8-K

UNITED STATES

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):  January 10, 2011

NeoMedia Technologies, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-21743	36-3680347
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Two Concourse Parkway, Suite 500, Atlanta, GA	30328
(Address of principal executive offices)	(Zip code)
Registrant's telephone number, including area code:	(678) 638-0460

Not Applicable

(Former Name or Former Address, If Changed Since Last Report)

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:

¨ 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

Agreement and Debenture Closing, January, 2011

On January 10, 2011, NeoMedia Technologies, Inc., a Delaware corporation (the “Company”), entered into an Agreement (the “ Agreement ”), a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein, to issue and sell a secured convertible debenture  to YA Global Investments, L.P. (the “Buyer”) in the principal amount of $450,000 (the “Debenture”), a copy of which is attached hereto as Exhibit 10.2 and incorporated by reference herein. The closing of the transaction was held on January 10, 2011. In addition to the Debenture, the Company also issued a warrant to the Buyer to purchase 1,250,000 shares of the Company’s common stock, par value $0.001 per share (the  “Common Stock”), for an exercise price of $0.10 per share (the “Warrant”), a copy of which is incorporated by reference herein and attached hereto as Exhibit 10.3.

The Debenture shall mature on July 29, 2012 (the“Maturity Date”) and shall accrue interest at a rate equal to fourteen percent (14%) per annum and such interest shall be paid on the Maturity Date (or sooner as provided in the Debenture) in cash or, provided that certain Equity Conditions are satisfied (as such term is defined in the Debenture), in shares of Common Stock at the applicable Conversion Price (as defined in the Debenture).  At any time, the Buyer shall be entitled to convert any portion of the outstanding and unpaid principal and accrued interest thereon into fully paid and non-assessable shares of Common Stock at a price equal to the lesser of $0.10 and ninety-five percent (95%) of the lowest volume weighted average price of the Common Stock during the sixty (60) trading days immediately preceding each conversion date.

The Debenture is secured by certain pledges made with respect to the assets of the Company and its subsidiaries as set forth in the Sixth Ratification Agreement dated January 10, 2011 (the “Sixth Ratification Agreement”), and that certain Security Agreement (the “Security Agreement”) and Patent Security Agreement (the “Patent Security Agreement”) both dated July 29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto, and the Buyer. Copies of the Security Agreement and the Patent Security Agreement are incorporated by reference herein and attached by reference hereto as Exhibits 10.4 and 10.5, respectively. The Sixth Ratification Agreement is incorporated by reference herein and attached as Exhibit 10.6 hereto.

In connection with the Agreement, the Company also entered into those certain Irrevocable Transfer Agent Instructions (the “ITAI”) with the Buyer, an escrow agent and WorldWide Stock Transfer, LLC, the Company’s transfer agent, a copy of which is incorporated herein by reference and attached hereto as Exhibit 10.7 hereto.

The Company shall not affect any conversion, and the Buyer shall not have the right to convert any portion of the Debenture to the extent that after giving effect to such conversion, the Buyer (together with the Buyer’s affiliates) would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion, except for not less than sixty-five (65) days prior written notice from the Buyer.

The Company shall have the right to redeem a portion or all amounts outstanding (subject to certain conditions) in the Debenture via Optional Redemption (as defined in the Debenture) by paying the amount equal to the principal amount being redeemed plus a redemption premium equal to ten percent (10%) of the principal amount being redeemed, and accrued interest.

The foregoing descriptions of the Agreement, Debenture, Warrant, Security Agreement, Patent Security Agreement, Sixth Ratification Agreement and ITAI do not purport to be complete and are qualified in their entirety by reference to such documents, which are attached as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, and 10.7, respectively, to this Current Report on Form 8-K and incorporated herein by reference.

Item 3.02.  Unregistered Sales of Equity Securities

See Item 1.01 herein above.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibit No. Description:

EXHIBIT	DESCRIPTION	LOCATION
Exhibit 10.1	Agreement, dated January 10, 2011, by and between the Company and YA Global Investments, L.P.	Provided Herewith
Exhibit 10.2	Secured Convertible Debenture, No. NEOM-11-1, dated January 10, 2011,  issued by the Company to YA Global Investments, L.P.	Provided Herewith
Exhibit 10.3	Warrant, No. NEOM-0111, dated January 10, 2011, issued by the Company to YA Global Investments, L.P.	Provided Herewith
Exhibit 10.4	Security Agreement, dated July 29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P.	Incorporated by reference to Exhibit 10.3 in the Company’s Current Report on Form 8-K as filed with the SEC on August 4, 2008
Exhibit 10.5	Patent Security Agreement, dated July 29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P.	Incorporated by reference to Exhibit 10.4 in the Company’s Current Report on Form 8-K as filed with the SEC on August 4, 2008
Exhibit 10.6	Sixth Ratification Agreement, dated January 10, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.	Provided Herewith
Exhibit 10.7	Irrevocable Transfer Agent Instructions, dated January 10, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC	Provided Herewith

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:      January 14, 2011	NEOMEDIA TECHNOLGIES, INC.
	By:	/s/ Michael W. Zima
	Name:	Michael W. Zima
	Its:	Chief Financial Officer

EX-10.1

Exhibit 10.1

THIS AGREEMENT (this “Agreement”), dated January 10, 2011 is entered into by and between NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), and YA GLOBAL INVESTMENTS, L.P. (the “Buyer”).

WHEREAS:

A. Reference is made to certain financing arrangements entered into by and between the Company and certain of its former and/or current subsidiaries (collectively, the “Obligors”) and the Buyer, evidenced by, among other things, the documents, instruments, and agreements listed on Exhibit X attached hereto and incorporated herein by reference (collectively, together with all other documents, instruments, and agreements executed in connection therewith or related thereto, the “Existing Financing Documents”).

B. Reference is also made to the Securities Purchase Agreement (the “Securities Purchase Agreement”) dated as of May 27, 2010, between the Company and the Buyer pursuant to which the Company has issued and the Buyer has purchased the Convertible Debentures and Warrants.  All capitalized terms used but not defined herein shall have the meaning ascribed thereto in the Securities Purchase Agreement.

C. The parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to the Buyer, as provided herein, and the Buyer shall purchase (i) a $450,000 secured convertible debenture in the form attached hereto as “Exhibit A” (the “First 2011 Convertible Debenture”, which shall be deemed to be included in the term Convertible Debentures), which shall be convertible into Common Stock (as converted such shares of Common Stock, shall be Conversion Shares), and (ii) warrants substantially in the form attached hereto as “Exhibit B” (the “First 2011 Warrants”, which shall be deemed to be included in the term Warrants and together with this Agreement, the First 2011 Convertible Debenture, the Existing Financing Documents and all other documents, instruments and agreements executed in connection therewith or related thereto, the “Financing Documents”), to acquire up to 1,250,000 additional shares of Common Stock (as exercised, such shares of Common Stock shall be Warrant Shares) which shall be funded on the date hereof (the “First 2011 Closing”) for a total purchase price of $450,000, (the “First 2011 Purchase Price”).

D. In order to induce the Company to issue and the Buyer to purchase the First 2011 Convertible Debenture and the First 2011 Warrants, the parties desire to enter into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Buyer hereby agree as follows:

1. Purchase and Sale of First 2011 Convertible Debenture and First 2011 Warrants.

(a)     Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, the Buyer agrees to purchase at the First 2011 Closing and the Company agrees to sell and issue to the Buyer at the First 2011 Closing the First 2011 Convertible Debenture and First 2011 Warrants.

(b)    The First 2011 Closing shall take place at 10:00 a.m. Eastern Standard Time on the same business day as the date hereof, subject to notification of satisfaction of the conditions to the First 2011 Closing set forth in this Agreement (or such other date as is mutually agreed to by the Company and the Buyer).  The First 2011 Closing shall occur at the offices of Yorkville Advisors, LLC, 101 Hudson Street, Suite 3700, Jersey City, New Jersey 07302 (or such other place as is mutually agreed to by the Company and the Buyer).

(c)     Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, on the First 2011 Closing Date, (i) the Buyer shall deliver to the Company such aggregate proceeds for the First 2011 Convertible Debenture and First 2011 Warrants to be issued and sold to such Buyer at the First 2011 Closing, minus the fees to be paid directly from the proceeds thereof as set forth herein, and (ii) the Company shall deliver to the Buyer the First 2011 Convertible Debenture and First 2011 Warrants duly executed on behalf of the Company.

2. Representations and Warranties of Buyer.

(a)             The representations and warranties of the Buyer set forth in Section 2 of the Securities Purchase Agreement are hereby incorporated by reference with such changes necessary to relate to this Agreement as if set forth in their entirety herein (the “Buyer Representations and Warranties”).  For the avoidance of doubt, in the Buyer Representations and Warranties references to “Securities” shall be deemed references to the First 2011 Convertible Debenture, the First 2011 Warrants and the shares of Common Stock issuable upon conversion or exercise thereof, references to “Conversion Shares” shall be deemed to reference the shares of Common Stock issuable upon conversion of the First 2011 Convertible Debenture, references to “Warrant Shares” shall be deemed to reference the shares of Common Stock issuable upon exercise of the First 2011 Warrants and any reference to “Transaction Documents” shall be deemed to include a reference to this Agreement, the First 2011 Convertible Debenture and the First 2011 Warrants.

(b)             The Buyer hereby represents and warrants that except as may otherwise be disclosed on a disclosure schedule attached hereto, the Buyer Representations and Warranties are true and correct on the date hereof (except for Buyer Representations and Warranties that speak as of a specific date).

3. Representations and Warranties of the Company.

(a)            The representations and warranties of the Company set forth in Section 3 of the Securities Purchase Agreement are hereby incorporated by reference with such changes necessary to relate to this Agreement as if set forth in their entirety herein (the “Company Representations and Warranties”). For the avoidance of doubt, in the Company Representations and Warranties references to “Securities” shall be deemed references to the First 2011 Convertible Debenture, the First 2011 Warrants and the shares of Common Stock issuable upon conversion or exercise thereof, references to “Conversion Shares” shall be deemed to reference the shares of Common Stock issuable upon conversion of the First 2011 Convertible Debenture, references to “Warrant Shares” shall be deemed to reference the shares of Common Stock issuable upon exercise of the First 2011 Warrants and any reference to “Transaction Documents” shall be deemed to include a reference to this Agreement, the First 2011 Convertible Debenture and the First 2011 Warrants.

(b)        The Company hereby represents and warrants that except as may otherwise be disclosed on a disclosure schedule attached hereto or as set forth in the SEC Documents, such Company Representations and Warranties are true and correct on the date hereof (except for Company Representations and Warranties that speak as of a specific date).

4. Covenants.

(a)        With the exception of subsections 4(d), 4(g)(ii), 7(e) and 7(h), the covenants set forth (or referenced) in Section 4 of the Securities Purchase Agreement are hereby incorporated by reference with such changes necessary to relate to this Agreement as if set forth in their entirety herein (the “Covenants”).  For the avoidance of doubt, the Covenants’ references to “Securities” shall be deemed references to the First 2011 Convertible Debenture, the First 2011 Warrants and the shares of Common Stock issuable upon conversion or exercise thereof, references to “Conversion Shares” shall be deemed to reference the shares of Common Stock issuable upon conversion of the First 2011 Convertible Debenture, references to “Warrant Shares” shall be deemed to reference the shares of Common Stock issuable upon exercise of the First 2011 Warrants and any reference to “Transaction Documents” shall be deemed to include a reference to this Agreement, the First 2011 Convertible Debenture and the First 2011 Warrants.

(b)        The Company will use the proceeds from the sale of the First 2011 Convertible Debenture for the general corporate and working capital purposes of the Company and its subsidiaries.

5.           Ratification of Financing Documents; Confirmation of Collateral; Cross-Default; Cross-Collateralization; Further Assurances.

(a) The Company hereby ratifies, confirms, and reaffirms all and singular the terms and conditions of the Existing Financing Documents, and acknowledges and agrees that, subject to the terms and conditions of this Agreement, all terms and conditions of the Existing Financing Documents shall remain in full force and effect and the Company remains liable to the Buyer for the payment and performance of all amounts due under the Existing Documents, without offset, defense or counterclaim of any kind, nature or description whatsoever.

(b) The Company hereby ratifies, confirms, and reaffirms that (i) the obligations secured by the Financing Documents include, without limitation, all amounts hereafter owed or due under the First 2011 Convertible Debenture and/or the Financing Documents (the “Obligations”), and any future modifications, amendments, substitutions, or renewals thereof, (ii) all collateral, whether now existing or hereafter acquired, granted to the Buyer pursuant to the Financing Documents, or otherwise, shall secure all of the Obligations until the full, final, and indefeasible payment of the Obligations, and (iii) the occurrence of a default and/or event of default under any Financing Document shall constitute a default and an event of default under all of the Financing Documents, it being the express intent of the Company that all of the Obligations be fully cross-collateralized, cross-guaranteed, and cross-defaulted.

(c)  The Company has previously granted the Buyer security interests in all of its assets, and to confirm the same the Company hereby grants the Buyer a security interest in all of its assets, whether now existing or hereafter acquired, including, without limitation, all accounts, inventory, goods, equipment, software and computer programs, securities, investment property, financial assets, deposit accounts, chattel paper, electronic chattel paper, instruments, patents, patent applications, copyrights, trademarks, trademark applications, trade names, domain names, documents, letter-of-credit rights, health-care-insurance receivables, supporting obligations, notes secured by real estate, commercial tort claims, and general intangibles including payment intangibles, to secure the Obligations free and clear of all liens and encumbrances, except those in favor of the Buyer.

(d)  The Company shall, from and after the execution of this Agreement, execute and deliver to the Buyer whatever additional documents, instruments, and agreements that the Buyer may require in order to correct any document deficiencies, or to vest or perfect the Financing Documents and the collateral granted therein more securely in the Investor and/or to otherwise give effect to the terms and conditions of this Agreement and/or any documents, instruments and agreement required in connection with, related to, or contemplated by this Agreement, and hereby irrevocably authorizes the Buyer to file any financing statements (including financing statements with a generic description of the collateral such as “all assets”), and take any other normal and customary steps, the Buyer deems necessary to perfect or evidence the Buyer’s security interests and liens in any such collateral.

(e)   The Company acknowledges and agrees that this Agreement shall constitute an authenticated record as such term is defined in the Uniform Commercial Code.

(f)    The Company acknowledges and agrees that nothing contained in this Agreement, the First 2011 Convertible Debenture, the First 2011 Warrants or in any document, instrument or agreement required in connection with, related to or contemplated thereby shall be deemed to constitute (1) a waiver of any defaults or events of default now existing or hereafter arising, (2) an agreement to forbear by the Buyer with respect to such defaults or events of default, or (3) an amendment, modification, extension or waiver of any of the terms of the Financing Documents or of any of the Buyer’s rights and remedies thereunder.

6.              Conditions.  The obligation of the Buyer hereunder to purchase the First 2011 Convertible Debenture is subject to the Buyer having received an opinion of counsel from counsel to the Company in a form satisfactory to the Buyer; provided that this condition is for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion.

7.              Fees and Expenses. The Company shall pay all of its costs and expenses incurred by it connection with the negotiation, investigation, preparation, execution and delivery of this Agreement, the First 2011 Convertible Debenture, the First 2011 Warrants or any document, instrument or agreement required in connection with, related to or contemplated thereby.   The Company shall pay a structuring and due diligence fee to Yorkville Advisors, LLC, the Buyer’s investment manager, of $25,000 which shall be paid directly from the proceeds of the Closing.  The Company acknowledges and agrees that the structuring and due diligence fee paid shall be nonrefundable, fully earned as of the date of the execution of this Agreement, and retained by the Lender as a fee and not applied in reduction of any other Obligations.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of date first above written.

COMPANY:
NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Michael W. Zima
Name:		Michael W. Zima
Title:		Chief Financial Officer
BUYER:
YA GLOBAL INVESTMENTS, L.P.
By:	Yorkville Advisors, LLC
	its Investment Manager
By:	/s/ Troy Rillo
Name:		Troy Rillo
Title:		Sr. Managing Director

EX-10.2

Exhibit 10.2

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.  THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

NEOMEDIA TECHNOLOGIES, INC.

Secured Convertible Debenture

Issuance Date:  January 10, 2011	Original Principal Amount:               $450,000
No. NEOM-11-1

FOR VALUE RECEIVED, NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), hereby promises to pay to the order of YA GLOBAL INVESTMENTS, L.P. or registered assigns (the “Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof).  This Secured Convertible Debenture (including all Secured Convertible Debentures issued in exchange, transfer or replacement hereof, this “Debenture”) is issued pursuant to the Agreement dated January 10, 2011 (the “SPA Agreement”).  Certain capitalized terms used herein are defined in Section 17.

(1)  GENERAL TERMS

(a) Payment of Principal.  On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal, accrued and unpaid Interest.  The “Maturity Date” shall be July 29, 2012 as may be extended at the option of the Holder (i) in the event that, and for so long as, an Event of Default (as defined below) shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure to cure would result in an Event of Default.  Other than as specifically permitted by this Debenture, the Company may not prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

(b) Interest.  Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to fourteen percent (14%) (“Interest Rate”).  Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law.  Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee in whose name this Debenture is registered on the records of the Company regarding registration and transfers of Debentures at the option of the Company in cash, or, provided that the Equity Conditions are then satisfied converted into Common Stock at the applicable Conversion Price.

(c) Security.  The Debenture is secured by a security interest in all of the assets of the Company and of each of the Company’s subsidiaries as evidenced by and further described in the SPA Agreement.

(2) EVENTS OF DEFAULT.

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

(i)   The Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Debenture (including, without limitation, the Company’s failure to pay any redemption payments, or other amounts hereunder) or any agreement between the Company and/or any of its subsidiaries and the Holder, including without limitation, the Transaction Documents;

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

(iii)      The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable;

(iv)      If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on any Primary Market within five Trading Days of such delisting: (a) the NYSE Amex, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”);

(v)      The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 6) unless in connection with such Change of Control Transaction this Debenture is retired;

(vi)      The Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five Business Days after the applicable Conversion Failure or (B) notice, written or oral, to any holder of the Debentures, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of any Debentures into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);

(vii)      The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three Business Days after such payment is due;

(viii)The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which is not cured within the time prescribed; or

(ix)      The occurrence of a default or event of default under one or more of the document, instruments, or agreements between one or more of the Company and its subsidiaries and affiliates, and the Holder.

(b)  During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder’s election, immediately due and payable in cash; provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company.  If an Event of Default occurs and for so long as such Event of Default remains uncured, the Interest Rate on this Debenture shall immediately become the lesser of 20% per annum and the maximum interest rate allowable by law and shall remain at such increased interest rate until the applicable Event of Default is cured.  Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Default Conversion Price.  The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

(3)           REDEMPTION.  The Company at its option shall have the right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) there is no Equity Conditions Failure.  The Company shall pay an amount equal to the principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to 10% of the Principal amount being redeemed, and accrued Interest, (collectively referred to as the “Company Additional Redemption Amount”).  In order to make an Optional Redemption, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Optional Redemption Notice”) setting forth the amount of Principal it desires to redeem.  After receipt of the Optional Redemption Notice the Holder shall have 45 Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set forth in Section 4(c).  On the 46th Business Day after the Optional Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to the Principal amount redeemed after giving effect to conversions effected during the 45 Business Day period.

(4)          CONVERSION OF DEBENTURE.           This Debenture shall be convertible into shares of the Company’s Common Stock, on the terms and conditions set forth in this Section 4.

(a)      Conversion Right.  Subject to the provisions of Section 4(c), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below).  The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).  The Company shall not issue any fraction of a share of Common Stock upon any conversion.  If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share.  The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

(i)           “Conversion Amount” means the portion of the Principal and accrued Interest to be converted, redeemed or otherwise with respect to which this determination is being made.

(ii)           “Conversion Price” means, as of any Conversion Date (as defined below), any Redemption Date or other date of determination the lesser of (a) $0.10 (the “Fixed Conversion Price”), subject to adjustment as provided herein, or (b) ninety five percent (95%) of the lowest Volume Weighted Average Price during the 60 Trading Days immediately preceding the Conversion Date, Redemption Date or other date of determination (the “Market Conversion Price”).

(b)     Mechanics of Conversion.

(i)      Optional Conversion.  To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction).  On or before the Fifth Business Day following the date of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreement and provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to Section 2(g) of the Securities Purchase Agreement.  If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted.  The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice.

(ii)      Company’s Failure to Timely Convert.  If within three Trading Days after the Company’s receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder’s conversion of any Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.

(iii)      Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture.  The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.

(c)           Limitations on Conversions.

(i)      Beneficial Ownership.  The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock as payment of interest hereunder to the extent that after giving effect to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment of interest.    Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the principal amount of this Debenture is convertible shall be the responsibility and obligation of the Holder.  If the Holder has delivered a Conversion Notice for a principal amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance with Section 4(a) and, any principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

(d)          Other Provisions.

(i)      The Company shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Debenture.

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

(iii)      The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such number of shares of the Common Stock as shall (subject to any additional requirements of the Company as to reservation of such shares set forth in this Debenture or in the Transaction Documents) be issuable (taking into account the adjustments and restrictions set forth herein) upon the conversion of the outstanding principal amount of this Debenture and payment of interest hereunder. In the event that the Company has  less than the full number of such shares of Common Stock reserved and kept available for issuance upon conversion, then only upon the written request of the Holder shall the Company be required to promptly reserve and keep available a sufficient number of shares of  Common Stock to comply with such requirement, including, without limitation, calling and holding a meeting of the stockholders of the Company within sixty (60) calendar days of such written request for the sole purpose of increasing the number of authorized shares of Common Stock, and the Board of Directors of the Company shall recommend to the stockholders a vote in favor of such proposal and shall vote all shares held by them, in proxy or otherwise, in favor of the proposal.  The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid, nonassessable and, if the Underlying Shares Registration Statement has been declared effective under the Securities Act, registered for public sale in accordance with such Underlying Shares Registration Statement.

(iv)      Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company ‘s failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

(5)  Adjustments to Conversion Price

(a)            Adjustment of Conversion Price upon Issuance of Common Stock.  If the Company, at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to ave issued or sold, any shares of Common Stock, excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.  For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable:

(i)      Issuance of Options.  If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share.  For purposes of this Section, the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option.  No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

(ii)      Issuance of Convertible Securities.  If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share.  For the purposes of this Section, the “lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security.  No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(iii)      Change in Option Price or Rate of Conversion.  If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold.  For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the Issuance Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change.  No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)      Calculation of Consideration Received.  In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company.  If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount received by the Company therefor.  If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt.  If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be.  The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder.  If such parties are unable to reach agreement within ten days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder.  The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(v)      Record Date.  If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

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

(c)               Purchase Rights.  If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(d)               Other Events.  If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.

(e)               Other Corporate Events.  In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder’s option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate.  Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders.  The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.

(f)               Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(g)               In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible Debenture with a principal amount equal to the aggregate principal amount of this Debenture then held by such Holder, plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible Debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

(6)           REISSUANCE OF THIS DEBENTURE.

(a)               Transfer.  If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will, subject to the satisfaction of the transfer provisions of the Securities Purchase Agreement, forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal not being transferred.  The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

(b)               Lost, Stolen or Mutilated Debenture.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding Principal.

(c)               Debenture Exchangeable for Different Denominations.  This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

(d)               Issuance of New Debentures.  Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall represent accrued and unpaid Interest from the Issuance Date.

(7)           NOTICES.        Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

If to the Company, to:	NeoMedia Technologies, Inc.
	Two Concourse Parkway, Suite 500
	Atlanta, GA 30328
	Attention:	Chief Executive Officer or Chief Financial Officer
	Telephone:	678-638-0460 (x132)
	Facsimile:	678-638-0466
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention:	Clayton E. Parker, Esq.
	Telephone:	(305) 539-3300
	Facsimile:	(305) 358-7095
If to the Holder:	YA Global Investments, LP
	101 Hudson Street, Suite 3700
	Jersey City, NJ  07302
	Attention:	Mark Angelo
	Telephone:	(201) 985-8300
With a copy to:	David Gonzalez, Esq.
	101 Hudson Street – Suite 3700
	Jersey City, NJ 07302
	Telephone:	(201) 985-8300
	Facsimile:	(201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three Business Days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

(8)           Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed.  This Debenture is a direct obligation of the Company. As long as this Debenture is outstanding, the Company shall not and shall cause their subsidiaries not to, without the consent of the Holder, (i) amend its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder (which shall include combining (by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares); (ii) repay, repurchase or offer to repay, repurchase or otherwise acquire shares of its Common Stock or other equity securities other than as to the Underlying Shares to the extent permitted or required under the Transaction Documents; or (iii) enter into any agreement with respect to any of the foregoing.

(9)           This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(10)           No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to interest, damages or upon liquidation or dissolution or otherwise.  Without the Holder’s consent, the Company will not and will not permit any of their subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits there from that is senior in any respect to the obligations of the Company under this Debenture.

(11)           This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to conflicts of laws thereof.  Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

(12)           If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

(13)           Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

(14)           If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

(15)           Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(16)           THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEBENTURE OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS DEBENTURE.

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

(a)               “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, or director for services provided to the Company.

(b)               “Bloomberg” means Bloomberg Financial Markets.

(c)               “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

(d)               “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).

(e)               “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

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

(g)               “Commission” means the Securities and Exchange Commission.

(h)               “Common Stock” means the common stock, par value $.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.

(i)               “Default Conversion Price” means, the lower of (i) the Fixed Conversion Price and (ii) that price which shall be computed as 50% of the lowest daily Volume Weighted Average Price of the Common Stock during the sixty (60) consecutive Trading Days immediately preceding the applicable Conversion Date.  All such determinations to be appropriately adjusted for any stock split, stock dividend, stock combination or other similar transaction

(j)               “Equity Conditions” means that each of the following conditions is satisfied:  (i) on each day during the period beginning two weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”), either (x) an Underlying Shares Registration Statement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.

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

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

(m)              “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreement, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreement, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreement, (c) shares issued in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies, leasing arrangement or any other transaction the primary purpose of which is not to raise equity capital, and (d) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture.

(n)               “Fundamental Transaction” means any of the following: (1) the Company effects any merger or consolidation of the Company with or into another Person and the Company is the non-surviving company (other than a merger or consolidation with a wholly owned subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.

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

(p)               “Original Issue Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture.

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

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

(s)               “Securities Purchase Agreement” means the Securities Purchase Agreement dated May 27, 2010 by and among the Company and the Holder, and any amendments and supplements thereto.

(t)               “Trading Day” means a day on which the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

(u)               “Transaction Documents” means the Securities Purchase Agreement, the SPA Agreement and any other agreement delivered in connection with the Securities Purchase Agreement and/or the SPA Agreement including, without limitation, the Ratification Agreement and the Irrevocable Transfer Agent Instructions.

(v)               “Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture or as payment of interest in accordance with the terms hereof.

(w)               “Underlying Shares Registration Statement” means a registration statement covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.

(x)               “Volume Weighted Average Price” means, for any security as of any date, the daily dollar volume-weighted average price of such security for such date on the Principal Market as reported by Bloomberg, LP (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time) if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC.

(y)               “Warrants” has the meaning ascribed to such term in the Securities Purchase Agreement, and shall include all warrants issued in exchange therefor or replacement thereof and all warrants issued pursuant to the SPA Agreement.

 [Signature Page Follows]

IN WITNESS WHEREOF, the Company has caused this Secured Convertible Debenture to be duly executed by a duly authorized officer as of the date set forth above.

COMPANY:
NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Michael W. Zima
Name:	Michael W. Zima
Title:	Chief Financial Officer

 

EX-10.3

Exhibit 10.3

WARRANT

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

NEOMEDIA TECHNOLOGIES, INC.

Warrant To Purchase Common Stock

Warrant No.: NEOM-0111	Number of Shares:	1,250,000
	Warrant Exercise Price:	$0.10
	Expiration Date:	January 10, 2016

Date of Issuance: January 10, 2011

NeoMedia Technologies, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, YA Global Investments, L.P.(“YA Global”), the registered holder hereof or any permitted assigns (each a “Holder” and collectively, the “Holders”), is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) up to 1,250,000 fully paid and nonassessable shares of Common Stock (as defined herein) of the Company (the “Warrant Shares”) at the exercise price per share provided in Section 1(b) below or as subsequently adjusted; provided, however, that in no event shall the Holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates to exceed 9.99% of the outstanding shares of the Common Stock following such exercise (however, such restriction may be waived by Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company).  For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Holder and its affiliates (including, without limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein.  Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.  For purposes of this Warrant, in determining the number of outstanding shares of Common Stock a Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written request of any Holder, the Company shall promptly, but in no event later than one (1) Business Day following the receipt of such notice, confirm in writing to any such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the exercise of Warrants (as defined below) by such Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

Section 1.

(a)           This Warrant is issued pursuant to the Agreement (“SPA Agreement”) dated January 10, 2011 between the Company and YA Global or issued in exchange or substitution thereafter or replacement thereof.  Each Capitalized term used, and not otherwise defined herein, shall have the meaning ascribed thereto in the Securities Purchase Agreement.

(b)           Definitions.  The following words and terms as used in this Warrant shall have the following meanings:

(i)           “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company prior to the date of the Securities Purchase Agreement, pursuant to which the Company’s securities may be issued only to any employee, officer or director for services provided to the Company.

(ii)          “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

(iii)         “Closing Bid Price” means the closing bid price of Common Stock as quoted on the Principal Market (as reported by Bloomberg Financial Markets (“Bloomberg”) through its “Volume at Price” function).

(iv)         “Common Stock” means (i) the Company’s common stock, par value $0.001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.

(v)          “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan, (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreement, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreement, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreement,  and (c) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of the Convertible Debentures or exercise of the Warrants.

(vi)         “Expiration Date” means the date written on the first page of this Warrant.

(vii)        “Issuance Date” means the date hereof.

(viii)       “Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

(ix)          “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

(x)           “Primary Market” means on any of (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global Select Market, (d) the Nasdaq Global Market, (e) the Nasdaq Capital Market, or (e) the Over-the-Counter Bulletin Board (“OTCBB”)

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

(xii)         “Warrant” means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.

(xiii)        “Warrant Exercise Price” shall be $0.10 or as subsequently adjusted as provided in Section 8 hereof.

(c)           Other Definitional Provisions.

(i)           Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company’s successors and (B) to any applicable law defined or referred to herein shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time.

(ii)          When used in this Warrant, the words “herein”, “hereof”, and “hereunder” and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words “Section”, “Schedule”, and “Exhibit” shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified.

(iii)         Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.

Section 2.              Exercise of Warrant.

(a)           Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder hereof then registered on the books of the Company, pro rata as hereinafter provided, at any time on any Business Day on or after the opening of business on such Business Day, commencing with the first day after the date hereof, and prior to 11:59 P.M. Eastern Time on the Expiration Date (i) by delivery of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the “Exercise Notice”), of such Holder’s election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, payment to the Company of an amount equal to the Warrant Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to which this Warrant is being exercised (plus any applicable issue or transfer taxes) (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available funds and the surrender of this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) to a common carrier for overnight delivery to the Company as soon as practicable following such date (“Cash Basis”) or (ii) if at the time of exercise, the Warrant Shares are not subject to an effective registration statement, by delivering an Exercise Notice and in lieu of making payment of the Aggregate Exercise Price in cash or wire transfer, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (the “Cashless Exercise”):

Net Number = (A x B) – (A x C)

                                      B

For purposes of the foregoing formula:

A = the total number of Warrant Shares with respect to which this Warrant is then being exercised.

B = the Closing Bid Price of the Common Stock on the date of exercise of the Warrant.

C = the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2, the Company shall on or before the fifth Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) and the receipt of the representations of the Holder specified in Section 6 hereof, if requested by the Company (the “Exercise Delivery Documents”), and if the Common Stock is DTC eligible, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with The Depository Trust Company; provided, however, if the Holder who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, or, if the Common Stock is not DTC eligible  then the Company shall, on or before the fifth Business Day following receipt of the Exercise Delivery Documents, issue and surrender to a common carrier for overnight delivery to the address specified in the Exercise Notice, a certificate, registered in the name of the Holder, for the number of shares of Common Stock to which the Holder shall be entitled pursuant to such request.  Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (i) or (ii) above the Holder of this Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised.  In the case of a dispute as to the determination of the Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that is not disputed and shall submit the disputed determinations or arithmetic calculations to the Holder via facsimile within one (1) Business Day of receipt of the Holder’s Exercise Notice.

(b)           If the Holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or arithmetic calculation of the Warrant Shares within one day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall immediately submit via facsimile (i) the disputed determination of the Warrant Exercise Price or the Closing Bid Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant.  The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than forty-eight hours from the time it receives the disputed determinations or calculations.  Such investment banking firm’s or accountant’s determination or calculation, as the case may be, shall be deemed conclusive absent manifest error.

(c)           Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five (5) Business Days after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised.

(d)           No fractional Warrant Shares are to be issued upon any pro rata exercise of this Warrant, but rather the number of Warrant Shares issued upon such exercise of this Warrant shall be rounded up or down to the nearest whole number.

(e)           If the Company or its Transfer Agent shall fail for any reason or for no reason to issue to the Holder within ten (10) days of receipt of the Exercise Delivery Documents, a certificate for the number of Warrant Shares to which the Holder is entitled or to credit the Holder’s balance account with The Depository Trust Company for such number of Warrant Shares to which the Holder is entitled upon the Holder’s exercise of this Warrant, the Company shall, in addition to any other remedies under this Warrant or otherwise available to such Holder, pay as additional damages in cash to such Holder on each day the issuance of such certificate for Warrant Shares is not timely effected an amount equal to 0.025% of the product of (A) the sum of the number of Warrant Shares not issued to the Holder on a timely basis and to which the Holder is entitled, and (B) the Closing Bid Price of the Common Stock for the trading day immediately preceding the last possible date which the Company could have issued such Common Stock to the Holder without violating this Section 2.

(f)           If within ten (10) days after the Company’s receipt of the Exercise Delivery Documents, the Company fails to deliver a new Warrant to the Holder for the number of Warrant Shares to which such Holder is entitled pursuant to Section 2 hereof, then, in addition to any other available remedies under this Warrant, or otherwise available to such Holder, the Company shall pay as additional damages in cash to such Holder on each day after such tenth (10th) day that such delivery of such new Warrant is not timely effected in an amount equal to 0.25% of the product of (A) the number of Warrant Shares represented by the portion of this Warrant which is not being exercised and (B) the Closing Bid Price of the Common Stock for the trading day immediately preceding the last possible date which the Company could have issued such Warrant to the Holder without violating this Section 2.

Section 3.              Covenants as to Common Stock.  The Company hereby covenants and agrees as follows:

(a)           This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued.

(b)           All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

(c)           If at any time during the period within which the rights represented by this Warrant may be exercised the Company does not have a sufficient number of shares of Common Stock authorized and available to provide for the exercise in full of the rights represented by this Warrant, or if the par value of such shares is less than or equal to the applicable Warrant Exercise Price, then upon written notice from two Fifths of the Holders, the Company shall call and hold a special meeting of its stockholders within sixty  (60) days of such notice for the purpose of increasing the number of authorized shares of Common Stock and/or reducing the par value of the Common Stock.

(d)           If at any time after the date hereof the Company shall file a registration statement, the Company shall include the Warrant Shares issuable to the Holder, pursuant to the terms of this Warrant and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system.

(e)           The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the Holder in order to protect the exercise privilege of the Holder against dilution or other impairment, consistent with the tenor and purpose of this Warrant.  The Company will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

(f)           This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets.

Section 4.               Taxes.  The Company shall pay any and all taxes, except any applicable withholding, which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

Section 5.              Warrant Holder Not Deemed a Stockholder.  Except as otherwise specifically provided herein, no Holder, as such, shall be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.  Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

Section 6.               Representations of Holder.  The Holder, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the Holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act.  The Holder further represents, by acceptance hereof, that, as of this date, such holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an “Accredited Investor”).  Upon exercise of this Warrant the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the Holder’s own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale and that the Holder is an Accredited Investor.  If the Holder cannot make such representations because they would be factually incorrect, it shall be a condition to the Holder’s exercise of this Warrant that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or state securities laws.

Section 7.               Ownership and Transfer.

(a)           The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee.  The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.

Section 8.               Adjustment of Warrant Exercise Price and Number of Shares.  The Warrant Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows:

(a)           Adjustment of Warrant Exercise Price and Number of Shares upon Issuance of Common Stock.  If and whenever on or after the Issuance Date of this Warrant, the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than Excluded Securities) for a consideration per share less than a price (the “Applicable Price”) equal to the Warrant Exercise Price in effect immediately prior to such issuance or sale, then immediately after such issue or sale the Warrant Exercise Price then in effect shall be reduced to an amount equal to such consideration per share.  Upon each such adjustment of the Warrant Exercise Price hereunder, the number of Warrant Shares issuable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Warrant Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant Exercise Price resulting from such adjustment.

(b)           Effect on Warrant Exercise Price of Certain Events.  For purposes of determining the adjusted Warrant Exercise Price under Section 8(a) above, the following shall be applicable:

(i)           Issuance of Options.  If after the date hereof, the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange of any convertible securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share.  For purposes of this Section 8(b)(i), the lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option or upon conversion or exchange of any convertible security issuable upon exercise of such Option.  No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock or of such convertible securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such convertible securities.

(ii)          Issuance of Convertible Securities.  If the Company in any manner issues or sells any convertible securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such convertible securities for such price per share.  For the purposes of this Section 8(b)(ii), the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the convertible security and upon conversion or exchange of such convertible security.  No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such convertible securities, and if any such issue or sale of such convertible securities is made upon exercise of any Options for which adjustment of the Warrant Exercise Price had been or are to be made pursuant to other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by reason of such issue or sale.

(iii)         Change in Option Price or Rate of Conversion.  If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any convertible securities, or the rate at which any convertible securities are convertible into or exchangeable for Common Stock changes at any time, the Warrant Exercise Price in effect at the time of such change shall be adjusted to the Warrant Exercise Price which would have been in effect at such time had such Options or convertible securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold and the number of Warrant Shares issuable upon exercise of this Warrant shall be correspondingly readjusted.  For purposes of this Section 8(b)(iii), if the terms of any Option or convertible security that was outstanding as of the Issuance Date of this Warrant are changed in the manner described in the immediately preceding sentence, then such Option or convertible security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change.  No adjustment pursuant to this Section 8(b) shall be made if such adjustment would result in an increase of the Warrant Exercise Price then in effect.

(iv)         Calculation of Consideration Received.  If any Common Stock, Options or convertible securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefore will be deemed to be the net amount received by the Company therefore.  If any Common Stock, Options or convertible securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of marketable securities, in which case the amount of consideration received by the Company will be the market price of such securities on the date of receipt of such securities.  If any Common Stock, Options or convertible securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefore will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or convertible securities, as the case may be.  The fair value of any consideration other than cash or securities will be determined jointly by the Company and the holders of Warrants representing at least two-Fifths (b) of the Warrant Shares issuable upon exercise of the Warrants then outstanding.  If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the holders of Warrants representing at least two-Fifths (b) of the Warrant Shares issuable upon exercise of the Warrants then outstanding.  The determination of such appraiser shall be final and binding upon all parties and the fees and expenses of such appraiser shall be borne jointly by the Company and the holders of Warrants.

(v)          Integrated Transactions.  In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.001.

(vi)         Treasury Shares.  The number of shares of Common Stock outstanding at any given time does not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held will be considered an issue or sale of Common Stock.

(vii)        Record Date.  If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or in convertible securities or (2) to subscribe for or purchase Common Stock, Options or convertible securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(c)           Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common Stock.  If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased.  If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant will be proportionately decreased.  Any adjustment under this Section 8(c) shall become effective at the close of business on the date the subdivision or combination becomes effective.

(d)           Distribution of Assets.  If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

(i)           any Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitledto receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator shall be the Closing Sale Price of the Common Stock on the trading day immediately preceding such record date; and

(ii)           either (A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i), or (B) in the event that the Distribution is of common stock of a company whose common stock is traded on a national securities exchange or a national automated quotation system, then the holder of this Warrant shall receive an additional warrant to purchase Common Stock, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount of the assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant immediately prior to such record date and with an exercise price equal to the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i).

(e)           Certain Events.  If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrants; provided, except as set forth in section 8(c),that no such adjustment pursuant to this Section 8(e) will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this Section 8.

(f)           Voluntary Adjustments By Company.  The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

(g)           Notices.

(i)           Immediately upon any adjustment of the Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment.

(ii)          The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.

(iii)         The Company will also give written notice to the holder of this Warrant at least ten (10) days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder.

Section 9.              Purchase Rights; Reorganization, Reclassification, Consolidation, Merger or Sale.

(a)           In addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(b)           Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an “Organic Change.”  Prior to the consummation of any (i) sale of all or substantially all of the Company’s assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the “Acquiring Entity”) a written agreement (in form and substance satisfactory to Holders representing at least two-Fifths of the Warrant Shares issuable upon exercise of the Warrants then outstanding(iii) of the Warrant Shares issuable upon exercise of the Warrants then outstanding) to deliver to each Holder in exchange for such Warrants, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to this Warrant and satisfactory to the Holders (including an adjusted warrant exercise price equal to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and exercisable for a corresponding number of shares of Common Stock acquirable and receivable upon exercise of the Warrants without regard to any limitations on exercise, if the value so reflected is less than any Applicable Warrant Exercise Price immediately prior to such consolidation, merger or sale).  Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance satisfactory to the Holders representing a majorityof the Warrant Shares issuable upon exercise of the Warrants then outstanding) to insure that each of the Holders will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the Warrant Shares immediately theretofore issuable and receivable upon the exercise of the Holder’s Warrants (without regard to any limitations on exercise), such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of Warrant Shares which would have been issuable and receivable upon the exercise of such holder’s Warrant as of the date of such Organic Change (without taking into account any limitations or restrictions on the exercisability of this Warrant).

Seection 10.               Lost, Stolen, Mutilated or Destroyed Warrant.  If this Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

Section 11.               Notice.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of receipt is received by the sending party transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

If to the Company, to:	NeoMedia Technologies, Inc.
	Two Concourse Parkway, Suite 500
	Atlanta, GA 30328
	Attention:	Chief Executive Officer or Chief Financial Officer
	Telephone:	678-638-0460 (x132)
	Facsimile:	678-638-0466
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention:	Clayton E. Parker, Esq.
	Telephone:	(305) 539-3300
	Facsimile:	(305) 358-7095
If to Holder:	YA Global Investments, L.P.
	101 Hudson Street – Suite 3700
	Jersey City, NJ  07302
	Attention:	Mark A. Angelo
	Telephone:	(201) 985-8300
	Facsimile:	(201) 985-8266
With Copy to:	David Gonzalez, Esq.
	101 Hudson Street – Suite 3700
	Jersey City, NJ 07302
	Telephone:	(201) 985-8300
	Facsimile:	(201) 985-8266

or at such other address and facsimile as shall be delivered to the Company upon the issuance or transfer of this Warrant.  Each party shall provide five (5) days’ prior written notice to the other party of any change in address or facsimile number.  Written confirmation of receipt (A) given by the recipient of such notice, consent, facsimile, waiver or other communication, (or (B) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

Section 12.              Date.  The date of this Warrant is set forth on page 1 hereof.  This Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date, except that notwithstanding any other provisions hereof, the provisions of Section 8(b) shall continue in full force and effect after such date as to any Warrant Shares or other securities issued upon the exercise of this Warrant.

Section 13.              Amendment and Waiver.  Except as otherwise provided herein, the provisions of the Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holders representing at least two-Fifths of the Warrant Shares issuable upon exercise of the Warrants then outstanding; provided that, except for Section 8(d), no such action may increase the Warrant Exercise Price or decrease the number of shares or class of stock obtainable upon exercise of any Warrant without the written consent of the holder of such Warrant.

Section 14.              Descriptive Headings; Governing Law.  The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.  The corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders.  All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New Jersey, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New Jersey or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New Jersey.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Hudson County and the United States District Court for the District of New Jersey, for the adjudication of any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

Section 15.              Waiver of Jury Trial.  AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the date first set forth above.

NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Michael W. Zima
Name:	Michael W. Zima
Title:	Chief Financial Officer

EX-10.6

Exhibit 10.6

SIXTH RATIFICATION AGREEMENT

THIS SIXTH RATIFICATION AGREEMENT (hereinafter, this “Agreement”) made this 10th day of January, 2011 by and among:

YA GLOBAL INVESTMENTS, L.P.,f/k/a Cornell Capital Partners, LP(the “Lender”), a Cayman Island exempt limited partnership with offices located at 101 Hudson Street Suite 3700, Jersey City, New Jersey 07302; and

NEOMEDIA TECHNOLOGIES, INC. (the “Borrower”), a Delaware corporation with its principal office located at Two Concourse Parkway, Suite 500, Atlanta, Georgia 30328 and whose fax number is (678) 638-0466.

Background

Reference is made to certain financing arrangements entered into by and between the Borrower and certain of its former and/or current subsidiaries (collectively, the “Obligors”) and the Lender, evidenced by, among other things, the documents, instruments, and agreements listed on Schedule “1” attached hereto and incorporated herein by reference (collectively, together with all other documents, instruments, and agreements executed in connection therewith or related thereto, the “Existing Financing Documents”).

The Borrower has represented to the Lender that it requires short term financing for working capital.  In connection therewith, the Borrower has requested that the Lender make an additional financial accommodation to the Borrower in the amount of $450,000.00 to fund ongoing business operations, which financial accommodation shall be evidenced by, among other documents, instruments, and agreements, a certain Secured Convertible Debenture of even date herewith issued by the Borrower in favor of the Lender (the “New Debenture”, and collectively, together with this Agreement, the Existing Financing Documents, the Related Documents (as defined herein) and all other documents, instruments, and agreements executed in connection therewith or related thereto, the “Financing Documents”).  The Lender has agreed to make such an additional financial accommodation to the Obligors but only upon the condition, among others, that the Borrower enter into this Agreement with the Lender.

Accordingly, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by and between the Borrower and the Lender as follows:

Acknowledgment of Indebtedness

1. The Borrower hereby acknowledges and agrees that it is liable to the Lender as follows:

a. Owed under the CCP-1 Debenture as of January 10, 2011:

Principal	$	5,000,000.00
Interest	$	1,889,003.82
Total	$	6,889,003.82

b. Owed under the CCP-2 Debenture as of January 10, 2011:

Principal	$	2,500,000.00
Interest	$	945,710.11
Total	$	3,445,710.11

c. Owed under the NEOM-4-1 Debenture as of January 10, 2011:

Principal	$	7,458,651.00
Interest	$	2,679,260.58
Total	$	10,137,911.58

d. Owed under the NEOM-1-1 Debenture as of January 10, 2011:

Principal	$	1,775,000.00
Interest	$	838,772.60
Total	$	2,613,772.60

e. Owed under the NEOM-2008-1 Debenture as of January 10, 2011:

Principal	$	390,000.00
Interest	$	163,312.50
Total	$	553,312.50

f. Owed under the NEOM-2008-2 Debenture as of January 10, 2011:

Principal	$	500,000.00
Interest	$	201,875.00
Total	$	701,875.00

g. Owed under the NEOM-2008-3 Debenture as of January 10, 2011:

Principal	$	790,000.00
Interest	$	314,683.33
Total	$	1,104,683.33

h. Owed under the NEOM-2008-4 Debenture as of January 10, 2011:

Principal	$	137,750.00
Interest	$	52,459.79
Total	$	190,209.79

i. Owed under the NEOM-9-1 Debenture as of January 10, 2011:

Principal	$	2,325,000.00
Interest	$	798,143.84
Total	$	3,123,143.84

j. Owed under the NEOM-9-2 Debenture as of January 10, 2011:

Principal	$	2,325,000.00
Interest	$	716,991.78
Total	$	3,041,991.78

k. Owed under the NEOM-9-4 Debenture as of January 10, 2011:

Principal	$	258,035.80
Interest	$	90,813.82
Total	$	348,849.62

l. Owed under the NEOM-9-5 Debenture as of January 10, 2011:

Principal	$	715,000.00
Interest	$	160,160.00
Total	$	875,160.00

m. Owed under the NEOM-9-6 Debenture as of January 10, 2011:

Principal	$	535,000.00
Interest	$	111,631.75
Total	$	646,631.75

n. Owed under the NEOM-9-7 Debenture as of January 10, 2011:

Principal	$	475,000.00
Interest	$	93,646.58
Total	$	569,646.58

o. Owed under the NEOM-10-1 Debenture as of January 10, 2011:

Principal	$	2,006,137.04
Interest	$	175,440.80
Total	$	2,181,577.84

p. Owed under the NEOM-10-2 Debenture as of January 10, 2011:

Principal	$	550,000.00
Interest	$	31,643.84
Total	$	581,643.84

q. Owed under the NEOM-10-3 Debenture as of January 10, 2011:

Principal	$	475,000.00
Interest	$	18,765.75
Total	$	493,765.75

r. Owed under the NEOM-10-4 Debenture as of January 10, 2011:

Principal	$	400,000.00
Interest	$	11,353.42
Total	$	411,353.42

s. Owed under the NEOM-10-5 Debenture as of January 10, 2011:

Principal	$	450,000.00
Interest	$	4,660.27
Total	$	454,660.27

t. For all interest accruing from and after January 10, 2011 due under the above-referenced debentures and notes, and for all fees, late charges, redemption premiums, liquidated damages, costs, expenses, and costs of collection (including attorneys’ fees and expenses) and other amounts, heretofore or hereafter accrued or coming due or incurred by the Lender in connection with the protection, preservation, or enforcement of its rights and remedies under the Financing Documents (including, without limitation, the preparation and negotiation of this Agreement).

Hereinafter, all amounts due as set forth in this Paragraph 1, and all amounts hereafter owed or due under the New Debenture and/or the other Financing Documents shall be referred to collectively as the “Obligations”.

Waiver of Claims

2. The Borrower, for itself and on behalf of any other Obligors, hereby acknowledges and agrees that none of the Obligors have any offsets, defenses, claims, or counterclaims against the Lender, its general partner, and its investment manager, and each of their respective agents, servants, attorneys, advisors, officers, directors, employees, affiliates, partners, members, managers, predecessors, successors, and assigns (singly and collectively, as the “Released Parties”), with respect to the Obligations, the Financing Documents, the transactions set forth or otherwise contemplated in this Agreement, or otherwise, and that if the Obligors now have, or ever did have, any offsets, defenses, claims, or counterclaims against any of the Released Parties, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this Agreement, all of them are hereby expressly WAIVED, and the Obligors each hereby RELEASE each of the Released Parties from any and all liability therefor.

Ratification of Financing Documents; Confirmation of Collateral; Cross-Default;

Cross-Collateralization; Further Assurances

3. The Borrower:

a. Hereby ratifies, confirms, and reaffirms all and singular the terms and conditions of the Existing Financing Documents, and acknowledges and agrees that, subject to the terms and conditions of this Agreement, all terms and conditions of the Existing Financing Documents shall remain in full force and effect;

b. Hereby ratifies, confirms, and reaffirms that (i) the obligations secured by the Financing Documents include, without limitation, the Obligations, and any future modifications, amendments, substitutions, or renewals thereof, (ii) all collateral, whether now existing or hereafter acquired, granted to the Lender pursuant to the Financing Documents, or otherwise, shall secure all of the Obligations until the full, final, and indefeasible payment of the Obligations, and (iii) subject to the provisions of Paragraph 6, below, the occurrence of a default and/or event of default under any Financing Document shall constitute a default and an event of default under all of the Financing Documents, it being the express intent of the Borrower that all of the Obligations be fully cross-collateralized, cross-guaranteed, and cross-defaulted;

c. Has previously granted the Lender security interests in all of its assets, and to confirm the same the Borrower hereby grants the Lender a security interest in all of its assets, whether now existing or hereafter acquired, including, without limitation, all accounts, inventory, goods, equipment, software and computer programs, securities, investment property, financial assets, deposit accounts, chattel paper, electronic chattel paper, instruments, patents, patent applications, copyrights, trademarks, trademark applications, trade names, domain names, documents, letter-of-credit rights, health-care-insurance receivables, supporting obligations, notes secured by real estate, commercial tort claims, and general intangibles including payment intangibles, to secure the Obligations free and clear of all liens and encumbrances;

d. Shall, from and after the execution of this Agreement, execute and deliver to the Lender whatever additional documents, instruments, and agreements that the Lender may require in order to correct any document deficiencies, or to vest or perfect the Financing Documents and the collateral granted therein more securely in the Lender and/or to otherwise give effect to the terms and conditions of this Agreement and/or the Related Documents, and hereby irrevocably authorizes the Lender to file any financing statements (including financing statements with a generic description of the collateral such as “all assets”), and take any other normal and customary steps, the Lender deems necessary to perfect or evidence the Lender’s security interests and liens in any such collateral; and

e. Acknowledges and agrees that this Agreement shall constitute an authenticated record as such term is defined in the Uniform Commercial Code.

f. In accordance with Section 6.17 of the Security Agreement dated as of July 29, 2008 (the “2008 Security Agreement”) entered into by and between the  Borrower and the Lender, and Section 7(f) hereof, hereby grants the Lender a security interest in all of Borrower’s rights arising from, in connection with, or relating to any commercial tort claims listed on Schedule 2 hereto, and all judgments, proceeds, products, and awards related to the foregoing (collectively, the “Tort Claims”).  The Borrower acknowledges and agrees that the Tort Claims constitutes Pledged Property (as defined in the 2008 Security Agreement) and secures all of the Obligations, including those pursuant to the New Debenture.

Conditions Precedent

4. The Lender’s agreements hereunder as contemplated herein shall not be effective unless and until each of the following conditions precedent have been fulfilled, pursuant to documentation in form and substance satisfactory to the Lender in all respects, all as determined by the Lender in its sole and exclusive discretion:

a. The Lender shall have received such lien searches and other evidence as the Lender may require to confirm that the Lender’s liens and security interests in the collateral pledged by the Obligors remain duly perfected, first priority security interests, subject only to such liens and security interests granted in favor of the Lender;

b. The Borrower shall have (i) executed and delivered to the Lender all documents, instruments, and agreements required by the Lender in connection with the New Debenture in a form and substance acceptable to the Lender in all respects; and (ii) satisfied all conditions precedent to the effectiveness thereof in a manner satisfactory to the Lender in all respects;

c. The Obligors shall have paid to the Lender’s investment manager, Yorkville Advisors, LLC, a commitment and structuring fee in the amount of $25,000.00 in good and collected funds in accordance with the closing statement attached hereto as Exhibit “A”;

d. The Borrower shall have taken any and all actions necessary to perfect and further perfect the Lender’s security interest in the Borrower’s intellectual property, including without limitation, obtaining, executing and/or filing any documents, instruments, or agreements necessary to perfect or vest title to all patents and patent applications set forth in the Financing Documents in the name of the Borrower, and to perfect the Lender’s security interests in all of the Borrower’s intellectual property, including without limitation, patents and patent applications.

e. All action on the part of the Borrower necessary for the valid execution, delivery and performance by the Borrower of this Agreement shall have been duly and effectively taken and evidence thereof, including, without limitation, an opinion of the Borrower’s counsel, satisfactory to the Lender in all respects shall have been provided to the Lender; and

f. This Agreement, and all documents, instruments, and agreements required in connection with, related to, or contemplated by this Agreement (collectively, the “Related Documents”), shall be executed and delivered to the Lender by the parties thereto, shall be in full force and effect and shall be form and substance satisfactory to the Lender.

New Loan

5. The Borrower has requested that the Lender make a short-term loan in the original principal amount of $450,000.00 (the “New Loan”) to fund ongoing business operations.  Upon the satisfaction of all of the conditions precedent set forth in Paragraph 4 of this Agreement, as determined by the Lender in the Lender’s sole and exclusive discretion, and subject to the terms and conditions of the New Debenture and the Related Documents, the New Loan shall (a) be made by the Lender in accordance with the terms and conditions of the New Debenture and the other Financing Documents, (b) constitute a portion of the Obligations, and (c) be secured by all of the collateral granted to the Lender by the Obligors.  The Borrower hereby acknowledges and agrees that (x) the New Loan is a single, one time loan, (y) by making the New Loan the Lender is not agreeing to make any further loans in the future, and (z) will be repaid in full on or before July 29, 2012.

Provision Regarding Events of Default Under The Financing Documents

6. The Lender hereby agrees that from and after the execution of this Agreement, the breach of, or failure to comply with, a provision of the Financing Documents by the Borrower shall not constitute an event of default under the Financing Documents unless and until the Lender declares such breach or failure to comply to be an event of default in a written notice sent to the Borrower by facsimile and at the address set forth in this Agreement by nationally-recognized overnight delivery service (i.e., Federal Express, UPS), provided, however, that (a) such declaration shall be effective upon the delivery of the notice to such overnight delivery service and shall not require proof that the Borrower received the same, and (b) no such declaration or notice shall be required with respect to any breach or default occurring as a result of, or in the nature of, a bankruptcy of the Borrower or any similar insolvency proceeding or action (including, without limitation, any assignment for the benefit of creditors, composition, reorganization, or the like) filed by or against the Borrower, each of which shall be an immediate event of default.

Representations, Warranties, and Covenants

7. The Borrower hereby represents, warrants, and covenants to the Lender as follows:

a. The execution and delivery of this Agreement and the other Financing Documents by the Borrower and the performance by the Borrower of its obligations and agreements under this Agreement and the other Financing Documents are within the authority of the Borrower, have been duly authorized by all necessary corporate proceedings on behalf of the Borrower, and do not and will not contravene any provision of law, statute, rule or regulation to which the Borrower is subject or, if applicable, any charter, other organization papers, by-laws, or any stock provision or any amendment thereof or of any agreement or other instrument binding upon the Borrower.

b. This Agreement and the other Financing Documents constitute legal, valid, and binding obligations of the Borrower, enforceable in accordance with their respective terms.

c. No approval or consent of, or filing with, any governmental agency or authority is required to make valid and legally binding the execution, delivery or performance by the Borrower of this Agreement or the other Financing Documents.

d. The Borrower has performed and complied in all material respects with all terms and conditions herein required to be performed or complied with by the Borrower prior to or at the time hereof, and as of the date hereof, no default or event of default has occurred and is continuing under any of the Financing Documents.

e. The representations and warranties contained in the Financing Documents were true and correct in all material respects at and as of the date made and are true and correct as of the date hereof, except to the extent of changes resulting from transactions specifically contemplated or specifically permitted by this Agreement and the other Financing Documents, changes which have been disclosed in writing to the Lender on or prior to the date hereof and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and except to the extent that such representations and warranties relate expressly to an earlier date.

f. The Borrower currently has no commercial tort claims (as such term is defined in the Uniform Commercial Code) and hereby covenants and agrees that in the event the Borrower shall hereafter hold or acquire a commercial tort claim, the Borrower shall immediately notify the Lender of the particulars of such claim in writing and shall grant to the Lender a security interest therein and in the proceeds thereof, upon such terms and documentation as may be satisfactory to the Lender.

g. The Borrower has read and understands each of the terms and conditions of this Agreement and the other Financing Documents and that it is entering into this Agreement and the other Financing Documents freely and voluntarily, without duress, after having had an opportunity for consultation with independent counsel of its own selection, and not in reliance upon any representations, warranties, or agreements made by the Lender and not set forth in this Agreement or the other Financing Documents.

h. The Borrower acknowledges and agrees that nothing contained in this Agreement or the Related Documents shall be deemed to constitute (a) a waiver of any defaults or events of default now existing or hereafter arising, or any events that, but for the passage of time or the giving of notice, would constitute defaults or events of default, (b) an agreement to forbear by the Lender with respect to such defaults or events of default, or (c) except as expressly set forth herein, an amendment, modification, extension, or waiver of any of the terms of the Financing Documents or of any of the Lender’s rights and remedies thereunder.

i. NeoMedia Migration, Inc. (“Migration”) is a wholly owned subsidiary of the Borrower which has no assets, employees, or operations and which the Borrower intends to dissolve upon completion and filing of Migration’s final tax return. The Borrower hereby covenants and agrees that Migration shall have no assets, employees, or operations going forward and that the Borrower will not transfer, or cause the transfer of, any assets to Migration, or allow or cause Migration to have any employees or business operations hereafter.  The Borrower specifically acknowledges and agrees that the Lender is relying upon this provision in determining to enter into this Agreement.

j. The Borrower shall not, and shall not permit or direct any of the other Obligors to license, transfer, assign, or otherwise divest their interest in their respective assets, including without limitation, patents and patent applications, without the prior written consent of the Lender, which consent may be granted or withheld in the Lender’s sole and exclusive discretion.

Costs of Collection

8. The Borrower shall reimburse the Lender on demand for any and all unreimbursed costs, expenses, and costs of collection (including attorneys’ fees and expenses) heretofore or hereafter incurred by the Lender in connection with the protection, preservation, and enforcement by the Lender of its rights and remedies under the Financing Documents, the Related Documents, and/or this Agreement, including, without limitation, the negotiation and preparation of this Agreement and the Related Documents, and/or any matters related thereto.

Waiver of Jury Trial

9. The Borrower and the Lender hereby make the following waiver knowingly, voluntarily, and intentionally, and understand that the other, in entering into this Agreement, is relying on such a waiver:  THE BORROWER AND THE LENDER EACH HEREBY IRREVOCABLY WAIVE ANY PRESENT OR FUTURE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE OTHER BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST SUCH PARTY OR IN WHICH SUCH PARTY IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE OBLIGORS, OR ANY OTHER PERSON, AND THE LENDER.

Credit Bidding

10. The Borrower hereby acknowledges and agrees, in further consideration for the Lender entering into this Agreement, that the Lender shall be permitted to credit bid the Obligations at any auction and/or other sale, including without limitation, at any auction and/or other sale or disposition conducted under or in connection with any of the sections or chapters of the Bankruptcy Code, 11 U.S.C. §101 et seq. (the “Bankruptcy Code”).  The Borrower hereby acknowledges and agrees that this provision is a material inducement to the Lender entering into this Agreement.  The Lender, in turn, acknowledges that this paragraph shall not be construed as a restriction or prohibition on any Borrower’s right to file any voluntary petition or make application for or seek relief or protection under the Bankruptcy Code.  The Borrower acknowledges and agrees that the agreements as set forth in this Paragraph shall survive expiration and/or termination of this Agreement.

Consent to Jurisdiction

11. The Borrower agrees that any legal action, proceeding, case, or controversy against the Borrower with respect to the Financing Documents or this Agreement may be brought in the state court or the United States District Court having jurisdiction in Jersey City, New Jersey (each a “Court”), as the Lender may elect in the Lender’s sole discretion.  By execution and delivery of this Agreement, the Borrower, for itself, and in respect of its property, accepts, submits, and consents generally and unconditionally, to the jurisdiction of the aforesaid courts.  The Borrower further hereby:

a. WAIVES personal service of any and all process upon it, and irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by certified mail, postage prepaid, to the Borrower at its addresses as specified herein, such service to become effective five (5) days after such mailing.

b. WAIVES any objection based on forum non conveniens and any objection to venue of any action or proceeding instituted under the Financing Documents or this Agreement and consents to the granting of such legal or equitable remedy as is deemed appropriate by a Court.

c. Agrees that any action or proceeding commenced by the Borrower asserting any claim arising under or in connection with the Financing Documents or this Agreement shall be brought solely in a state court or the United States District Court having jurisdiction in Jersey City, New Jersey, and that such Courts shall have exclusive jurisdiction with respect to any such action instituted by the Borrower.

d. Agrees that any voluntary petition or application filed by the Borrower seeking relief or protection under the Bankruptcy Code shall be filed in a United States Bankruptcy Court for the District of Florida, a United States Bankruptcy Court for the District of Georgia, or a United States Bankruptcy Court for the District of Nevada, and that if the Borrower files a petition or application for relief in any other jurisdiction, the Lender shall have the right, in its sole and exclusive discretion, to transfer any such proceeding to one of the foregoing courts that has jurisdiction over the Borrower under the Bankruptcy Code.

e. Agree that nothing herein shall affect the right of the Lender to bring legal actions or proceedings in any other competent jurisdiction.

Non-Interference

12. From and after the date hereof, the Borrower agrees:

a. Not to interfere with the exercise by the Lender of any of its rights and remedies under this Agreement, the Related Documents, the Financing Documents, and/or applicable law;

b. The Borrower shall not seek to distrain or otherwise hinder, delay, or impair the Lender’s efforts to realize upon any collateral or otherwise to enforce its rights and remedies pursuant to this Agreement, the Related Documents, the Financing Documents, and/or applicable law, and shall at all times cooperate with the Lender’s exercise of its rights and remedies under this Agreement, the Related Documents, the Financing Documents, and/or applicable law; and

c. The provisions of this Paragraph shall be specifically enforceable by the Lender.

Entire Agreement

13. This Agreement shall be binding upon the Borrower and the Borrower’s employees, representatives, successors, and assigns, and shall inure to the benefit of the Lender and the Lender’s successors and assigns.  This Agreement and the other Financing Documents incorporate all of the discussions and negotiations between the Borrower and the Lender, either express or implied, concerning the matters included herein and in such other documents, instruments, and agreements, any statute, custom, or usage to the contrary notwithstanding.  No such discussions or negotiations shall limit, modify, or otherwise affect the provisions hereof.  No modification, amendment, or waiver of any provision of this Agreement, or any provision of any other document, instrument, or agreement between the Obligors, or any one of them, and the Lender shall be effective unless executed in writing by the party to be charged with such modification, amendment, or waiver, and if such party be the Lender, then by a duly authorized representative thereof.

Construction of Agreement

14. In connection with the interpretation of this Agreement and the other Financing Documents:

a. All rights and obligations hereunder and thereunder, including matters of construction, validity, and performance, shall be governed by and construed in accordance with the law of the State of New Jersey and are intended to take effect as sealed instruments.

b. The captions of this Agreement are for convenience purposes only, and shall not be used in construing the intent of the Lender and the Borrower under this Agreement.

c. In the event of any inconsistency between the provisions of this Agreement and any other document, instrument, or agreement entered into by and between the Lender and the Borrower, the provisions of this Agreement shall govern and control.

d. The Lender and the Borrower have prepared this Agreement and the other Financing Documents with the aid and assistance of their respective counsel.  Accordingly, all of them shall be deemed to have been drafted jointly by the Lender and the Borrower and shall not be construed against either the Lender or the Borrower.

Illegality or Unenforceability

15. Any determination that any provision or application of this Agreement is invalid, illegal, or unenforceable in any respect, or in any instance, shall not affect the validity, legality, or enforceability of any such provision in any other instance, or the validity, legality, or enforceability of any other provision of this Agreement.

Counterparts

16. This Agreement may be executed in multiple identical counterparts (including by facsimile or e-mail transmission of an adobe file format document (also known as a PDF file)), each of which when duly executed shall be deemed an original, and all of which shall be construed together as one agreement.  This Agreement will not be binding on or constitute evidence of a contract between the parties hereto until such time as a counterpart has been executed by such party and a copy thereof is delivered to each other party to this Agreement.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, this Ratification Agreement has been executed as of the date first set forth above.

YA GLOBAL INVESTMENTS, L.P.,		NEOMEDIA TECHNOLOGIES, INC.
f/k/a Cornell Capital Partners, LP
By: Yorkville Advisors, LLC,
its Investment Manager
By:	/s/ Troy Rillo	By:	/s/ Michael W. Zima
Name:	Troy Rillo	Name:	Michael W. Zima
Title:	Sr. Managing Director	Title:	Chief Financial Officer & Secretary

[Signature Page to Sixth Ratification Agreement]

Schedule “1”

(Financing Documents)

DEBENTURES AND NOTES

1. Secured Convertible Debenture dated August 23, 2006 issued by the Borrower to the Lender in the original principal amount of $5,000,000.00 (hereinafter, as amended and in effect, the “CCP-1 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. CCP-1 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

2. Secured Convertible Debenture dated December 29, 2006 issued by the Borrower to the Lender in the original principal amount of $2,500,000.00 (hereinafter, as amended and in effect, the “CCP-2 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. CCP-2 dated as of January 5, 2010 by and between the Borrower and the Lender;

3. Secured Convertible Debenture dated March 27, 2007 issued by the Borrower to the Lender in the original principal amount of $7,458,651.00 (hereinafter, as amended and in effect, the “NEOM-4-1 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-4-1 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

4. Secured Convertible Debenture dated August 24, 2007 issued by the Borrower to the Lender in the original principal amount of $1,775,000.00 (hereinafter, as amended and in effect, the “NEOM-1-1 Debenture”), as amended by that certain letter agreement dated as of August 14, 2009, and as further amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-1-1 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

5. Secured Convertible Debenture dated April 11, 2008 issued by the Borrower to the Lender in the original principal amount of $390,000.00 (hereinafter, as amended and in effect, the “NEOM-2008-1 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-2008-1 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

6. Secured Convertible Debenture dated May 16, 2008 issued by the Borrower to the Lender in the original principal amount of $500,000.00 (hereinafter, as amended and in effect, the “NEOM-2008-2 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-2008-2 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

7. Secured Convertible Debenture dated May 29, 2008 issued by the Borrower to the Lender in the original principal amount of $790,000.00 (hereinafter, as amended and in effect, the “NEOM-2008-3 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-2008-3 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

8. Secured Convertible Debenture dated July 10, 2008 issued by the Borrower to the Lender in the original principal amount of $137,750.00 (hereinafter, as amended and in effect, the “NEOM-2008-4 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-2008-4 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

9. Secured Convertible Debenture dated July 29, 2008 issued by the Borrower to the Lender in the original principal amount of $2,325,000.00 (hereinafter, as amended and in effect, the “NEOM-9-1 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-9-1 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

10. Secured Convertible Debenture dated October 28, 2008 issued by the Borrower to the Lender in the original principal amount of $2,325,000.00 (hereinafter, as amended and in effect, the “NEOM-9-2 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-9-2 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

11. Secured Convertible Debenture dated May 1, 2009 issued by the Borrower to the Lender in the original principal amount of $550,000.00 (hereinafter, as amended and in effect, the “NEOM-9-4 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-9-4 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

12. Secured Convertible Debenture dated June 5, 2009 issued by the Borrower to the Lender in the original principal amount of $715,000.00 (hereinafter, as amended and in effect, the “NEOM-9-5 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-9-5 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

13. Secured Convertible Debenture dated July 15, 2009 issued by the Borrower to the Lender in the original principal amount of $535,000.00 (hereinafter, as amended and in effect, the “NEOM-9-6 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-9-6 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

14. Secured Convertible Debenture dated August 14, 2009 issued by the Borrower to the Lender in the original principal amount of $475,000.00 (hereinafter, as amended and in effect, the “NEOM-9-7 Debenture”), as amended by that certain Amendment to NeoMedia Technologies, Inc. Secured Convertible Debenture No. NEOM-9-7 dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

15. Secured Convertible Debenture dated May 27, 2010 issued by the Borrower to the Lender in the original principal amount of $2,006,137.04 (hereinafter, as amended and in effect, the “NEOM-10-1 Debenture”)

16. Secured Convertible Debenture dated August 13, 2010 issued by the Borrower to the Lender in the original principal amount of $550,000.00 (hereinafter, as amended and in effect, the “NEOM-10-2 Debenture”);

17. Secured Convertible Debenture dated September 29, 2010 issued by the Borrower to the Lender in the original principal amount of $475,000.00 (hereinafter, as amended and in effect, the “NEOM-10-3 Debenture”);

18. Secured Convertible Debenture dated October 28, 2010 issued by the Company to the Investor in the original principal amount of $400,000 (hereinafter, as amended and in effect, the “NEOM-10-4 Debenture”),

19. Secured Convertible Debenture dated December 15, 2010 issued by the Company to the Investor in the original principal amount of $450,000 (hereinafter, as amended and in effect, the “NEOM-10-5 Debenture”)and collectively, together with the CCP-1 Debenture, the CCP-2 Debenture, the NEOM 4-1 Debenture, the NEOM 1-1 Debenture, the NEOM 2008-1 Debenture, the NEOM 2008-2 Debenture, the NEOM 2008-3 Debenture, the NEOM 2008-4 Debenture, the NEOM 9-1 Debenture, the NEOM 9-2 Debenture, the NEOM 9-4 Debenture, the NEOM 9-5 Debenture, the NEOM 9-6 Debenture, the NEOM 9-7 Debenture, NEOM-10-2 Debenture, the NEOM-10-3 Debenture, the NEOM-10-4 Debenture, the NEOM-10-5 Debenture and the First 2011 Convertible Debenture, the “Debentures”);

20. Promissory Note dated April 1, 2010 made by the Company payable to the Investor in the original principal amount of $500,000.00 (hereinafter, the “4/1/10 Note”, and collectively, together with the Debentures and the 12/23/09 Note, the “Debt Instruments”);

21. Master Amendment Agreement dated as of March 27, 2007 by and between the Company and the Investor;

SECURITIES PURCHASE AGREEMENTS

22. Securities Purchase Agreement dated as of August 23, 2006 entered into by and between the Borrower and the Lender;

23. Securities Purchase Agreement dated as of December 29, 2006 entered into by and between the Borrower and the Lender;

24. Securities Purchase Agreement dated as of March 27, 2007 entered into by and between the Borrower and the Lender;

25. Securities Purchase Agreement dated as of August 24, 2007 entered into by and between the Borrower and the Lender;

26. Securities Purchase Agreement dated as of July 29, 2008 entered into by and between the Borrower and the Lender, as amended on April 6, 2009;

27. Agreement dated June 5, 2009 by and between the Borrower and the Lender pursuant to which the Lender purchased a secured convertible debenture in the original principal amount of $715,000;

28. Agreement dated July 15, 2009 by and between the Borrower and the Lender pursuant to which the Lender purchased a secured convertible debenture in the original principal amount of $535,000;

29. Agreement dated August 14, 2009 by and between the Borrower and the Lender pursuant to which the Lender purchased a secured convertible debenture in the original principal amount of $475,000;

30. Securities Purchase Agreement, dated as of May 27, 2010, by and among the Borrower and the Lender pursuant to which the Lender purchased a Secured Convertible Debenture in the original principal amount of $2,006,137.04;

31. Agreement, dated as of August 13, 2010, by and among the Borrower and the Lender pursuant to which the Lender purchased a Secured Convertible Debenture in the original principal amount of $550,000.00;

32. Agreement, dated as of September 29, 2010, by and among the Borrower and the Lender pursuant to which the Lender purchased a Secured Convertible Debenture in the original principal amount of $475,000.00;

33. Agreement, dated as of October 28, 2010, by and among the Company and the Investor pursuant to which the Investor purchased a Secured Convertible Debenture in the original principal amount of $400,000;

34. Agreement, dated as of December 15, 2010, by and among the Company and the Investor pursuant to which the Investor purchased a Secured Convertible Debenture in the original principal amount of $450,000;

SECURITY DOCUMENTS

35. Pledge and Security Agreement dated as of August 23, 2006 entered into by and between the Borrower and the Lender;

36. Security Agreement dated as of March 27, 2007 entered into by and between the Obligors and the Lender;

37. Security Agreement (Patent) dated as of March 27, 2007 entered into by and between the Obligors and the Lender;

38. Security Agreement dated as of August 24, 2007 entered into by and between the Obligors and the Lender;

39. Security Agreement (Patent) dated as of August 24, 2007 entered into by and between the Obligors and the Lender;

40. Security Agreement dated as of July 29, 2008 entered into by and between the Borrower and the Lender;

41. Patent Security Agreement dated as of July 29, 2008 entered into by and between the Borrower and the Lender;

42. Share Pledge Agreement (Anteilsverpfandung) dated August 3, 2010 entered into by and between the Issuer and the Buyer;

43. Agreement on the Pledge of Intellectual Property Rights as Collateral (Vereinbarung uber die Verpfandung von geistigen Eigentumsrechten) dated August 13, 2010 by and between the Buyer and NeoMedia Europe AG (“AG”);

44. Security Transfer of Moveable Assets (Sicherungsubereignunsgvertrag) dated August 13, 2010 by and between the Buyer and AG;

WARRANTS

45. “A” Warrant No. CCP-001 dated February 17, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 20,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to “A” Warrant No. CCP-001 dated as of August 23, 2006 entered into by and between the Borrower and the Lender, as further amended by that certain Amendment to “A” Warrant No.: CCP-001 dated December 29, 2006;

46. “B” Warrant No. CCP-002 dated February 17, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 25,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to “B” Warrant No. CCP-002 dated as of August 23, 2006 entered into by and between the Borrower and the Lender, as further amended by that certain Amendment to “B” Warrant No.: CCP-002 dated December 29, 2006;

47. “C” Warrant No. CCP-003 dated February 17, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 30,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to “C” Warrant No. CCP-003 dated as of August 23, 2006 entered into by and between the Borrower and the Lender, as further amended by that certain Amendment to “C” Warrant No.: CCP-003 dated December 29, 2006;

48. “A” Warrant No. CCP-001 dated August 23, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 25,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to “A” Warrant No. CCP-001 dated as of December 29, 2006 entered into by and between the Borrower and the Lender;

49. “B” Warrant No. CCP-001 dated August 23, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 50,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to “B” Warrant No. CCP-001 dated as of December 29, 2006 entered into by and between the Borrower and the Lender;

50. “C” Warrant No. CCP-001 dated August 23, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 50,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to “C” Warrant No. CCP-001 dated as of December 29, 2006 entered into by and between the Borrower and the Lender;

51. “D” Warrant No. CCP-001 dated August 23, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 50,000,000 shares of the Borrower’s common stock;

52. “A” Warrant No. CCP-001 dated December 29, 2006 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 42,000,000 shares of the Borrower’s common stock;

53. Warrant No. NEOM-4-1 dated March 27, 2007 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 125,000,000 shares of the Borrower’s common stock;

54. Warrant No. NEOM-1-1 dated August 24, 2007 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 75,000,000 shares of the Borrower’s common stock;

55. Warrant No. NEO-2008-2 dated May 16, 2008 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 7,500,000 shares of the Borrower’s common stock;

56. Warrant No. NEO-2008-3 dated May 29, 2008 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 50,000,000 shares of the Borrower’s common stock;

57. Warrant No. NEOM-9-1 dated July 29, 2008 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 100,000,000 shares of the Borrower’s common stock;

58. Warrant No. NEOM-9-1-B dated July 29, 2008 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 100,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to NeoMedia Technologies, Inc. Warrant No. NEOM-9-1B dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

59. Warrant No. NEOM-9-1-C dated July 29, 2008 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 125,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to NeoMedia Technologies, Inc. Warrant No. NEOM-9-1C dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

60. Warrant No. NEOM-9-1-D dated July 29, 2008 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 125,000,000 shares of the Borrower’s common stock, as amended by that certain Amendment to NeoMedia Technologies, Inc. Warrant No. NEOM-9-1D dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

61. Warrant No. NEOM-10-1 dated January 5, 2010 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 225,000,000 shares of the Borrower’s common stock;

62. Letter Agreement re: Repricing of All Existing Warrants dated August 24, 2007 entered into by and between the Borrower and the Lender;

63. Warrant No.: NEOM-0510 dated May 27, 2010 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 5,000,000 shares of the Borrower’s common stock;

64. Warrant No.: NEOM-0810 dated August 13, 2010 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 1,000,000 shares of the Borrower’s common stock;

65. Warrant No.: NEOM-0910 dated September 29, 2010 executed and delivered to the Lender by the Borrower granting the Lender the right to purchase 750,000 shares of the Borrower’s common stock;

66. Warrant No.: NEOM-1010 dated October 28, 2010 executed and delivered to the Investor by the Company granting the Investor the right to purchase 600,000 shares of the Company’s common stock;

67. Warrant No.: NEOM-1210 dated December 15, 2010 executed and delivered to the Investor by the Company granting the Investor the right to purchase 1,250,000 shares of the Company’s common stock;

REGISTRATION RIGHTS AGREEMENTS

68. Lender Registration Rights Agreement dated as of February 17, 2006 entered into by and between the Borrower and the Lender, as amended by a certain First Amendment to Lender Registration Rights Agreement and as further amended by that certain Second Amendment to Lender Registration Rights Agreement dated June 15, 2006;

69. Lender Registration Rights Agreement dated as of August 23, 2006 entered into by and between the Borrower and the Lender;

70. Lender Registration Rights Agreement dated as of December 29, 2006 entered into by and between the Borrower and the Lender;

71. Registration Rights Agreement dated as of March 27, 2007 entered into by and between the Borrower and the Lender;

72. Registration Rights Agreement dated as of August 24, 2007 entered into by and between the Borrower and the Lender;

73. Lender Registration Rights Agreement dated as of January 5, 2010 entered into by and between the Borrower and the Lender;

TRANSFER AGENT INSTRUCTIONS

74. Amended and Restated Irrevocable Transfer Agent Instructions dated October 26, 2007 from the Borrower to Worldwide Stock Transfer, LLC, which amended and restated those certain Irrevocable Transfer Agent Instructions dated February 16, 2006 from the Borrower to American Stock Transfer & Trust Co.;

75. Irrevocable Transfer Agent Instructions dated August 23, 2006 from the Borrower to American Stock Transfer & Trust Co.;

76. Amended and Restated Irrevocable Transfer Agent Instructions dated November 21, 2007 from the Borrower to Worldwide Stock Transfer, LLC, which amended and restated those certain Irrevocable Transfer Agent Instructions dated December 29, 2006 from the Borrower to American Stock Transfer & Trust Co.;

77. Amended and Restated Irrevocable Transfer Agent Instructions dated November 21, 2007 from the Borrower to Worldwide Stock Transfer, LLC, which amended and restated those certain Irrevocable Transfer Agent Instructions dated August 23, 2006 from the Borrower to American Stock Transfer & Trust Co.;

78. Irrevocable Transfer Agent Instructions dated March 27, 2007 from the Borrower to Worldwide Stock Transfer, LLC;

79. Irrevocable Transfer Agent Instructions dated August 24, 2007 from the Borrower to Worldwide Stock Transfer, LLC;

80. Irrevocable Transfer Agent Instructions dated July 29, 2008 from the Borrower to Worldwide Stock Transfer, LLC;

81. Irrevocable Transfer Agent Instructions dated January 5, 2010 from the Borrower to Worldwide Stock Transfer, LLC;

82. Irrevocable Transfer Agent Instructions dated May 27, 2010 from the Borrower to Worldwide Stock Transfer, LLC;

83. Irrevocable Transfer Agent Instructions dated August 13, 2010 from the Borrower to Worldwide Stock Transfer, LLC;

84. Irrevocable Transfer Agent Instructions dated September 29, 2010 from the Borrower to Worldwide Stock Transfer, LLC;

85. Irrevocable Transfer Agent Instructions dated October 28, 2010 from the Company to Worldwide Stock Transfer, LLC;

86. Irrevocable Transfer Agent Instructions dated December 15, 2010 from the Company to Worldwide Stock Transfer, LLC;

OTHER DOCUMENTS

87. Blocked Account Control Agreement (“Shifting Control”) dated as of August 28, 2008 by and among the Borrower, the Lender, and JPMorgan Chase Bank, N.A.;

88. Lockup Agreement dated July 28, 2008 by SKS Consulting of FL Corp. to the Lender;

89. Lockup Agreement dated July 28, 2008 by James J. Keil to the Lender;

90. Lockup Agreement dated July 28, 2008 by J. Scott Womble to the Lender;

91. Pledge Shares Escrow Agreement dated March 27, 2007 between the Borrower and the Lender;

92. Monitoring Fee Escrow Agreement dated January 5, 2010 by and among the Borrower, the Lender, Yorkville Advisors, LLC, and David Gonzalez, Esquire;

93. Investment Agreement dated February 17, 2006 by and between the Borrower and the Lender;

94. Investment Agreement dated January 5, 2010 by and between the Borrower and the Lender, as amended by that certain First Amendment to Investment Agreement dated March 5, 2010;

95. Escrow Agreement dated July 29, 2008 entered into by and among the Borrower, the Lender, Yorkville Advisors, LLC, as Investment Manager, and David Gonzalez, Esq., as Escrow Agent;

96. Escrow Agreement dated April 1, 2010 entered into by and among the Borrower, the Lender, Yorkville Advisors, LLC, as Investment Manager, and David Gonzalez, Esq., as Escrow Agent;

97. Ratification Agreement dated as of May 27, 2010 entered into by and between the Company and the Investor;

98. All other documents, instruments, and agreements executed in connection with any of the foregoing.

EX-10.7

Exhibit 10.7

IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

January 10, 2011

WorldWide Stock Transfer , LLC

433 Hackensack Avenue, Level L

Hackensack, New Jersey 07601

RE:           NEOMEDIA TECHNOLOGIES, INC.

Ladies and Gentlemen:

Reference is made to that certain Agreement (the “Agreement”) of even date herewith by and between Neomedia Technologies, Inc, a Delaware corporation (the“Company”), and YA Global Investments, L.P. (the “Buyer”).  Pursuant to the Agreement, the Company shall sell to the Buyer, and the Buyer shall purchase from the Company, convertible debentures (the “Debenture”) in the aggregate principal amount of $450,000.00, plus accrued interest, which are convertible into shares of the Company’s common stock, par value $.001 per share (the “Common Stock”), at the Buyer’s discretion.  The Company has also issued to the Buyer warrants to purchase up to 1,250,000 shares of Common Stock, at the Buyer’s discretion (the “Warrant”).  These instructions relate to the following stock or proposed stock issuances or transfers:

1. Shares of Common Stock to be issued to the Buyer upon conversion of the Debenture (“Conversion Shares”) plus the shares of Common Stock to be issued to the Buyer upon conversion of accrued interest into Common Stock (the “Interest Shares”).

2. Up to 1,250,000 shares of Common Stock to be issued to the Buyer upon exercise of the Warrant (the “Warrant Shares”).

This letter shall serve as our irrevocable authorization and direction to WorldWide Stock Transfer, LLC (the “Transfer Agent”) to do the following:

1. Conversion Shares, Warrant Shares and Interest Shares.

a. Instructions Applicable to Transfer Agent.  With respect to the Conversion Shares, Warrant Shares and the Interest Shares, the Transfer Agent shall issue the Conversion Shares, Warrant Shares and the Interest Shares to the Buyer from time to time upon delivery to the Transfer Agent of a properly completed and duly executed Conversion Notice (the “Conversion Notice”) in the form attached hereto as Exhibit A to the Debenture, or a properly completed and duly executed Exercise Notice  (the “Exercise Notice”) in the form attached as Exhibit A to the Warrant, delivered to the Transfer Agent by the Company or on behalf of the Company by David Gonzalez, Esq. as escrow agent (the “Escrow Agent”).  Upon receipt of a Conversion Notice or an Exercise Notice, the Transfer Agent shall, as soon as reasonably practical thereafter, (i) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice or the Exercise Notice, a certificate, registered in the name of the Buyer or its designees, for the number of shares of Common Stock to which the Buyer shall be entitled as set forth in the Conversion Notice or Exercise Notice, or (ii) provided the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Buyer, credit such aggregate number of shares of Common Stock to which the Buyer shall be entitled to the Buyer’s or its designees’ balance account with DTC through its Deposit Withdrawal At Custodian (“DWAC”) system, provided that the Buyer causes its bank or broker to initiate the DWAC transaction, and further provided that a certificate representing such shares of Common Stock would not be required to bear a legend restricting transfer.

b. The Company hereby confirms to the Transfer Agent and the Buyer that certificates representing the Conversion Shares, Warrant Shares and Interest Shares shall not bear any legend restricting transfer and should not be subject to any stop-transfer restrictions and shall otherwise be freely transferable on the books and records of the Company; provided that Buyer confirm to the Transfer Agent and the Company that the Conversion Shares, Warrant Shares and Interest Shares have been or will be sold only pursuant to an effective registration statement for such securities under the Securities Act of 1933, as amended (the “Act”), and that the Buyer has complied, or will comply, with all applicable prospectus delivery requirements; and further provided that counsel to the Company delivers (i) the Notice of Effectiveness set forth in Exhibit I attached hereto and (ii) an opinion of counsel in the form set forth in Exhibit II attached hereto, and that if the Conversion Shares, Warrant Shares and the Interest Shares are not registered for sale under the Act, then the certificates for the Conversion Shares, Warrant Shares and Interest Shares shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”

c. In the event that counsel to the Company fails or refuses to render an opinion as required to issue the Conversion Shares, the Warrant Shares or the Interest Shares in accordance with the preceding paragraph (either with or without restrictive legends, as applicable), then the Company irrevocably and expressly authorizes counsel to the Buyer to render such opinion.  The Transfer Agent shall accept and be entitled to rely on such opinion for the purposes of issuing the Conversion Shares, the Warrant Shares or the Interest Shares.

d. Upon the Company’s or the Escrow Agent’s receipt of a properly completed Conversion Notice or Exercise Notice (along with evidence that the Aggregate Exercise Price (as defined in the Warrant) has been delivered to the Company), the Company or the Escrow Agent, as the case may be, shall, within one Trading Day thereafter, send to the Transfer Agent the Conversion Notice or Exercise Notice, as the case may be, which shall constitute an irrevocable instruction to the Transfer Agent to process such Conversion Notice or Exercise Notice in accordance with the terms of these instructions.  For purposes hereof “Trading Day” shall mean any day on which the Nasdaq Market is open for customary trading.

2. All Shares.

a. The Company hereby irrevocably appoints the Escrow Agent as a duly authorized agent of the Company for the purposes of authorizing the Transfer Agent to process issuances and transfers specifically contemplated herein.

b. The Transfer Agent shall rely exclusively on the Conversion Notice or the Exercise Notice, and shall have no liability for relying on such instructions.  Any Conversion Notice or Exercise Notice delivered hereunder shall constitute an irrevocable instruction to the Transfer Agent to process such notice or notices in accordance with the terms thereof.  Such notice or notices may be transmitted to the Transfer Agent by facsimile or any commercially reasonable method.

c. The Company hereby confirms to the Transfer Agent and the Buyer that no instructions other than as contemplated herein will be given to Transfer Agent by the Company with respect to the matters referenced herein.  The Company hereby authorizes the Transfer Agent, and the Transfer Agent shall be obligated, to disregard any contrary instructions received by or on behalf of the Company.

3. Certain Notice Regarding the Escrow Agent. The Company and the Transfer Agent hereby acknowledge that the Escrow Agent is general counsel to the Buyer, a partner of the general partner of the Buyer and counsel to the Buyer in connection with the transactions contemplated and referred herein.  The Company and the Transfer Agent agree that in the event of any dispute arising in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted to continue to represent the Buyer and neither the Company nor the Transfer Agent will seek to disqualify such counsel.

4. Company Acknowledgments.

a. The Company hereby agrees that it shall not replace the Transfer Agent as the Company’s transfer agent without the prior written consent of the Buyer.

b. The Company agrees that in the event that the Transfer Agent resigns as the Company’s transfer agent the Company shall engage a suitable replacement transfer agent that will agree to serve as transfer agent and to be bound by the terms and conditions of these Irrevocable Transfer Agent Instructions within 5 business days from the effectiveness of such resignation.

c. The Company acknowledges that the Buyer is relying on the representations and covenants made by the Company hereunder and are a material inducement to the Buyer purchasing the Debenture pursuant to the Agreement.  The Company further acknowledges that without such representations and covenants of the Company made hereunder, the Buyer would not purchase the Debenture.

d. The Company specifically acknowledges and agrees that in the event of a breach or threatened breach by a party hereto of any provision hereof, the Buyer will be irreparably damaged and that damages at law would be an inadequate remedy if these Irrevocable Transfer Agent Instructions were not specifically enforced.  Therefore, in the event of a breach or threatened breach by the Company, including, without limitation, the attempted termination of the agency relationship created by this instrument, the Buyer shall be entitled, in addition to all other rights or remedies, to an injunction restraining such breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of these Irrevocable Transfer Agent Instructions.

5. Transfer Agent Binding Disclaimer:  In consideration for the Transfer Agent agreeing and attesting to all terms in the above referenced Irrevocable Transfer Agent Instructions, in particular any kind of lawsuit and or action that may arise from the Buyer’s instructing the Transfer Agent to issue shares based on the legality of the Agreement whereas the Company is denying the request in full or partially for whatever reason, the Company, Buyer and any other third party involved agree for ourselves, our successors, legal representatives and assigns, at all times to defend, indemnify and save the Transfer Agent, their successors and assigns, free and harmless from and against any and all claims, from actions, suits, whether groundless or otherwise, and from and against any and all liabilities, taxes, losses, damages, costs, charges, counsel fees, and other expenses of every nature and character that arises from this action.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have caused this letter agreement regarding Irrevocable Transfer Agent Instructions to be duly executed and delivered as of the date first written above.

COMPANY:
Neomedia Technologies, Inc.
By:	/s/ Michael W. Zima
Name:	Michael W. Zima
Title:	CFO
BUYER:
YA Global Investments, L.P.
By:	Yorkville Advisors, LLC
Its:	Investment Manager
By:	/s/ Troy Rillo
Name:	Troy Rillo
Title:	Sr. Managing Director
ESCROW AGENT
By:
David Gonzalez, Esq.

WorldWide Stock Transfer, LLC
By:	/s/ Yonah J. Kopstick
Name	Yonah  Kopstick
Title:	SVP