PATENT SECURITY AGREEMENT

THIS PATENT SECURITY AGREEMENT (“ Agreement ”), is entered into and made effective as of July 29, 2008, by and between NEOMEDIA TECHNOLOGIES INC., a Delaware corporation with its principal place of business located at Two Concourse Parkway, Suite 500, Atlanta, GA 30328 (the “ Parent ”), and the each subsidiary of the Parent listed on Schedule I attached hereto (each a “ Subsidiary ,” and collectively and together with the Parent, the “ Company ”), in favor of the YA GLOBAL INVESTMENTS, L.P. (the “ Secured Party ”).

WHEREAS , the Secured Party is the holder of certain secured convertible debentures and notes, and other evidence of indebtedness issued by the Parent to the Secured Party as set forth on Schedule A attached hereto (as may be amended, supplemented and restated from time to time, the “ Original Debentures ”);

WHEREAS, in connection with the Securities Purchase Agreement by and among the Parent and the Secured Party of even date herewith (the “ Securities Purchase Agreement ”), the Parent has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement, to issue to the Secured Party (i) an aggregate original principal amount of $8,650,000 of senior secured convertible debentures (the “ Convertible Debentures ”), which shall be convertible into shares of the Company’s Common Stock (the “ Conversion Shares ”); and (ii) warrants (the “ Warrants ”) to be exercisable to acquire additional shares of Common Stock (the “ Warrants Shares ”) initially in that number of shares of Common Stock set forth in the Securities Purchase Agreement;

WHEREAS , the Secured Party and the Parent are parties to the following (collectively, the “ Prior Debt Documents ”): the Original Debentures, the Security Agreement dated August 24, 2007 (the “ Prior Security Agreement ”) and any other existing security agreements, guaranty agreements, pledge agreements, credit agreement or other facility, mortgage, other debenture agreements or instruments, by and between the Secured Party and the Parent, under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or evidencing any outstanding obligation of the Parent to the Secured Party, and any other existing documents executed in connection with any of the foregoing; and

WHEREAS, it is a condition precedent to the Secured Party purchasing the Convertible Debentures and Warrants pursuant to the Securities Purchase Agreement that each Company shall have executed and delivered to the Secured Party this Agreement providing for the grant to the Secured Party of a security interest in all the Patent Collateral (as defined below) of each Company to secure all of the Parent's Obligations (as defined below) under the Securities Purchase Agreement, the Security Agreement dated July 29, 2008 (the “ Security Agreement ” and collectively along with the Prior Security Agreement, the “ Security Document ”) this Agreement, the Convertible Debentures, the Warrants, the Prior Debt Documents, any other mortgages, pledges, or other collateral documents, and any amendment, amendment and restatement, modification or supplement to any of the foregoing (collectively, the “ Transaction Documents ”);  

WHEREAS , the Parent has agreed to provide the Secured Party a general security interest in Pledged Property (as this term is defined in the Security Documents) and to enter into this Agreement in addition to, and not in limitation of, the Security Documents for the purpose of recording the security interest of the Secured Party in the Patent Collateral with the United States Patent and Trade Marks Office;

WHEREAS , each Company has duly authorized the execution, delivery and performance of this Agreement;

NOW THEREFORE , for good and valuable consideration, the receipt of which is hereby acknowledged, the Company agrees as follows:

SECTION 1.   Definitions. Unless otherwise defined herein otherwise requires, terms used in this Agreement, including its preamble a