade secret of the Licensee, that the Licensee Technology is of great commercial value to the Licensee, and that the value of the Licensee Technology would be significantly impaired by its unauthorized distribution or disclosure. Mobot shall keep confidential, and shall protect from unauthorized disclosure by its employees, agents and customers, the Licensee Technology and any and all copies or physical embodiments thereof that may come into its possession, and Mobot shall secure and protect the Licensee Technology and any and all copies or physical embodiments thereof that may so come into its possession in a manner consistent with the maintenance of the Licensee’s rights and interest therein. Promptly upon discovery that Mobot or any other person has acquired possession, use or knowledge of any portion of the Licensee Technology, Mobot shall notify the Licensee of such fact and the surrounding circumstances. The obligations of this Section of this Agreement shall survive any termination of this Agreement for any reason.

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8.6 Licensee Trademarks. Subject to Section 7.2, Mobot shall not have any right to use the Licensee’s trade name other than in the form and stylization approved from time to time by the Licensee and according to such standards for use as shall be set from time to time by the Licensee, and shall not have the right to use any other trademark, service mark or trade name of the Licensee except as may be otherwise permitted by the Licensee in advance and in writing. Mobot acknowledges that the Licensee’s trade names and other trademarks, service marks and trade names of the Licensee (collectively, “Licensee Trademarks”) and all rights and goodwill pertaining thereto belong exclusively to the Licensee. Without limiting the generality of the foregoing, any rights that arise by virtue of the use of the Licensee Trademarks in the Territory, whether by the Licensee, Mobot or any third party, shall belong exclusively to the Licensee. To the extent any rights in and to any Licensee Trademarks are deemed to accrue to Mobot, Mobot hereby assigns any and all such rights, at such time as they may be deemed to accrue, including the related goodwill, to the Licensee. Mobot shall never challenge the validity, or the Licensee’s ownership of, any trademark or other rights in or to any Licensee Trademarks or any application for registration thereof, or any trademark registration thereof, and will never contest the fact that Mobot’s rights to use the Licensee Trademarks or Licensee Technology under this Agreement are solely those of a licensee, and will terminate upon expiration or termination of this Agreement, or earlier as provided below. Mobot shall exercise its best efforts in its use of the Licensee’s trade name in the manner permitted under this Agreement not to impair such positioning, prestige, goodwill and reputation. In the event that the Licensee determines at any time in its sole discretion that the continued use by Mobot of the Licensee Trademarks in the manner permitted under this Agreement (or the use by Mobot of any other Licensee trade mark that the Licensee may permit Mobot to use hereafter) impairs or is likely to impair the positioning, prestige, goodwill or reputation of the Licensee or its trade name or other Licensee Trademarks, the Licensee may terminate Mobot’s right to use the Licensee’s trade name (or such other Licensee Trademark) upon written notice to Mobot, whereupon Mobot shall discontinue all further use thereof. Mobot shall not use (except for use of the Licensee’s trade name in accordance with the terms and conditions of this Agreement) or register or attempt to register any Licensee Trademark or any trade name or trademark which the Licensee reasonably deems to be confusingly similar to the Licensee trade name or any other Licensee Trademark.

8.7 Competitive Technology.

(a) Licensee agrees that, during the Term, neither the Licensee nor any of its Affiliates as at the date of this Agreement shall, directly or indirectly, develop, implement or use, or have developed. implemented or used (whether on Licensee’s own or by obtaining from any third party any license or other right to use or any services based upon) any technology that is competitive with the Mobot Technology. In addition, Licensee agrees that, during the Term, neither the Licensee nor any of its Affiliates as of the date of this Agreement shall, directly or indirectly, engage or participate in (as an owner, investor, partner, consultant, independent -contractor, advisor or otherwise), or assist in any manner or in any capacity in, or have any interest in or make any loan to any person, firm, corporation or business which engages in, any Competitive Business.

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(b) In addition to the provisions of Section 8.7(a), if Licensee acquires or merges with (regardless of the exact form of such combination) another party such that such other party would then be an Affiliate of Licensee (a “Future Affiliate”), and the Future Affiliate at the time of such acquisition or merger or at any time thereafter either (i) directly or indirectly, develops or implements or has developed or implemented any image processing or recognition technology that is competitive with the Mobot Technology, or (ii) directly or indirectly, engages or participates in (as an owner, investor, partner, consultant, independent -contractor, advisor or otherwise), or assists in any manner or in any capacity in, or has any interest in or makes any loan to any person, firm, corporation or business which engages in, any Competitive Business, then, at Mobot’s option, Mobot may terminate this Agreement upon no less than sixty (60) days’ written notice to Licensee. Such termination by Mobot shall be treated as a Termination by Licensee, without cause, as more fully described in Section 10.5, below.

9. Warranties and Liability.

9.1 Intellectual Property Warranty and Indemnity by Mobot.

(a) Mobot warrants that the Mobot Services and the use of the Mobot Technology by the Licensee will not infringe the intellectual property rights (copyright, trademark, patent, and trade secrets only) of any third party in the Territory (the “Mobot Warranted IP”). In the event of any claim by any third party against Licensee of infringement of the Mobot Warranted IP by the Mobot Technology, Mobot shall defend Licensee against such action at Mobot’s expense, and shall indemnify and hold harmless Licensee against any expense, judgment or loss (including reasonable attorneys’ fees) arising therefrom, provided that (i) Mobot is notified promptly in writing of such action; (ii) Mobot shall have sole control of the defense of any such action and all negotiations for its settlement or compromise; and (iii) Licensee shall cooperate reasonably with Mobot, at Mobot’s expense, in the defense, settlement or compromise of any such action.

(b) In the event of a claim relating to Mobot Warranted IP by any third party, Mobot shall, or if Mobot reasonably believes that Licensee’s use of the Mobot Technology could be enjoined, or if in Mobot’s opinion any part of the Mobot Technology is likely to become the subject of a successful claim of such infringement, Mobot may, at Mobot’s option and expense, (i) procure for Licensee the right to continue using the Mobot Technology as provided in this Agreement, (ii) replace or modify the Mobot Technology so that it becomes non-infringing (so long as the functionality of the Mobot Technology is essentially unchanged) or, in the event neither of the previous two options are commercially feasible for Mobot, (iii) terminate this Agreement.

(c) Notwithstanding the provisions of Section 9.1(a), Mobot shall not have any liability to Licensee under this Section 9.1 to the extent that any infringement or claim thereof is based upon (i) the combination, operation or use of the Mobot Technology in combination with equipment, technology, software or services not supplied by Mobot hereunder where the Mobot Technology would not itself be infringing, (ii) compliance with designs, specifications or instructions provided by Licensee, (iii) use of the Mobot Technology in an application or environment for which it was not designed or not contemplated under this Agreement, or (iv) modifications of the Mobot Technology by anyone other than Mobot where the unmodified version of the Mobot Technology would not be infringing.

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(d) If notified promptly in writing, Licensee shall indemnify, defend and hold harmless Mobot against any expense, judgment or loss (including reasonable attorneys’ fees) arising from infringement or alleged infringement of any valid patent, copyright, trademark, trade secret in the Territory as a result of Mobot’s compliance with Licensee’s designs, specifications or instructions or inclusion in the Mobot Technology of any content provided by or through Licensee provided that (i) Licensee shall have sole control of the defense of any such action and all negotiations for its settlement or compromise and (ii) Mobot shall cooperate reasonably with Licensee, at Licensee’s expense, in the defense, settlement or compromise of any such action.

9.2 Intellectual Property Warranty and Indemnity by Licensee.

(a) Licensee warrants that the Licensee Services and the use of the Licensee Technology will not infringe the intellectual property rights (copyright, trademark, patent, and trade secrets only) of any third party in the Territory (the “Licensee Warranted IP”). In the event of any claim by any third party against Mobot of infringement of the Licensee Warranted IP by the Licensee Technology, Licensee shall defend Mobot against such action at Licensee’s expense, and shall indemnify and hold harmless Mobot against any expense, judgment or loss (including reasonable attorneys’ fees) arising therefrom, provided that (i) Licensee is notified promptly in writing of such action; (ii) Licensee shall have sole control of the defense of any such action and all negotiations for its settlement or compromise; and (iii) Mobot shall cooperate reasonably with Licensee, at Licensee’s expense, in the defense, settlement or compromise of any such action.

(b) In the event of a claim relating to Licensee Warranted IP by any third party, Licensee shall, or if Licensee reasonably believes that use of the Licensee Technology could be enjoined, or if in Licensee’s opinion any part of the Licensee Technology is likely to become the subject of a successful claim of such infringement, Licensee may, at Licensee’s option and expense, (i) procure the right to continue using the Licensee Technology as provided in this Agreement, (ii) replace or modify the Licensee Technology so that it becomes non-infringing (so long as the functionality of the Licensee Technology is essentially unchanged) or, in the event neither of the previous two options are commercially feasible for Licensee, (iii) terminate this Agreement.

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(c) Notwithstanding the provisions of Section 9.2(a), Licensee shall not have any liability to Mobot under this Section 9.2 to the extent that any infringement or claim thereof is based upon (i) the combination, operation or use of the Licensee Technology in combination with the Mobot Technology where the Licensee Technology would not itself be infringing, or (ii) compliance with designs, specifications or instructions provided by Mobot.

(d) If notified promptly in writing, Mobot shall indemnify, defend and hold harmless Licensee against any expense, judgment or loss (including reasonable attorneys’ fees) arising from infringement or alleged infringement of any valid patent, copyright, trademark, trade secret in the Territory as a result of Licensee’s compliance with Mobot’s designs, specifications or instructions or inclusion in the Licensee Technology of any content provided by or through Mobot provided that (i) Mobot shall have sole control of the defense of any such action and all negotiations for its settlement or compromise and (ii) Licensee shall cooperate reasonably with Mobot, at Mobot’s expense, in the defense, settlement or compromise of any such action.

9.3 Exclusion of Warranties. EXCEPT AS EXPRESSLY STATED HEREIN, THE MOBOT SERVICES AND MOBOT TECHNOLOGY ARE LICENSED AS-IS, AND MOBOT DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS OR WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE RESPECTING ANY OF THE MOBOT TECHNOLOGY OR THE MOBOT SERVICES OR ANY OTHER MATTER RELATED TO THIS AGREEMENT.

9.4 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LICENSE GRANTED HEREBY, THE SERVICES PERFORMED HEREUNDER, OR ANY OTHER MATTER RELATED HERETO (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST SAVINGS, LOST PROFITS OR BUSINESS INTERRUPTION), EVEN IF SUCH PARTY HAS BEEN ADVISED, IS AWARE OR SHOULD BE AWARE, OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE IN DAMAGES OR OTHERWISE IN EXCESS OF AN AMOUNT EQUAL TO US $50,000 OR ALL FEES AND ROYALTIES PAID BY LICENSEE TO MOBOT HEREUNDER WITHIN THE TWELVE (12) MONTHS PRIOR TO THE DATE OF ACCRUAL OF THE CLAIM, WHICHEVER IS THE GREATER. THE FOREGOING LIMITATIONS DO NOT APPLY TO ANY CLAIMS RELATING TO LICENSEE’S USE OF THE MOBOT SERVICE OR THE MOBOT TECHNOLOGY OTHER THAN AS EXPRESSLY PERMITTED HEREUNDER OR ANY OTHER BREACH OF MOBOT’S PROPRIETARY RIGHTS, OR TO AMOUNTS REPRESENTING FEES DIRECTLY PAYABLE TO MOBOT HEREUNDER, AS SPECIFICALLY SET FORTH IN SECTION 6, ABOVE. THE PARTIES AGREE THAT THIS SECTION 9 REPRESENTS A REASONABLE ALLOCATION OF RISK.

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10. Term and Termination.

10.1 Term. This Agreement shall be effective as of the Effective Date and, unless earlier terminated pursuant to this Section 10, shall continue for the Initial Term and shall be renewed thereafter for successive one (1)-year terms (each, an "Extended Term") unless either Party gives to the other not less than ninety (90) days’ notice in writing that it does not wish to renew for the next applicable Extended Term. Both the Initial Term and any Extended Term are referred to throughout this Agreement as the “Term.”

10.2 Termination by Mobot. Mobot may terminate this Agreement by written notice to Licensee in the event of the occurrence of any of the following: (a) if Licensee fails to pay any amount due hereunder within ten (10) days after written demand by Mobot for payment thereof (after expiration of the 45 day period to pay as set forth in Section 6.2 hereof), (b) if Licensee violates the confidentiality provisions of Section 8 of this Agreement, or uses the Mobot Service or the Mobot Technology in any manner not authorized by the License granted in Section 2, (c) if Licensee fails to observe or perform any other term or condition of this Agreement and does not cure such failure within thirty (30) days after written demand by Mobot, (d) if Licensee fails to meet the Minimum Levels for the Extended Period, or (e) if Licensee makes a general assignment for the benefit of creditors, or files a voluntary petition in bankruptcy or for reorganization or arrangement under the bankruptcy laws, or if a petition in bankruptcy is filed against Licensee and is not dismissed within thirty (30) days after the filing, or if a receiver or trustee is appointed for all or any part of the property or assets of Licensee.

10.3 Termination by Licensee for Cause. Licensee may terminate this Agreement by written notice to Mobot in the event of the occurrence of any of the following: (a) if Mobot fails to observe or perform any term or condition of this Agreement and does not cure such failure within thirty (30) days after written demand by Licensee, or (b) if Mobot makes a general assignment for the benefit of creditors, or files a voluntary petition in bankruptcy or for reorganization or arrangement under the bankruptcy laws, or if a petition in bankruptcy is filed against Mobot and is not dismissed within thirty days after the filing, or if a receiver or trustee is appointed for all or any part of the property or assets of Mobot.

10.4 Termination by Licensee Without Cause. Licensee may terminate this Agreement by written notice to Mobot without cause at any time, upon no less than ninety (90) days’ notice to Mobot.

10.5 Rights and Obligations on Termination.

(a) Upon any termination of this Agreement, the License granted under Section 2 shall immediately terminate and, except as provided in Section 10.5(c), Licensee shall immediately cease all use of the Mobot Service.

(b) Upon any termination of this Agreement, all rights and obligations of the parties under this Agreement shall cease except for (i) Licensee’s obligations to make any payment which was due and payable on or prior to the date of termination, (ii) the rights and obligations of the parties that state that they survive the termination of this Agreement, (iii) the Parties’ obligations under Sections 8.1-8.6, and (iv) the obligations of the parties under this Section 10.

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(c) In the event of a termination by Licensee as provided in Section 10.3 (for cause), then Mobot shall, upon written request of Licensee delivered with any notice of termination of this Agreement, continue to provide the Mobot Service to Licensee, upon the applicable terms and conditions of this Agreement, for up to an additional thirty (30) days after termination of this Agreement.

(d) Within ninety (90) days after termination of this Agreement, upon written request from a Party, the other Party shall promptly return to the requesting Party (or, at the requesting Party’s option, destroy and certify in writing to the requesting Party that it has destroyed) the original and all copies of any confidential or proprietary materials (excluding Licensee Materials) in the other Party’s possession.

The Parties’ counsel may retain one archival copy of materials returned pursuant to Section 10.5(d), to be used only in case of a dispute between the Parties, and all such materials shall remain subject to the provisions of Section 8.3.

11. General.

11.1 Payments. All payments under this Agreement shall be made in US dollars.

11.2 Taxes. The amounts payable under this Agreement are in addition to all local, state or federal sales, use, excise, or personal property or other similar taxes or duties, and any applicable value added taxes, and any such taxes shall be assumed and paid by Licensee except those taxes based on the net income of Mobot.

11.3 Notices. Notices to either Party under or relating to this Agreement shall be in writing to the address indicated in the first paragraph of this Agreement, or such other address of which notice has been given to the other Party in accordance herewith, and shall be deemed effective when received, on the day following sending if sent by a recognized overnight delivery service, or on the third day following the date of postmark if sent by prepaid certified mail, return receipt requested.

11.4 Severability. The terms and conditions of this Agreement are severable. If any term or condition of this Agreement is deemed to be illegal or unenforceable under any rule of law, all other terms shall remain in force. Further, the term or condition which is held to be illegal or unenforceable shall remain in effect as far as possible in accordance with the intention of the parties hereto.

11.5 Entire Agreement. The Schedules 1 through 3 attached hereto are incorporated by reference and made a part hereof. The parties hereto agree that this Agreement is the complete and exclusive statement of the agreement between the parties, and supersedes all prior proposals and understandings, oral or written, relating to the subject matter of this Agreement. This Agreement may be amended only by a writing executed by Licensee and Mobot.

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11.6 Effect of Waiver. No waiver of any provisions of this Agreement shall be effective unless contained in a writing signed by the Party waiving its rights hereunder. Failure by either Party to enforce any provision of this Agreement shall not be deemed a waiver of that provision or of any other provision of this Agreement.

11.7 Force Majeure.

(a) Except for Licensee’s obligations to pay Mobot fees hereunder, neither Party shall be liable to the other Party for any failure or delay in performance caused by reasons beyond its or its suppliers (with whom it has a contractual relationship) reasonable control (having taken all steps which are in compliance with acting in accordance with standard industry practice) including without limitation any act of God, inclement weather, failure or shortage of power supplies, flood, drought, lightning or fire, strike, lockout, trade dispute or labor disturbance, failure of telecommunications or digital transmission links, Internet slowdowns or failures, the negligent or malicious acts of third parties, the act or omission of Government, highways authorities, other telecommunications or utility operators or administrations or other competent authority, war, terrorism, military operations, or riot (“an event of Force Majeure”).

(b) If the delay or failure caused by the event of Force Majeure lasts for a continuous period of thirty (30) days or less from the date that either Party notifies the other of the event of Force Majeure, any obligation outstanding shall be fulfilled by the Party affected as soon as reasonably possible after the event of Force Majeure has ended, save to the extent that such fulfillment is no longer possible.

(c) If the delay or failure caused by the event of Force Majeure lasts for more than thirty (30) days from the date that either Party notifies the other of the event of Force Majeure, then either Party shall be entitled (but not obliged) to terminate this Agreement by giving not less than 30 days’ written notice to the other Party on expiry of the said thirty (30)- day period.

11.8 Assignment. This Agreement shall be binding on the parties hereto and their respective successors and assigns. Licensee may not assign this Agreement in whole or in part without the prior written consent of Mobot. Any change of control of Licensee, whether by way of a business reorganization, merger, sale of stock or otherwise, shall be regarded as an assignment subject to the terms of this Section 11.8.

11.9 Headings. The headings and captions used in this Agreement are for convenience only and are not to be used in the interpretation of this Agreement.

11.10 Independent Contractors. The parties to this Agreement are independent contractors and engage in the operation of their own respective businesses. Neither Party is the agent or employee of the other Party for any purpose whatsoever. Nothing in this Agreement shall be construed to establish a relationship of co-partners or joint venturers between the two parties. Neither Party has the authority to enter into any contracts or assume any obligations for the other Party or to make any warranties or representations on behalf of the other Party.

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11.11 Disputes.

(a) In the event of a dispute arising out of or in connection with this Agreement both parties shall agree to use all reasonable efforts to resolve the dispute prior to commencement of the formal legal proceedings.

(b) Within five (5) days of the dispute each Party shall record in writing the exact nature of the dispute (the “Dispute Document”) and shall send to the other Party in accordance with Section 11.3 (Notices). Both parties shall appoint a senior representative to review the Dispute Document within two (2) days of receipt.

(c) Within two (2) days of the review of the Dispute Document, the appointed senior representatives of both parties shall meet (in person, or, if not commercially practical, using telephonic means) and use all reasonable efforts to produce an action plan to resolve all the matters contained in the Dispute Document. If within five (5) days an action plan cannot be agreed between the parties then both parties shall be entitled enforce all rights available to them at law or in equity.

11.12 Governing Law. This Agreement shall be construed under and governed by the laws of the Commonwealth of Massachusetts, excluding of choice of law provisions, and excluding the 1980 United Nations Convention on Contracts for the International Sale of Goods. The parties hereby submit to the nonexclusive jurisdiction of state courts of the Commonwealth of Massachusetts or the United States District Court for the District of Massachusetts. The prevailing Party in any litigation shall be entitled to recover all reasonable expenses thereof, including reasonable attorney’s fees in connection with such proceedings or any appeal thereof.

11.13 Export Regulation. The parties shall comply with all applicable export laws and regulations of the United States, the country in which Licensee is located or the Mobot Service is used, and any other country having competent jurisdiction.

11.14 Execution. This Agreement may be executed in two or more counterparts (and may be executed and delivered by facsimile), each of which shall be an original, but all of which shall constitute one and the same instrument.

11.15 Public Announcements. Neither of the parties shall make any press release or other disclosure of this Agreement or the transactions contemplated hereby without the prior written consent of the other party, except as may be required by law. To the extent that any such disclosure is required by law, the party required to make such disclosure shall provide written notice thereof (together with a copy of the disclosure it proposes to make) to the other party at least twenty-four (24) hours prior to such disclosure, shall permit the other party to comment upon such proposed disclosure, and shall make any corrections or changes to such disclosure reasonably requested by such other party provided such corrections or changes are true and accurate and may be made consistent with the disclosing party’s legal obligations.

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EXECUTED as a document under seal as of the date first set forth above by the duly authorized representatives of the parties hereto.

MOBOT, INC.		NEOMEDIA TECHNOLOGIES, INC.

By:	/s/ Russell Gocht	By:	/s/ David A. Dodge
	Name: Russell Gocht		Name: David A. Dodge
	Title: CEO		Title: Chief Financial Officer

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EX-16.6 7 v059730_ex16-6.htm

Exhibit 16.6

For Immediate Release

Press Contacts:
Charles T. Jensen NeoMedia Technologies, Inc. +(239) 337-3434 cjensen@neom.com	David A. Kaminer NeoMedia Technologies, Inc. +(914) 684-1934 dkaminer@kamgrp.com

NeoMedia Sells Mobot and Retains Minority Stake

FORT MYERS, FLA., Dec. 7, 2006 - Moving to fulfill its planned consolidation of its mobile marketing strategy, NeoMedia Technologies, Inc. (OTC BB: NEOM), today announced the sale of its Lexington, Massachusetts-based Mobot subsidiary to its founders, while retaining a minority ownership in the company.

NeoMedia President and CEO Charles T. Jensen said, “This step moves NeoMedia closer to fulfilling its goal of being able to target all corporate resources on the continued enhancement and ongoing marketing and launch of our patented qode suite of products in Europe, North America and China. As with the planned sale of our micro paint repair business unit, and the sale of a U.K. subsidiary last month, we have, as promised to our shareholders, continued to focus on qode while cutting back our burn rate and reversing substantial dilution.”

Under the terms of the agreement, NeoMedia returned 82% of its ownership interest in Mobot, which was acquired in February of this year, while retaining 18% ownership in the company. In addition, all obligations under the original merger agreement, including the purchase price guarantee obligation, were terminated. Based on NeoMedia’s current share price, this obligation would have been in excess of $5 million. At closing, NeoMedia contributed $67,000 in cash to Mobot, and also entered into a promissory note for an additional $200,000 payable to Mobot by December 31, 2006 or earlier on the completion of the sale of NeoMedia’s Micro Paint Repair business.

NeoMedia received 16,931 “preference shares” in Mobot, which can be redeemed to reclaim the 16,931,493 original consideration shares issued by NeoMedia in its acquisition of Mobot. Each preference share can be redeemed for 1,000 shares of the NeoMedia common stock within 15 months of the closing of this transaction. After 15 months, the preference shares can be redeemed upon a liquidation event of Mobot for either 1,000 shares of NeoMedia common stock each, or for the then-current cash equivalent of the shares.

NeoMedia also received a limited exclusive license to access Mobot services for integration with barcode-related applications.

“As a nearly one-fifth owner -- and as a licensee of Mobot services as they relate to barcode applications -- NeoMedia believes in Mobot’s technology and management team,” Mr. Jensen said.

“Moving forward, NeoMedia will continue to concentrate on developing and marketing its expertise on next-generation mobile applications and opportunities, especially for our qode direct-to-mobile-web cell phone technology,” Mr. Jensen said.

NeoMedia’s patented qode (www.qode.com) suite is an easy-to-use set of applications -- qode®reader and qode®window -- which provide One Click to Content™ connectivity for products, print, packaging and other physical objects to link directly to specific desired content on the Mobile Internet. qode®reader works with camera phones, letting users “click” on two-dimensional “smart codes” to access the Mobile Web site to which the code is linked, while qode®window lets users reach the same destination by entering a key word, slogan, or product barcode number.

About NeoMedia Technologies, Inc.

NeoMedia Technologies, Inc. (www.neom.com), is a diversified global company offering leading edge, technologically advanced products and solutions for companies and consumers, built upon its solid family of patented products and processes, and management experience and expertise. Its NeoMedia Mobile group of companies offers end-to-end mobile enterprise and mobile marketing solutions through its flagship qode direct-to-mobile-web technology and ground-breaking products and services from four of the leading mobile marketing providers in the U.S. and Europe. By linking consumers and companies to the interactive electronic world, NeoMedia delivers one-to-one, permission-based, personalized and profiled dialogue -- anytime and anywhere.

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.

qode is a registered trademark, and qode®reader, qode®window and One Click to Content are trademarks of NeoMedia Technologies, Inc. Other trademarks are properties of their respective owners.

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